1 00:00:05,120 --> 00:00:09,200 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane, along 2 00:00:09,200 --> 00:00:12,719 Speaker 1: with Jonathan Ferrell and Lisa brown Witz Jay Lee. We 3 00:00:12,840 --> 00:00:16,760 Speaker 1: bring you insight from the best and economics, finance, investment, 4 00:00:17,079 --> 00:00:22,400 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple, podcast, SoundCloud, 5 00:00:22,800 --> 00:00:26,240 Speaker 1: Bloomberg dot Com, and of course on the Bloomberg terminal. 6 00:00:29,080 --> 00:00:30,800 Speaker 1: It's been a tough year so far for the big 7 00:00:30,800 --> 00:00:33,120 Speaker 1: banks on Wall Street, on the stock price. We can 8 00:00:33,120 --> 00:00:35,760 Speaker 1: now catch up with Jamie Diamond of JP Morgan sitting 9 00:00:35,760 --> 00:00:39,080 Speaker 1: down with Bloomberg's France saint. Thank you so much, John. Yes, 10 00:00:39,120 --> 00:00:41,280 Speaker 1: we're in London and we could not be more pleased. 11 00:00:41,360 --> 00:00:43,519 Speaker 1: I say the Royal Weed. We're really delighted. Speak to 12 00:00:43,560 --> 00:00:45,800 Speaker 1: Jamie Diamond, thank you so much for taking the time. 13 00:00:45,960 --> 00:00:48,360 Speaker 1: Walster in London speak to us. So the Fed, the Fed, 14 00:00:48,400 --> 00:00:51,440 Speaker 1: the Fed today we're expecting fifty basis points hikes. What 15 00:00:51,600 --> 00:00:54,080 Speaker 1: happens to inflation? Here? Is this your biggest concern? So 16 00:00:54,360 --> 00:00:56,840 Speaker 1: first all, Francine happy to be here and give it 17 00:00:56,840 --> 00:00:59,480 Speaker 1: a little perspective. We have and this this is contradictory 18 00:00:59,480 --> 00:01:02,520 Speaker 1: about to say both the true very strong US economy. 19 00:01:02,880 --> 00:01:07,039 Speaker 1: They consumers in great shape, lots of money spending the money, jobs, 20 00:01:07,040 --> 00:01:09,400 Speaker 1: of plentiful wages of going up, though everything is distorted 21 00:01:09,400 --> 00:01:11,440 Speaker 1: by inflation and all that, but those are good news. 22 00:01:11,480 --> 00:01:14,319 Speaker 1: And businesses are in very good shape. And the FED 23 00:01:14,400 --> 00:01:16,080 Speaker 1: is going to have to raise rates and reverse Q 24 00:01:16,200 --> 00:01:18,080 Speaker 1: eight and they're gonna, you know, if they can. They're 25 00:01:18,080 --> 00:01:21,199 Speaker 1: gonna try to slow down the economy enough eight percent 26 00:01:21,240 --> 00:01:23,600 Speaker 1: starts to come down over time, and I wish them 27 00:01:23,600 --> 00:01:26,039 Speaker 1: the best. You know, we're a little late, but you 28 00:01:26,120 --> 00:01:28,640 Speaker 1: remember two years ago we have fifteen percent unemployment and 29 00:01:28,680 --> 00:01:31,040 Speaker 1: no vaccine. So I think people should take a deep breath, 30 00:01:31,360 --> 00:01:33,039 Speaker 1: give him a chance. And I think they're gonna move. 31 00:01:33,120 --> 00:01:35,479 Speaker 1: I think the sooner they move, the better. So yeah, 32 00:01:35,520 --> 00:01:38,280 Speaker 1: they're gonna be raising races. Breath, But can they engineer 33 00:01:38,319 --> 00:01:40,400 Speaker 1: a soft planting or is there a worry of recession? 34 00:01:40,520 --> 00:01:42,400 Speaker 1: Of course, but none of us will ever know, right, 35 00:01:42,440 --> 00:01:44,759 Speaker 1: But if I had to, I'm not a betting man. 36 00:01:44,840 --> 00:01:47,480 Speaker 1: I just the odds of the following something like, yes, 37 00:01:47,520 --> 00:01:49,840 Speaker 1: they can engineer soft landing, a third of persent chance, 38 00:01:50,160 --> 00:01:52,000 Speaker 1: probably a third of percent chance. They can engineer a 39 00:01:52,120 --> 00:01:56,279 Speaker 1: mild recession. Think of we've had mild FED induced recessions before, 40 00:01:56,640 --> 00:01:58,160 Speaker 1: you know, where inflation goes up one and a half 41 00:01:58,200 --> 00:02:01,520 Speaker 1: for two percent, everything slows down, phases coming down, and 42 00:02:01,560 --> 00:02:03,600 Speaker 1: it's six or nine months, and then there's a chance 43 00:02:03,640 --> 00:02:05,240 Speaker 1: it's gonna be much harder than that. And then in 44 00:02:05,280 --> 00:02:07,560 Speaker 1: the face of all of that, you have Ukraine, which 45 00:02:07,600 --> 00:02:10,800 Speaker 1: is a huge global issue. And do you fear the 46 00:02:10,840 --> 00:02:13,359 Speaker 1: FED and do you fear a policy mistake from the Fed? 47 00:02:13,520 --> 00:02:17,600 Speaker 1: And what does does to consumers? I'm not I'm not 48 00:02:17,680 --> 00:02:20,280 Speaker 1: afraid of the FED. You know, I'll change this subject 49 00:02:20,360 --> 00:02:23,800 Speaker 1: a little bit. I think America needs very good domestic 50 00:02:23,880 --> 00:02:27,160 Speaker 1: policy to improve the growth the economy, which makes the 51 00:02:27,200 --> 00:02:30,600 Speaker 1: FED job easier. And that is about regulations and rules 52 00:02:30,639 --> 00:02:34,120 Speaker 1: and policies and improving projects and things like that. So 53 00:02:34,160 --> 00:02:37,280 Speaker 1: you have increased the supply side as opposed to, you know, 54 00:02:37,320 --> 00:02:39,600 Speaker 1: do something the demand side. So the FED job would 55 00:02:39,600 --> 00:02:42,400 Speaker 1: be easier if we had very rational, thoughtful economic policy. 56 00:02:42,760 --> 00:02:44,320 Speaker 1: What could go wrong? But I mean, when you talk about, 57 00:02:44,360 --> 00:02:46,160 Speaker 1: you know, a strong US consumer or strong business. You 58 00:02:46,200 --> 00:02:50,480 Speaker 1: talked us about storm clouds, what are those storm crowds? Clouds? 59 00:02:50,480 --> 00:02:53,400 Speaker 1: And what's worst case are your I hate the word unprecedented, 60 00:02:53,440 --> 00:02:57,480 Speaker 1: but there's kind of fiscal and monetary induced unbelievable growth 61 00:02:57,560 --> 00:02:59,120 Speaker 1: in the U S, which was true around the world, 62 00:02:59,120 --> 00:03:02,600 Speaker 1: though it's obviously slow going down in Europe. That's abnormal. 63 00:03:02,680 --> 00:03:05,280 Speaker 1: We've never really quite had that before. We've never had 64 00:03:05,360 --> 00:03:07,720 Speaker 1: q T before. So you know, you look at QUEI, 65 00:03:07,919 --> 00:03:10,120 Speaker 1: that's one of the greatest experiments ever done. They're gonna 66 00:03:10,120 --> 00:03:12,440 Speaker 1: be writing books for fifty years on it, and we're 67 00:03:12,440 --> 00:03:14,720 Speaker 1: gonna have to reverse it, and that's a huge change 68 00:03:14,720 --> 00:03:16,600 Speaker 1: in the flow of funds over time around bonds and 69 00:03:16,720 --> 00:03:18,639 Speaker 1: rates and stuff like that. My own view is that 70 00:03:18,720 --> 00:03:21,640 Speaker 1: Rachel probably will still have to go up from here. Uh. 71 00:03:21,720 --> 00:03:23,799 Speaker 1: And then you've got Ukraine, which you know, I think 72 00:03:23,919 --> 00:03:26,919 Speaker 1: is a potent. When you look at Ukraine, obviously the 73 00:03:26,960 --> 00:03:28,800 Speaker 1: wishful thinking is that we have a FED and dew 74 00:03:28,880 --> 00:03:32,760 Speaker 1: slow down works. The world is fine, Ukraine resolves, but 75 00:03:32,840 --> 00:03:35,200 Speaker 1: there's a chance that this goes on for years and 76 00:03:35,400 --> 00:03:39,600 Speaker 1: you completely rattle global energy markets, wheat markets, commodity markets, 77 00:03:40,040 --> 00:03:41,880 Speaker 1: and you know that we need, as you know, the 78 00:03:41,960 --> 00:03:44,040 Speaker 1: Western world needs to be prepared for that and needs 79 00:03:44,080 --> 00:03:46,680 Speaker 1: to take every action today to be prepared that that 80 00:03:46,800 --> 00:03:49,240 Speaker 1: can get really bad tomorrow. And you know it gets 81 00:03:49,280 --> 00:03:51,000 Speaker 1: really bad tomorrow, you don't have time So how do 82 00:03:51,040 --> 00:03:53,920 Speaker 1: you handle that? How what what's your plan B if 83 00:03:53,960 --> 00:03:57,320 Speaker 1: it does go shape. I like the fact that it 84 00:03:57,400 --> 00:03:59,160 Speaker 1: will deal with it, you know, I mean that's life. 85 00:03:59,240 --> 00:04:02,520 Speaker 1: I mean, I like, in my view the most important 86 00:04:02,560 --> 00:04:05,920 Speaker 1: thing is American growth and that America. You know, I 87 00:04:06,000 --> 00:04:08,800 Speaker 1: called this Marshall Plan for Energy that we do everything 88 00:04:08,920 --> 00:04:11,880 Speaker 1: we can and this doesn't violate climate change, it doesn't 89 00:04:11,960 --> 00:04:14,960 Speaker 1: change anything about long term objectives. But we do everything 90 00:04:15,000 --> 00:04:17,360 Speaker 1: you can to get oil and gas into the hands 91 00:04:17,400 --> 00:04:19,880 Speaker 1: of Europeans so they don't freeze in the winter. You know. 92 00:04:20,200 --> 00:04:22,000 Speaker 1: And again I'm not saying it's going to happen, but 93 00:04:22,080 --> 00:04:24,200 Speaker 1: you know, you have a couple of problems out there 94 00:04:24,240 --> 00:04:28,160 Speaker 1: that the national energy stuff is, the global energy is precarious, 95 00:04:28,560 --> 00:04:31,839 Speaker 1: and if oil goes to that's a huge problem for people. 96 00:04:31,880 --> 00:04:33,840 Speaker 1: And we should do everything we can today. We need 97 00:04:33,880 --> 00:04:37,400 Speaker 1: to pump moral and gas. We do. I feel like 98 00:04:37,400 --> 00:04:39,520 Speaker 1: at the US Frankers they could drill mar We get 99 00:04:39,680 --> 00:04:42,880 Speaker 1: confused about policy and that somehow doing that is bad 100 00:04:42,920 --> 00:04:45,240 Speaker 1: for the climate. It's not. You know, we need you know, 101 00:04:45,240 --> 00:04:48,280 Speaker 1: if you want transitioning gas, replace called and we should 102 00:04:48,279 --> 00:04:50,640 Speaker 1: approve all the gleen stuff too, even the green stuff. 103 00:04:50,680 --> 00:04:52,200 Speaker 1: Takes five years to ten years to approve. In the 104 00:04:52,279 --> 00:04:54,680 Speaker 1: United States, I mean, America's needs to get us act 105 00:04:54,720 --> 00:04:56,960 Speaker 1: together and they should have a war room. They shouldt 106 00:04:57,000 --> 00:04:59,320 Speaker 1: everyone involved, get all the people and say what do 107 00:04:59,360 --> 00:05:01,720 Speaker 1: we need to do in a consistent careering way. We 108 00:05:01,800 --> 00:05:05,040 Speaker 1: need to get more gas to LERG terminals. We can't 109 00:05:05,040 --> 00:05:07,320 Speaker 1: do that without a gas pipeline, you know. And so 110 00:05:07,440 --> 00:05:10,320 Speaker 1: we're just not national anymore. We we we we have 111 00:05:10,480 --> 00:05:12,760 Speaker 1: misconceived notions about how we gonna get things done, and 112 00:05:13,600 --> 00:05:16,400 Speaker 1: so they're trying. But the roll of Europe and this 113 00:05:16,800 --> 00:05:19,480 Speaker 1: could Europe see a recession because of the energy prices. Absolutely, 114 00:05:19,520 --> 00:05:21,520 Speaker 1: you know, our condoms would say that you had slowed 115 00:05:21,560 --> 00:05:24,760 Speaker 1: down to two percent of something. But the problem with 116 00:05:25,080 --> 00:05:26,960 Speaker 1: right now and the economs would agree with me. We're 117 00:05:27,000 --> 00:05:29,920 Speaker 1: looking at a static analysis that if things stay the 118 00:05:30,000 --> 00:05:32,039 Speaker 1: way they are, but you and I know for certain 119 00:05:32,080 --> 00:05:34,760 Speaker 1: things don't stay the way they are. And my view 120 00:05:34,880 --> 00:05:36,920 Speaker 1: is as a very high chance that oil go higher. 121 00:05:37,160 --> 00:05:39,080 Speaker 1: That only takes a million to two million barrels off 122 00:05:39,120 --> 00:05:41,400 Speaker 1: the market a day. That can drive prices up thirty 123 00:05:41,480 --> 00:05:44,720 Speaker 1: or forty dollars, and so we should prepare for that today. 124 00:05:45,440 --> 00:05:48,680 Speaker 1: And uh so but but but I like the fact. 125 00:05:48,839 --> 00:05:50,840 Speaker 1: I think it's great that the Western world has gotten 126 00:05:50,839 --> 00:05:56,400 Speaker 1: together and who would have thought would get Sweden, Finland, Germany, Switzerland, 127 00:05:56,839 --> 00:05:59,640 Speaker 1: all of us. But that working together part we need 128 00:05:59,680 --> 00:06:03,240 Speaker 1: to make permanent for global security. First of all, just 129 00:06:03,279 --> 00:06:05,120 Speaker 1: going back to the European economy, how quickly could we 130 00:06:05,120 --> 00:06:07,080 Speaker 1: see a recession and how deep could it be? I 131 00:06:07,160 --> 00:06:09,839 Speaker 1: don't know. I mean, you know, I hate to guess 132 00:06:09,920 --> 00:06:11,800 Speaker 1: the future. No one really knows the future. I've never 133 00:06:11,839 --> 00:06:14,320 Speaker 1: seen any really guess it. Well, but again, if you have, 134 00:06:14,720 --> 00:06:16,960 Speaker 1: if Ukraine gets worse, I would assume that you're going 135 00:06:17,000 --> 00:06:18,599 Speaker 1: to go to a recession and may take a couple 136 00:06:18,640 --> 00:06:20,799 Speaker 1: of cores, but I would assume that our sanctions working. 137 00:06:20,880 --> 00:06:23,560 Speaker 1: So are the sanctions trying to deter Russia from continuing 138 00:06:23,600 --> 00:06:25,160 Speaker 1: the war and you crying? Or is it just to 139 00:06:25,520 --> 00:06:28,040 Speaker 1: try and put the Russian contom there? Well, sanction is 140 00:06:28,080 --> 00:06:31,040 Speaker 1: not the same of having tanks and airplanes, okay, but 141 00:06:31,440 --> 00:06:33,240 Speaker 1: they are working to the extent that you know, the 142 00:06:33,360 --> 00:06:36,200 Speaker 1: Russian GDP is gonna drop by ten or fift with 143 00:06:36,360 --> 00:06:39,640 Speaker 1: the current sanctions. Remember there are sanctions that also the 144 00:06:39,760 --> 00:06:42,200 Speaker 1: export controls and stuff like that, And you know, the 145 00:06:42,320 --> 00:06:44,680 Speaker 1: next round. If you're really stop stops oil, and you 146 00:06:44,720 --> 00:06:47,240 Speaker 1: can really stop oil being delivered, you know Europe, I 147 00:06:47,279 --> 00:06:49,480 Speaker 1: mean Russia, you can get another teen percent down. So 148 00:06:49,800 --> 00:06:52,839 Speaker 1: it's a tool in the tool kit. It's not definitive, 149 00:06:53,120 --> 00:06:55,920 Speaker 1: which definitive is tanks, So you know we're not don't 150 00:06:56,120 --> 00:06:58,040 Speaker 1: don't confuse the two, but you know one is a 151 00:06:58,120 --> 00:07:00,360 Speaker 1: pretty powerful The sanctions are pretty powerful to all. But 152 00:07:00,440 --> 00:07:02,360 Speaker 1: if you expect this to last for I think you 153 00:07:02,400 --> 00:07:04,479 Speaker 1: said years. I don't expect it. I said we should 154 00:07:04,480 --> 00:07:06,760 Speaker 1: be prepared for it too. I don't know what's going 155 00:07:06,800 --> 00:07:09,679 Speaker 1: to happen. But how do you see this ending? And actually, 156 00:07:09,680 --> 00:07:11,720 Speaker 1: if you're if you're a president of the US, if 157 00:07:11,760 --> 00:07:14,000 Speaker 1: you're a president of the Commission, if you're the FED, 158 00:07:14,160 --> 00:07:16,520 Speaker 1: right now, you need to game theory and it could 159 00:07:16,560 --> 00:07:19,680 Speaker 1: go either way. It's like a three way system. So 160 00:07:19,840 --> 00:07:23,160 Speaker 1: what do you do is listen. I think it's a 161 00:07:23,240 --> 00:07:25,160 Speaker 1: mistake to guess at which one will be. It should 162 00:07:25,200 --> 00:07:26,840 Speaker 1: be all three of them. And I think, you know, 163 00:07:26,920 --> 00:07:29,320 Speaker 1: I think basically the Cold War is back. I think 164 00:07:29,360 --> 00:07:31,200 Speaker 1: the whole world learned something that we always knew that 165 00:07:31,320 --> 00:07:34,480 Speaker 1: national security is always the most important thing, but it 166 00:07:34,560 --> 00:07:36,640 Speaker 1: kind of recedes in the background. We're all doing well, 167 00:07:37,040 --> 00:07:39,040 Speaker 1: but now it's the most important thing. It should be 168 00:07:39,120 --> 00:07:41,040 Speaker 1: the most important thing for the rest of our lives. 169 00:07:41,080 --> 00:07:43,840 Speaker 1: So maybe we all learned that that is a permanent 170 00:07:43,960 --> 00:07:46,360 Speaker 1: date of affairs. The Cold War is back. Uh. The 171 00:07:46,600 --> 00:07:49,400 Speaker 1: Allies have to call ESCE and not just for military purposes, 172 00:07:49,480 --> 00:07:53,920 Speaker 1: but for global economic strategic investment purposes, so that we've 173 00:07:53,960 --> 00:07:57,040 Speaker 1: got a safe world if and if we don't do that, 174 00:07:57,440 --> 00:07:59,880 Speaker 1: you know, you would you see Ukraine, you can see 175 00:07:59,880 --> 00:08:02,200 Speaker 1: all around the world. You will see forms of chaos. 176 00:08:02,480 --> 00:08:04,080 Speaker 1: So the impact on the economy, I mean, would you 177 00:08:04,080 --> 00:08:06,800 Speaker 1: go around a trading floor until the young kids that 178 00:08:06,840 --> 00:08:09,240 Speaker 1: I've never dealt with inflation that actually interest rates could 179 00:08:09,240 --> 00:08:13,200 Speaker 1: be about five shortly, of course, of course that's you know, 180 00:08:13,640 --> 00:08:15,640 Speaker 1: things change, and you know, I mean, I think you 181 00:08:15,680 --> 00:08:18,760 Speaker 1: can easily see five percent bonds. The bonds have already 182 00:08:19,120 --> 00:08:21,960 Speaker 1: ten year bonds. Were reacted dramatically and hopefully it won't 183 00:08:21,960 --> 00:08:23,880 Speaker 1: go a lot. But I don't think it's a disaster. 184 00:08:24,000 --> 00:08:25,760 Speaker 1: I don't think a slowdown as a disaster. I don't 185 00:08:25,760 --> 00:08:28,000 Speaker 1: think a many Look when you say a many recessions, 186 00:08:28,240 --> 00:08:30,280 Speaker 1: I feel for the people get hurt in that but 187 00:08:30,400 --> 00:08:32,560 Speaker 1: it's not a disaster for the world economy. I think 188 00:08:32,640 --> 00:08:35,679 Speaker 1: the potential outcomes Ukraine are And you've got to just 189 00:08:35,760 --> 00:08:38,040 Speaker 1: separate the two and just remember when you talk about war, 190 00:08:38,480 --> 00:08:40,280 Speaker 1: we didn't know how bad Vietnam is going to get. 191 00:08:40,520 --> 00:08:43,120 Speaker 1: We don't know how long Gfghaistan was gonna last. The Russians, 192 00:08:43,160 --> 00:08:45,160 Speaker 1: you know how long ifgast was gonna last. You can 193 00:08:45,200 --> 00:08:47,880 Speaker 1: go war after war after war. They were not predictable. 194 00:08:48,120 --> 00:08:49,719 Speaker 1: You didn't know the World War War was gonna be 195 00:08:49,760 --> 00:08:51,199 Speaker 1: like that. You didn't know the World War two is 196 00:08:51,200 --> 00:08:55,199 Speaker 1: going to start in September of nine. So I think 197 00:08:55,280 --> 00:08:57,720 Speaker 1: predicting the outcomes war, you've got to be very curious. 198 00:08:57,760 --> 00:09:01,160 Speaker 1: So why our markets so relaxed? That's markets, you know. 199 00:09:01,240 --> 00:09:04,760 Speaker 1: I'm that can change just like that. Do you think 200 00:09:04,800 --> 00:09:06,719 Speaker 1: it will? Are we expecting a big comm guessing? I 201 00:09:06,760 --> 00:09:08,880 Speaker 1: don't know. I mean, again, fancying my job in life, 202 00:09:09,400 --> 00:09:11,480 Speaker 1: I will serve our clients with thicker thin and our 203 00:09:11,520 --> 00:09:14,160 Speaker 1: country and stuff like that. And of course we're always 204 00:09:14,280 --> 00:09:16,439 Speaker 1: I mean, as a rule of thumb, we're always prepared 205 00:09:16,720 --> 00:09:18,920 Speaker 1: for bid outcomes, not because we're predicting them. Because I 206 00:09:19,000 --> 00:09:21,040 Speaker 1: need to say to the shareholder of the American public, 207 00:09:21,160 --> 00:09:25,400 Speaker 1: my regulators, you know, the UK that JP Morgan will 208 00:09:25,440 --> 00:09:27,920 Speaker 1: be safe and sound and help your country and your 209 00:09:27,960 --> 00:09:31,000 Speaker 1: people if things get bad, and that is our job. 210 00:09:31,080 --> 00:09:32,840 Speaker 1: Now we're dealing with a whole bunch of different things, 211 00:09:32,920 --> 00:09:35,880 Speaker 1: and we're prepared. You know, we have extraordinary capability and capital, 212 00:09:35,960 --> 00:09:41,000 Speaker 1: but earnest power. And where's China and this right now? Look, 213 00:09:41,040 --> 00:09:43,480 Speaker 1: I my view is that China can't possibly like this, 214 00:09:44,040 --> 00:09:45,880 Speaker 1: and they're playing if you look at them, they're playing 215 00:09:45,880 --> 00:09:48,000 Speaker 1: a very neutral role. They're not trying to anger the 216 00:09:48,080 --> 00:09:50,760 Speaker 1: United States. They know that the American Congress may very well, 217 00:09:51,240 --> 00:09:53,079 Speaker 1: the Congress, not just the President, can come in and 218 00:09:53,200 --> 00:09:56,440 Speaker 1: put you know, the secondary sanctions. They do three point 219 00:09:56,559 --> 00:09:59,760 Speaker 1: five trillion dollars of trade with the West, imports and exports. 220 00:09:59,800 --> 00:10:03,839 Speaker 1: They a hundred and fifty billion with Russia. Okay, one 221 00:10:03,960 --> 00:10:07,439 Speaker 1: number is critically important. Sanctions against them maybe bad for 222 00:10:07,480 --> 00:10:09,360 Speaker 1: the Western world, it will be even worse for them, 223 00:10:09,800 --> 00:10:11,640 Speaker 1: and so they don't need that. They want to grow 224 00:10:11,679 --> 00:10:14,440 Speaker 1: their country, they want to expand you know, maybe they 225 00:10:14,480 --> 00:10:16,520 Speaker 1: don't like the West so much. They like this. I 226 00:10:16,559 --> 00:10:18,760 Speaker 1: don't I just don't believe that's true. I think that 227 00:10:18,760 --> 00:10:20,440 Speaker 1: they're caught between a rock and heart place that had 228 00:10:20,480 --> 00:10:23,760 Speaker 1: the so called ally who's putting them in a difficult place? 229 00:10:23,960 --> 00:10:26,240 Speaker 1: Can we still rely on China given the COVID zero 230 00:10:26,320 --> 00:10:28,839 Speaker 1: policy and actually the shocks that's coming just from from 231 00:10:28,920 --> 00:10:32,480 Speaker 1: that policy continuing. I think China has done. You gotta 232 00:10:32,480 --> 00:10:35,480 Speaker 1: put China perspective. It's done a very good job developing 233 00:10:35,520 --> 00:10:38,440 Speaker 1: itself over thirty or forty years. It doesn't have all 234 00:10:38,520 --> 00:10:40,719 Speaker 1: the strains to the Western world. Okay, it doesn't. It 235 00:10:40,800 --> 00:10:44,040 Speaker 1: doesn't have our food or water, or energy, or innovation 236 00:10:44,480 --> 00:10:46,920 Speaker 1: or rule of law. You know that the the the 237 00:10:47,679 --> 00:10:51,480 Speaker 1: competition of ideas. You know, autocracy has huge negatives. They 238 00:10:51,520 --> 00:10:54,000 Speaker 1: don't have enough food, war and energy. Their their neighbors 239 00:10:54,000 --> 00:10:58,280 Speaker 1: are very complex Russia, Indian Pact and Afghanistan, Philippino and Japan, Korea. 240 00:10:58,520 --> 00:11:00,920 Speaker 1: It's hard for them to be expansion there. Uh, they 241 00:11:00,960 --> 00:11:04,080 Speaker 1: don't have are a lot of things you have. So yes, 242 00:11:04,240 --> 00:11:06,040 Speaker 1: I think we should be worried about them, and I 243 00:11:06,080 --> 00:11:09,800 Speaker 1: think the West should negotiate, you know, how we're going 244 00:11:09,840 --> 00:11:13,559 Speaker 1: to deal with trade, unfair competition, I p if, but 245 00:11:13,679 --> 00:11:16,120 Speaker 1: sit down with them, you know, work work it through 246 00:11:16,160 --> 00:11:17,720 Speaker 1: with them. We should don't need to be afraid of them. 247 00:11:17,920 --> 00:11:20,360 Speaker 1: We should be afraid of is our own incompetence, not 248 00:11:20,760 --> 00:11:22,800 Speaker 1: dealing with the Chinese as long as we stay together. 249 00:11:22,840 --> 00:11:25,240 Speaker 1: If the Western world doesn't stay together, no little cherry 250 00:11:25,280 --> 00:11:28,040 Speaker 1: pick every nation and and then you'll you'll end up 251 00:11:28,120 --> 00:11:31,000 Speaker 1: what we had with Germany and North Dream too, which 252 00:11:31,040 --> 00:11:33,040 Speaker 1: will be that would be a problem. Are you committed 253 00:11:33,080 --> 00:11:35,079 Speaker 1: to China? So if we're seeing a splits and we're 254 00:11:35,080 --> 00:11:38,440 Speaker 1: seeing the HSBC and an investor activism, could you see 255 00:11:38,440 --> 00:11:41,280 Speaker 1: big banks actually being split into because of this East 256 00:11:41,360 --> 00:11:45,640 Speaker 1: West tension? I think again, you gotta look business. You 257 00:11:45,760 --> 00:11:47,920 Speaker 1: run for thirty or forty years. So we've made a 258 00:11:47,960 --> 00:11:50,839 Speaker 1: big investment in China. The Greater China, including Hong Kong, 259 00:11:50,920 --> 00:11:53,280 Speaker 1: etor you know, will be thirty or four percent in 260 00:11:53,320 --> 00:11:56,319 Speaker 1: the global market one day. There there they will be 261 00:11:56,440 --> 00:11:58,880 Speaker 1: a fully developed nation in twenty or thirty years, their 262 00:11:58,920 --> 00:12:02,080 Speaker 1: politics will change. Is there a chance of a very 263 00:12:02,160 --> 00:12:05,400 Speaker 1: bad outcome that you know, the world completely separates. There's 264 00:12:05,400 --> 00:12:07,400 Speaker 1: a chance, you know that that will be bad for 265 00:12:07,480 --> 00:12:09,800 Speaker 1: JP Morgan, but will survive. But I think there's a 266 00:12:09,880 --> 00:12:14,000 Speaker 1: much bigger chance that that the blocks will negotiate strategic 267 00:12:14,160 --> 00:12:17,319 Speaker 1: economic a bunch of other arrangements. Like I said three 268 00:12:17,360 --> 00:12:21,880 Speaker 1: point five trade, where will change, what will change, it'll 269 00:12:22,000 --> 00:12:24,000 Speaker 1: it'll take time. What will change is anything to do 270 00:12:24,120 --> 00:12:29,600 Speaker 1: with national security anything. So think of AI five G, penicillin, 271 00:12:30,000 --> 00:12:34,000 Speaker 1: rare earth, semiconductors, those supply chains will be brought back. 272 00:12:34,080 --> 00:12:36,520 Speaker 1: As Janet Young said, the day will be friendly sourced 273 00:12:36,640 --> 00:12:38,360 Speaker 1: doesn't be in the States. It's got to be in 274 00:12:38,360 --> 00:12:40,200 Speaker 1: an ally, and so I think old nations are going 275 00:12:40,240 --> 00:12:42,679 Speaker 1: to do that. China already does that. So this is 276 00:12:42,720 --> 00:12:44,760 Speaker 1: a unilateral thing. And I think the rest of the 277 00:12:44,800 --> 00:12:47,880 Speaker 1: trade will be fine or fundamentally fine. And they may 278 00:12:48,080 --> 00:12:50,400 Speaker 1: that may take time, but you know, but that will 279 00:12:50,480 --> 00:12:52,760 Speaker 1: happen over time. And it's kind of a little surprising 280 00:12:52,800 --> 00:12:55,160 Speaker 1: to me how much the Western world relied on China, 281 00:12:55,240 --> 00:12:57,800 Speaker 1: not not for trade and for sneakers and for shirts 282 00:12:57,840 --> 00:13:00,960 Speaker 1: and stuff, but for rare earth. But they have them. 283 00:13:01,040 --> 00:13:03,400 Speaker 1: We don't know we do. That's that's that's the whole thing. 284 00:13:03,760 --> 00:13:06,200 Speaker 1: America's got tons of rare earths. It's just quote will 285 00:13:06,240 --> 00:13:07,480 Speaker 1: cost a lot more money to take it out and 286 00:13:07,559 --> 00:13:10,439 Speaker 1: smelt it, and therefore and their environmentalists and all that. 287 00:13:10,760 --> 00:13:13,520 Speaker 1: That's why I'm saying national security. If I was in 288 00:13:13,679 --> 00:13:15,400 Speaker 1: Why it's the only thing I'd be doing now is 289 00:13:15,480 --> 00:13:18,440 Speaker 1: national security, and I'd be making decisions every day about 290 00:13:18,480 --> 00:13:23,079 Speaker 1: how we create more secure energy, rare earth commodities, wet, 291 00:13:23,240 --> 00:13:26,040 Speaker 1: all the things that the world's gonna need, not against 292 00:13:26,160 --> 00:13:30,280 Speaker 1: China but to protect the Western world and um so 293 00:13:30,440 --> 00:13:32,520 Speaker 1: all these things could be done. America is not used 294 00:13:32,520 --> 00:13:35,360 Speaker 1: to have an industrial policy. To do that successfully, you're 295 00:13:35,360 --> 00:13:37,760 Speaker 1: gonna have to have some form of industrial policy where 296 00:13:37,760 --> 00:13:40,719 Speaker 1: you're doing some kind of subsidies. It should but but 297 00:13:41,040 --> 00:13:43,599 Speaker 1: be clear, I don't want to subsidize a company. I 298 00:13:43,720 --> 00:13:45,120 Speaker 1: just think some of these things need to be brought 299 00:13:45,160 --> 00:13:47,719 Speaker 1: back to the United States. Probably be inflationary, right, does 300 00:13:47,760 --> 00:13:51,360 Speaker 1: it is crypto? I think head against inflation, right. No, 301 00:13:52,160 --> 00:13:55,280 Speaker 1: I think the higher rates go, the more cost to 302 00:13:55,320 --> 00:13:58,120 Speaker 1: hold an asset. Doesn't produce at of things. So, but 303 00:13:58,440 --> 00:14:01,800 Speaker 1: I think national secure already is number one. I would 304 00:14:01,880 --> 00:14:04,960 Speaker 1: not do something because of inflation because of national security. 305 00:14:05,240 --> 00:14:08,960 Speaker 1: They are completely different, and people shouldn't get confused. Two. 306 00:14:09,000 --> 00:14:11,520 Speaker 1: And you know that this is why the America has 307 00:14:11,520 --> 00:14:13,800 Speaker 1: to take leadership and that this is a matter of 308 00:14:13,920 --> 00:14:17,120 Speaker 1: national security. If everything turns out fire in Ukraine, but 309 00:14:17,240 --> 00:14:20,400 Speaker 1: I'll take a deep breath and say we overreacted. I'd 310 00:14:20,520 --> 00:14:22,880 Speaker 1: rather that then we all take a deep breath and say, 311 00:14:23,120 --> 00:14:26,840 Speaker 1: my god, we were not prepared. And when it comes 312 00:14:26,880 --> 00:14:29,120 Speaker 1: to Roe v. Wade, we've been talking about nothing else 313 00:14:29,160 --> 00:14:30,320 Speaker 1: for the lost two days. What does it mean for 314 00:14:30,400 --> 00:14:32,560 Speaker 1: JP Morgan? And I'm not going to get involved in that. 315 00:14:33,200 --> 00:14:35,080 Speaker 1: I think it's a mistake. You know, these things are 316 00:14:35,200 --> 00:14:38,600 Speaker 1: very complicated, and you know people pass laws everywhere. There's 317 00:14:38,600 --> 00:14:41,440 Speaker 1: actually a hundred things in the law. It's not it's 318 00:14:41,520 --> 00:14:43,720 Speaker 1: not there are a hundred things in all these laws, 319 00:14:44,320 --> 00:14:47,240 Speaker 1: a hundred like And so when you people say support this, 320 00:14:47,280 --> 00:14:49,720 Speaker 1: support that, all you're doing is being sucked into support 321 00:14:49,800 --> 00:14:51,840 Speaker 1: something you probably shouldn't. I've looked at all the voting 322 00:14:51,920 --> 00:14:53,480 Speaker 1: laws and looked all these laws, and you look at them. 323 00:14:53,600 --> 00:14:55,040 Speaker 1: I agree with some of the things they say. I 324 00:14:55,080 --> 00:14:56,440 Speaker 1: don't agree with some of the things they say. In 325 00:14:56,440 --> 00:14:58,440 Speaker 1: New York does a better job than Georgia this. So 326 00:14:58,480 --> 00:15:01,280 Speaker 1: I'm not gonna get sucked into saying I support your law. 327 00:15:01,720 --> 00:15:03,600 Speaker 1: But instead of support, I mean, do you see actually 328 00:15:03,680 --> 00:15:06,400 Speaker 1: for for such a big bank in the US having 329 00:15:06,440 --> 00:15:12,800 Speaker 1: to shift because of policies? Will deal with it. I 330 00:15:12,840 --> 00:15:15,000 Speaker 1: don't sit here and fear that whatever it is, we'll 331 00:15:15,040 --> 00:15:16,680 Speaker 1: deal with it and we'll take care of our people 332 00:15:16,760 --> 00:15:19,080 Speaker 1: like we've alway said we would. All right, Jamie Diamond, 333 00:15:19,080 --> 00:15:20,240 Speaker 1: thanks so much. I need to talk to you about 334 00:15:20,240 --> 00:15:22,280 Speaker 1: the UK. We need to have a conversation as about 335 00:15:22,320 --> 00:15:25,080 Speaker 1: the UKNSA city of London, Jamie Diamonds, and we'll have 336 00:15:25,160 --> 00:15:28,640 Speaker 1: plenty more from London throughout the day. Fancying lankwith thank you. 337 00:15:28,720 --> 00:15:31,760 Speaker 1: Sitting down with Jammie down the CEO of JP Morgan Chase, 338 00:15:38,200 --> 00:15:39,960 Speaker 1: do you have a two hard discussion on us today 339 00:15:39,960 --> 00:15:42,680 Speaker 1: with Kenneth Rogoff that we squeezed into a matter of minutes. 340 00:15:42,720 --> 00:15:46,040 Speaker 1: We do that again with the laureate from New York University. 341 00:15:46,560 --> 00:15:49,200 Speaker 1: Paul Romer joins us. He is a different economist and 342 00:15:49,240 --> 00:15:52,640 Speaker 1: that from day one the gentleman of Colorado has done 343 00:15:52,720 --> 00:15:56,760 Speaker 1: academics at Rochester and beyond where he has said, always 344 00:15:56,840 --> 00:16:01,200 Speaker 1: consider technology. Paul Romer joins us at this morning, professor, 345 00:16:01,280 --> 00:16:03,120 Speaker 1: thank you so much for joining. I want to go 346 00:16:03,280 --> 00:16:07,760 Speaker 1: back to the heart of it, indogenous technological change. Do 347 00:16:07,880 --> 00:16:12,600 Speaker 1: we actually understand what technology is doing to the American 348 00:16:13,120 --> 00:16:18,000 Speaker 1: labor economy, to people in our many death stiles yea 349 00:16:18,200 --> 00:16:20,400 Speaker 1: so there's a good way to see if some of 350 00:16:20,440 --> 00:16:24,320 Speaker 1: the problems were experiencing the US are technology based. Look 351 00:16:24,360 --> 00:16:28,280 Speaker 1: at other countries, same technology shocks are hitting all countries. 352 00:16:28,920 --> 00:16:32,080 Speaker 1: And what's unfortunate is the US really stands out as 353 00:16:32,120 --> 00:16:37,040 Speaker 1: an outlier with this declining fraction of adult males, adult 354 00:16:37,080 --> 00:16:40,600 Speaker 1: females who are working. All of the other countries Britain, Germany, 355 00:16:40,680 --> 00:16:43,480 Speaker 1: you know, they're seeing these steady increases. So it can't 356 00:16:43,480 --> 00:16:46,840 Speaker 1: be technology which is explaining this decline in the US. 357 00:16:47,480 --> 00:16:50,040 Speaker 1: Jeffrey Sachs would agree with you his book over ten 358 00:16:50,160 --> 00:16:52,040 Speaker 1: years ago. Now I really got out front on this 359 00:16:52,200 --> 00:16:55,600 Speaker 1: from a whole different angle, I would say, Professor Roman, 360 00:16:55,680 --> 00:16:59,040 Speaker 1: Professor Sax, two different views on a part of America 361 00:16:59,200 --> 00:17:02,920 Speaker 1: that can't get a job. Why can't they? Yeah, I 362 00:17:03,240 --> 00:17:05,840 Speaker 1: think can't get a job is not quite right because 363 00:17:05,960 --> 00:17:07,760 Speaker 1: we've got all this evidence that there are jobs that 364 00:17:07,840 --> 00:17:11,399 Speaker 1: are available right now. The returns to work, just the 365 00:17:11,480 --> 00:17:14,760 Speaker 1: compensation you get, the quality of what the work is 366 00:17:14,840 --> 00:17:18,000 Speaker 1: like is just not high enough. We've let this deteriorate 367 00:17:18,160 --> 00:17:20,800 Speaker 1: through a couple of decades now, and what we have 368 00:17:20,920 --> 00:17:24,600 Speaker 1: to commit to is that everyone should be working. But 369 00:17:24,760 --> 00:17:27,480 Speaker 1: if you work, you should uh, earn enough to make 370 00:17:27,520 --> 00:17:30,520 Speaker 1: it worth your your trouble. So these increases we were 371 00:17:30,520 --> 00:17:33,919 Speaker 1: seeing for jobs like a gas station at end increase, 372 00:17:34,320 --> 00:17:37,440 Speaker 1: that's catching up for the clients that we tolerated for 373 00:17:37,680 --> 00:17:40,520 Speaker 1: for much too long. And uh, we should we should 374 00:17:40,560 --> 00:17:45,600 Speaker 1: be pushing for more increases in wages, more attractiveness of work, 375 00:17:45,680 --> 00:17:48,200 Speaker 1: because we can't live in a society where people just 376 00:17:48,359 --> 00:17:52,040 Speaker 1: check out, especially adults. Adults checkout and don't work. And Paul, 377 00:17:52,040 --> 00:17:54,359 Speaker 1: you're saying, this is the participation rate still hasn't gotten 378 00:17:54,400 --> 00:17:57,280 Speaker 1: back to where it was pre pandemic. I still below that. 379 00:17:57,680 --> 00:18:00,160 Speaker 1: Still you're talking about the need for even fast stir 380 00:18:00,240 --> 00:18:02,600 Speaker 1: wage increases at a time when people are very concerned 381 00:18:02,880 --> 00:18:06,040 Speaker 1: about the highest levels of consumer price inflation. Going back 382 00:18:06,440 --> 00:18:09,879 Speaker 1: to Night one, how much do you think that the 383 00:18:09,960 --> 00:18:13,119 Speaker 1: flood of money put into the economy during the pandemic, 384 00:18:13,240 --> 00:18:17,359 Speaker 1: the checks sent to individuals, actually undermined the ability to 385 00:18:17,520 --> 00:18:20,040 Speaker 1: engage in fiscal stimulus like what you're talking about to 386 00:18:20,080 --> 00:18:23,560 Speaker 1: get more people into the workforce. Well, you have to 387 00:18:23,640 --> 00:18:26,440 Speaker 1: think about targeting the fiscal stimulus, like what would be 388 00:18:26,520 --> 00:18:30,880 Speaker 1: a targeted measure. We could have a subsidy for wages 389 00:18:31,119 --> 00:18:33,440 Speaker 1: at the bottom end of the wage distribution. The government 390 00:18:33,520 --> 00:18:35,480 Speaker 1: could pick up part of the cost, or we could 391 00:18:35,480 --> 00:18:37,760 Speaker 1: be like other countries, we don't make the worker in 392 00:18:37,800 --> 00:18:40,520 Speaker 1: the firm cover the full cost of the health insurance 393 00:18:40,600 --> 00:18:43,119 Speaker 1: for the worker. There's ways to target spending to make 394 00:18:43,200 --> 00:18:46,560 Speaker 1: work more attractive that that don't involve just like sending 395 00:18:46,720 --> 00:18:49,600 Speaker 1: checks to to everybody in the economy. And if you 396 00:18:49,640 --> 00:18:52,440 Speaker 1: think about inflation, it's a weighted average of a bunch 397 00:18:52,480 --> 00:18:56,080 Speaker 1: of price changes. So the wrong response right now is 398 00:18:56,160 --> 00:18:58,919 Speaker 1: to say we want to make those gas station attendants 399 00:18:59,680 --> 00:19:03,760 Speaker 1: have uh lower wages or stop them from getting wage increases. 400 00:19:04,040 --> 00:19:07,200 Speaker 1: There's a lot of other prices in the economy that 401 00:19:07,440 --> 00:19:10,560 Speaker 1: we could be putting some pressure on without hammering the 402 00:19:10,880 --> 00:19:13,280 Speaker 1: low wage workers who have been hammered for two decades. 403 00:19:13,440 --> 00:19:15,520 Speaker 1: There's the show and then there's the will. And as 404 00:19:15,600 --> 00:19:17,520 Speaker 1: we talk, we know that President Biden is going to 405 00:19:17,560 --> 00:19:20,600 Speaker 1: speak at two pm today to talk about deficit reduction, 406 00:19:20,760 --> 00:19:23,720 Speaker 1: to appeal to a lot of voters who are concerned 407 00:19:23,760 --> 00:19:26,800 Speaker 1: about how much the debt limit and the debt has 408 00:19:26,920 --> 00:19:30,520 Speaker 1: increased in this nation. What do you think will happen 409 00:19:30,680 --> 00:19:33,080 Speaker 1: given that the fiscal stimulus that you're talking about is 410 00:19:33,160 --> 00:19:36,320 Speaker 1: unlikely and given the pace of inflation, how it's being 411 00:19:36,400 --> 00:19:42,640 Speaker 1: targeted right now. Let me be honest, um on especially 412 00:19:42,680 --> 00:19:45,960 Speaker 1: in the realm of politics. I've been telling everybody for 413 00:19:46,000 --> 00:19:50,600 Speaker 1: about four years now, add more variants to your estimates, 414 00:19:50,760 --> 00:19:54,879 Speaker 1: put more weight in the tails. We've seen more astonishing 415 00:19:55,040 --> 00:19:57,520 Speaker 1: unexpected things in the last four years than in the 416 00:19:57,560 --> 00:20:01,320 Speaker 1: rest of my lifetime. So I'm not I'm not gonna 417 00:20:01,400 --> 00:20:04,040 Speaker 1: make any strong predictions about what's going to happen in 418 00:20:04,080 --> 00:20:06,200 Speaker 1: the politics. All I can tell you is what I 419 00:20:06,280 --> 00:20:08,600 Speaker 1: think should happen, and we should make we should make 420 00:20:08,640 --> 00:20:11,520 Speaker 1: work attractive for everybody. Paul Roman, this is great. I 421 00:20:11,600 --> 00:20:13,840 Speaker 1: love it how the Nobel laureate folks is telling us 422 00:20:13,880 --> 00:20:16,680 Speaker 1: there's been four once in a lifetime events in the 423 00:20:16,800 --> 00:20:19,520 Speaker 1: last four years. Professor Roma, I want to go to 424 00:20:19,600 --> 00:20:21,560 Speaker 1: the behavioral heart of the matter, and maybe this is 425 00:20:21,680 --> 00:20:25,160 Speaker 1: very Jeff sax Like and others as well. Did all 426 00:20:25,240 --> 00:20:31,919 Speaker 1: of this wage challenge and disincentive start with executive bonuses 427 00:20:32,040 --> 00:20:35,760 Speaker 1: and the way that executives are compensated, and that well 428 00:20:35,920 --> 00:20:39,479 Speaker 1: meeting executives look at that if they give a wage 429 00:20:39,520 --> 00:20:42,800 Speaker 1: growth to their lower two death siles, three death siles 430 00:20:43,200 --> 00:20:47,120 Speaker 1: of staff of labor they're taking dollar for dollar from 431 00:20:47,160 --> 00:20:51,639 Speaker 1: their bonus. Yeah. Yeah. To be honest, I think economists 432 00:20:51,680 --> 00:20:55,240 Speaker 1: contributed to this because we argued, uh, and I was 433 00:20:55,400 --> 00:20:57,560 Speaker 1: one of them. I these sounded right to me that 434 00:20:57,680 --> 00:21:01,480 Speaker 1: if we made the compensation for exact citives more variable, 435 00:21:01,840 --> 00:21:05,600 Speaker 1: they'd have stronger incentives to do their jobs well. But 436 00:21:05,840 --> 00:21:10,520 Speaker 1: more variable got translated into just higher payments almost across 437 00:21:10,600 --> 00:21:13,800 Speaker 1: the board, and so we provided cover for this change 438 00:21:13,840 --> 00:21:17,280 Speaker 1: in norms um and at the same time, we didn't 439 00:21:17,320 --> 00:21:22,520 Speaker 1: pay enough attention to the really serious lagging effects we 440 00:21:22,600 --> 00:21:25,560 Speaker 1: were seeing in the rest of the economy. And there 441 00:21:25,600 --> 00:21:28,639 Speaker 1: were many beneficial effects from opening up to free trade, 442 00:21:29,119 --> 00:21:31,680 Speaker 1: but we understood at the time that one of the 443 00:21:31,760 --> 00:21:34,720 Speaker 1: harmful effects would be that people would lose jobs in manufacturing. 444 00:21:35,040 --> 00:21:36,840 Speaker 1: And we always said, well, you can do something to 445 00:21:36,920 --> 00:21:40,240 Speaker 1: help those those workers. So everybody benefits from trade. But 446 00:21:40,359 --> 00:21:42,960 Speaker 1: the problem is we didn't do that something, and so 447 00:21:43,240 --> 00:21:46,560 Speaker 1: they suffered. One of the things here, folks, that we 448 00:21:46,640 --> 00:21:49,399 Speaker 1: need to say, as Professor Romer is truly expert at 449 00:21:49,440 --> 00:21:52,560 Speaker 1: monetary theory as well. You're having a cup of coffee 450 00:21:52,640 --> 00:21:55,600 Speaker 1: today with the Chairman of the Federal Reserve System, and 451 00:21:55,720 --> 00:21:58,720 Speaker 1: he's looking at you saying, tell me about technology, tell 452 00:21:58,760 --> 00:22:01,440 Speaker 1: me about labor, tell me about the dynamics of the 453 00:22:01,520 --> 00:22:05,320 Speaker 1: American economy. Should he care about that or does he 454 00:22:05,640 --> 00:22:08,800 Speaker 1: need to stay riveted on a FED mandate in the 455 00:22:09,000 --> 00:22:14,159 Speaker 1: purity of what a central bank does? You know? I 456 00:22:14,280 --> 00:22:16,800 Speaker 1: think I would tell him to stay focused on his mandate, 457 00:22:16,880 --> 00:22:19,880 Speaker 1: which is really to watch inflation. And if you think 458 00:22:19,880 --> 00:22:23,480 Speaker 1: about what was most damaging in the end of the seventies, 459 00:22:23,960 --> 00:22:26,280 Speaker 1: it was the sense of living in a world where 460 00:22:26,320 --> 00:22:29,639 Speaker 1: things are out of control. And what vulgar Re established 461 00:22:29,680 --> 00:22:32,040 Speaker 1: for us was that there was somebody who was in 462 00:22:32,160 --> 00:22:35,040 Speaker 1: control and would bring inflation down. I think the job 463 00:22:35,119 --> 00:22:37,119 Speaker 1: of the FED right now is to show that they 464 00:22:37,240 --> 00:22:41,280 Speaker 1: can bring inflation down, both technically and politically. They've got 465 00:22:41,320 --> 00:22:43,520 Speaker 1: the room to do that, and they will. He needs 466 00:22:43,560 --> 00:22:46,720 Speaker 1: to reassure people and give them confidence. But I think 467 00:22:47,080 --> 00:22:49,920 Speaker 1: we really need to not let Congress and the executive 468 00:22:49,960 --> 00:22:52,960 Speaker 1: branch off the hook on the rest of economic policy. 469 00:22:53,400 --> 00:22:55,560 Speaker 1: It's their job to think hard about what do we 470 00:22:55,640 --> 00:23:00,640 Speaker 1: do to make work and economic life attract of everybody. 471 00:23:00,880 --> 00:23:02,760 Speaker 1: But one of the biggest questions is whether the Fed's 472 00:23:02,760 --> 00:23:04,439 Speaker 1: going to try to get back down to a two 473 00:23:04,480 --> 00:23:06,639 Speaker 1: and a half to two percent inflation rate in the 474 00:23:06,720 --> 00:23:09,240 Speaker 1: near term, and that this will decide how quickly they 475 00:23:09,320 --> 00:23:11,720 Speaker 1: have to go in the potential destruction to the economy. 476 00:23:12,160 --> 00:23:14,600 Speaker 1: Do you think that they should target a higher rate 477 00:23:14,760 --> 00:23:17,159 Speaker 1: of say three percent or more the adam posing like 478 00:23:17,840 --> 00:23:22,320 Speaker 1: kind of idea. I'm I'm persuaded by that argument. And three. 479 00:23:22,359 --> 00:23:24,560 Speaker 1: You know, Olivia Bonch Harden were signing about four percent 480 00:23:24,640 --> 00:23:26,960 Speaker 1: for a while. I think either of those numbers would 481 00:23:27,000 --> 00:23:30,119 Speaker 1: be fine. But the argument you hear about that against 482 00:23:30,200 --> 00:23:32,800 Speaker 1: that as well. If it's three or four percent, it'll 483 00:23:32,920 --> 00:23:35,320 Speaker 1: it'll also be six or seven or eight or nine. 484 00:23:35,440 --> 00:23:37,680 Speaker 1: And that doesn't make any sense to me. We could 485 00:23:37,720 --> 00:23:40,639 Speaker 1: target a stable four percent inflation rate if we wanted to, 486 00:23:41,080 --> 00:23:43,760 Speaker 1: or a stable two percent. I think we'd be much 487 00:23:43,800 --> 00:23:46,600 Speaker 1: better off at a stable three percent, maybe better off 488 00:23:46,640 --> 00:23:51,359 Speaker 1: at a stable four percent. Paul, you lived the Colorado Boom. 489 00:23:51,640 --> 00:23:53,280 Speaker 1: All I did was go down to the sink and 490 00:23:53,359 --> 00:23:55,879 Speaker 1: boulder and have Beer's course three two is like your 491 00:23:55,960 --> 00:23:59,240 Speaker 1: course three to light, Paul is your father's fault. I 492 00:23:59,320 --> 00:24:01,840 Speaker 1: want to make that clear, just so we understand that 493 00:24:02,359 --> 00:24:05,080 Speaker 1: you live, take that, you'll take that you live the 494 00:24:05,200 --> 00:24:09,320 Speaker 1: Colorado Boom. I can't say enough about that. There's a 495 00:24:09,400 --> 00:24:12,600 Speaker 1: part of America like in Ohio with the primary we 496 00:24:12,680 --> 00:24:17,879 Speaker 1: saw yesterday screaming that they want their Colorado boom. How 497 00:24:17,960 --> 00:24:22,000 Speaker 1: do we move the Colorado boom to Ohio without the 498 00:24:22,080 --> 00:24:26,800 Speaker 1: cores three to beer. Yeah. You know, one thing that 499 00:24:26,960 --> 00:24:29,720 Speaker 1: we aren't paying enough attention to is that the jobs 500 00:24:29,800 --> 00:24:31,560 Speaker 1: can come to the workers, but the workers ought to 501 00:24:31,600 --> 00:24:34,920 Speaker 1: be able to go to the jobs. UM mobility has 502 00:24:35,000 --> 00:24:38,520 Speaker 1: gone down, like cross state mobility, partly because we've put 503 00:24:38,640 --> 00:24:42,320 Speaker 1: restrictions on the supply of new housing. Housing has gotten 504 00:24:42,560 --> 00:24:45,960 Speaker 1: so expensive in places that have these hot, these hot 505 00:24:46,080 --> 00:24:49,160 Speaker 1: labor markets. So this is not something you can turn 506 00:24:49,200 --> 00:24:51,960 Speaker 1: around in a quarter or a year. But we should 507 00:24:52,000 --> 00:24:55,720 Speaker 1: be trying to increase the mobility of labor. And also 508 00:24:55,840 --> 00:24:58,240 Speaker 1: recognize a point I've been hammer around for a while, 509 00:24:58,359 --> 00:25:00,960 Speaker 1: which is that the future is in cities. And we 510 00:25:01,119 --> 00:25:03,520 Speaker 1: kept be talking about how do we bring life back 511 00:25:04,119 --> 00:25:06,840 Speaker 1: all this kind of manufacturing and other kinds of economic 512 00:25:06,920 --> 00:25:10,000 Speaker 1: activity to small rural towns. It's not going to happen. 513 00:25:10,280 --> 00:25:13,760 Speaker 1: We've got to make room in cities for everybody who 514 00:25:13,840 --> 00:25:15,800 Speaker 1: wants to move there, to move there and get a job. 515 00:25:16,040 --> 00:25:18,440 Speaker 1: Paul has been fantastic listening to you. Thanks for giving 516 00:25:18,480 --> 00:25:20,879 Speaker 1: us your time. Paul Runner, there of n why you 517 00:25:26,480 --> 00:25:29,120 Speaker 1: John Us now? Ben Laidler Global Markets Strategies, to eat 518 00:25:29,160 --> 00:25:32,160 Speaker 1: Tire to Tamas what he really thinks not far from 519 00:25:32,280 --> 00:25:35,920 Speaker 1: peak Fed fear? Ben Laidler, what makes you think that? 520 00:25:36,320 --> 00:25:38,080 Speaker 1: I think we've we've priced in three and a half 521 00:25:38,160 --> 00:25:40,600 Speaker 1: percent for the terminal FED funds, right, We've got this 522 00:25:40,680 --> 00:25:43,879 Speaker 1: sort of double barrel tightening going on, Holliday's tightening and 523 00:25:44,000 --> 00:25:46,760 Speaker 1: the Fed funds. Right, I think we're pretty close to 524 00:25:47,080 --> 00:25:49,760 Speaker 1: peak inflation eight and a half percent. I think the 525 00:25:49,840 --> 00:25:53,760 Speaker 1: market sort of jaw bones are tightening of financial conditions 526 00:25:53,920 --> 00:25:57,680 Speaker 1: and economic conditions already sort of weakening. So I'm not 527 00:25:57,840 --> 00:26:00,720 Speaker 1: sure what entirely there yet, And I don't think power 528 00:26:00,840 --> 00:26:03,560 Speaker 1: is gonna tunnel dubbish on us, But I do think 529 00:26:03,720 --> 00:26:07,399 Speaker 1: markets have priced in a lot here um, and and 530 00:26:07,520 --> 00:26:10,159 Speaker 1: we're very sensitive to a little bit of loosening of 531 00:26:10,280 --> 00:26:12,600 Speaker 1: this sort of Fed vice that we've been caught in. Right, 532 00:26:12,640 --> 00:26:17,080 Speaker 1: They've been driving down valuations and driving up recession fears. Uh, 533 00:26:17,480 --> 00:26:19,800 Speaker 1: And I see both of those loosening off a little 534 00:26:19,840 --> 00:26:21,560 Speaker 1: bit over the next few weeks. So when do you 535 00:26:21,640 --> 00:26:24,760 Speaker 1: think that financial conditions have tightened enough, and it starts 536 00:26:24,800 --> 00:26:28,399 Speaker 1: have sold off enough to slow the economy enough to 537 00:26:28,440 --> 00:26:30,800 Speaker 1: get inflation back to a reasonable point for the FED. 538 00:26:32,680 --> 00:26:35,200 Speaker 1: I think we're well on our way right where equities 539 00:26:35,240 --> 00:26:38,240 Speaker 1: are are in a correction, mortgage rates are over five cent, 540 00:26:39,000 --> 00:26:42,720 Speaker 1: we have real real yields for the first time in 541 00:26:42,880 --> 00:26:46,040 Speaker 1: in years. The economy is slowing, not just in the 542 00:26:46,160 --> 00:26:48,080 Speaker 1: US but around the world. If there is a silver 543 00:26:48,200 --> 00:26:50,080 Speaker 1: lining to what's going on in China and what's going 544 00:26:50,119 --> 00:26:53,840 Speaker 1: on in Europe is the whole world is now clearly slowing. 545 00:26:54,359 --> 00:26:56,800 Speaker 1: So I think you put all that together, and I think, 546 00:26:57,720 --> 00:27:02,120 Speaker 1: along with the again these expectations, So this unprecedented sort 547 00:27:02,119 --> 00:27:05,439 Speaker 1: of double barreled FED tightening here both off the balance 548 00:27:05,480 --> 00:27:08,520 Speaker 1: sheet and the and the interest rate. Um, I think, 549 00:27:09,200 --> 00:27:12,320 Speaker 1: I think enough being done. And again I think, um, 550 00:27:12,680 --> 00:27:16,080 Speaker 1: we're primed for more hawkishness, and we don't get that. Again. 551 00:27:16,160 --> 00:27:18,399 Speaker 1: I see the jaws of this vice loosening off a 552 00:27:18,440 --> 00:27:20,879 Speaker 1: little bit, and and equities training better than they certainly 553 00:27:20,920 --> 00:27:22,440 Speaker 1: have done over the last few months. And that's the 554 00:27:22,560 --> 00:27:24,400 Speaker 1: broadest story I want to talk about. A single name. 555 00:27:24,800 --> 00:27:26,720 Speaker 1: T K. You've seen this move and lift this morning 556 00:27:27,240 --> 00:27:30,760 Speaker 1: down twenty in the pre market, it's about access to 557 00:27:30,880 --> 00:27:33,280 Speaker 1: labor and the cost of labor. And I imagine, yes, 558 00:27:33,400 --> 00:27:36,119 Speaker 1: Lift has its own unique problems and Uper maybe shares them, 559 00:27:36,160 --> 00:27:38,040 Speaker 1: and we'll hear from over a little bit later this morning. 560 00:27:38,359 --> 00:27:41,520 Speaker 1: But I'm surely that's a signal about the broader issue 561 00:27:41,720 --> 00:27:44,280 Speaker 1: in the US labor market at the moment. And Ben Ladler, 562 00:27:44,320 --> 00:27:46,280 Speaker 1: I mean, what this comes down to, our models of 563 00:27:46,400 --> 00:27:50,520 Speaker 1: digital models that are not profit later? Is profit all 564 00:27:50,640 --> 00:27:54,720 Speaker 1: that matters now, Ben Ladler, It is the only anchor 565 00:27:54,800 --> 00:27:57,640 Speaker 1: for this market. I mean, just to be gross and simplistic, 566 00:27:57,680 --> 00:27:59,560 Speaker 1: you're only there's only two ways to make money in equities, 567 00:27:59,640 --> 00:28:01,800 Speaker 1: right either valuations carp or only to go up. Hopefully 568 00:28:01,800 --> 00:28:04,480 Speaker 1: they both go up together. But right now evaluations have 569 00:28:04,520 --> 00:28:07,000 Speaker 1: been falling, and if the Fed States hawkish, they may 570 00:28:07,040 --> 00:28:10,720 Speaker 1: continue to fall. So it's all on earnings. And luckily, 571 00:28:11,200 --> 00:28:14,000 Speaker 1: the big silver lining to all this is a corporates 572 00:28:14,680 --> 00:28:17,280 Speaker 1: remain in very good shape. I mean, despite the sort 573 00:28:17,320 --> 00:28:20,119 Speaker 1: of headline numbers and some sort of high profile misses, 574 00:28:20,520 --> 00:28:23,360 Speaker 1: earnings and beating expectations on both sides of the Atlantic, 575 00:28:23,760 --> 00:28:27,280 Speaker 1: profit margins are near record highs and very resilient, and 576 00:28:27,640 --> 00:28:30,520 Speaker 1: and corporate CEOs of voting with their balance sheets, and 577 00:28:30,600 --> 00:28:35,120 Speaker 1: they're investing very aggressively, and that's your closest leading indicator. 578 00:28:35,119 --> 00:28:36,639 Speaker 1: That's what earnings are going to be in the future. 579 00:28:36,880 --> 00:28:40,160 Speaker 1: Ben labor of Open great to catch out, buddy, as always. 580 00:28:46,280 --> 00:28:48,400 Speaker 1: Right now, we're going to digress to the issue of 581 00:28:48,600 --> 00:28:51,840 Speaker 1: the moment, which is riveted America. And what we do 582 00:28:51,960 --> 00:28:54,400 Speaker 1: with surveillance is we've done with Ukraine, as we've done 583 00:28:54,440 --> 00:28:59,560 Speaker 1: with COVID is literally fine legit experts. That would be 584 00:28:59,720 --> 00:29:03,840 Speaker 1: a comark. She's senior fellow at the Brookings Institute, yes, 585 00:29:03,920 --> 00:29:07,280 Speaker 1: professor at Harvard, but far more she is a student 586 00:29:07,520 --> 00:29:11,400 Speaker 1: of presidential success and failure, and a book of another 587 00:29:11,680 --> 00:29:14,560 Speaker 1: a number of years ago, the end of government as 588 00:29:14,640 --> 00:29:19,080 Speaker 1: we know it, making public policy work alloying. You wrote 589 00:29:19,120 --> 00:29:23,680 Speaker 1: a definitive essay I thought very balanced for Brookings yesterday 590 00:29:24,360 --> 00:29:27,959 Speaker 1: on this raging debate of abortion, and at the end 591 00:29:28,000 --> 00:29:32,080 Speaker 1: of it you predict off of the mask experience of COVID, 592 00:29:32,840 --> 00:29:39,240 Speaker 1: a tsunami, a fury. When does the tsunami hit? Um, Hello, 593 00:29:39,600 --> 00:29:42,440 Speaker 1: and thank you for having me. Um. The tsunami is 594 00:29:42,640 --> 00:29:45,680 Speaker 1: hits hit yesterday. Look at hit last night with the 595 00:29:46,040 --> 00:29:49,960 Speaker 1: demonstrations outside the Supreme Court. I think these will continue, 596 00:29:50,360 --> 00:29:52,160 Speaker 1: and I think what it's gonna do, it's going to 597 00:29:52,440 --> 00:29:56,680 Speaker 1: increase turnout for the mid term elections. So a sleepy 598 00:29:57,240 --> 00:30:01,320 Speaker 1: and kind of indifferent Democratic electorate I think has gotten 599 00:30:01,480 --> 00:30:03,600 Speaker 1: a big wake up call, and I think people are 600 00:30:03,640 --> 00:30:06,840 Speaker 1: going to come out to vote in November, perhaps even 601 00:30:07,040 --> 00:30:10,040 Speaker 1: up ending some of those elections which we were assuming 602 00:30:10,480 --> 00:30:14,040 Speaker 1: was going to go to the Republicans. Laine Linda Greenhouse, 603 00:30:14,080 --> 00:30:18,400 Speaker 1: among others, have walked through the Mississippi circuit approach and 604 00:30:18,560 --> 00:30:22,920 Speaker 1: what the Supreme Court traditionally has done. Is any of 605 00:30:23,000 --> 00:30:25,800 Speaker 1: that nuance gonna matter in this debate? Or is it 606 00:30:26,000 --> 00:30:30,320 Speaker 1: so polarized and each and every American so decisive of 607 00:30:30,480 --> 00:30:34,200 Speaker 1: their choice on the choice of abortion that all the 608 00:30:34,360 --> 00:30:40,320 Speaker 1: niceties really don't matter. It's an interesting question because part 609 00:30:40,400 --> 00:30:42,320 Speaker 1: of what we're going to wait and see is how 610 00:30:42,440 --> 00:30:46,880 Speaker 1: this in fact plays out. Um, there will be states 611 00:30:47,000 --> 00:30:50,480 Speaker 1: that will still offer abortion, but at six weeks or 612 00:30:50,520 --> 00:30:54,320 Speaker 1: at fifteen weeks, okay, So um, you know this doesn't 613 00:30:54,360 --> 00:30:59,160 Speaker 1: mean automatically abortion disappears everywhere. And the more interesting thing 614 00:30:59,240 --> 00:31:02,520 Speaker 1: that's been happening is while attention has been focused on 615 00:31:02,720 --> 00:31:06,200 Speaker 1: the UH States getting rid of abortion. There are other 616 00:31:06,360 --> 00:31:12,240 Speaker 1: states like Maryland, Connecticut, Oregon who are increasing their abortion workforce. 617 00:31:12,680 --> 00:31:17,000 Speaker 1: They are allowing non doctors other other health professionals like 618 00:31:17,360 --> 00:31:22,040 Speaker 1: like nurse practitioners to perform abortions. They are getting ready 619 00:31:22,120 --> 00:31:25,040 Speaker 1: for the abortion influx. So people are going to be 620 00:31:25,200 --> 00:31:29,920 Speaker 1: traveling to get abortions. It's um, it's abortions will not 621 00:31:30,040 --> 00:31:32,239 Speaker 1: be appropriate, but that people will be traveling. As your 622 00:31:32,280 --> 00:31:35,400 Speaker 1: map shows, um, some will have to travel very far. 623 00:31:36,040 --> 00:31:39,000 Speaker 1: And this is going to, like all things, it will 624 00:31:39,080 --> 00:31:43,200 Speaker 1: have a small effect on the well educated and people 625 00:31:43,280 --> 00:31:45,280 Speaker 1: with money, and it's going to have a big effect 626 00:31:45,360 --> 00:31:48,800 Speaker 1: on poor women who can't afford to travel or who 627 00:31:48,960 --> 00:31:52,120 Speaker 1: can't even get the information about traveling. So it's gonna 628 00:31:52,160 --> 00:31:56,160 Speaker 1: have a very disparate effect. But we will have abortion 629 00:31:56,280 --> 00:32:00,880 Speaker 1: providing states and abortion banned states. Here's a question about 630 00:32:01,040 --> 00:32:04,440 Speaker 1: how this transforms the election heading into the midterms, a 631 00:32:04,520 --> 00:32:06,040 Speaker 1: lot of people saying that this was a leak to 632 00:32:06,120 --> 00:32:09,360 Speaker 1: impart in order to galvanize voters. There's a lot of 633 00:32:09,360 --> 00:32:12,400 Speaker 1: speculation all sides. Putting all that aside, do you think 634 00:32:12,400 --> 00:32:16,040 Speaker 1: that this fundamentally reshapes the Democrats chance of actually being 635 00:32:16,040 --> 00:32:19,360 Speaker 1: a little bit more successful in the midterms. I think 636 00:32:19,400 --> 00:32:23,160 Speaker 1: it does. I think it's a fundamental reshaping um, particularly 637 00:32:23,280 --> 00:32:26,080 Speaker 1: in the Senate. Okay, I think that the Senate races, 638 00:32:26,160 --> 00:32:29,920 Speaker 1: because there's statewide races as opposed to districts drawn from 639 00:32:29,960 --> 00:32:33,440 Speaker 1: one party or the other. I think this fundamentally increases 640 00:32:33,520 --> 00:32:37,160 Speaker 1: the Democrats chances of holding the Senate. UM. I think 641 00:32:37,240 --> 00:32:41,360 Speaker 1: there's gonna be real outrage at just the the interference 642 00:32:41,720 --> 00:32:44,920 Speaker 1: here in people's lives, and the irony is that many 643 00:32:45,000 --> 00:32:49,720 Speaker 1: of the same people advocating this rather draconian choice about 644 00:32:49,920 --> 00:32:52,240 Speaker 1: what women should do with their bodies were also the 645 00:32:52,280 --> 00:32:56,160 Speaker 1: same people who are arguing for um medical choice and 646 00:32:56,320 --> 00:32:59,120 Speaker 1: medical freedom when it came to whether or not they 647 00:32:59,200 --> 00:33:02,760 Speaker 1: got a COVID test or a COVID shot. So this, 648 00:33:03,000 --> 00:33:05,760 Speaker 1: this is this is going to really get people riled up. 649 00:33:05,840 --> 00:33:08,680 Speaker 1: It has already. I think it will continue to rile 650 00:33:08,760 --> 00:33:11,760 Speaker 1: people up all the way through November. Elaine, wonderful to 651 00:33:11,840 --> 00:33:13,959 Speaker 1: hear from you this morning. Thank you. Elene came out 652 00:33:14,040 --> 00:33:22,640 Speaker 1: that of the Brookings Institution, I want to toss out 653 00:33:22,760 --> 00:33:25,000 Speaker 1: right now, and we're doing this as we introduced Barbara 654 00:33:25,040 --> 00:33:26,720 Speaker 1: Corker and who we like to talk to once a 655 00:33:26,840 --> 00:33:30,880 Speaker 1: year twice here she is a dynamo of the five 656 00:33:30,960 --> 00:33:34,440 Speaker 1: bureaus and joins us today. But I don't want to 657 00:33:34,440 --> 00:33:38,479 Speaker 1: make a joke about this. People magazine does it absolutely 658 00:33:38,920 --> 00:33:44,800 Speaker 1: killer issue every year on women across all of entertainment, 659 00:33:44,920 --> 00:33:48,960 Speaker 1: across all of enterprise and capitalism, and Barbara, they have 660 00:33:49,120 --> 00:33:52,680 Speaker 1: selected you as a beautiful person. I mean, we were 661 00:33:52,720 --> 00:33:54,880 Speaker 1: talking about Adell earlier in the show. I don't want 662 00:33:54,920 --> 00:33:57,560 Speaker 1: you to sing like Adele, but I guess we can 663 00:33:57,640 --> 00:34:01,720 Speaker 1: talk about your wheelhouse year, which is real estate, all 664 00:34:01,760 --> 00:34:03,960 Speaker 1: the other things you've done over the years, Barbara, We've 665 00:34:04,040 --> 00:34:08,280 Speaker 1: never seen rent and housing in this city the disaster 666 00:34:08,440 --> 00:34:12,200 Speaker 1: that it is today. How do we extricate ourselves from 667 00:34:12,280 --> 00:34:16,960 Speaker 1: this train wreck of real estate pricing? Well, it's not 668 00:34:17,040 --> 00:34:20,680 Speaker 1: a total train wreck, because it depends upon whose viewpoint 669 00:34:20,760 --> 00:34:22,960 Speaker 1: you have. If you're a buyer right now, you're complaining 670 00:34:23,680 --> 00:34:26,480 Speaker 1: that you can possibly afforded. Interest rates have gone from 671 00:34:26,520 --> 00:34:29,200 Speaker 1: what two and a half percent to five point three 672 00:34:29,280 --> 00:34:32,800 Speaker 1: I think as of yesterday, and so everything's less affordable. 673 00:34:32,880 --> 00:34:35,400 Speaker 1: So it's a train wreck from a Buias view. But interesting, 674 00:34:35,520 --> 00:34:39,440 Speaker 1: Tom is the buyers. I'm not slowing down. People are 675 00:34:39,480 --> 00:34:42,520 Speaker 1: still grabbing real estate, So nothing is happening, and that's 676 00:34:42,600 --> 00:34:46,920 Speaker 1: making a lot of people nervous. It doesn't make me nervous, honestly, 677 00:34:47,320 --> 00:34:49,520 Speaker 1: because I see that the under footings of the market 678 00:34:49,520 --> 00:34:53,160 Speaker 1: are very solid. They're real usage buying real homes that 679 00:34:53,280 --> 00:34:56,360 Speaker 1: are highly leveraged, and they aren't loaned out with crazy, 680 00:34:56,719 --> 00:34:59,719 Speaker 1: crazy configurations. If I look at Cork and Group, you 681 00:34:59,800 --> 00:35:02,359 Speaker 1: know that you built from scratch. If I look at 682 00:35:02,400 --> 00:35:04,960 Speaker 1: it on say Tony Madison Avenue or down in the 683 00:35:05,040 --> 00:35:09,839 Speaker 1: fancy downtown area, the number one fear is we don't 684 00:35:09,880 --> 00:35:12,360 Speaker 1: want to make New York City look like a given 685 00:35:12,480 --> 00:35:15,880 Speaker 1: East German city. We don't want row after row of 686 00:35:16,000 --> 00:35:19,239 Speaker 1: ugly high rise high rises. How do we create more 687 00:35:19,360 --> 00:35:23,279 Speaker 1: housing that mayor Adams wants without looking like a given 688 00:35:23,360 --> 00:35:27,799 Speaker 1: city in Eastern Europe. Well, the reality is that they're 689 00:35:27,840 --> 00:35:30,960 Speaker 1: not going to be putting affordable housing right next door 690 00:35:31,000 --> 00:35:34,120 Speaker 1: at the fifteen million dollar condos. It's just not gonna happen. So, 691 00:35:34,200 --> 00:35:36,439 Speaker 1: whether you like the concept that there are some poor 692 00:35:36,520 --> 00:35:39,719 Speaker 1: neighborhoods and some very very rich neighborhoods, that guy has 693 00:35:39,760 --> 00:35:41,919 Speaker 1: been cast in New York a long long time ago. 694 00:35:42,239 --> 00:35:45,399 Speaker 1: There was never a time when Midtown Manhattan was inexpensive, 695 00:35:45,480 --> 00:35:48,520 Speaker 1: nor will they ever be, I hope, But the problem 696 00:35:48,640 --> 00:35:52,240 Speaker 1: really is in the city's court for making affordable housing. 697 00:35:52,320 --> 00:35:55,279 Speaker 1: Our supply is like a third of what we actually need, 698 00:35:55,520 --> 00:35:58,520 Speaker 1: and I think those public work programs are going to happen, 699 00:35:58,840 --> 00:36:01,439 Speaker 1: and I don't think they're gonna happen in the part 700 00:36:01,480 --> 00:36:03,719 Speaker 1: of town that people want to impress their friends with. 701 00:36:03,840 --> 00:36:06,200 Speaker 1: It's just not going to be Barbara, you're talking about 702 00:36:06,320 --> 00:36:09,680 Speaker 1: how the footings of this market are incredibly solid, that 703 00:36:09,800 --> 00:36:13,080 Speaker 1: people are not leveraging their purchases. Are you saying that 704 00:36:13,200 --> 00:36:16,360 Speaker 1: the housing market of two is more immune to the 705 00:36:16,520 --> 00:36:19,160 Speaker 1: rising interest rates that a lot of people are hoping 706 00:36:19,440 --> 00:36:22,040 Speaker 1: will damp in some of the price increases that we've 707 00:36:22,080 --> 00:36:27,200 Speaker 1: seen on homes. I'm not saying it's totally immune, but 708 00:36:27,520 --> 00:36:30,919 Speaker 1: it's better equipped to handle it simply because you don't 709 00:36:30,960 --> 00:36:34,200 Speaker 1: have leverage buying in the sun Belt right now, about 710 00:36:34,320 --> 00:36:37,440 Speaker 1: one and eight homes of being purchased by investors. That 711 00:36:37,560 --> 00:36:40,040 Speaker 1: worries me. You didn't see that two years ago. So 712 00:36:40,200 --> 00:36:43,960 Speaker 1: that makes a buyer that I'm not as confident as 713 00:36:44,000 --> 00:36:45,880 Speaker 1: a regular buyer who's going to raise their kids in 714 00:36:45,960 --> 00:36:48,960 Speaker 1: that house. But the people who are buying homes today 715 00:36:49,480 --> 00:36:52,520 Speaker 1: are not highly leveraged, and there are no bank programs 716 00:36:52,560 --> 00:36:54,759 Speaker 1: that make them more tempt them to be leveraged out, 717 00:36:55,120 --> 00:36:58,000 Speaker 1: and so that gives me a great, great peace of mind. 718 00:36:58,280 --> 00:37:01,360 Speaker 1: Of course, interest rates is a partner in the housing market. 719 00:37:01,440 --> 00:37:04,279 Speaker 1: If those continue to shoot up, the government will put 720 00:37:04,360 --> 00:37:07,120 Speaker 1: down the housing market and with it the inflation and 721 00:37:07,400 --> 00:37:10,280 Speaker 1: all the problems will follow. The housing markets a leader 722 00:37:10,680 --> 00:37:14,160 Speaker 1: in the inflation category, so that if that changes, if 723 00:37:14,280 --> 00:37:16,720 Speaker 1: if people are irresponsible in the government in that regard, 724 00:37:17,000 --> 00:37:20,600 Speaker 1: of course we could demolish this housing market, but nobody's 725 00:37:20,640 --> 00:37:22,600 Speaker 1: really expecting them to act that way. What would you 726 00:37:22,640 --> 00:37:25,240 Speaker 1: map you share my competence, What would you be investing 727 00:37:25,280 --> 00:37:27,080 Speaker 1: in right now, Barbara, if you had a million two 728 00:37:27,120 --> 00:37:32,719 Speaker 1: million dollars. What I'm investing is secondary cities. Used to 729 00:37:32,800 --> 00:37:35,640 Speaker 1: be that the primary cities like New York City Chicago 730 00:37:36,120 --> 00:37:38,600 Speaker 1: was the best place for investments in real estate, and 731 00:37:38,680 --> 00:37:40,560 Speaker 1: of course I love that because it's a slow way 732 00:37:40,600 --> 00:37:42,920 Speaker 1: to get very rich. But what I'm doing right now 733 00:37:43,080 --> 00:37:46,960 Speaker 1: is I'm investing in minor, minor cities or secondary cities. 734 00:37:46,960 --> 00:37:49,719 Speaker 1: I should call them or they'll be offended, like Baltimore 735 00:37:50,239 --> 00:37:52,440 Speaker 1: UM and many of the small cities in the mid 736 00:37:52,520 --> 00:37:55,399 Speaker 1: West because the inflation rates are greatest there in real 737 00:37:55,520 --> 00:37:59,040 Speaker 1: estate values, Barbara, like Chicago or Los Angeles or Miami, 738 00:37:59,239 --> 00:38:01,719 Speaker 1: right as a set in darry City. Yes, thank you 739 00:38:01,880 --> 00:38:07,040 Speaker 1: very much for giving me my words, Barbara. Barbara a 740 00:38:07,160 --> 00:38:10,279 Speaker 1: simple question which so many people want to know. If 741 00:38:10,320 --> 00:38:18,200 Speaker 1: house prices go up, should people's property texts go up? No? 742 00:38:18,560 --> 00:38:20,640 Speaker 1: I just don't think so. It would break the back 743 00:38:20,719 --> 00:38:23,120 Speaker 1: of the housing market. You can't have that. People can't 744 00:38:23,160 --> 00:38:26,160 Speaker 1: take it on both sides. Okay, Barbara cork And thank 745 00:38:26,200 --> 00:38:28,880 Speaker 1: you so much for joining the Corkin group and featured 746 00:38:28,920 --> 00:38:31,359 Speaker 1: in People's magazine. Really good to see that as well. 747 00:38:31,400 --> 00:38:33,600 Speaker 1: And you know her from Shark Tank. I should say. 748 00:38:33,960 --> 00:38:37,719 Speaker 1: This is the Bloomberg Surveillance Podcast. Thanks for listening. Join 749 00:38:37,840 --> 00:38:41,160 Speaker 1: us live weekdays from seven to ten am Eastern on 750 00:38:41,280 --> 00:38:45,479 Speaker 1: Bloomberg Radio and on Bloomberg Television each day from six 751 00:38:45,640 --> 00:38:50,440 Speaker 1: to nine am for insight from the best in economics, finance, investment, 752 00:38:50,640 --> 00:38:55,600 Speaker 1: and international relations. And subscribe to the Surveillance podcast on 753 00:38:55,719 --> 00:38:59,560 Speaker 1: Apple podcast, SoundCloud, Bloomberg dot com, and of course on 754 00:38:59,640 --> 00:39:03,680 Speaker 1: the Turn. I'm Tom keene In. This is Bloomer