WEBVTT - Ellen Zentner's Shift From Public to Private Sector 0:00:02.240 --> 0:00:06.800 This is Masters in Business with Barry Ridholts on Bloomberg Radio. 0:00:09.960 --> 0:00:13.080 This week on the podcast, I have an extra special guest. 0:00:13.600 --> 0:00:17.880 Her name I almost said Mandina Parwan. Her name is 0:00:17.880 --> 0:00:21.520 Ellen Zentner, and she is the chief US economist at 0:00:21.560 --> 0:00:26.279 Morgan Stanley. She has a fascinating career and is one 0:00:26.360 --> 0:00:30.440 of the highest ranked women in the world of finance today. 0:00:31.040 --> 0:00:37.080 She is very, very insightful, bringing a unique perspective to 0:00:37.760 --> 0:00:41.559 really what has been We talked about this during the podcast. 0:00:41.640 --> 0:00:45.320 A boys club filled with middle aged white dudes who 0:00:45.360 --> 0:00:50.000 are uh the average economist of days gone by, and 0:00:50.320 --> 0:00:54.040 Allen and I couldn't agree more. Argues that the more 0:00:54.120 --> 0:00:59.240 diversity of opinion and thought we have in various organizations, 0:00:59.280 --> 0:01:01.240 the less likely we are to have group think, the 0:01:01.360 --> 0:01:05.440 more likely we are to consider different perspectives, and that's 0:01:05.600 --> 0:01:10.679 enormously helpful when you have literally hundreds of billions of 0:01:10.760 --> 0:01:14.840 dollars at risk in the marketplace, and and being able 0:01:14.920 --> 0:01:19.360 to look at everything from that perspective is enormously helpful. 0:01:19.600 --> 0:01:23.000 This was a fascinating conversation if you are at all 0:01:23.200 --> 0:01:28.640 interested in economics, Wall Street, how big firms operate, what 0:01:28.800 --> 0:01:31.400 it's like to travel around the world speaking to clients 0:01:31.440 --> 0:01:34.960 and have them ask you all sorts of really interesting questions. 0:01:35.319 --> 0:01:38.520 Then you're going to really enjoy this conversation. So, with 0:01:38.640 --> 0:01:44.080 no further ado, my conversation with Morgan Stanley's Ellen Sentner. 0:01:47.960 --> 0:01:51.920 My special guest today is Ellen Zentner. She is currently 0:01:52.520 --> 0:01:56.880 the chief US economist for Morgan Stanley. UH. Previously, she 0:01:56.960 --> 0:02:01.320 had held senior economist positions with such August firms as 0:02:01.800 --> 0:02:07.880 Nomura and Bank of Tokyo Mitsubishi. Previous to joining Morgan Stanley, 0:02:08.000 --> 0:02:12.840 she was a senior economist with the Texas State Controller's Office. 0:02:13.680 --> 0:02:18.000 Ellen Setner, Welcome to Bloomberg. Thanks, Thanks Barry. So that's 0:02:18.000 --> 0:02:21.080 a kind of interesting progression. How do you go from 0:02:21.360 --> 0:02:27.240 Texas State Controller and the office overseeing Texas is I 0:02:27.280 --> 0:02:30.639 guess government spending and we held the purse strings right 0:02:30.880 --> 0:02:34.359 to I guess it would be somewhat similar to a 0:02:34.360 --> 0:02:37.760 big brokerage firm like Morgan Stanley. Yeah, I don't know. 0:02:37.880 --> 0:02:42.400 Working private versus public UM is very different. It's a 0:02:42.400 --> 0:02:47.320 different pace of life. Uh, it's a different focus of study. UM. 0:02:47.360 --> 0:02:50.880 I think starting out in government is a great way 0:02:50.880 --> 0:02:54.280 to cultivate the career of an economist because you can 0:02:54.320 --> 0:02:56.880 start out in a slower paced environment where you can 0:02:56.919 --> 0:03:00.880 really learn deeply and think those deep thoughts were supposed 0:03:00.919 --> 0:03:03.280 to have time to think, but often don't have time 0:03:04.000 --> 0:03:06.880 when you move into investment banking. Um. And for me 0:03:06.919 --> 0:03:10.120 it was a great first job out of graduate school. Uh. 0:03:10.120 --> 0:03:13.000 The no brainer was to go back to Austin, Texas, 0:03:13.000 --> 0:03:15.560 where I'm from and work for the state government. We 0:03:15.560 --> 0:03:18.160 were just in Austin. It's such a fabulous city. It 0:03:18.240 --> 0:03:20.400 was a ten pound trip because the food there is 0:03:20.400 --> 0:03:23.720 so fanta. I imagine you got in a lot of barbecue. 0:03:23.760 --> 0:03:26.520 So so what years were you working in the controller's office? 0:03:27.000 --> 0:03:30.160 So I was there from ninety eight to two thousand three. 0:03:30.320 --> 0:03:34.520 So you missed the Great Financial Crisis, right. I had 0:03:34.680 --> 0:03:38.600 the uh lovely experience of being right in the thick 0:03:38.600 --> 0:03:40.920 of it in New York by then. But Texas did 0:03:41.000 --> 0:03:45.640 miss uh miss it in large part because of having 0:03:45.640 --> 0:03:48.400 a rainy day fund, which I think after the financial 0:03:48.440 --> 0:03:51.960 crisis was a great example to other state governments that 0:03:52.280 --> 0:03:55.520 you know, in in in good times, when revenues were 0:03:55.520 --> 0:03:57.760 good in the State of Texas or are good, especially 0:03:57.760 --> 0:04:01.600 in energy, you siphon those off past a certain point 0:04:01.640 --> 0:04:03.480 and put them in a so called rainy day fund 0:04:03.800 --> 0:04:06.520 to tap should you ever need it. Um and I 0:04:06.520 --> 0:04:08.720 think after the financial crisis it was the first time 0:04:08.720 --> 0:04:11.960 that Texas ever had to tap it's rainy day fund. 0:04:12.000 --> 0:04:14.000 But it's one reason why it's been able to keep 0:04:14.000 --> 0:04:18.400 its triple A rating. Financial planning one on one counter 0:04:18.600 --> 0:04:23.160 cyclical that precautionary savings that unfortunately America's households didn't have 0:04:23.240 --> 0:04:26.280 after the financial crisis, but but Texas had. And there's 0:04:26.279 --> 0:04:30.320 a little known thing about Texas that I find fascinating 0:04:30.880 --> 0:04:34.480 that given the boom and bus cycle with energy long 0:04:34.560 --> 0:04:37.480 before the Great Financial Crisis, they used to I believe 0:04:37.480 --> 0:04:40.640 they have something I want to say. It's it's in 0:04:40.680 --> 0:04:45.120 the state constitution that you cannot use your home mortgage, 0:04:45.600 --> 0:04:50.280 your home equity for cash out financing. So Texas had 0:04:50.320 --> 0:04:54.440 a much lower rate of default and subsequent issues foreclosures 0:04:54.520 --> 0:04:56.440 than the rest of the country. Yeah, I think that, 0:04:56.520 --> 0:04:59.840 And I could also draw a line between that to Japan. 0:05:00.080 --> 0:05:02.039 Of course, I was working for a Japanese firm at 0:05:02.080 --> 0:05:04.479 the time of the financial crisis, and one of the 0:05:04.520 --> 0:05:07.520 thing I things I witnessed at Bank of Tokyo Mitsubishi 0:05:07.680 --> 0:05:10.440 was I was there at the time that we UH. 0:05:10.480 --> 0:05:12.440 Not literally I did not walk a check over to 0:05:12.440 --> 0:05:15.480 Morgan Stanley, but a check was walked over to Morgan 0:05:15.600 --> 0:05:18.880 Stanley in theory and and a chunk of Morgan Stanley 0:05:19.000 --> 0:05:22.640 was purchased UM. And now there's this amazing partnership between 0:05:23.160 --> 0:05:27.599 m uf G, It'subishi United Financial Group UH AND and 0:05:27.640 --> 0:05:30.560 Morgan Stanley. Because the Japanese were the ones that were 0:05:30.600 --> 0:05:33.600 cash rich at the time of the financial crisis, because 0:05:33.640 --> 0:05:37.680 they had already gone through their big financial crisis, they 0:05:37.760 --> 0:05:41.520 did not participate in the mortgage crisis. UH, they were 0:05:41.560 --> 0:05:43.920 not over leveraged in that area, and so they had 0:05:43.960 --> 0:05:46.400 a lot of cash to deploy UH and it was 0:05:46.480 --> 0:05:49.160 much needed by by many of the firms that were 0:05:49.160 --> 0:05:52.080 bought up at that time. So so I'm gonna sort 0:05:52.080 --> 0:05:55.039 of jump ahead. But given this relationship that came out 0:05:55.040 --> 0:05:59.360 of the financial crisis, how has that impacted Morgan Stanley 0:06:00.440 --> 0:06:05.039 as an international company. Has that broadened their footprints around 0:06:05.080 --> 0:06:08.920 the globe? It absolutely has. UH and Morgan Stanley already 0:06:08.920 --> 0:06:11.800 had a strong presence in Asia, but by partnering with 0:06:12.000 --> 0:06:15.880 m uf G, opening access to to markets more fully 0:06:16.000 --> 0:06:18.919 and mind share across more of the global economy. I 0:06:18.920 --> 0:06:22.160 think it's been a fantastic partnership. Was it a coincidence 0:06:22.200 --> 0:06:24.200 that this deal took place and then you end up 0:06:24.200 --> 0:06:27.520 at Morgan Stanley or did you just happen out of 0:06:27.520 --> 0:06:30.960 this relationship to meet people and one thing led to another. 0:06:31.000 --> 0:06:35.000 It was a coincidence. Um. I'm when I began at 0:06:35.040 --> 0:06:39.840 Morgan Stanley, back in my colleagues at Bank of Tokyo Mitsubishi, 0:06:39.920 --> 0:06:42.039 had felt like I had come full circle. I was 0:06:42.120 --> 0:06:45.680 back in the family, so to speak. Um. And but 0:06:45.760 --> 0:06:49.800 I'll tell you, Uh, probably the most important reason of 0:06:49.880 --> 0:06:53.800 how I became connected at Morgan Stanley, UM, is that 0:06:53.839 --> 0:06:57.200 I'm a nice person. Berry, And I always say this, 0:06:57.279 --> 0:07:00.520 You've got to be a nice person. And when people 0:07:00.520 --> 0:07:02.479 think about who do you want to work with, who 0:07:02.520 --> 0:07:05.840 do you want to have on your team? Uh, the 0:07:05.880 --> 0:07:09.800 ones yes, write it down. Be a nice person. It's 0:07:09.920 --> 0:07:13.200 very simple. But it's not something everyone can do. Um. 0:07:13.240 --> 0:07:16.360 And especially in finance, we've heard of yellers and screamers 0:07:16.440 --> 0:07:19.560 and exactly, but you will be rewarded. And so when 0:07:19.640 --> 0:07:21.960 people when we all reach out to each other when 0:07:22.000 --> 0:07:24.200 we're networking, saying hey, I've got an open spot on 0:07:24.240 --> 0:07:26.360 my team? Who have you worked within the past, Who 0:07:26.360 --> 0:07:28.040 do you really like? Who do you think I should 0:07:28.080 --> 0:07:30.680 reach out to? Uh, if you were a jerk and 0:07:30.720 --> 0:07:32.640 nobody liked working with you, you're not going to be 0:07:32.680 --> 0:07:34.520 one of the names on that list. And then that's 0:07:34.560 --> 0:07:38.000 exactly how I came about to be recommended for position 0:07:38.040 --> 0:07:40.760 at Morgan Stanley was because I was good people and 0:07:40.800 --> 0:07:43.120 you started as a senior economist And how long have 0:07:43.200 --> 0:07:45.440 you been chief economist in Worrow? I became chief a 0:07:45.480 --> 0:07:49.720 conist Morgan Stanley in February. Oh, so you've been here 0:07:49.760 --> 0:07:52.160 for in the role for over two years. For over 0:07:52.200 --> 0:07:56.000 two years? Yeah to me, and judging from your reaction, 0:07:56.040 --> 0:07:58.840 it sounds like it's been a lengthy time. But let 0:07:58.840 --> 0:08:00.440 me tell you. One of the things I love about 0:08:00.440 --> 0:08:03.920 Morgan Stanley is that people are shocked when they hear 0:08:03.960 --> 0:08:06.320 that I've only been there a total of four years, 0:08:06.360 --> 0:08:09.880 because you talked to anyone their lifers. The longevity is 0:08:09.960 --> 0:08:14.000 amazing and it and it uh says something about Morgan 0:08:14.080 --> 0:08:16.200 Stanley is a place to work. It really is a 0:08:16.240 --> 0:08:18.640 family um and it just makes me feel good that 0:08:18.680 --> 0:08:21.000 there's there's just not a lot of turnover. We were 0:08:21.040 --> 0:08:27.400 talking earlier about the transition from private sector to public sector. 0:08:27.960 --> 0:08:31.720 You had an interesting experience this past election. How did 0:08:32.120 --> 0:08:35.520 the politics that have gotten kind of crazy in America 0:08:36.000 --> 0:08:42.679 affect clients, investing and just generally interacting with Morgan Stanley customers. 0:08:43.720 --> 0:08:47.160 You know, I think this is this is definitely Uh, 0:08:47.320 --> 0:08:50.800 this has definitely been a unique election cycle. Uh. And 0:08:50.880 --> 0:08:53.160 I know that we've beat that word unique to death, 0:08:53.200 --> 0:08:56.719 it feels, but I can tell you that I don't 0:08:56.760 --> 0:09:02.079 believe I've ever experienced emotions being this high and uh 0:09:02.120 --> 0:09:05.840 it affecting sort of Let's say, the emotional data this much, 0:09:05.920 --> 0:09:09.080 the survey based data of how do you feel? And 0:09:09.120 --> 0:09:15.679 it has been swinging wildly. There are massive divergences between say, uh, 0:09:15.720 --> 0:09:20.160 your your Trump voter, that's middle income America where uh 0:09:20.440 --> 0:09:23.719 you can see that by voter preference. Consumer confidence is 0:09:23.760 --> 0:09:26.000 a record high for Republicans but at a record home 0:09:26.240 --> 0:09:29.440 low for Democrats. And we saw a similar similar split 0:09:29.880 --> 0:09:34.120 among clients and among my internal colleagues as well. Just 0:09:35.640 --> 0:09:39.400 trying to dissect which economists, generally, I believe are very 0:09:39.440 --> 0:09:43.079 good at staying objective and trying not to let emotion 0:09:43.320 --> 0:09:45.800 drive your work. That was my next question is how 0:09:45.840 --> 0:09:52.360 do you keep clients from allowing their own emotions, political biases, 0:09:52.640 --> 0:09:57.480 just reactions to the crazingens on TV, from impacting their 0:09:57.559 --> 0:10:00.360 investing in trading. What you have to do is be 0:10:00.440 --> 0:10:03.120 the is remained, the calm voice in the room, and 0:10:03.200 --> 0:10:07.600 just keep coming back to the fundamentals, the fundamentals, the fundamentals, 0:10:07.679 --> 0:10:12.280 and try to create a story with a very strong 0:10:12.920 --> 0:10:16.880 argument based in fundamentals so that you you just keep 0:10:16.920 --> 0:10:20.000 coming back to that and saying, let's keep emotions out 0:10:20.040 --> 0:10:23.640 of it, let's keep feelings out of it, and just 0:10:24.000 --> 0:10:28.280 stick to the basics. And that has been extraordinarily difficult, 0:10:28.880 --> 0:10:32.880 UH post election, where emotions have run high. What I 0:10:33.000 --> 0:10:35.880 like now, what makes me more confident in the US 0:10:35.920 --> 0:10:39.440 outlook going forward, is that I can see that investors 0:10:40.480 --> 0:10:44.840 have adjusted their expectations for fiscal policy over time, and 0:10:44.920 --> 0:10:48.480 you don't see companies UH providing forward guidance on what 0:10:48.520 --> 0:10:52.000 Congress might deliver, and you you hear households talking more 0:10:52.600 --> 0:10:56.760 UH realistically about what Congress might deliver. And so that 0:10:56.840 --> 0:10:59.320 makes me more confident that what we're seeing in the 0:10:59.320 --> 0:11:03.440 economic activity is being driven by a stronger global economy, 0:11:03.480 --> 0:11:08.640 stronger fundamental US economy, legitimately and not being driven anymore 0:11:08.679 --> 0:11:11.200 by expectations of what Congress made de lyrics. As we 0:11:11.240 --> 0:11:15.559 all know, campaigning is easy. Policy making is difficult, for sure, 0:11:15.720 --> 0:11:17.600 And so I think I think that makes me less 0:11:18.440 --> 0:11:22.120 worried about what happens in the event of complete fiscal failure. 0:11:22.480 --> 0:11:24.920 You mentioned campaigning. I think we were all kind of 0:11:25.160 --> 0:11:28.440 hoping that once the election came and went, everything would 0:11:28.440 --> 0:11:30.520 settle down. And here we are in the middle of 0:11:30.520 --> 0:11:34.280 the summer, where more than six months through the first 0:11:34.520 --> 0:11:39.200 year of the first term of President Trump, and you 0:11:39.280 --> 0:11:43.640 travel extensively, you meet with clients in the United States abroad. 0:11:44.240 --> 0:11:47.160 I know when I travel around, it's all anybody wants 0:11:47.200 --> 0:11:51.560 to talk about. Is President Trump. Are you finding similar 0:11:51.600 --> 0:11:55.000 things that it dominates at least in the beginning of 0:11:55.000 --> 0:12:01.559 the conversation, Republican, Democrat, conservative, liberal, It does matter. Everybody 0:12:01.679 --> 0:12:05.800 is transfixed by the world's greatest reality show. Yeah, you know, Actually, 0:12:05.800 --> 0:12:08.959 I'm glad that you brought up regional differences because, uh, 0:12:09.240 --> 0:12:11.280 here in the U s. It has petered out. Right, 0:12:11.280 --> 0:12:14.920 My conversations with clients have gone back to simply talking 0:12:14.960 --> 0:12:18.360 about the economy, talking about global central banks and liquidity 0:12:18.360 --> 0:12:21.520 and everything other than fiscal policy, almost like we've gone 0:12:21.520 --> 0:12:23.679 back to a I'll believe it when I see it, 0:12:24.400 --> 0:12:26.160 but when I do go abroad, it is a very 0:12:26.200 --> 0:12:29.240 different story, And the conversations do still start out with 0:12:29.520 --> 0:12:34.640 what's going on with politics with Congress UH United At 0:12:34.679 --> 0:12:38.079 first it was our investors outside of the U S 0:12:38.120 --> 0:12:41.600 trying to understand what is the political process? How do 0:12:41.720 --> 0:12:44.960 things move through Congress? How much power does the president 0:12:45.120 --> 0:12:48.280 have to do X, y and z unilaterally or how 0:12:48.360 --> 0:12:52.320 much does a president need Congress for? And working Sometimes 0:12:52.320 --> 0:12:55.120 it would take an entire client meeting just working through 0:12:55.240 --> 0:12:59.600 the process, which could at times open their eyes to oh, okay, 0:12:59.640 --> 0:13:03.400 policy making is difficult, is it? Are they perplexed by 0:13:03.520 --> 0:13:09.280 the show? Are they um curious? Because I have recently 0:13:09.320 --> 0:13:14.880 been in Germany, I've been in in various places in Europe. 0:13:15.640 --> 0:13:20.960 The response in different areas are it's almost detached amusement 0:13:21.640 --> 0:13:24.200 versus the UK is like, oh, we have the same 0:13:24.240 --> 0:13:26.760 thing here, we are we're on the same page, not 0:13:26.920 --> 0:13:32.640 exactly brexiting, and the most recent UM change candidates seemed 0:13:32.640 --> 0:13:35.559 to be very different. What what are you finding overseas? 0:13:35.600 --> 0:13:39.400 Is it a uniform situation or is it full on like, Wow, 0:13:39.400 --> 0:13:42.000 what's going on there? Well, I would say the amusement 0:13:42.559 --> 0:13:44.760 comes up in meetings, but it's very fleeting, sort of 0:13:44.800 --> 0:13:48.080 at the beginning, kind of chuckling over whatever has happened 0:13:48.120 --> 0:13:50.439 in the media, most recently in the US, and then 0:13:50.480 --> 0:13:54.719 we dive right into more serious issues because at the 0:13:54.800 --> 0:13:58.760 end of the day, I get around quite often around 0:13:58.800 --> 0:14:01.280 the global economy, but not so often that clients do 0:14:01.400 --> 0:14:05.560 want to UH. I'll use the word waste, waste an 0:14:05.720 --> 0:14:09.960 entire hour of of client time, you know, but it 0:14:10.000 --> 0:14:13.199 comes up being being bemused over US politics, but it 0:14:13.240 --> 0:14:15.120 will come up as just a sort of a quick 0:14:15.400 --> 0:14:17.400 quip or two at the beginning of the meeting, and 0:14:17.400 --> 0:14:19.600 then we move on to more serious things. So let 0:14:19.600 --> 0:14:21.640 me ask you a more serious question because you have 0:14:21.800 --> 0:14:25.120 said previously you love going out and talking with clients. 0:14:25.640 --> 0:14:28.720 Who are they and other than politics, what sort of 0:14:28.760 --> 0:14:33.120 stuff do they lean on you for? So again, going 0:14:33.200 --> 0:14:38.800 to UH folks outside of the US, UM. You know, 0:14:38.880 --> 0:14:40.840 it's different when I sit down in front of equities 0:14:40.880 --> 0:14:45.920 investors versus fixed income investors. Fixed income investors UM. They 0:14:46.000 --> 0:14:54.240 love the nuances of how every economist will interpret UH 0:14:54.640 --> 0:15:00.760 pars fed speak UH and the data differently UH. And 0:15:00.880 --> 0:15:03.320 the fact that you can have two economists that see 0:15:03.360 --> 0:15:05.960 the economy the same way but have two completely different 0:15:05.960 --> 0:15:08.400 calls on what the FED will do, and so really 0:15:08.400 --> 0:15:11.680 working through the nuances of how is it that I 0:15:11.720 --> 0:15:14.720 listened to the FED. How do I come to conclusions 0:15:14.720 --> 0:15:17.280 of what I think I've discerned from from FED speak 0:15:17.320 --> 0:15:21.120 and meetings with FED policymakers working through those details I 0:15:21.160 --> 0:15:24.000 think is most important for them. It's a very presentation 0:15:24.160 --> 0:15:28.040 light and conversation heavy meeting. When I sit down with 0:15:28.080 --> 0:15:31.760 equities investors, it's more talking talk me through the fundamental 0:15:31.880 --> 0:15:34.600 see me how companies, show me, how companies are positioned, 0:15:34.640 --> 0:15:38.440 where are they investing, How to consumers spend if they're 0:15:38.440 --> 0:15:41.960 given more tax dollars? UH? Will interest rate simply be 0:15:42.040 --> 0:15:44.240 higher or lower at this time next year? You know? 0:15:44.320 --> 0:15:47.040 And it's a much more presentation heavy, show me the 0:15:47.080 --> 0:15:50.880 client deck meeting. UH. And so that's why I think 0:15:50.880 --> 0:15:53.240 my trips around the globe can be very dynamic because 0:15:53.360 --> 0:15:55.600 as part of the economics team, we have a foot 0:15:55.920 --> 0:15:58.720 in fixed income, we have a foot in equities, and 0:15:58.760 --> 0:16:02.200 we basically of us all sides of the firm UH, 0:16:02.240 --> 0:16:04.960 And so it can be very dynamic meetings in one trip, 0:16:05.040 --> 0:16:07.560 and I think that keeps it very very interesting for me. 0:16:07.840 --> 0:16:11.080 Let's talk a little bit about, um, your time at 0:16:11.080 --> 0:16:14.600 Morgan Stanley. You've been there about four years. You have 0:16:14.800 --> 0:16:20.080 a very high profile job in a field that's dominated 0:16:20.120 --> 0:16:24.840 by men. How is that changing? Because I've noticed more 0:16:24.840 --> 0:16:28.760 and more women are starting to assume senior piece positions 0:16:29.320 --> 0:16:34.040 in big farms. Uh they are. Uh, it's still lagging tremendously. 0:16:34.160 --> 0:16:37.880 Of course, it's still lagging tremendously. And I can tell 0:16:37.920 --> 0:16:40.520 you that we spend an unbelievable amount of time at 0:16:40.520 --> 0:16:44.960 Morgan Stanley, uh, beating to death all the ways and 0:16:45.000 --> 0:16:50.640 have we uncovered every way possible to uh lower attrition 0:16:50.720 --> 0:16:54.280 rates uh for women in the firm, uh, and keep 0:16:54.320 --> 0:16:57.240 them moving forward, and be being sure that there's nothing 0:16:57.320 --> 0:16:59.920 on our end that we haven't done in order to 0:17:00.040 --> 0:17:03.120 remove barriers to the moving higher. Specifically in economics, we 0:17:03.160 --> 0:17:07.639 saw cher Yelling spend time on this giving speeches about 0:17:08.119 --> 0:17:10.320 women in economics. I can tell you that when I 0:17:10.359 --> 0:17:13.960 was in graduate school, Uh, there were four of us 0:17:14.080 --> 0:17:21.320 ladies in graduate school and economomics, uh about two hundred. Yeah, 0:17:23.560 --> 0:17:27.320 it was very tiny and and so but today right. 0:17:27.480 --> 0:17:30.760 I am not the only woman on the economics team 0:17:30.760 --> 0:17:33.720 in the U S. I'm not the only U chief 0:17:33.760 --> 0:17:37.040 economist at Morgan Stanley that is a woman. Elgabarsh, our 0:17:37.160 --> 0:17:42.360 chief European economist, has been there many many many years. Um, 0:17:42.440 --> 0:17:45.480 and that is unique that Morgan Stanley has more than 0:17:45.560 --> 0:17:50.240 one female chief economist in the firm. Um. I think 0:17:50.600 --> 0:17:56.520 overall finances finances doing a horrible job having women in 0:17:56.680 --> 0:18:00.560 high positions. But we are doing we are make leaps 0:18:00.560 --> 0:18:06.360 and bounds trying to overcome that. It seems that the industry, 0:18:06.400 --> 0:18:11.320 however slowly, the changes are taking place. It's really starting 0:18:11.359 --> 0:18:14.320 to move in the right direction, with miles still to go. 0:18:14.520 --> 0:18:17.080 Oh yes, well, And that's exactly how we would characterize 0:18:17.080 --> 0:18:20.959 it when I say finance overall is a sector is 0:18:21.000 --> 0:18:24.000 doing a horrible job. That is a feeling shared to 0:18:24.119 --> 0:18:28.560 the highest rank in Morgan Stanley. It's not some uh, 0:18:28.720 --> 0:18:32.439 you know, outlandish statement that I'm making. Uh, It's just 0:18:32.560 --> 0:18:36.080 understood that the industry still has a long way to go. 0:18:36.320 --> 0:18:39.480 It's a long process to groom people to take over exactly. 0:18:39.480 --> 0:18:41.679 And what we find at Morgan Stanley, and this is 0:18:41.720 --> 0:18:44.520 probably not unique to Morgan Stanley is that when you 0:18:44.520 --> 0:18:48.480 look at our analysts class of new analysts coming in. Uh, 0:18:48.480 --> 0:18:52.960 it's an extremely good balance between men and women. But 0:18:53.040 --> 0:18:55.760 the attrition rate is higher for women as they get 0:18:55.880 --> 0:18:59.520 higher up the chain. Why is that? Is it because 0:18:59.560 --> 0:19:02.720 they don't come back after leaving to have children. Uh, 0:19:03.000 --> 0:19:06.360 we don't know. We're scrubbing the data and working with 0:19:06.560 --> 0:19:09.879 every individual segment within the firm to be sure that 0:19:09.920 --> 0:19:12.040 the data aren't telling us that we're not creating the 0:19:12.119 --> 0:19:15.639 right environment for them to come back. We've got a 0:19:15.720 --> 0:19:18.800 very strong return to work program that's been very successful. 0:19:19.119 --> 0:19:20.920 And I can tell you what we do recognize, and 0:19:21.000 --> 0:19:25.000 what I recognize firsthand, is that you get much more 0:19:25.160 --> 0:19:30.200 diversity of thought on an economics team when when it's 0:19:30.400 --> 0:19:34.520 diverse between male and female and all walks of life. 0:19:34.560 --> 0:19:37.960 I'm not just talking about a gender um difference, but 0:19:38.040 --> 0:19:42.000 I can tell you I developed a love for studying 0:19:42.119 --> 0:19:45.400 US household behavior from very early on in my career. 0:19:45.440 --> 0:19:46.760 It was one of the first things I did at 0:19:46.760 --> 0:19:49.960 the State of Texas out of graduate school. UH. And 0:19:50.240 --> 0:19:53.280 I also feel, UH, and maybe this is a biased view, 0:19:53.359 --> 0:19:56.240 that that I bring a unique perspective to studying the 0:19:56.320 --> 0:20:00.119 US household because as a woman, I'm extremely connected to 0:20:00.400 --> 0:20:04.480 running the household UH, and so I feel also from 0:20:04.520 --> 0:20:08.400 being from Texas, I didn't grow up on this island 0:20:08.440 --> 0:20:12.280 of Manhattan, and so I am not so far removed 0:20:12.280 --> 0:20:16.480 that I don't remember what the average American experiences like 0:20:17.040 --> 0:20:19.919 in the US UH. And if I were not on 0:20:20.080 --> 0:20:23.560 the US economics team and it was all UH men 0:20:24.440 --> 0:20:29.239 run by your typical mid middle aged white male economist, right, 0:20:29.280 --> 0:20:32.359 they might miss that perspective. There are a number of 0:20:32.440 --> 0:20:36.560 FED governors and chiefs of the federal Reserve banks who 0:20:36.600 --> 0:20:40.679 are either currently held by a woman as president or 0:20:40.800 --> 0:20:46.080 have previously been held by a woman. What does that 0:20:46.280 --> 0:20:52.000 shift really over the past decade say to young women 0:20:52.000 --> 0:20:55.040 who may be considering a career in finance or economics, 0:20:55.080 --> 0:21:00.280 How important are those roles to driving the industry Greek 0:21:00.359 --> 0:21:04.640 towards a little more gender parity. I think it's hugely important. 0:21:04.760 --> 0:21:06.920 Right If if I'm a young woman coming out of 0:21:07.480 --> 0:21:10.760 UH school and I'm studying economics UM, and I'm thinking 0:21:10.840 --> 0:21:13.800 about where do I see myself going? Where do I 0:21:13.840 --> 0:21:16.040 see myself five years from now, ten years from out, 0:21:16.080 --> 0:21:19.520 fifteen years from now, I might not think, Oh, staff 0:21:19.560 --> 0:21:22.359 economists somewhere on some team, either on Wall Street or 0:21:22.400 --> 0:21:25.960 at a think tank or a nonprofit. I might I 0:21:26.040 --> 0:21:29.880 might actually think, which was the unthinkable just two decades ago. 0:21:29.960 --> 0:21:32.040 I might actually think that I could run the FED 0:21:32.119 --> 0:21:34.560 one day, or I could head one of the regional 0:21:34.840 --> 0:21:38.160 federal reserve banks. Let's talk a little bit about the 0:21:38.280 --> 0:21:44.040 intersection between economics and markets. So does the stock market 0:21:44.119 --> 0:21:47.240 drive the economy or does the economy drive the stock market? 0:21:47.640 --> 0:21:50.600 Or is it a little bit of each? Oh, Barry, 0:21:50.640 --> 0:21:52.800 I'm an economist. I'm gonna say a little bit of each. 0:21:52.840 --> 0:21:55.800 Because you opened that door. Um, it's the chicken and 0:21:55.840 --> 0:21:58.879 the egg. Uh. And you'll have a strategist sit in 0:21:58.920 --> 0:22:01.919 this chair and tell you that it's the markets. Uh. 0:22:01.920 --> 0:22:03.520 And then you have an economist that sits in its 0:22:03.560 --> 0:22:07.000 chair and says it's the economy. Isn't the markets reflecting 0:22:07.080 --> 0:22:10.199 what the economy is doing or at least discounting what 0:22:10.280 --> 0:22:13.000 the economy is about to do the discounting. So I 0:22:13.040 --> 0:22:16.160 will say that markets are forward looking, but there forward 0:22:16.200 --> 0:22:18.680 looking at their trying to anticipate when things have gotten 0:22:18.680 --> 0:22:21.240 as bad as they could possibly get or as good 0:22:21.280 --> 0:22:25.040 as they could possibly get. And typically liquidity and global 0:22:25.080 --> 0:22:27.920 flows drive the markets first before anyone can see what's 0:22:27.960 --> 0:22:31.760 going on. Uh, and so that that tends to sort 0:22:31.760 --> 0:22:35.120 of be the forward looking piece that confirms and then 0:22:35.160 --> 0:22:38.199 the economic data confirms that. So if you look at 0:22:38.200 --> 0:22:40.679 every business cycle, uh. And let's go back to the 0:22:40.720 --> 0:22:45.200 most recent downturn, the financial crisis. The stock market reached 0:22:45.200 --> 0:22:49.520 its bottom first in March, started turning up and then 0:22:49.880 --> 0:22:54.640 the ultimately the date that the NBRUH said the recession 0:22:54.720 --> 0:22:58.040 was over was June of two thousand nine, so it 0:22:58.240 --> 0:23:01.639 led the economy by a couple of months um and 0:23:01.720 --> 0:23:04.720 on the flip side in seven, I think the market 0:23:04.720 --> 0:23:10.480 peaked in October seven NBR December of oh seven. So yeah, 0:23:10.520 --> 0:23:14.040 and so a lot of that is that the wealth 0:23:14.080 --> 0:23:19.440 effect is huge earlier late in a cycle. So March, 0:23:19.600 --> 0:23:23.280 what happened that March, this stock market bottomed, it started 0:23:23.640 --> 0:23:29.120 uh racing higher. Uh. And in in a cycle, when 0:23:29.200 --> 0:23:32.159 consumers start spending again, guess who are the ones that 0:23:32.240 --> 0:23:38.440 spend first? The wealthy because financial assets are rising the wealthy. 0:23:38.640 --> 0:23:43.800 The top twenty of households in income in the US. 0:23:43.840 --> 0:23:47.600 Income holders in the US make up of all spending, 0:23:48.520 --> 0:23:52.439 so that again the top so the top income quintile. 0:23:52.640 --> 0:23:56.680 So the top of income group in the US makes 0:23:56.760 --> 0:24:00.560 up of all makes sure that makes a lot. They're 0:24:00.600 --> 0:24:04.200 buying big ticket it good. So when wealth starts to recover, 0:24:05.040 --> 0:24:08.000 as the cycle is taking off, the expansion is taking off, 0:24:08.040 --> 0:24:13.119 they're getting out there buying motor vehicles and recreational vehicles 0:24:13.160 --> 0:24:18.400 and motorcycles and purchasing trips abroad. And let me push 0:24:18.400 --> 0:24:21.280 back a little bit on this because a well, we'll 0:24:21.280 --> 0:24:24.560 have a fuller debate about the wealth effect during the 0:24:24.600 --> 0:24:28.480 podcast portion. But if you remember back in two thousand 0:24:28.480 --> 0:24:34.240 and nine, there was kind of a rising um since 0:24:34.680 --> 0:24:40.280 that people were a little intimidated about either conspicuous consumption 0:24:40.400 --> 0:24:45.160 or ostentatious spending, and even the wealthy, or at least 0:24:45.240 --> 0:24:47.760