1 00:00:00,520 --> 00:00:03,760 Speaker 1: This is Bloomberg Wall Street Week. We turn our attention 2 00:00:03,880 --> 00:00:07,120 Speaker 1: to the markets this week. U s CPI never's reinforcing 3 00:00:07,160 --> 00:00:10,639 Speaker 1: concerns about inflation. The financial stories that chiep are worth 4 00:00:10,720 --> 00:00:13,480 Speaker 1: a really different reaction to Mark. It's more indications of 5 00:00:13,640 --> 00:00:16,239 Speaker 1: just how hot the U. S. Economy really is. Through 6 00:00:16,239 --> 00:00:19,520 Speaker 1: the eyes of the most influential voices Larry Summers, the 7 00:00:19,560 --> 00:00:22,439 Speaker 1: former Streatory Secretary, Katherine Keening, CEO of d n Y 8 00:00:22,600 --> 00:00:26,160 Speaker 1: Moms Sam's l Sharmon and founder of Equatic Group Investment. 9 00:00:26,200 --> 00:00:30,280 Speaker 1: In Bloomberg wool Street Week with David Weston from Bloomberg Radio, 10 00:00:31,000 --> 00:00:34,839 Speaker 1: Searching in Vain, for solid ground in an escalating Russian war, 11 00:00:34,920 --> 00:00:38,680 Speaker 1: in Ukraine in a troubled global economy, and goodness knows 12 00:00:38,680 --> 00:00:42,080 Speaker 1: in the British authorities economic management. This is Bloomberg Wall 13 00:00:42,080 --> 00:00:46,440 Speaker 1: Street Week. I'm David Weston. This week special contributor Larry 14 00:00:46,479 --> 00:00:50,400 Speaker 1: Summers of Harvard on the potential next shoe to drop economically. 15 00:00:51,159 --> 00:00:55,880 Speaker 1: I doubt we've seen the last mine UH go off. 16 00:00:55,920 --> 00:00:57,960 Speaker 1: Some of them may be in the private sector. I 17 00:00:58,000 --> 00:01:01,960 Speaker 1: think more of them may be a national and former 18 00:01:02,000 --> 00:01:06,039 Speaker 1: New Jersey governor and EPA administrator Christine Todd Whitman on 19 00:01:06,120 --> 00:01:10,360 Speaker 1: a path forward on nuclear energy. Nuclear and play a 20 00:01:10,480 --> 00:01:14,160 Speaker 1: huge role at least in the transition from fossil fuels 21 00:01:14,240 --> 00:01:31,120 Speaker 1: to renewables. Global Wall Street It's spent the week trying 22 00:01:31,160 --> 00:01:33,959 Speaker 1: to get its footing after things only got worse in 23 00:01:34,120 --> 00:01:37,920 Speaker 1: Ukraine as Russian missiles rained down across the country and 24 00:01:38,000 --> 00:01:40,920 Speaker 1: NATO chief Yen Stollenberg had to reassure us the things 25 00:01:40,959 --> 00:01:46,440 Speaker 1: weren't about to go nuclear. Russian knows that the nuclear 26 00:01:46,520 --> 00:01:51,200 Speaker 1: war channep won I must never be fall. The I 27 00:01:51,400 --> 00:01:53,640 Speaker 1: m F, for at least its economic projections and its 28 00:01:53,680 --> 00:01:56,800 Speaker 1: chief economists were warned that a global recession just maybe looming. 29 00:01:57,560 --> 00:02:00,880 Speaker 1: What we see is about a third of global economy 30 00:02:01,120 --> 00:02:05,720 Speaker 1: is going to be experiencing the contraction this year on next. 31 00:02:06,240 --> 00:02:09,320 Speaker 1: And if that weren't enough, President Biden told CNN recession 32 00:02:09,360 --> 00:02:12,840 Speaker 1: may come specifically to the United States. I don't think 33 00:02:12,840 --> 00:02:14,560 Speaker 1: there will be a recession. If it is, it will 34 00:02:14,560 --> 00:02:18,200 Speaker 1: be a very slight recession. And then then the CPI 35 00:02:18,320 --> 00:02:21,680 Speaker 1: numbers came in hotter than expected, with the headline numbers 36 00:02:21,720 --> 00:02:25,639 Speaker 1: still up at eight point and core accelerating the six 37 00:02:25,680 --> 00:02:29,720 Speaker 1: point six percent year over year. It is not a 38 00:02:29,720 --> 00:02:32,839 Speaker 1: good picture here. Those who were thinking that inflation might 39 00:02:32,919 --> 00:02:37,040 Speaker 1: drop off fairly quickly are going to be disappointed by 40 00:02:37,160 --> 00:02:39,840 Speaker 1: the numbers here. In the meantime, over in Great Britain, 41 00:02:39,880 --> 00:02:42,239 Speaker 1: we had a week of financial turmoil, with a very 42 00:02:42,240 --> 00:02:44,600 Speaker 1: public battle between the Bank of England and Prime Minister 43 00:02:44,639 --> 00:02:47,680 Speaker 1: Trust's government, which ended up with a new Chancellor of 44 00:02:47,720 --> 00:02:50,520 Speaker 1: the Exchequer and her giving up on more of her 45 00:02:50,560 --> 00:02:54,400 Speaker 1: controversial budget. I want to be honest, this is difficult, 46 00:02:55,160 --> 00:02:57,440 Speaker 1: but we will get through this storm and we will 47 00:02:57,440 --> 00:03:01,000 Speaker 1: deliver the strong and sustained grace that can transform the 48 00:03:01,040 --> 00:03:05,200 Speaker 1: prosperity of our country for generations to come. But the 49 00:03:05,240 --> 00:03:08,320 Speaker 1: surprises weren't all bad this week, at least not for 50 00:03:08,320 --> 00:03:11,480 Speaker 1: former FED chair Ben Bernanke, who was awakened to learn 51 00:03:11,520 --> 00:03:14,400 Speaker 1: that he shares with two others the Nobel Prize for 52 00:03:14,440 --> 00:03:19,280 Speaker 1: Economics this year. It was completely unexpected. My wife and 53 00:03:19,280 --> 00:03:20,760 Speaker 1: I shut off our cell phones when we went to 54 00:03:20,800 --> 00:03:24,520 Speaker 1: bed last night, not thinking about this issue um and 55 00:03:24,600 --> 00:03:27,240 Speaker 1: it was our daughter in Chicago who was finally contacted 56 00:03:27,280 --> 00:03:29,520 Speaker 1: and called us on the landline to inform us that 57 00:03:29,520 --> 00:03:35,040 Speaker 1: this this had happened, And the markets had just as 58 00:03:35,080 --> 00:03:37,240 Speaker 1: hard a time as the rest of us finding its footing, 59 00:03:37,280 --> 00:03:40,600 Speaker 1: with the SMP swinging five points between big losses and 60 00:03:40,720 --> 00:03:44,000 Speaker 1: big gains. On Thursday alone, after the CPI numbers came 61 00:03:44,000 --> 00:03:48,280 Speaker 1: out for the week, the SMP was down one, the 62 00:03:48,360 --> 00:03:51,080 Speaker 1: NASDAG down over a three percent, and yield on the 63 00:03:51,120 --> 00:03:53,840 Speaker 1: tenure was up over thirteen basis points to close the 64 00:03:53,880 --> 00:03:57,640 Speaker 1: week just above four teples. Sort out a wild week 65 00:03:57,640 --> 00:04:00,320 Speaker 1: in the markets. We welcome now Joe and Phoene, partner 66 00:04:00,360 --> 00:04:04,240 Speaker 1: in Advisor's Capital Management, and Lizanne Sanders, chief investment strategist 67 00:04:04,240 --> 00:04:06,560 Speaker 1: at charl Schwab. So welcome back both of you to 68 00:04:06,600 --> 00:04:08,840 Speaker 1: Wall Street. Let me start with you, Luzenne, what happened 69 00:04:08,840 --> 00:04:10,600 Speaker 1: this week? I feel like we hit by a mack truck. 70 00:04:12,040 --> 00:04:15,200 Speaker 1: So I think it was probably mostly technical the reversal 71 00:04:15,280 --> 00:04:18,880 Speaker 1: that we saw yesterday. On an inter day basis, in 72 00:04:18,960 --> 00:04:21,960 Speaker 1: the first part of the day, you did see the swoon. 73 00:04:22,040 --> 00:04:27,600 Speaker 1: Take the SMP two below seventeen. And I'm not a technician, 74 00:04:27,760 --> 00:04:31,960 Speaker 1: but that level was important because it was the retracement 75 00:04:32,200 --> 00:04:36,120 Speaker 1: of the post pandemic move higher, and and that probably 76 00:04:36,279 --> 00:04:40,200 Speaker 1: kicked in a combination of buying head just being taken off, 77 00:04:40,800 --> 00:04:43,839 Speaker 1: some short covering, and that fed on itself through the 78 00:04:43,920 --> 00:04:46,680 Speaker 1: end of the day. Maybe you could point to the 79 00:04:46,800 --> 00:04:49,760 Speaker 1: move down and yields yesterday, the move down in the dollar, 80 00:04:49,960 --> 00:04:53,039 Speaker 1: but that could also help to explain today's weakness too, 81 00:04:53,040 --> 00:04:56,080 Speaker 1: because you saw reversals there. So Joanna fairmoun A noise. 82 00:04:56,120 --> 00:04:57,720 Speaker 1: I think it's fair to say in the equity markets 83 00:04:57,720 --> 00:04:59,840 Speaker 1: there but on Friday, actually they gave up pretty much 84 00:04:59,839 --> 00:05:03,320 Speaker 1: every they got back on Thursday. So when you net net, 85 00:05:03,360 --> 00:05:05,440 Speaker 1: when you get through it all, what did we learn 86 00:05:05,520 --> 00:05:07,640 Speaker 1: this week that should affect the markets over the longer term, 87 00:05:07,960 --> 00:05:09,200 Speaker 1: You know, Dave, But I think what we learned is 88 00:05:09,240 --> 00:05:11,279 Speaker 1: that there's still a lot of risks out there facing 89 00:05:11,360 --> 00:05:13,240 Speaker 1: the future of the global economy, not just here in 90 00:05:13,240 --> 00:05:15,560 Speaker 1: the US. And those two price reports we got, the 91 00:05:15,560 --> 00:05:17,920 Speaker 1: p p I and the c p I reinforce the 92 00:05:18,000 --> 00:05:19,760 Speaker 1: view that inflation is going to be a really hard 93 00:05:19,800 --> 00:05:22,400 Speaker 1: challenge for the Fed to solve. But it also seems 94 00:05:22,440 --> 00:05:25,520 Speaker 1: to have removed any wiggle room that people think the 95 00:05:25,560 --> 00:05:28,360 Speaker 1: Fed has. They're they're really gonna have to be adamant 96 00:05:28,360 --> 00:05:31,120 Speaker 1: about raising rates, try to constrain liquidity, try to discourage 97 00:05:31,120 --> 00:05:33,520 Speaker 1: consumer demand in order for inflation to get under control. 98 00:05:33,960 --> 00:05:35,479 Speaker 1: There's not a lot of room for them to do 99 00:05:35,560 --> 00:05:37,680 Speaker 1: anything but raizor rates now for the next at least 100 00:05:37,680 --> 00:05:41,039 Speaker 1: couple of meetings. The market finally perhaps is digesting that. 101 00:05:42,520 --> 00:05:44,599 Speaker 1: There's a lot of talk about me sorry, go ahead please. Yeah. 102 00:05:45,240 --> 00:05:49,719 Speaker 1: I think joins absolutely right. And I think there have 103 00:05:49,839 --> 00:05:52,800 Speaker 1: been these moments where it seems like, whether it's in 104 00:05:52,839 --> 00:05:55,719 Speaker 1: reaction to things going on in the UK, that the 105 00:05:55,760 --> 00:05:59,400 Speaker 1: markets almost cheering for are looking for some sort of 106 00:05:59,400 --> 00:06:04,400 Speaker 1: financial system accident because of the messaging from the FED, 107 00:06:04,560 --> 00:06:07,839 Speaker 1: from Powell that they're not going to step in because 108 00:06:07,839 --> 00:06:11,200 Speaker 1: of financial market weakness across any of the asset markets, 109 00:06:11,320 --> 00:06:15,760 Speaker 1: or just volatility, but financial system and stability maybe what 110 00:06:15,960 --> 00:06:19,680 Speaker 1: could bring the fedback in. But even in a situation 111 00:06:19,760 --> 00:06:22,560 Speaker 1: like that, what they may do is use the tool 112 00:06:22,600 --> 00:06:26,800 Speaker 1: of their balance sheet or repo facilities versus doing a 113 00:06:26,920 --> 00:06:30,640 Speaker 1: pivot anytime soon on rates. And I'm not sure that's 114 00:06:30,640 --> 00:06:34,120 Speaker 1: been fully digested by the market yet. Yeah, there could 115 00:06:34,120 --> 00:06:37,200 Speaker 1: be certainly more digested to come, particularly because the risks 116 00:06:37,200 --> 00:06:40,320 Speaker 1: that are out there are really unusual. You know, it's 117 00:06:40,320 --> 00:06:43,040 Speaker 1: not just the inflation problem, right, The US has a 118 00:06:43,120 --> 00:06:46,800 Speaker 1: labor shortage born of the pandemic, born of early retirees, 119 00:06:46,839 --> 00:06:49,920 Speaker 1: born of a lack of legal migration immigration into the US. 120 00:06:50,640 --> 00:06:52,719 Speaker 1: Joan Peony and Lisia and Saunders will be staying with 121 00:06:52,760 --> 00:06:54,080 Speaker 1: us as we're trying to figure out what to do 122 00:06:54,160 --> 00:06:56,760 Speaker 1: with our money in these turbulent times. It's gonna have 123 00:06:56,800 --> 00:07:08,720 Speaker 1: backs on Wall stere week on Bloomberg. Well, this was 124 00:07:08,760 --> 00:07:11,080 Speaker 1: the week when Wall Street got much of what it 125 00:07:11,160 --> 00:07:15,120 Speaker 1: had been asking for and then decided, quite characteristically, that 126 00:07:15,200 --> 00:07:19,720 Speaker 1: it didn't like it. The economy is simmering down as requested. 127 00:07:20,160 --> 00:07:23,480 Speaker 1: Industrial production took its worst fall in more than a year, 128 00:07:24,080 --> 00:07:29,200 Speaker 1: business inventories are rising ominously, and the Housing Industries Trade 129 00:07:29,240 --> 00:07:34,040 Speaker 1: Association said its members were virtually out of business. That, 130 00:07:34,200 --> 00:07:36,240 Speaker 1: of course, was Lewis Rocks around Wall Street. Wee back 131 00:07:37,640 --> 00:07:40,200 Speaker 1: or not forty one years ago now, when all the 132 00:07:40,240 --> 00:07:43,360 Speaker 1: markets wanted was a slowing economy and the lower interest 133 00:07:43,440 --> 00:07:45,559 Speaker 1: rates that they thought would come with that. The big 134 00:07:45,600 --> 00:07:48,520 Speaker 1: movie that week was a romantic comedy you may not 135 00:07:48,600 --> 00:07:51,960 Speaker 1: remember it with Burt Reynolds named Paternity, and the number 136 00:07:52,000 --> 00:07:55,200 Speaker 1: one song was Arthur's theme from that Dudley Moore film 137 00:07:55,280 --> 00:07:58,480 Speaker 1: named Arthur. Now the problems are very different, as interest 138 00:07:58,560 --> 00:08:00,560 Speaker 1: rates are on the way up, not down, and the 139 00:08:00,560 --> 00:08:03,560 Speaker 1: economy is still very robust by most measures, still with 140 00:08:03,680 --> 00:08:05,880 Speaker 1: us or joe An Feeny of Advisor's Capital Management and 141 00:08:05,960 --> 00:08:08,880 Speaker 1: Liz Anne Saunders of Charles Swab, So, Joeann, let me 142 00:08:08,920 --> 00:08:10,280 Speaker 1: come to you. The question is what do we do 143 00:08:10,320 --> 00:08:12,160 Speaker 1: with our money in this world? Where does it make 144 00:08:12,200 --> 00:08:16,200 Speaker 1: sense to invest with this much Volati's much uncertainty. It's 145 00:08:16,240 --> 00:08:18,600 Speaker 1: really been challenging time for investors, and it really depends 146 00:08:18,640 --> 00:08:21,720 Speaker 1: what sort of time frame you have as an investor. 147 00:08:22,040 --> 00:08:25,280 Speaker 1: You know, if if you're in retirement, what you probably 148 00:08:25,320 --> 00:08:27,400 Speaker 1: need is some assurance that you're going to going to 149 00:08:27,440 --> 00:08:29,040 Speaker 1: be able to get the cash flow you need off 150 00:08:29,040 --> 00:08:31,080 Speaker 1: of your portfolio. And so one of the things we've 151 00:08:31,120 --> 00:08:32,800 Speaker 1: done for for our clients in that kind of a 152 00:08:32,840 --> 00:08:37,320 Speaker 1: situation is to create portfolios with above average dividendields on 153 00:08:37,360 --> 00:08:39,560 Speaker 1: the one side. And now as bond yields are rising 154 00:08:39,640 --> 00:08:42,640 Speaker 1: and we've kept our duration relatively short, we've been able 155 00:08:42,679 --> 00:08:45,560 Speaker 1: to let bonds mature and then re up at higher yields. So, 156 00:08:45,840 --> 00:08:48,520 Speaker 1: you know, one area to go to is some relatively 157 00:08:48,559 --> 00:08:50,839 Speaker 1: stable companies, whether it's a General Mills or an ab 158 00:08:50,960 --> 00:08:53,840 Speaker 1: V or you know, some of the others in consumer 159 00:08:53,880 --> 00:08:57,120 Speaker 1: staples and in energy that have you know, dividendnields in 160 00:08:57,120 --> 00:08:59,400 Speaker 1: the four or five six percent range, and that way 161 00:08:59,400 --> 00:09:01,120 Speaker 1: they can still get that income and they can ride 162 00:09:01,120 --> 00:09:03,920 Speaker 1: out the volatility and the stock prices and wait this out. 163 00:09:04,080 --> 00:09:06,560 Speaker 1: And then that gives our clients a fair bit of comfort. 164 00:09:06,800 --> 00:09:09,320 Speaker 1: But you know, it hasn't been easy really for anybody, 165 00:09:09,320 --> 00:09:12,840 Speaker 1: but that's one way to deal with the volatility. Luzanne, 166 00:09:12,880 --> 00:09:15,760 Speaker 1: what are you recommending these days? Well, first of all, 167 00:09:15,760 --> 00:09:18,640 Speaker 1: I absolutely agree with Joanne that there's no there's no 168 00:09:18,679 --> 00:09:20,960 Speaker 1: cookie cutter answer to a question like that. It really 169 00:09:21,000 --> 00:09:23,880 Speaker 1: does depend on who the investor is, their risk tolerance 170 00:09:24,000 --> 00:09:28,240 Speaker 1: or past experience, their time horizon, whether they're financial risk tolerance, 171 00:09:28,240 --> 00:09:30,960 Speaker 1: and their emotional risk tolerance, whether there's a narrow gap 172 00:09:31,000 --> 00:09:33,319 Speaker 1: between the two or a wide gap between the two. 173 00:09:33,360 --> 00:09:36,439 Speaker 1: But I think we're in a part of the market 174 00:09:36,600 --> 00:09:40,199 Speaker 1: cycle right now where you want to actually focus on fundamentals. 175 00:09:40,200 --> 00:09:42,439 Speaker 1: And I know that sounds trite and sounds what we're 176 00:09:42,440 --> 00:09:45,520 Speaker 1: always supposed to do, but gone are the days where 177 00:09:45,559 --> 00:09:48,439 Speaker 1: you could look at segments of the market, components of 178 00:09:48,559 --> 00:09:51,480 Speaker 1: say big tech, and look at it monolithically make an 179 00:09:51,480 --> 00:09:54,920 Speaker 1: assumption that they're all going to go up simultaneously. There's 180 00:09:54,960 --> 00:09:57,400 Speaker 1: much more differentiation in the market right now, and I'd 181 00:09:57,440 --> 00:10:02,320 Speaker 1: say look for where things our dear from a macro perspective. 182 00:10:02,440 --> 00:10:06,320 Speaker 1: So we have declining earnings revisions in the aggregate, so 183 00:10:06,840 --> 00:10:10,840 Speaker 1: look for the factor around positive earning to revisions positive 184 00:10:10,880 --> 00:10:13,960 Speaker 1: earning surprise. We know we're in a rising interest rate environment, 185 00:10:14,080 --> 00:10:18,760 Speaker 1: so companies with strong balance sheets, low debt, high cash flow, 186 00:10:18,840 --> 00:10:23,559 Speaker 1: strong free cash flow, um low lower volatility. It's just 187 00:10:23,640 --> 00:10:26,880 Speaker 1: kind of a quality wrapper and I think that's the 188 00:10:26,920 --> 00:10:29,640 Speaker 1: best type of approach in this environment. And then the 189 00:10:29,720 --> 00:10:33,640 Speaker 1: last thing we've suggested for those investors who can do it, 190 00:10:33,679 --> 00:10:36,880 Speaker 1: If you were a re balancer based on the calendar, 191 00:10:37,559 --> 00:10:40,400 Speaker 1: maybe instead of doing it once a year, once a quarter, 192 00:10:40,840 --> 00:10:44,880 Speaker 1: let your portfolio and the volatility associated with dictate the 193 00:10:45,000 --> 00:10:49,080 Speaker 1: timing of of taking advantage of the volatility by you know, 194 00:10:49,160 --> 00:10:52,959 Speaker 1: adding into weakness, trimming into strength relative to your overall 195 00:10:53,400 --> 00:10:57,480 Speaker 1: strategic asset allocation. Joan, What about the possibility of fixed 196 00:10:57,480 --> 00:10:59,280 Speaker 1: income at this point. I mean, for a long time 197 00:10:59,280 --> 00:11:00,760 Speaker 1: and you didn't want to be in bonds given what 198 00:11:00,800 --> 00:11:03,360 Speaker 1: we're going to bonds, but those yields have really come up. 199 00:11:03,360 --> 00:11:06,360 Speaker 1: They're yielding something now and they do generate cash. It's 200 00:11:06,360 --> 00:11:08,880 Speaker 1: sort of like dividends, right, yeah, absolutely right. You know 201 00:11:09,120 --> 00:11:12,920 Speaker 1: we're getting in the order of six plus percent in 202 00:11:12,920 --> 00:11:17,120 Speaker 1: in yields in our all investment grade UH fixed income solution. 203 00:11:17,520 --> 00:11:19,800 Speaker 1: And when you pair that within a balanced strategy with 204 00:11:19,880 --> 00:11:23,040 Speaker 1: the equity front, you know, you can generate a pretty 205 00:11:23,120 --> 00:11:25,760 Speaker 1: nice cash flow for clients. Um. And so if you 206 00:11:25,840 --> 00:11:28,920 Speaker 1: keep duration short and you're really careful about selecting credit 207 00:11:29,000 --> 00:11:31,679 Speaker 1: quality because credit spreads have widened here, so you want 208 00:11:31,679 --> 00:11:33,520 Speaker 1: to be careful that you're not adding risk to the 209 00:11:33,520 --> 00:11:35,439 Speaker 1: side of your portfolio that it's supposed to be sort 210 00:11:35,440 --> 00:11:38,400 Speaker 1: of the suspenders on the pants, right to provide more stability. 211 00:11:38,720 --> 00:11:40,720 Speaker 1: And so that's one thing we've done and it's helped 212 00:11:40,720 --> 00:11:42,520 Speaker 1: our clients feel a lot more comfortable in this kind 213 00:11:42,559 --> 00:11:44,679 Speaker 1: of environment. Listen, are you do the point yet where 214 00:11:44,679 --> 00:11:48,240 Speaker 1: you'd consider duration that is going longer duration from EIX income? So, 215 00:11:48,440 --> 00:11:51,160 Speaker 1: my my colleague Cathy Jones has a regular guest on 216 00:11:51,520 --> 00:11:55,240 Speaker 1: on Bloomberg. She's our fixed incomes strategists, and in the 217 00:11:55,520 --> 00:11:59,400 Speaker 1: sort of four ish per set range we have suggested 218 00:11:59,480 --> 00:12:02,800 Speaker 1: you can't that are lengthening duration. But I agree with 219 00:12:02,880 --> 00:12:05,839 Speaker 1: everything that Joanne said too, I think there are finally 220 00:12:05,840 --> 00:12:08,760 Speaker 1: opportunity and we've gone from a from a TINA environment. 221 00:12:08,800 --> 00:12:12,920 Speaker 1: There is no alternative to TIA. There is an alternative, 222 00:12:13,080 --> 00:12:16,080 Speaker 1: and there's income and fixed income again, and there's strategies, 223 00:12:16,120 --> 00:12:19,080 Speaker 1: a bit more active strategies that you can employ to 224 00:12:19,160 --> 00:12:23,600 Speaker 1: take advantage of this move up in yields. Even well 225 00:12:23,679 --> 00:12:27,520 Speaker 1: down the duration spectrum, you're actually generating a yield. If 226 00:12:27,559 --> 00:12:31,080 Speaker 1: inflation ever came down, Um, we might actually have positive 227 00:12:31,080 --> 00:12:33,040 Speaker 1: really yields. We're not quite there yet, but I think 228 00:12:33,080 --> 00:12:34,920 Speaker 1: we'll get there. Well, you know, Lisiyne, I want to 229 00:12:34,920 --> 00:12:36,679 Speaker 1: pick up. That was exactly the point I was going 230 00:12:36,720 --> 00:12:39,359 Speaker 1: to make is the challenges that inflation is so high 231 00:12:39,520 --> 00:12:42,120 Speaker 1: that even if you're getting those appealing yields on fixed income, 232 00:12:42,120 --> 00:12:45,280 Speaker 1: you're still losing purchasing power. And so that's why we, 233 00:12:45,360 --> 00:12:47,480 Speaker 1: you know, continue to counsel if if the client has 234 00:12:47,640 --> 00:12:50,959 Speaker 1: appropriate risk tolerances and the time horizon, the equity side 235 00:12:50,960 --> 00:12:53,680 Speaker 1: can help you offset the cost of inflation. You know, 236 00:12:53,760 --> 00:12:56,000 Speaker 1: for example, one of the stocks in one of these 237 00:12:56,000 --> 00:12:58,600 Speaker 1: portfolios is McDonald's. Now, what you want is to find 238 00:12:58,600 --> 00:13:00,520 Speaker 1: a company like that that has good cash so that 239 00:13:00,600 --> 00:13:03,320 Speaker 1: can continue to pay its dividend, but more importantly, even 240 00:13:03,400 --> 00:13:05,800 Speaker 1: can raise its dividend year after year, and they just 241 00:13:05,840 --> 00:13:08,320 Speaker 1: announced this week a tem percent increase in their dividend. 242 00:13:08,559 --> 00:13:11,320 Speaker 1: So you're being compensated more than compensated for that cost 243 00:13:11,360 --> 00:13:13,559 Speaker 1: of inflation. It wrote in the persame power of your money, 244 00:13:13,720 --> 00:13:15,280 Speaker 1: and that's something that you're more likely to get on 245 00:13:15,280 --> 00:13:16,960 Speaker 1: the equity side than you are on the on the 246 00:13:17,000 --> 00:13:19,280 Speaker 1: fixed income side. What are earnings? We are in earning 247 00:13:19,280 --> 00:13:21,079 Speaker 1: season now, we had the first four banks come out 248 00:13:21,080 --> 00:13:23,559 Speaker 1: this week of their earnings. Is there possibly that could 249 00:13:23,559 --> 00:13:27,079 Speaker 1: help the investor right now to the up side. It's possible. 250 00:13:27,120 --> 00:13:29,480 Speaker 1: I think The rub though, is that even if we 251 00:13:29,720 --> 00:13:34,200 Speaker 1: end reporting season with um some sort of positive beat rate, 252 00:13:34,559 --> 00:13:38,520 Speaker 1: we have to recognize that estimates have been coming down 253 00:13:38,679 --> 00:13:41,240 Speaker 1: since the April May period of time, both for the 254 00:13:41,280 --> 00:13:45,120 Speaker 1: second half of two and the first half of three, 255 00:13:45,240 --> 00:13:47,600 Speaker 1: so it has been a lowered bar and much like 256 00:13:47,679 --> 00:13:51,200 Speaker 1: the second quarter, we're still early, but expectations are that 257 00:13:51,480 --> 00:13:54,960 Speaker 1: energy pretty much as all the earnings growth. So consensus 258 00:13:55,040 --> 00:13:57,360 Speaker 1: right now, once the quarter is all said and done 259 00:13:57,400 --> 00:13:59,480 Speaker 1: a month from an hour or so, you'll have three 260 00:13:59,480 --> 00:14:02,400 Speaker 1: percent over alls and p earnings growth be exclude energy 261 00:14:02,720 --> 00:14:06,559 Speaker 1: that goes down to minus three percent, and that's if 262 00:14:06,600 --> 00:14:09,960 Speaker 1: that's the case, that would be worse than the second quarter. 263 00:14:10,000 --> 00:14:12,480 Speaker 1: And I think the path of least resistance for estimates 264 00:14:12,920 --> 00:14:16,520 Speaker 1: is still down. I'd also say really important to watch 265 00:14:16,679 --> 00:14:19,680 Speaker 1: and listen in earning season, not just for did you 266 00:14:19,720 --> 00:14:22,560 Speaker 1: beat your numbers or your profit margins. What's your profit 267 00:14:22,600 --> 00:14:25,640 Speaker 1: margin outlook if you're a multinational company, the impact of 268 00:14:25,640 --> 00:14:29,080 Speaker 1: the incredibly strong dollar, whether you're hedging it or not. 269 00:14:29,240 --> 00:14:31,160 Speaker 1: The impact of inflation, whether you have a lot of 270 00:14:31,200 --> 00:14:33,880 Speaker 1: fixed costs or variable costs, what your labor costs are. 271 00:14:34,360 --> 00:14:36,920 Speaker 1: So I think it's a lot of the details under 272 00:14:36,960 --> 00:14:39,640 Speaker 1: the surface that a matter as much as just the 273 00:14:39,680 --> 00:14:42,560 Speaker 1: top line reading. Thank you so much to joe Anfini 274 00:14:42,640 --> 00:14:46,160 Speaker 1: and listen. Siders. Great to have you with us. Coming up. 275 00:14:46,440 --> 00:14:49,680 Speaker 1: If we're really serious about getting to zero emissions, experts 276 00:14:49,680 --> 00:14:52,800 Speaker 1: say expanded nuclear power has to be part of the plan. 277 00:14:53,400 --> 00:14:56,320 Speaker 1: We'll talk about the challenges and the opportunities with Christine 278 00:14:56,360 --> 00:15:01,320 Speaker 1: Todd Whitman, former administrator of the Environmental Protection Agency. This 279 00:15:01,520 --> 00:15:14,720 Speaker 1: is Wall Street Week on Bloomberg Net. Zero emissions. It's 280 00:15:14,720 --> 00:15:18,480 Speaker 1: a lofty goal, but times a wasting just ask John Kerry, 281 00:15:18,520 --> 00:15:23,440 Speaker 1: President Biden's Special Climate Envoy. Many companies are making promises 282 00:15:23,520 --> 00:15:27,640 Speaker 1: to be net zero by but the reality is unless 283 00:15:27,720 --> 00:15:32,440 Speaker 1: you do enough between now and you can't hit zero. 284 00:15:33,480 --> 00:15:36,120 Speaker 1: And if we're really going to get there, Bill Gates says, 285 00:15:36,160 --> 00:15:39,360 Speaker 1: the math makes a pretty compelling case for nuclear power. 286 00:15:39,640 --> 00:15:42,400 Speaker 1: You get a million times much energy peraction. I should 287 00:15:42,400 --> 00:15:47,040 Speaker 1: do burning hydrocarbons, and so it's very advantaged if you 288 00:15:47,160 --> 00:15:51,080 Speaker 1: do the design right. Nuclear physicist and former Energy Secretary 289 00:15:51,240 --> 00:15:54,720 Speaker 1: Ernest Monies says it won't get done without a public 290 00:15:54,880 --> 00:15:57,480 Speaker 1: private partnership. I think what we need to see is 291 00:15:57,600 --> 00:16:01,520 Speaker 1: governments moving together with the fine ancial sector and with 292 00:16:01,680 --> 00:16:07,000 Speaker 1: the equipment providers to get new power plants over the 293 00:16:07,000 --> 00:16:10,760 Speaker 1: finish line. But partnership, we're not convincing the public about 294 00:16:10,840 --> 00:16:14,640 Speaker 1: safety may remain an issue given high profile accidents like Fukushima, 295 00:16:14,720 --> 00:16:17,280 Speaker 1: Japan in two thousand eleven, when an earthquake led to 296 00:16:17,320 --> 00:16:21,320 Speaker 1: a disaster at the plant, causing tens of thousands of evacuations. 297 00:16:21,520 --> 00:16:24,560 Speaker 1: All the nuclear power plants in this country, they operate 298 00:16:24,600 --> 00:16:28,360 Speaker 1: really on this precipice of normal routine operation on one 299 00:16:28,400 --> 00:16:31,840 Speaker 1: side and catastrophic accident on the other, and that's it's 300 00:16:31,920 --> 00:16:34,680 Speaker 1: it's unclear exactly when kind of you'll fall to one 301 00:16:34,720 --> 00:16:37,320 Speaker 1: side or the other, but it's certainly possible. So the 302 00:16:37,400 --> 00:16:39,840 Speaker 1: question is what will it take, how safe it can be, 303 00:16:40,240 --> 00:16:43,160 Speaker 1: and how soon can we get there? Even for some 304 00:16:43,280 --> 00:16:47,200 Speaker 1: who initially opposed the idea but now embrace it. Given 305 00:16:47,200 --> 00:16:50,200 Speaker 1: this challenge we face today and given the progress for 306 00:16:50,280 --> 00:16:56,480 Speaker 1: fourth generation nuclear, go for it. And again of some 307 00:16:56,480 --> 00:16:59,160 Speaker 1: answers these very important questions, we turned out to Christine 308 00:16:59,200 --> 00:17:01,920 Speaker 1: Todd Whitman. She is president of Whitman Strategies. She is, 309 00:17:01,960 --> 00:17:03,760 Speaker 1: of course, the former governor of the state of New 310 00:17:03,800 --> 00:17:06,159 Speaker 1: Jersey and the former administrator of the e p A. 311 00:17:06,400 --> 00:17:08,280 Speaker 1: So welcome to Wall Street Week. It's really good to 312 00:17:08,320 --> 00:17:11,040 Speaker 1: have you with this governor. You've dealt with nuclear energy 313 00:17:11,080 --> 00:17:14,199 Speaker 1: for years now, So give us your sense of the 314 00:17:14,400 --> 00:17:18,280 Speaker 1: role of nuclear energy potentially in getting to net zero. Well, 315 00:17:18,280 --> 00:17:20,680 Speaker 1: I think nuclear and play a huge role at least 316 00:17:20,720 --> 00:17:25,600 Speaker 1: in the transition from fossil fuels to renewables. Renewables are 317 00:17:25,640 --> 00:17:29,960 Speaker 1: not yet base energy. Their peak shaving and we're seven society, 318 00:17:30,000 --> 00:17:31,520 Speaker 1: as is the rest of the world. The world is, 319 00:17:32,920 --> 00:17:35,840 Speaker 1: and nuclear is the only form of base power that 320 00:17:35,960 --> 00:17:41,119 Speaker 1: releases no regulated pollutants or greenhouse gases, wireless producing power. 321 00:17:41,960 --> 00:17:46,159 Speaker 1: And we have an an incredible safety record here in 322 00:17:46,240 --> 00:17:49,720 Speaker 1: this country on nuclear and actually with a few obviously 323 00:17:50,160 --> 00:17:55,240 Speaker 1: very huge exceptions being Chernobyl and what happened in Fukushima Daishi, 324 00:17:56,080 --> 00:17:59,359 Speaker 1: overall worldwide it's been it's been safe and getting safe 325 00:17:59,359 --> 00:18:02,119 Speaker 1: for all the time. Mean, the US Nuclear Regulatory Commission 326 00:18:02,280 --> 00:18:07,600 Speaker 1: is considered the gold standard on regulatory oversight of nuclear reactors. 327 00:18:08,080 --> 00:18:10,760 Speaker 1: I don't think, given costs and time, that we're going 328 00:18:10,840 --> 00:18:13,560 Speaker 1: to see any more large reactors built in this country. 329 00:18:13,560 --> 00:18:16,320 Speaker 1: Certainly they are being built in China, They're being built 330 00:18:16,359 --> 00:18:18,320 Speaker 1: around the world, and we can certainly play a part 331 00:18:18,480 --> 00:18:22,640 Speaker 1: in developing the parts for those reactors. But I see 332 00:18:22,680 --> 00:18:25,240 Speaker 1: the future for nuclear right now being in the small 333 00:18:25,320 --> 00:18:28,520 Speaker 1: modular reactors. Nuclear is actually one of the few things 334 00:18:28,560 --> 00:18:31,639 Speaker 1: that really don't have emissions that can be taken to scale. 335 00:18:31,640 --> 00:18:34,320 Speaker 1: I think something like energy United States and generated by 336 00:18:35,080 --> 00:18:38,320 Speaker 1: in France, right And you know, you saw an example 337 00:18:38,359 --> 00:18:41,480 Speaker 1: of what happens when you take nuclear offline when California 338 00:18:41,840 --> 00:18:46,240 Speaker 1: took the Santino Frey nuclear reactor offline, their emissions went 339 00:18:46,320 --> 00:18:48,720 Speaker 1: up and the cost of their energy went up. I mean, 340 00:18:48,800 --> 00:18:52,399 Speaker 1: it was totally counter to everything that they were hoping 341 00:18:52,440 --> 00:18:55,520 Speaker 1: to achieve in my mind. And so what I found 342 00:18:55,600 --> 00:18:58,159 Speaker 1: over time is that you if you have an opportunity 343 00:18:58,200 --> 00:19:00,760 Speaker 1: to talk to people and answer they're in real questions. 344 00:19:00,800 --> 00:19:03,560 Speaker 1: I mean, it's it's normal to have questions about the 345 00:19:03,600 --> 00:19:06,080 Speaker 1: safety and you should ask them. But the answers are 346 00:19:06,119 --> 00:19:08,760 Speaker 1: really good, and they're based on our history. You can 347 00:19:08,800 --> 00:19:11,760 Speaker 1: prove that in fact, these things work, and once you 348 00:19:11,880 --> 00:19:14,080 Speaker 1: do that with people, they get much more comfortable with 349 00:19:14,119 --> 00:19:16,400 Speaker 1: the idea of nuclear It's just that for so long, 350 00:19:17,000 --> 00:19:19,680 Speaker 1: um it's been used as frankly a fundraiser a lot 351 00:19:19,680 --> 00:19:22,280 Speaker 1: and a lot of times for the environmental groups, and 352 00:19:22,400 --> 00:19:25,240 Speaker 1: we need to get the public to understand. Particularly with 353 00:19:25,359 --> 00:19:28,560 Speaker 1: the new small modular reactors that are built in a 354 00:19:28,600 --> 00:19:32,280 Speaker 1: contained facility, they can be placed on site, they're much 355 00:19:32,320 --> 00:19:36,359 Speaker 1: safer technology, they are much safer way to produce the 356 00:19:36,440 --> 00:19:41,840 Speaker 1: nuclear energy. So overall they are really I believe, have 357 00:19:42,040 --> 00:19:45,359 Speaker 1: the potential to make a huge difference, particularly if you 358 00:19:45,400 --> 00:19:50,000 Speaker 1: think about the rural parts of America where you're not 359 00:19:50,160 --> 00:19:52,800 Speaker 1: on the grid or you're not close to the grid. 360 00:19:53,600 --> 00:19:57,200 Speaker 1: You can take a small modular reactor and provide power 361 00:19:57,200 --> 00:20:01,160 Speaker 1: for an entire town or an entire bi business. So 362 00:20:01,280 --> 00:20:04,639 Speaker 1: they have a lot of potential there. So let's pursue 363 00:20:04,680 --> 00:20:06,520 Speaker 1: that question of safety because that is on a lot 364 00:20:06,560 --> 00:20:08,800 Speaker 1: of people's minds without a doubt. And as you've mentioned, 365 00:20:08,800 --> 00:20:12,360 Speaker 1: we've had some horrific instances. Is the issue with safety 366 00:20:12,400 --> 00:20:14,840 Speaker 1: that people don't realize that actually the tracker is quite 367 00:20:14,840 --> 00:20:18,280 Speaker 1: good for nuclear or is it technological developments such as 368 00:20:18,520 --> 00:20:21,320 Speaker 1: as you're referring to small module reactors. Now. I think 369 00:20:21,359 --> 00:20:24,359 Speaker 1: it's because people just don't know, they don't understand. I mean, 370 00:20:24,400 --> 00:20:26,320 Speaker 1: I get a lot of questions I used to in 371 00:20:26,359 --> 00:20:29,959 Speaker 1: the past about well, what about the spent rods? And 372 00:20:29,960 --> 00:20:32,120 Speaker 1: first of all, I tell them from all that when 373 00:20:32,240 --> 00:20:33,919 Speaker 1: the time when we had a hundred and two nuclear 374 00:20:33,960 --> 00:20:36,560 Speaker 1: reactors in this country, and you took all those spent 375 00:20:36,640 --> 00:20:39,160 Speaker 1: rods and you put them in one place, you'd fill 376 00:20:39,240 --> 00:20:40,920 Speaker 1: up one foot fall field to the height of the 377 00:20:40,960 --> 00:20:43,400 Speaker 1: goal posts. They might have gotten slightly above that now 378 00:20:43,400 --> 00:20:47,600 Speaker 1: because this was data from several years ago, but the 379 00:20:47,680 --> 00:20:50,919 Speaker 1: point being, it's not this massive thing the size of 380 00:20:50,920 --> 00:20:54,159 Speaker 1: the state of Vermont. Okay. Governor, thank you so very 381 00:20:54,240 --> 00:20:56,639 Speaker 1: much for being with us. Really appreciate this. Former Governor 382 00:20:56,840 --> 00:21:02,000 Speaker 1: Christine Todd Women. Now with Whitman's strategy coming up, we 383 00:21:02,040 --> 00:21:04,080 Speaker 1: wrap up the week with our special contributor to Larry 384 00:21:04,119 --> 00:21:08,800 Speaker 1: Summers of Harvard. That's next on Wall Street Week on Bloomberg. 385 00:21:16,560 --> 00:21:18,840 Speaker 1: This is Wall Street Week. I'm David Weston. Welcome once 386 00:21:18,840 --> 00:21:20,960 Speaker 1: again our very special contributor to Wall Street Week. He 387 00:21:21,080 --> 00:21:23,919 Speaker 1: is Larry Summers of Harvard. So, Larry, we got the 388 00:21:23,960 --> 00:21:26,880 Speaker 1: CPI numbers in that we've waited for this week, and boy, 389 00:21:26,960 --> 00:21:30,280 Speaker 1: they came in hot and expected. It's been doing this repeatedly. Now, 390 00:21:30,400 --> 00:21:33,240 Speaker 1: what do you read in these numbers? Not so much 391 00:21:33,280 --> 00:21:38,320 Speaker 1: hotter than I expected. Inflation has got a lot of momentum. 392 00:21:38,400 --> 00:21:41,600 Speaker 1: The best single measures to look at for inflation is 393 00:21:41,640 --> 00:21:45,439 Speaker 1: a kind of super core measure, which is wages. Or 394 00:21:45,480 --> 00:21:51,160 Speaker 1: you couldn't look at the median component of inflation. They've 395 00:21:51,200 --> 00:21:57,200 Speaker 1: just been running strong for a long time and not decelerating. 396 00:21:57,720 --> 00:22:02,000 Speaker 1: So I think Team Transitory is engaged in a lot 397 00:22:02,080 --> 00:22:07,440 Speaker 1: of uh, wishful thinking. And I must say that I'm 398 00:22:07,480 --> 00:22:12,560 Speaker 1: struck by the hypocrisy of some friends of mine like 399 00:22:12,640 --> 00:22:17,080 Speaker 1: Paul Krugman, who are very quick now to focus on 400 00:22:17,200 --> 00:22:23,000 Speaker 1: housing and the fact that the private indusserise lead the 401 00:22:23,080 --> 00:22:27,639 Speaker 1: public induserise when the private industries are looking soft. But 402 00:22:27,800 --> 00:22:31,680 Speaker 1: we're entirely unwilling to credit that argument or to pay 403 00:22:31,720 --> 00:22:35,919 Speaker 1: attention to the private indusseries some months ago, when the 404 00:22:35,960 --> 00:22:41,160 Speaker 1: private industries were obviously pointing to an acceleration of inflation. 405 00:22:41,760 --> 00:22:47,080 Speaker 1: So I think we've gotta be uh, very very careful 406 00:22:47,760 --> 00:22:52,200 Speaker 1: uh here if we want to be credible about containing inflation, 407 00:22:52,560 --> 00:22:54,840 Speaker 1: how much momentum is built in inflation? And how can 408 00:22:54,880 --> 00:22:56,720 Speaker 1: you tell? What are you looking at right now? They're 409 00:22:56,720 --> 00:22:59,120 Speaker 1: telling you what happens in the fourth quarter and as 410 00:22:59,119 --> 00:23:02,120 Speaker 1: we go into next year. I'm looking at core measures. 411 00:23:02,200 --> 00:23:05,960 Speaker 1: I'm looking at super core measures that take housing out, 412 00:23:06,080 --> 00:23:08,879 Speaker 1: take use cars out, in addition to taking food and 413 00:23:09,000 --> 00:23:14,080 Speaker 1: energy out. I'm looking at the so called median inflation component, 414 00:23:14,520 --> 00:23:17,760 Speaker 1: whatever product it is that's right in the middle. I'm 415 00:23:17,760 --> 00:23:21,200 Speaker 1: looking at the so called trimmed mean that looks at 416 00:23:21,359 --> 00:23:25,840 Speaker 1: the middle half of the distribution of product prices. And 417 00:23:26,200 --> 00:23:30,359 Speaker 1: very crucially for me, I'm looking at wages um, which 418 00:23:30,400 --> 00:23:33,520 Speaker 1: is a kind of super core measure because labor goes 419 00:23:33,560 --> 00:23:37,639 Speaker 1: into everything, and all of those are saying that inflation 420 00:23:37,720 --> 00:23:40,280 Speaker 1: is not really coming down very fast. If it's coming 421 00:23:40,320 --> 00:23:44,120 Speaker 1: down at all, and that it's way above the two 422 00:23:44,119 --> 00:23:49,040 Speaker 1: percent target or any acceptable level. Besides the CPI numbers, 423 00:23:49,080 --> 00:23:51,400 Speaker 1: Larry a very big story throughout the week has been 424 00:23:51,600 --> 00:23:54,359 Speaker 1: and continues to be great Britain, where you had the 425 00:23:54,400 --> 00:23:56,600 Speaker 1: Bank of England come in with their emergency buying of 426 00:23:56,640 --> 00:23:59,440 Speaker 1: long term guilts that is due to expire on Friday 427 00:23:59,520 --> 00:24:01,560 Speaker 1: end of this At the same time we now have 428 00:24:02,040 --> 00:24:05,000 Speaker 1: Liz Trust coming out and making some changes. Give us 429 00:24:05,040 --> 00:24:07,520 Speaker 1: your take on what's going on in the British economy 430 00:24:07,560 --> 00:24:11,680 Speaker 1: and more importantly the management of the British economy. Look, 431 00:24:11,720 --> 00:24:15,159 Speaker 1: I think this is probably gonna be a textbook case 432 00:24:15,640 --> 00:24:24,480 Speaker 1: of crisis creation followed by crisis UH mismanagement. UM. I'd 433 00:24:24,480 --> 00:24:27,639 Speaker 1: be surprised if we were in the seventh inning of 434 00:24:28,480 --> 00:24:34,080 Speaker 1: this particular set of challenges. UM. I have said before 435 00:24:34,280 --> 00:24:39,000 Speaker 1: that people now, I think understand very clearly that when 436 00:24:39,000 --> 00:24:42,240 Speaker 1: you do a military intervention, you should never give a 437 00:24:42,280 --> 00:24:45,960 Speaker 1: sunset date when you're gonna leave, because it just emboldens 438 00:24:46,000 --> 00:24:49,280 Speaker 1: the opposition. And I think something similar is true of 439 00:24:49,400 --> 00:24:53,600 Speaker 1: last resort UH finance, where the kind of deadline in 440 00:24:53,640 --> 00:24:56,720 Speaker 1: the Bank of England gave I think is asking for 441 00:24:56,880 --> 00:25:01,560 Speaker 1: trouble uh down down the road. So I think we're 442 00:25:01,560 --> 00:25:07,760 Speaker 1: gonna see more tremors, more aftershocks, more problems. Well exactly, Larry, 443 00:25:07,760 --> 00:25:09,919 Speaker 1: I guess I'm asking the same as that we have 444 00:25:09,960 --> 00:25:12,560 Speaker 1: global slowed on. I m F this week came out 445 00:25:12,600 --> 00:25:14,080 Speaker 1: and said, we're looking at the global slow now at 446 00:25:14,119 --> 00:25:16,280 Speaker 1: the same time we have central banks in development countries 447 00:25:16,440 --> 00:25:19,280 Speaker 1: really all raising rates at the same time. What is 448 00:25:19,280 --> 00:25:21,920 Speaker 1: the likelihood we're gonna see similar won't be the same, 449 00:25:21,920 --> 00:25:24,280 Speaker 1: but similar sorts of problems elsewhere, particularly when it comes 450 00:25:24,280 --> 00:25:26,920 Speaker 1: to very highly leveraged places and places that are more 451 00:25:26,960 --> 00:25:29,520 Speaker 1: difficult to see. Some of the private credit, some of 452 00:25:29,560 --> 00:25:35,280 Speaker 1: the non bank banks, I doubt we've seen the last 453 00:25:35,480 --> 00:25:38,840 Speaker 1: mind uh go off. Some of them may be in 454 00:25:38,880 --> 00:25:42,840 Speaker 1: the private sector. I think more of them may be international. 455 00:25:43,359 --> 00:25:45,760 Speaker 1: You know, something that disappointed me at the I m 456 00:25:45,800 --> 00:25:50,000 Speaker 1: F World Bank meetings this week was the number of 457 00:25:50,080 --> 00:25:54,280 Speaker 1: countries who were reporting that they're having substantial difficulty in 458 00:25:54,400 --> 00:25:58,639 Speaker 1: getting market access. And I must say, I'm sort of 459 00:25:58,720 --> 00:26:04,360 Speaker 1: disappointed by a official sector people, people from the ministries 460 00:26:04,400 --> 00:26:08,320 Speaker 1: of finance and the central banks who are talking about 461 00:26:08,359 --> 00:26:11,240 Speaker 1: how we're gonna work with the private sector to catalyze 462 00:26:11,640 --> 00:26:15,240 Speaker 1: trillions of dollars of finance for green transitions and all 463 00:26:15,280 --> 00:26:19,240 Speaker 1: these countries, but don't seem to be doing anything about 464 00:26:19,280 --> 00:26:21,600 Speaker 1: the fact that many of these countries can't even issue 465 00:26:21,600 --> 00:26:25,840 Speaker 1: a bond UH today. So I think there's a whole 466 00:26:26,000 --> 00:26:31,920 Speaker 1: set of very important challenges with respect to developing countries 467 00:26:31,960 --> 00:26:36,359 Speaker 1: and emerging markets, and I'd have to say that I 468 00:26:36,440 --> 00:26:41,200 Speaker 1: don't feel those challenges were really met UH this week. 469 00:26:41,400 --> 00:26:46,520 Speaker 1: UH there's some fires burning and fire department is still 470 00:26:46,560 --> 00:26:49,520 Speaker 1: mostly in the station. So as we speak to you, 471 00:26:49,520 --> 00:26:51,520 Speaker 1: you are in Washington for those I m F World 472 00:26:51,520 --> 00:26:54,000 Speaker 1: Bank meetings and the i f as. As a practical matter, 473 00:26:54,200 --> 00:26:57,080 Speaker 1: you were very outspoken in the Project Syndicate piece, also 474 00:26:57,240 --> 00:26:59,680 Speaker 1: actually speaking with David Malpass, the head of the World Bank, 475 00:27:00,080 --> 00:27:02,200 Speaker 1: about the role of the World Bank right now on 476 00:27:02,400 --> 00:27:05,760 Speaker 1: things like sustainability. What is going on there? Is the 477 00:27:05,760 --> 00:27:08,119 Speaker 1: World Bank playing the role it should be playing and 478 00:27:08,200 --> 00:27:10,760 Speaker 1: what should it be doing? No, I think it is 479 00:27:11,160 --> 00:27:16,879 Speaker 1: um playing its usual roles in its usual UH way. 480 00:27:17,800 --> 00:27:22,639 Speaker 1: And I think generally the economic crisis of the moment 481 00:27:23,400 --> 00:27:29,760 Speaker 1: demands major changes in approach, just as the security crisis 482 00:27:29,760 --> 00:27:34,480 Speaker 1: in Ukraine demanded major changes in approach and we're not 483 00:27:34,560 --> 00:27:38,480 Speaker 1: really quite seeing it UH yet. The World Bank needs 484 00:27:38,480 --> 00:27:40,480 Speaker 1: to be much more aggressive in the use of its 485 00:27:40,480 --> 00:27:44,080 Speaker 1: balance sheet, and it also needs to get much more capital. 486 00:27:44,520 --> 00:27:46,760 Speaker 1: And instead of having a fight about which of those 487 00:27:46,800 --> 00:27:49,680 Speaker 1: two things is more important, we need to do both 488 00:27:49,680 --> 00:27:52,520 Speaker 1: of them. Because the one mistake we're certain not to 489 00:27:52,640 --> 00:27:57,199 Speaker 1: make is overinvesting in the green transition, and so we 490 00:27:57,240 --> 00:28:00,640 Speaker 1: need to make sure we're doing everything we can UH 491 00:28:00,720 --> 00:28:04,159 Speaker 1: to support that transition. So if there's a lack there, Larry, 492 00:28:04,320 --> 00:28:06,399 Speaker 1: often that lack comes for a lack of leadership. Do 493 00:28:06,440 --> 00:28:08,919 Speaker 1: we not have the leadership we need either from the 494 00:28:09,040 --> 00:28:11,560 Speaker 1: United States Treasury, the White House or for them and 495 00:28:11,680 --> 00:28:14,000 Speaker 1: at the World Bank? I mean, would you ever consider 496 00:28:14,040 --> 00:28:17,320 Speaker 1: taking over that role? I think that we do need 497 00:28:18,240 --> 00:28:24,679 Speaker 1: leadership that points towards UH larger changes in business as usual. 498 00:28:25,280 --> 00:28:29,919 Speaker 1: Then we're seeing UH in the financial area, and I 499 00:28:29,960 --> 00:28:33,639 Speaker 1: think there's some mistakes being made right now, at a 500 00:28:33,760 --> 00:28:37,600 Speaker 1: very very difficult moment in Africa, at a very very 501 00:28:37,680 --> 00:28:42,160 Speaker 1: difficult moment in UH, Latin America, at a very very 502 00:28:42,160 --> 00:28:46,040 Speaker 1: difficult moment in parts of Asia. Larry, one piece of 503 00:28:46,040 --> 00:28:48,480 Speaker 1: news which was actually really hit the markets, but has 504 00:28:48,520 --> 00:28:50,640 Speaker 1: not gotten too much attention is what the United States 505 00:28:50,680 --> 00:28:55,000 Speaker 1: did expect to semiconductors and China. The chips market really 506 00:28:55,000 --> 00:28:56,960 Speaker 1: went down substantially. It took a lot of the tech 507 00:28:57,320 --> 00:29:00,520 Speaker 1: with it at a time of so much difficulty globally. 508 00:29:01,160 --> 00:29:03,920 Speaker 1: What are the possible effects of those sorts of trade actions, 509 00:29:03,960 --> 00:29:08,480 Speaker 1: you know, the kind of large stale cut off on 510 00:29:08,720 --> 00:29:14,600 Speaker 1: cooperation and semiconductors that the Biden administration announced. I don't 511 00:29:14,600 --> 00:29:18,120 Speaker 1: think it's possible to pass an overall judgment on that 512 00:29:18,720 --> 00:29:25,120 Speaker 1: without understanding the security risks that they saw, which depend 513 00:29:25,200 --> 00:29:29,080 Speaker 1: on classified information which those of us on the outside 514 00:29:29,680 --> 00:29:32,360 Speaker 1: don't have. Okay, thank you so much to Larry Summers 515 00:29:32,360 --> 00:29:35,320 Speaker 1: are very special. Contribute here at Wall Street Week. Finally, 516 00:29:35,440 --> 00:29:39,080 Speaker 1: one more thought. When money is no object, watch out, 517 00:29:39,680 --> 00:29:41,800 Speaker 1: they say, the one with the most toys wins. And 518 00:29:41,880 --> 00:29:45,000 Speaker 1: let's face it, toys usually cost money, and the bigger 519 00:29:45,040 --> 00:29:48,200 Speaker 1: the toy, the more money it costs. Take for example, 520 00:29:48,280 --> 00:29:51,280 Speaker 1: Jeff Beza's new yacht, the largest sailing yacht in the 521 00:29:51,320 --> 00:29:55,160 Speaker 1: world at four hundred seventeen feet and costing upwards of 522 00:29:55,240 --> 00:29:58,880 Speaker 1: five hundred million dollars, or Elon musk Agreen to plunk 523 00:29:58,920 --> 00:30:01,280 Speaker 1: down forty four billion in dollars for the prize of 524 00:30:01,280 --> 00:30:04,720 Speaker 1: owning Twitter, something most people think is worth a lot 525 00:30:04,840 --> 00:30:07,160 Speaker 1: less than the price tag, that is, if he ends 526 00:30:07,200 --> 00:30:10,760 Speaker 1: up paying it. So there's two options here. One, uh, 527 00:30:10,800 --> 00:30:13,680 Speaker 1: you know, the deal falls apart and the stock that 528 00:30:13,880 --> 00:30:17,160 Speaker 1: has been sort of artificially inflated is going to crash. 529 00:30:17,680 --> 00:30:19,960 Speaker 1: Or if if things go the way Twitter want, then 530 00:30:20,000 --> 00:30:22,320 Speaker 1: they get the guy in charge who you know, for 531 00:30:22,360 --> 00:30:24,520 Speaker 1: the last three months has been saying that Twitter has 532 00:30:24,560 --> 00:30:26,840 Speaker 1: been lying about its user bait. But what happens when 533 00:30:26,880 --> 00:30:29,360 Speaker 1: you spare no expense, go all in, put all your 534 00:30:29,400 --> 00:30:32,640 Speaker 1: chips on the table, and don't win your dream prize. 535 00:30:33,080 --> 00:30:36,240 Speaker 1: Consider the case of Hillary Clinton's campaign spending one point 536 00:30:36,240 --> 00:30:40,280 Speaker 1: four billion dollars on the two sixteen presidential race, substantially 537 00:30:40,280 --> 00:30:44,600 Speaker 1: more than Donald Trump's sixty million dollars and coming up short. 538 00:30:45,160 --> 00:30:49,760 Speaker 1: This is not exactly the speech at the Capitol I 539 00:30:49,800 --> 00:30:54,080 Speaker 1: hoped to be giving after the election. More Poor Columbia 540 00:30:54,120 --> 00:30:58,760 Speaker 1: pictures which Inn decided to make ishtar figuring anything with 541 00:30:58,840 --> 00:31:02,320 Speaker 1: Dustin Hoffman and Warren Beatty just couldn't fail. But for 542 00:31:02,360 --> 00:31:05,320 Speaker 1: some reason, a movie about two lounge singers involved in 543 00:31:05,360 --> 00:31:07,800 Speaker 1: a coup in the made up country of Ish Tower 544 00:31:08,160 --> 00:31:11,840 Speaker 1: didn't quite land with the audiences. Columbia lost around forty 545 00:31:11,880 --> 00:31:14,640 Speaker 1: million dollars on the deal, almost a hundred million dollars 546 00:31:14,680 --> 00:31:19,160 Speaker 1: adjusted for inflation today, and the dud established Ishtar as 547 00:31:19,200 --> 00:31:23,680 Speaker 1: the synonym for box office flop. Is the oasis? Does 548 00:31:23,720 --> 00:31:26,280 Speaker 1: this look like an oasis? Yeah? Look at the parts 549 00:31:27,200 --> 00:31:30,080 Speaker 1: fell those vultures, And now we can add Steve Cohen 550 00:31:30,120 --> 00:31:32,560 Speaker 1: to the list of those who went big and lost. 551 00:31:33,160 --> 00:31:36,080 Speaker 1: The hugely successful hedge fund manager paid a round two 552 00:31:36,160 --> 00:31:38,680 Speaker 1: point five billion dollars to buy the New York Mats 553 00:31:38,720 --> 00:31:41,520 Speaker 1: and this year took it to number one at least 554 00:31:41,520 --> 00:31:44,640 Speaker 1: in players salaries. But sad to say for fans of 555 00:31:44,680 --> 00:31:48,000 Speaker 1: the Amazings, number one in payroll doesn't mean number one 556 00:31:48,120 --> 00:31:51,120 Speaker 1: on the diamond. The team lost the third game of 557 00:31:51,120 --> 00:31:53,880 Speaker 1: the wild Card playoff by a score of six to nothing. 558 00:31:54,160 --> 00:31:56,880 Speaker 1: Was executing pitches and the wheels fell off. I don't 559 00:31:56,880 --> 00:31:59,240 Speaker 1: know why. We just couldn't out a way to get 560 00:31:59,280 --> 00:32:02,120 Speaker 1: some runs them off. That's going leaving Mr Cohen to 561 00:32:02,200 --> 00:32:05,160 Speaker 1: spend the winter going back to first base and thinking 562 00:32:05,200 --> 00:32:07,480 Speaker 1: hard about whether that two d and seventy eight million 563 00:32:07,520 --> 00:32:10,840 Speaker 1: dollars in players sataries just maybe wasn't enough, they're going 564 00:32:10,880 --> 00:32:13,600 Speaker 1: to get to this great point and they have all 565 00:32:13,680 --> 00:32:16,480 Speaker 1: this momentum behind them, and then then they blow it. 566 00:32:16,920 --> 00:32:19,560 Speaker 1: That's the Mets, that's Mets met singing. That does it. 567 00:32:19,640 --> 00:32:21,680 Speaker 1: For this episode of Wall Street Week, I'm David Weston. 568 00:32:21,840 --> 00:32:23,720 Speaker 1: This is Bloomberg. See you next week.