Speaker 1: Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene
Speaker 1: Jay Ley. We bring you insight from the best in economics, finance, investment,
Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,
Speaker 1: Bloomberg dot Com, and of course on the Bloomberg YEA,
Speaker 1: what is going on in the market. It feels like
Speaker 1: we're going back to January. The VIX has a ten handle,
Speaker 1: the SMP five is just points away from a record high.
Speaker 1: To discuss you want to us here in New York
Speaker 1: is David Kotok, Cumbled Advisers, Chief investment officer and co
Speaker 1: found a Good morning to David. Good morning John. It's
Speaker 1: a pleasure to be here and we back at January. Well,
Speaker 1: it certainly looks like it you just described it, but
Speaker 1: remember February follows January, and we'll see what this next
Speaker 1: two months it's going to bring. In January February, we
Speaker 1: explored the concept with people like yourself as to whether
Speaker 1: we were going to go into a new trading regime,
Speaker 1: and you market regime of high volatility, lower returns. Is
Speaker 1: that where we're at? And if we are, why are
Speaker 1: we going back to a ten on the vix at
Speaker 1: a record handy SMP five. Well, I remember that discussion
Speaker 1: here along with a bunch of other folks who had
Speaker 1: during that period of time and felt the same way.
Speaker 1: One thing is different now. Trade is now war not
Speaker 1: even threatened. Rhetoric number two. All the promises that Peter
Speaker 1: Navarro made there will be no retaliation, there will be
Speaker 1: no penalties, everybody's gonna have a negotiation. I think that
Speaker 1: was March are proven wrong. And every single day we
Speaker 1: get another anecdote of the effects of trade war and
Speaker 1: how bad this can be. Ken lang Owned did an
Speaker 1: interview here yesterday. Yeah, and he's right, he's got well here.
Speaker 1: I mean he's trade words. We're headed for trouble. All
Speaker 1: the warnings of history say so. And we now have
Speaker 1: an administration which is entrenched in this policy and doesn't
Speaker 1: have a way out. It's trying to do a bilateral
Speaker 1: deal with Mexico. Then it's going to try to co
Speaker 1: opt in Canada when it comes to China. I think
Speaker 1: this adversary is patient, doesn't have our political issues, has
Speaker 1: studied us exceptionally well, and is advancing faster than we are.
Speaker 1: I read about how the rollout at five G in
Speaker 1: China is light years ahead of the United States, and
Speaker 1: you say to yourself, if China's gonna have this massive
Speaker 1: bandwidth and roll out, and we're going to be busy
Speaker 1: imposing tariffs and getting retalied. They were tariffs on soybeans
Speaker 1: and lobsters, what does the matter with us? Okay, the
Speaker 1: Good Morning I had to find the red button folks
Speaker 1: on New good Morning. David um, if that's true, what
Speaker 1: do I do with my investments? I mean you at
Speaker 1: Ohio last night with a suburban vote radically changed from
Speaker 1: the GOP traditional alliable. You've got all the Yanks with China.
Speaker 1: You and John have just voiced. Does it change Cumberland
Speaker 1: Advisors investment approach? Well, it has, and in that in
Speaker 1: the US portfolios with et F portfolios, we are now
Speaker 1: focused domestically. We are focused on small and mid caps.
Speaker 1: We are staying away from international exposure which is at
Speaker 1: risk to trade war. And we have a cash reserve.
Speaker 1: And in the in the bond side, the treasury is
Speaker 1: being flattened and suppressed by a tax effect which expires
Speaker 1: on the fift September. Let's see what the yield curve
Speaker 1: looks like. Are you gonna make like effort through there
Speaker 1: when the dog days of August? Are you gonna make
Speaker 1: your gold this year? A fishing two two days? That's
Speaker 1: your record is kind of tough. I'll get a little
Speaker 1: tired of my arms. So you moved to Florida to
Speaker 1: do that? I get the idea what you saw in
Speaker 1: Ohio last night? Is that gonna happen in Florida? Are
Speaker 1: you gonna have the suburban voters of Florida walk away
Speaker 1: from the GOP? Mr? Trump? I think that's an interesting question.
Speaker 1: The congressman in my district where I live in Sarisoda's
Speaker 1: Verne Buchanan, I think seven or eight term Republican. He's
Speaker 1: running ads, walking down the street, holding hands with his granddaughter.
Speaker 1: He doesn't mention Trump, he doesn't mention Republicans. He is
Speaker 1: now worried. He's had a reason to be worried. So
Speaker 1: then how does that affect your I mean, Phararell wants
Speaker 1: to know this. Farrell, you don't understand John Farrell is
Speaker 1: sleeping under a park bench in Central Park. If Sterling
Speaker 1: goes to and he's wiped out, I know, though, so
Speaker 1: much for Franzy summer place in Italy. But but what
Speaker 1: I want to know is does all this mumbo jumbo
Speaker 1: the John and I talked about every day on politics,
Speaker 1: does it affect what we do in investment? I think
Speaker 1: it raises risk profiles. I don't care where the vix goes.
Speaker 1: It's a contemporaneous indicator. It has no forecast power. Everybody, Well,
Speaker 1: if there's no distortion in a treasury curve, you would
Speaker 1: look at the flatness of the curve and you would
Speaker 1: say there's a message here. But we now find in
Speaker 1: this tax code change that the purchases of strips are
Speaker 1: consuming a great deal of the monthly action of the
Speaker 1: thirty year bond. And it's because of a tax code
Speaker 1: change which will expire on September. Anybody who's any corporation
Speaker 1: has got to define benefit pension plan that's underfunded as
Speaker 1: huge incentives right now today to buy long strips. They
Speaker 1: get paid for doing so in a big way. Do
Speaker 1: you know what I thought got lost in all the
Speaker 1: tests the noise yesterday? Tom was Pimco and Dan Iverson
Speaker 1: possibly one of the most talented portfolio managers on the planet,
Speaker 1: turning cautious and defensive. This is where the sequent fund. Yeah,
Speaker 1: Dan is a fantastic PM with a huge track record
Speaker 1: over the last few years, and he has taken the
Speaker 1: funds for a more defensive, cautious stance, and he says
Speaker 1: the following um, the populist parties have already gained traction
Speaker 1: across the globe. The major central banks are trying to
Speaker 1: step away from accommodation they've provided for the markets for
Speaker 1: many years. Their influence has been quickly replaced by that
Speaker 1: of politics. His view, the fund's view for both equity
Speaker 1: and fixed income investors, we think this means of returns
Speaker 1: and unfortunately higher volatility. Now that might not be the
Speaker 1: story of the morning, but that's the story they're anticipating.
Speaker 1: And you know fixed income really really well, David, So
Speaker 1: right now, the way that PIMCO would describe it is
Speaker 1: that you can quite simply expose yourself to two pools
Speaker 1: of assets. A pall of assets leverage to economic growth
Speaker 1: here in the United States, more back securities, corporate credit.
Speaker 1: Then a pool of assets that give you a hedge. Inky,
Speaker 1: so we get it down to it, highly liquid treasuries,
Speaker 1: things like treasury bills, et cetera, et cetera. How do
Speaker 1: you want to balance yourself between those two poles? Of
Speaker 1: assets through the duration of the ship. You just described
Speaker 1: the classic bond manager's barbell. That's what we call it
Speaker 1: as opposed to a ladder. If you're in a ladder today,
Speaker 1: you are taking on risk. You think you're reducing risk
Speaker 1: with the ladder, and you're failing. You're taking on risk
Speaker 1: with the letter. You need a barbel. Now, how do
Speaker 1: you do the barbell? Peace? Long, peace, short and in between.
Speaker 1: You measure the duration of the whole, You measure the
Speaker 1: yield curve for its sweet spot, and you match it.
Speaker 1: Only you match it with a barbell, not linearly or
Speaker 1: a ladder. That is a lot of technical jargon on like,
Speaker 1: but but that's how you do it. What are we
Speaker 1: doing in the barbell? When this curve gets fat like this?
Speaker 1: You shorten and build one side of the bar bill
Speaker 1: larger than the other, leans, lodge hard the fish. You're
Speaker 1: out there with a bunch of people fishing. Yeah, we
Speaker 1: had fifty folks. We had great conversation, divided views. Of course.
Speaker 1: You see the shot of me and John Farron. We
Speaker 1: went sturgeon fishing this weekend. Your sturgeon went viral? Did
Speaker 1: go viral? Yes? And we and we decided that the
Speaker 1: sturgeon is about the size of what we use for
Speaker 1: bait fish. But Leans close. You're Leans Lodge. We're over Patrosian.
Speaker 1: It's called vodka. You guys are permanently and invited. You
Speaker 1: would be ten years if you came up. There's no
Speaker 1: UK equivalent. It is so far in the middle of nowhere.
Speaker 1: Did you go by private like one of those planes
Speaker 1: with the pontoon things on it? You get to the
Speaker 1: lake plane you want, You're gonna hold my hand. If
Speaker 1: I do that, I will. I'll carry your bag. David Kotalk,
Speaker 1: thank you so much, coming that with a bottle of Carosotic.
Speaker 1: I'll be out there in the grumming canoe taking dramamine.
Speaker 1: David Kotalk, humble of advisors. Why don't you bring in
Speaker 1: our next guest and idiosyncratic em Pabla Goldberg blank Rock,
Speaker 1: head of a merchant market. Dad, I'm sure, Pablo A.
Speaker 1: You're gonna tell me some of these issues are idiosyncratic.
Speaker 1: But Turkey, Argentina, Brazil, it's sounding gap, isn't it. Well?
Speaker 1: I think they we need to separate these. I think
Speaker 1: that there are idiosyncredic vulnerabilities to global factors. If you
Speaker 1: want to put it like that. I think Argentina and
Speaker 1: Turkey belong to the same camp. Brazil is a little
Speaker 1: bit of a different story. Um, what is the trigger
Speaker 1: to Argentina and Turkey? The trigger is you tighter financial
Speaker 1: conditions globally. In that sense, it is not indiosy incredic issue.
Speaker 1: What it is idiosyncratic is that these two countries have
Speaker 1: been um, you know, in out of balance for for
Speaker 1: some time, and now the market has indicated that is
Speaker 1: time for reckoning. And the difference is that Argentina has
Speaker 1: bidden the bullet, I mean, has gone to the I
Speaker 1: m F, has tried to interest rates significantly, is lad
Speaker 1: in the economy to the adjudgment, but Turkey is not.
Speaker 1: And that's why now the pressure is on Turkey. Still
Speaker 1: a wall of silence over the last forty eight hours, Pamp.
Speaker 1: What are you expecting to say from the Turkish authorities
Speaker 1: just in terms of policy response? Well, I think that
Speaker 1: we're the Turkish authorities are working in three different camps
Speaker 1: right that The first one is try to um you
Speaker 1: know the case they go to gone to Washington. They're
Speaker 1: trying to deal with this issue of the sanctions, because
Speaker 1: that's quite important because for a country that has large
Speaker 1: external funding needs, anything that can affect, you know, the
Speaker 1: willingness of foreign lenders to roll over that debt would
Speaker 1: be a complication. And of course the process of sanctions
Speaker 1: or potential sanctions are the deterrent potentially to a cross
Speaker 1: border landing. So that's one area of work that they're doing.
Speaker 1: The other area of work is are they're gonna is
Speaker 1: the central band gonna be racing grates who you know,
Speaker 1: get ahead of the curve. And and and there's where
Speaker 1: we are not being so much advantced yet. Look, give
Speaker 1: us a clinic on any nation. In this case Turkey,
Speaker 1: it has to debt. They have debt in Turkish lira
Speaker 1: and they have debt in the US dollar. Both are
Speaker 1: going up and yield priced down, yields dramatically higher on
Speaker 1: Turkish debt. What does that mean for Turkish finance and
Speaker 1: Turkish banks? Let me let me do another cut on
Speaker 1: top of the one you've done. You you've done the
Speaker 1: cut by currency. Let me do a cut by borrower.
Speaker 1: Right there, sovereign dead, basically dead of the government. And
Speaker 1: there's that of the corporate sector being banks and corporate
Speaker 1: now financial corporate, where Turkey is heavily in debted, it
Speaker 1: is in dollars. So that's one part of the quadrant
Speaker 1: and the other part of the quadram that is the
Speaker 1: actually corporate sector, the one that is so in that
Speaker 1: it's not the government, it is the corporate sector. Um.
Speaker 1: And the banks are in between, right. The banks are
Speaker 1: the US who are just bringing dollars from abroad and
Speaker 1: lending to the guys inside. So where we need to
Speaker 1: put an eye on is on the corporate sector and
Speaker 1: the rollovers. Now, if they fail to roll over and
Speaker 1: they have payment problems, that's kind of eventually knock on
Speaker 1: the banks. And that's why the banks have been suffering.
Speaker 1: Do we see that within whatever is the short term
Speaker 1: paper market in Turkey is the you know, the proverbial
Speaker 1: canary in the coal mine. Is it some form of
Speaker 1: Turkish library or bank commercial paper? Well, I mean if
Speaker 1: you look at the sort of short term borrowing costs
Speaker 1: in Turkey, of course they've gone up. We've seen uh,
Speaker 1: sort of cross currency swaps going up. We have seen
Speaker 1: spreads of turkeysh banks gone up. So that pressure is
Speaker 1: pain felt through a system. Um. The question is, uh,
Speaker 1: we are the point where women have some failures or
Speaker 1: not and so far if you look at the data,
Speaker 1: and now granted that the data has a couple of
Speaker 1: months lag, but even an eg total and still whatevers
Speaker 1: are going through. I think investors are worried will they
Speaker 1: stop right or not? And that's probably where we have
Speaker 1: not a daily information and that's bring everybody to be
Speaker 1: a little apprehensive. So the other thing that I think
Speaker 1: many people are worried about whether these technical issues just
Speaker 1: become real fundamental issues paplow when you have short term
Speaker 1: interest rates this high in countries like Argentina and essentially
Speaker 1: a response will have to follow in a country like Turkey.
Speaker 1: Essentially that's going to choke off growth, and that's going
Speaker 1: to choke off NIX and then the whole thing just
Speaker 1: sort of ends up in this big loop that it's
Speaker 1: very hard to get out of. Pamplow. To what extent
Speaker 1: were entering that kind of cycle, we you know, you're
Speaker 1: totally right, and and this is an exercise of adjustment,
Speaker 1: right and and and the big question when you go
Speaker 1: into an exercise of adjustment is how to distribute the
Speaker 1: cost of the adjustment. And this is what we are
Speaker 1: seeing debated in Turkey today. I mean, in case of Argentina.
Speaker 1: It is clear that the fiscal side is doing it adjustment,
Speaker 1: but also the costumers are doing the adjustment on higher utility, terrests, etcetera.
Speaker 1: Um the general the corporate sector through lower growth. UH.
Speaker 1: In Turkey, the question is will the government fight back
Speaker 1: the necessary adjustment as they did into thousand and seventeen.
Speaker 1: Remember they did a massive push up in credit into
Speaker 1: thousand and seventeen. Turkey grew seven percent when this economy
Speaker 1: was already heavily dollarly indebted and with a large account deficits.
Speaker 1: So are they going to try to the fire gravity
Speaker 1: for longer, which actually stretches the court which you could
Speaker 1: eventually break or not, or they're gonna buy the bullet
Speaker 1: and just go through the slower and right now and
Speaker 1: trying to distribute the judgment. The banks are in generally
Speaker 1: solid and they will have good provisions to cover some
Speaker 1: of the not performing loans that are going to go
Speaker 1: up as the economy slow down as you indicate it
Speaker 1: um so, but they usually are you going to do
Speaker 1: it or you're just gonna fly back and you're gonna
Speaker 1: make the situation worse. And I think that's where the
Speaker 1: market is still debating because we're not seeing the right
Speaker 1: reaction function by the government yet. What how does contagions start?
Speaker 1: I mean, if we have all these events here there,
Speaker 1: if you look back to Ecuador in Mexico two or
Speaker 1: three times, and we all remember ninety eight, how does
Speaker 1: contagion happen? We all remember ninety eight very well, unfortunately,
Speaker 1: and contagion, contagion. The first thing about contagients happened, uh
Speaker 1: when you spected in the list. So that's that's one
Speaker 1: of the problems with contagion, right and uh and and
Speaker 1: this happens when investors start to pair uh different countries
Speaker 1: by sort of where they wulnerability lize and and and
Speaker 1: then you guys start to separate the winners and losers.
Speaker 1: I think that we have had a little bit of
Speaker 1: contagion before in emerging markets, kind of when the dollars
Speaker 1: started to move higher in April and May, we started
Speaker 1: to see contagion. We saw some contingent from Argentina to
Speaker 1: other countries. If anything, you could say that Turkey, you know,
Speaker 1: having a minded on vulnerabilities, it is a little bit
Speaker 1: of the effect of the contagion coming from Argentina. But
Speaker 1: we're not seeing contingent from Turkey to the rest. At
Speaker 1: this point, um, there's one you know line that is
Speaker 1: women through some of the countries. That is the issue
Speaker 1: of sanctions right today to look at the Russian ruble
Speaker 1: is under pressure on expectations of potential higher sanctions to Russia.
Speaker 1: So that is a new access that investors are dealing
Speaker 1: with that all of a sudden from Washington, that could
Speaker 1: be something that will impair the liquidity of some of
Speaker 1: the markets. That will prevent some place to play in
Speaker 1: significant markets. So that is things that could bring contagients
Speaker 1: the public Goldberg, thank you. So it's the black Rock folks.
Speaker 1: This will be out on our podcast on Spotify, Apple
Speaker 1: Music as well. Public Goldberg just brilliant there on e
Speaker 1: M as well, without cyphering its economics. And I want
Speaker 1: to rip up the script here. Just spend a good
Speaker 1: amount of time getting a clinic from Dr Weinberg on
Speaker 1: why we can't clear markets anymore. Carl Weinberg is legendary
Speaker 1: for his experience with many others and I think of
Speaker 1: Bill Rhodes a City group over the years in saying
Speaker 1: to troubled countries, you know what, you made some mistakes.
Speaker 1: Here's how you work it out, and you usually work
Speaker 1: it out, folks, by extending debt. Maybe there's a cram
Speaker 1: down where somebody takes a loss up front to make
Speaker 1: all benefit down the road. There's an interest rate workout
Speaker 1: in other creative adventures as well. Carl, what happened? Why
Speaker 1: can't we do this anymore? Well, um, we can. Uh.
Speaker 1: The politics of it have become increasingly difficult, and a
Speaker 1: lot of countries, even countries that still remain committed to
Speaker 1: globalism within their own houses, are not willing to commit
Speaker 1: domestic resources to international events. And I'm talking specifically about
Speaker 1: Europe here where Um, while the nations of Europe presumably
Speaker 1: are united in the Union, where they presumably share common
Speaker 1: interests in common causes and think of themselves as Europeans
Speaker 1: rather than Germans, Dutch or Italians, Nonetheless, when countries like Italy, Greece, Portugal, Spain,
Speaker 1: Ireland get into financial difficulty, the politics are unfavorable to
Speaker 1: burden sharing. Is part of this that we've eliminated, for
Speaker 1: the most part fixed currencies, in that a disciplinarian was
Speaker 1: the reality of selected fixed currencies which forced the politicians
Speaker 1: hands well. I think that the recent Europe's not working.
Speaker 1: Isn't the fixed currencies, it's all the things to support
Speaker 1: fixed currencies that have not been implemented. The Europeans, to
Speaker 1: their credit, have been making big strides recently, right better
Speaker 1: late than never on things like banking union, on deposit insurance,
Speaker 1: across borders, on shared risks, on burden sharing, on shared responsibilities,
Speaker 1: but still have a way to go on fiscal responsibilities,
Speaker 1: which is what makes it possible for the United States
Speaker 1: to have a Massachusetts in New York and Arkansas and
Speaker 1: the West Virginia all within the same nation, in the
Speaker 1: same banking system without having to worry about capital flows
Speaker 1: or currency adjustment. Do you worry? Do you worry about?
Speaker 1: I guess this new theology of politics trumping all no
Speaker 1: pun intended with a pacific rim or with idiosyncratic stories
Speaker 1: like Argentina and Turkey. I mean they don't have the
Speaker 1: europe excuse, do they? No, they don't, and there we have.
Speaker 1: But the same basic thing is there. You know, the
Speaker 1: domestic um response to any crisis, you know, is to um,
Speaker 1: you know, blame the foreigner for its shut down on
Speaker 1: foreign transactions and um, you know, try to clamp down
Speaker 1: on the parts of the boat that are leaking, which
Speaker 1: is uh maybe a first instance a good thing, but
Speaker 1: when the credit flows or across borders, you have to
Speaker 1: look across the border for cooperation and for a solution.
Speaker 1: You can't close well well said, and it shows your
Speaker 1: experience the phrase cop cooperation and solution. Are we not
Speaker 1: solving some of these debt workouts because they're really not
Speaker 1: that big of a crisis. Don't tell that to the Greeks, no,
Speaker 1: And they certainly are very real to the countries that
Speaker 1: are involved. And I think the most relevant example right
Speaker 1: now is Italy, and I think everything that we've experienced
Speaker 1: recently in Europe and as well in emerging markets, even
Speaker 1: though Italy is not an emerging market comes to bear
Speaker 1: when we think about Italy. We have a crushing public
Speaker 1: sector debt, we have crushing private sector debt. We have
Speaker 1: cross border cumulative balance of payments obligations which are hidden
Speaker 1: in the e CBS a clearing system, the so called
Speaker 1: target too. And then we have domestic politics where repuviation
Speaker 1: of relationships and obligations seems to be the populous factor
Speaker 1: that's winning the votes. So a government that comes in
Speaker 1: on that kind of vote can't do the right thing
Speaker 1: because it undermines its political base. Well, how do you
Speaker 1: reas on to the idea and this moves on from
Speaker 1: debt workouts, how do you respond to the idea of
Speaker 1: Asia that learned their lessons in and they have a
Speaker 1: bigger piggy bank and all that. How do you respond
Speaker 1: to that? I mean, is that do you buy the
Speaker 1: story that they're stealed for crisis? Yeah? I mean you
Speaker 1: have to respond to that story on seven different levels. Right,
Speaker 1: First of all, crises have always occurred. They're never going
Speaker 1: to stop occurring. Their part of the human condition, all right,
Speaker 1: that things get hot, they overheat, and then somebody has
Speaker 1: to pay for it. So you're never going to eliminate crisis,
Speaker 1: no matter how smart or sophisticated you are. But the
Speaker 1: real story that I think you allude to, which is
Speaker 1: the important one, which is that the growth in the world,
Speaker 1: the economic growth, the population in the world, the money
Speaker 1: in the world, the investment of the world, the future
Speaker 1: of the world is now pivoted towards Asia. And Asia
Speaker 1: is the new place where the action is for investors,
Speaker 1: both for its rewards and for its risks. Because, as
Speaker 1: we know, for us to have the investor risks can
Speaker 1: breed opportunities. Carl Weinberg, thank you so much, greatly appreciate it.
Speaker 1: This morning, Carl Weinberg with my frequency economics with a
Speaker 1: little more thoughtful time constrained, uh idea from what we
Speaker 1: see in the heat and all that, Fim Fox and
Speaker 1: Tom Keenan. Now I really enjoyed Gina smiling with us
Speaker 1: the Blueberg Economics and Bloomberg News, and she's written up
Speaker 1: a bang up story about one of the major trends.
Speaker 1: And you know, just to set this up for you,
Speaker 1: Villain Bowder turned to me one day and he said, Tom,
Speaker 1: this is secret and you can't say publicly, but we
Speaker 1: have hired Catherine Man. And I felt so wonderful to
Speaker 1: see Kathy Man out of brand Ice, who went to O. E. C. D.
Speaker 1: With one of the giant books on trade and one
Speaker 1: of the real theories of dysfunction China in the U
Speaker 1: s to to leave the shop at City Group, tell
Speaker 1: us what you learned about women as chief economists. So
Speaker 1: women are increasingly becoming private sector chief economists, which is
Speaker 1: a big deal because this his for a long time.
Speaker 1: Just spend one of those ceilings that women have a
Speaker 1: lot have had a lot of trouble cracking, and so
Speaker 1: we're seeing Kathy Man at City Group, michelmar Cusin, and
Speaker 1: Marian Stanley. Yeah, just across that, really across the globe,
Speaker 1: we're seeing these women get these great, big jobs Janet
Speaker 1: Henry at HSBC and so one of the things that's
Speaker 1: really interesting is the women who are getting elevated now
Speaker 1: they have these stellar resumes, they just have amazing histories
Speaker 1: and economics, and they're really helping to elevate women sort
Speaker 1: of behind them as well. They're sort of pulling women
Speaker 1: up the career ladder. So I think that is a
Speaker 1: positive sign for sort of gender equity in this field.
Speaker 1: There sounds like there's a negative here too. There's like
Speaker 1: a butt there's a big but, and that is that
Speaker 1: there's a pipeline issue in economics. You know. I feel like,
Speaker 1: you know, it's great to say we should hire women,
Speaker 1: we should strive for gender equity, but the reality is
Speaker 1: that there aren't as many women going into this field,
Speaker 1: and if you just don't have the folks with the qualifications,
Speaker 1: it's going to be hard to get near anything like
Speaker 1: a quality. It's it's not even a reasonable goal to
Speaker 1: ask banks or central banks to achieve. At this point,
Speaker 1: you describe in your story a conversation that has had
Speaker 1: between head hunters and one particular economists, one of if
Speaker 1: you could just describe that. So I absolutely loved this anecdote.
Speaker 1: So my my colleague Lucy Meekin in the UK talked
Speaker 1: to Janet Henry and Janet was telling her that she
Speaker 1: often gets this call from head hunters and they want
Speaker 1: to hire women, or they want to hire economists, and
Speaker 1: they say, you know, do you know anybody? Do you
Speaker 1: know anyone would be good? And she's like, well, I'm
Speaker 1: not interested, but here's a list. She'll give them a
Speaker 1: list and then they'll say, but do you know any women?
Speaker 1: And she just finds this happening again and again. And
Speaker 1: I heard the same thing when I talked to Mary Daley,
Speaker 1: who is senior vice president for research at San Francisco.
Speaker 1: Fat can we roop up the script? Ms? Smile like
Speaker 1: Folks is one of my former interns, and wandered through
Speaker 1: the door. Brilliant tell us your experienced, Gina of just
Speaker 1: what you described about economists, which is everybody's looking for
Speaker 1: bright women. You came out of what was the school.
Speaker 1: It was a small school, in the South Chapel Hill,
Speaker 1: Chapel Hill. Excuse me, it's Chapel Hill, not U n
Speaker 1: C Called Chapel Hill. Anyways, you came out and how
Speaker 1: did you get I mean the rap here is women
Speaker 1: don't take micro women don't do econometrics Bologney because you
Speaker 1: did it. So what was it like for you being
Speaker 1: in the trenches like Janet Andrey getting as smart as
Speaker 1: you are? Yeah, you know so, I actually feel like
Speaker 1: my experience is really emblematic of what we can You know. So,
Speaker 1: I came from a small town, working class family in Pennsylvania,
Speaker 1: and when I went to school, I never would have
Speaker 1: occurred to me to study economics. I didn't think that
Speaker 1: was a thing girls did. And so I study journalism
Speaker 1: and I had a couple of really good professors who
Speaker 1: really pushed me to look into economics, to look into accounting.
Speaker 1: And then Tom Cantiliano, who runs the Bloomberg's internship program.
Speaker 1: Tom Cantiliano really did me a solid and forcing me
Speaker 1: to take accounting. Um, and I think those things. And
Speaker 1: then obviously Tom, working with you when I was an intern,
Speaker 1: you sort of forced me to read a book every
Speaker 1: week about economic I would yell, just read a book
Speaker 1: and you know, like some of the great interns we've had,
Speaker 1: and I heard I heard the voice Colby Smith would
Speaker 1: have been the same thing. Yeah, And so I think
Speaker 1: I think that is consistent with what we heard and
Speaker 1: reporting this story, which is women sort of you know,
Speaker 1: often don't think of this as a field that is
Speaker 1: open to them, but then mentors get them into it
Speaker 1: and sort of pull them up the ladder. And I
Speaker 1: think that that is what we see happening now. I
Speaker 1: was gonna say, maybe they're just smarter. I don't know
Speaker 1: if that's true, but I do think there's this intes
Speaker 1: saying sort of untapped aptitude for economics um that women
Speaker 1: can bring to the table, but that maybe isn't introduced
Speaker 1: to them at early levels like high school or even
Speaker 1: early college. But it doesn't not have to do with
Speaker 1: the notion that and I've heard this, so I can't
Speaker 1: really there's no documentation where men really operate because they
Speaker 1: want to be right, they themselves want to be right,
Speaker 1: whereas women are more interested in finding the correct solution
Speaker 1: and it's not about them. So that is a really
Speaker 1: interesting observation, only in the sense that it's actually really
Speaker 1: squares with something. One of the women I was talking
Speaker 1: to set for the story. So she Tatyana Avalova at
Speaker 1: the Columbia University runs undergraduate Women in Economics and the
Speaker 1: whole point of this program is to encourage folks to
Speaker 1: study economics from from a younger age. And one thing
Speaker 1: she says is we see women going into micro going
Speaker 1: into applied and the reason is when you talk to them,
Speaker 1: they can see the outcomes immediately. They like to see
Speaker 1: that effect. Yeah, major shout out there to Susan Ah,
Speaker 1: the first woman to win the John Bates Clark Award,
Speaker 1: and we are honor Bloomberg to do the first interview
Speaker 1: with her. Then can we shout out another woman in
Speaker 1: economics who I'm sure I'm forgetting many We have to
Speaker 1: mention Julia Cornado of BMP Perry but when she was
Speaker 1: named head of North American Economics or BMP Parry. But
Speaker 1: that was a huge deal, huge deal at the French
Speaker 1: bank that would do that. Ginna, this is the most
Speaker 1: important article to day. Thank you. So what are you
Speaker 1: reading right now? I was just telling you I'm reading
Speaker 1: a Nissim telebs foo by randomness again for one of
Speaker 1: my classes at n y Uh. Do we agree she
Speaker 1: needs to get a life? Yeah? Okay, Gina smile like
Speaker 1: Bloomberg News. I'm Bloomberg Economics. Tom Keane, do you know
Speaker 1: how you can go from growing up on a farm
Speaker 1: in Iowa to running Bowing? You need to go to
Speaker 1: Iowa State University. Yeah. That helps the crack Aerospace program
Speaker 1: you do. And you know, one of the ways we're
Speaker 1: going to learn all about this is with David Rubinstein
Speaker 1: and the David Rubinstein Peer to peer Preview. It's brought
Speaker 1: to you by Wells Fargo Technology Banking. Wells Fargo helps
Speaker 1: business leaders find their moments of truth. A little outside
Speaker 1: perspective can create a lot of clarity. And here with
Speaker 1: his perspective is David Rubinstein. David, what was it like
Speaker 1: interviewing the chief executive of Bowing? Did he explain how
Speaker 1: he went from that farm to uh to be the
Speaker 1: head of Bowing? To grow up on a farm and
Speaker 1: milk the cows as you would expect in Iowa, and
Speaker 1: then he got an internship at boeing Um one summer
Speaker 1: and then ultimately got a job there when he graduated
Speaker 1: from college. He's been at the company thirty three years,
Speaker 1: but he's only fifties are years old. Amazingly, he is
Speaker 1: able to increase the value of a company quite considerably
Speaker 1: in three years. The stock is up about a hundred
Speaker 1: and forty nine since he's been the CEO. But the
Speaker 1: amazing part is not only that he's done that, but
Speaker 1: he rides about a hundred and fifty miles a week
Speaker 1: on his bike, about two hours a day. He's relentless,
Speaker 1: and uh, you know, when you interview him, you realize
Speaker 1: you might be able to overweight yourself because when you
Speaker 1: look at him, he is so thin. He's in great shape.
Speaker 1: But he says that riding a bike two hours a
Speaker 1: day clears his mind, and obviously it must work. So
Speaker 1: I begun to think maybe I should try that. Well,
Speaker 1: it maybe would help everybody when they get on those
Speaker 1: Boeing aircraft because the airlines have been cramming more and
Speaker 1: more seats into those fuselages. What does he say about
Speaker 1: the future of air traveler, We're gonna have to spend
Speaker 1: so much time in the air Well, only the people
Speaker 1: in the face of the earth have ever been on
Speaker 1: the airline. It's hard to believe because the people we
Speaker 1: know are flying all the time. But only and other
Speaker 1: people on the face of the earth have ever been
Speaker 1: on an airplane. So he's got a big market. His
Speaker 1: biggest challenge, I think is that he's got a friend
Speaker 1: of me, you might say, in China. He sells a
Speaker 1: lot to China, but ultimately China probably will build its
Speaker 1: own business in the aircraft area. Right now, it's been
Speaker 1: largely a duopoly for the last years or so, which
Speaker 1: is to say Airbus in Europe and and and Boeing
Speaker 1: in the United States. In terms of major airline aircraft.
Speaker 1: Obviously there there planes that are made made by others
Speaker 1: for smaller regional things or for um business jets, but
Speaker 1: those are the two dominant airlines aircraft companies, and I
Speaker 1: suspect China will ultimately become a major one as well. David,
Speaker 1: this guy is maybe more qualified than anyone from the Midwest.
Speaker 1: The fabric of Iowa in Iowa State, on the University
Speaker 1: of Washington and bowing to explain to the President United States,
Speaker 1: how is trade policy? Obviously affects defense in commercial Boeing,
Speaker 1: but Frank, he affects everything else as well. Did he
Speaker 1: discuss the president in our new tariff tax policy? Well,
Speaker 1: he has met with the President from time to time,
Speaker 1: and I think he's been supportive of the President's tax proposal,
Speaker 1: and Boeing was a big proponent of the tax cut. Obviously,
Speaker 1: the tariffs are a different matter. He didn't say what
Speaker 1: he said specifically to the President on a particular tariff,
Speaker 1: but there's no doubt that he doesn't think this is
Speaker 1: probably a great way to proceed. Um But he's not
Speaker 1: a person who tries to seek a lot of public
Speaker 1: attention for his views. He does operate very much in
Speaker 1: the background in some respects, but he's a very charming person.
Speaker 1: He's very um focused on philanthropy. Boeling has dramatically increased
Speaker 1: philanthropy under his leadership. But again, he's very very much
Speaker 1: on top of the job. He worked his way up
Speaker 1: through the defense part of the business, now runs everything.
Speaker 1: What's his style of Ellen Moleley Aerospace out of Kansas,
Speaker 1: Kansas State. Rather, we had a style one ford and
Speaker 1: all that. If you told me he was running a
Speaker 1: agribusiness company, I wouldn't be shocked because he does have
Speaker 1: a farmer kind of mindset in the sense that he's
Speaker 1: he's very modest, unassuming, uh not louduh and and just
Speaker 1: goes ahead and does what he thinks is right. And
Speaker 1: uh salute solitude is something that's important to my guess
Speaker 1: because he rides a bike so much. UM, I just
Speaker 1: don't know how he can do it, but he obviously does.
Speaker 1: A stock has done extremely well in the company is
Speaker 1: not extremely well, David. These are delicate matters, but on
Speaker 1: this historic day, we must ask you first of all
Speaker 1: about if you, Carlisle, have any relationships with Tesla. We
Speaker 1: don't want to step on those. But it's an absolutely
Speaker 1: original morning, David, in my career to see the headlines
Speaker 1: come across, I am familiar with it, but you do
Speaker 1: not have a relationship with the company. I saw it.
Speaker 1: I think it would be an incredible buy out. At
Speaker 1: seventy billion dollars or so, that would be the largest
Speaker 1: buyout ever done pure bio. But we'll see what happens.
Speaker 1: We'll see what happens. But there has to be a
Speaker 1: relationship with owning principal entrepreneur if you will, and his board.
Speaker 1: How would you advise the board and a proper action
Speaker 1: given all the transactions across the David Rubinstein career. While
Speaker 1: the board obviously has to retain UM an independent um
Speaker 1: set of advisors, because if the CEO of a publicly
Speaker 1: traded company is leading a bio, you have some potential conflicts.
Speaker 1: So you'd have to make certain that there's no other
Speaker 1: offer that would come along from somebody other than the CEO,
Speaker 1: and the CEO is going to lead it. The board
Speaker 1: would have to make certain that everything is done fairly
Speaker 1: so that it's not to the advantage just of the CEO.
Speaker 1: David Rubinstein as someone that has an extensive list of
Speaker 1: experience with companies going public, going private, and the operations
Speaker 1: of aarious companies. If one of your portfolio companies c
Speaker 1: e O s who maybe had a fifth of a company,
Speaker 1: came out with a Twitter tweet about a potential UH
Speaker 1: buy out at a specific price during market hours, what
Speaker 1: would be your first call? It would be unusual to
Speaker 1: think that that would happen. I haven't had that experience.
Speaker 1: Carlisle's had hundreds of companies have owned if we've never
Speaker 1: seen something like that, But you know, Mr Musk is
Speaker 1: an unusual person. He's done some things that people didn't
Speaker 1: think could be done before, including creating Tesla for nothing
Speaker 1: and right. But what would you do well? I would
Speaker 1: handle it in a way that would be private. I
Speaker 1: probably wouldn't publicly say what I would do, fair enough,
Speaker 1: David Rubinstein, thank you so much for those Thank you, Tesla,
Speaker 1: and of course David Rubinstein peered up here tonight at
Speaker 1: five pm and ten pm at Bloomberg Radio. Thanks for
Speaker 1: listening to the Bloomberg Surveillance podcast. Subscribe and listen to
Speaker 1: interviews on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer.
Speaker 1: I'm on Twitter at Tom Keene before the podcast. You
Speaker 1: can always catch us worldwide. I'm Bloomberg Radio