Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Daily
Speaker 1: 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 When
Speaker 1: we start strong with Ian Bremer of Eurasia Group. His
Speaker 1: TOMP Risk just released always timely, and he releases it
Speaker 1: this year with America front and center, and of course
Speaker 1: part of that is our coverage of the president. And
Speaker 1: then we we'll hear from the Senate impeachment trial. That
Speaker 1: will be twelve pm New York time, tenderly scheduled for
Speaker 1: their We're thrilled that Dr Bremmer begins our Tuesday here
Speaker 1: in Dabba's Ian. Wonderful to have you here today. Why
Speaker 1: did you make the US a top risk for this year? Well, size,
Speaker 1: the market's massive, and the precedented nature of the election
Speaker 1: coming up, where half of the population is going to
Speaker 1: think that it is rigged, is going to think it's delegitimized.
Speaker 1: I mean that is important. You're gonna have, you know,
Speaker 1: a period of time, whether it's weeks and months when
Speaker 1: we've had the election, but all likelihood, we haven't agreed
Speaker 1: on who the next president is. I haven't had that
Speaker 1: since Bush Gore and Bush Core. At least both sides
Speaker 1: were prepared to see what the Supreme Court was gonna
Speaker 1: rule that this is more unprecedented. People are prepared to
Speaker 1: Who was the president going to speak to here roughly
Speaker 1: thirty thirty five minutes. Who's he talking to as he
Speaker 1: comes to Davos? Oh no, he Look, he loves it
Speaker 1: here right when he Remember he was here three years
Speaker 1: ago and everyone thought it was going to be a
Speaker 1: disaster and he had a great time and the c
Speaker 1: e O s were extremely nice to him. And the
Speaker 1: lunch remember the lunch were absolutely And I mean, so
Speaker 1: did you go to the ch I did it, But
Speaker 1: actually I remember, like you know, billionaires trying to fight
Speaker 1: to go and listen to the president. Absolutely. Look, I
Speaker 1: mean you gotta understand, first of all, the delegates here
Speaker 1: may not like Trump. They like his policies, um, they
Speaker 1: like the regulatory rollback, they like his cabinet, um, they
Speaker 1: like his tax policy. I did informal poll last night
Speaker 1: about delegates on balance. I would say they think he's
Speaker 1: gonna win a second term. And there was a zero
Speaker 1: panic about the prospect that might happen. So, I mean,
Speaker 1: you can have Greta here, and you can have a
Speaker 1: bunch of people talking about climate sustainability. But the reality
Speaker 1: is that Trump doesn't drive people crazy at Davos the
Speaker 1: way he does in the United States. And people should
Speaker 1: hear that, they should know what the power brokers in
Speaker 1: the room in the closed door actually thinking. And in
Speaker 1: President Trump does his you know, the inaugural address for
Speaker 1: the World Economic from on the day where his impeachment
Speaker 1: trial starts. Is he going to be fighting and he's
Speaker 1: he going to say, look, Europeans, you're not doing enough.
Speaker 1: I'm going to post Harroffs because he needs an adversary
Speaker 1: to distract. Or is he going to try and keep
Speaker 1: everyone on side. I'd be very surprised, Um, if he's
Speaker 1: adversarial with this group. I expect this is gonna be
Speaker 1: Trump saying victory lap I'm the greatest ever. My economy
Speaker 1: is doing well, my markets are taking off. Look how
Speaker 1: much money I'm making you guys. I got rid of Sulimani,
Speaker 1: I'm killing ice in al Quaeda. He may go off
Speaker 1: script and talk about how bad and how unfair the
Speaker 1: impeachment is but this is going to be a triumphal
Speaker 1: list unilateralist president. Do people in the state's care? So
Speaker 1: does the voter care about what President Trump says in donals?
Speaker 1: I mean they care for a day, sure, and then
Speaker 1: they move on to the next thing. I mean, did
Speaker 1: we care when neuron crisis hit? We did? You're not
Speaker 1: asking me about it now. I mean, these these cycles
Speaker 1: are incredibly short, but it's interesting to see how the
Speaker 1: global markets, in the global investor community actually orient. You've
Speaker 1: got Steve Schwartzman coming up. You know how close he's
Speaker 1: been to Trump over the course of the last couple
Speaker 1: of years. I mean generally speaking as a group that
Speaker 1: wants access, they pay for access, and please when that happened,
Speaker 1: And we'll talk to Steven Schwartzman about that, about the
Speaker 1: fundraisers and all his support of the president, which just
Speaker 1: been somewhat controversial. Say I, and you've been studying this
Speaker 1: for decades. How alone is America right now because of
Speaker 1: this president and this president's policies? Is it an America
Speaker 1: or not only a Davos, but just generally worldwide in
Speaker 1: the Eurasian world? How alone are we? It's more alone
Speaker 1: because of this president. Certainly he doesn't care as much
Speaker 1: for traditional alliances or multilateral institutions the Americans have created.
Speaker 1: But let's be clear, the United States is in decline
Speaker 1: visa East China. The Chinese are spending a lot of
Speaker 1: money internet China on a per capita basis, and they've
Speaker 1: got what is one, They've got a major health scare
Speaker 1: going on in China. Worldly it is very clear that
Speaker 1: Belton Road is a bigger event than Dabos. It attracts
Speaker 1: more heads of state, it dispenses more cash. But America's
Speaker 1: relationship visa these American allies, the US is not only
Speaker 1: not in decline, it's increasing in power in the role
Speaker 1: of the dollar in military expenditure and its strength in
Speaker 1: production of oil and gas and food. And and if
Speaker 1: Trump's not president next year, that's still gonna be true.
Speaker 1: And allies don't want to deal with that reality. But
Speaker 1: it is the case. And He's figured out what kind
Speaker 1: of capitalism China will have in five ten years from now. Uh.
Speaker 1: The fact that the Chinese are not in any way
Speaker 1: aligning with or integrating with Western style capitalism is something
Speaker 1: that these CEOs are having a hard time coming to terms.
Speaker 1: With This is the fiftieth year anniversary of Davos, and
Speaker 1: for fifty years the message that has come from this
Speaker 1: platform has been winning globally globalization and free market capitalism.
Speaker 1: It's not anymore, and the reason for that is because
Speaker 1: the Chinese are not aligned with that. What are we
Speaker 1: peak globalization? So it's just going to be declined from now.
Speaker 1: It's not the end of globalization, but we're peak globalization.
Speaker 1: I mean the decision of the United States and the
Speaker 1: Chinese to decouple from each other in terms of technology.
Speaker 1: It's the single biggest step away from globalization we've seen
Speaker 1: in the fifty years since Davos has been created. Absolutely,
Speaker 1: the Edleman Trust Barometer on Richard Edelman's schedule to join us,
Speaker 1: I can't say enough about this important document, the Edelman
Speaker 1: Trust Barometer. I was stunned at the separateness on capitalism
Speaker 1: of general society and the elites. Does that surprise you
Speaker 1: in what's the solution for the anointed up this happy valley?
Speaker 1: To reattach to the rest of American frankly, to the
Speaker 1: rest of the developed economies. It's hard to claim that
Speaker 1: the average American as capitalists when the average American doesn't
Speaker 1: have capital I mean, certainly that's the way I was raised, right,
Speaker 1: I mean, my my mom said, they're not taking care
Speaker 1: of you. Only they're all gonna lie and they being
Speaker 1: governed a single sense for Richard Edelman, where he says
Speaker 1: CEOs have to become much more activist about explaining how
Speaker 1: everybody gets inclusive. Do we need Jamie Diamond, Michael Corbett,
Speaker 1: and the others to be more assertive about distributing the
Speaker 1: benefits of capitalism to American No, no, we don't. We
Speaker 1: don't need them to explain. We need the problem to
Speaker 1: start being resolved. We need less inequality in the United States.
Speaker 1: We need people that are being left behind and feel
Speaker 1: the system is riged to feel less that way. And
Speaker 1: there's nothing that CEOs can say. There is no document
Speaker 1: they can sign, there is no advertisement they can take
Speaker 1: out in the paper that is going to change that
Speaker 1: reality if the reality doesn't change. And let's keep in mind,
Speaker 1: not only is global inequality and American inequality increased over
Speaker 1: the last several years, but also now we have an
Speaker 1: economy that's starting to soften globally. The i m F
Speaker 1: just yesterday exactly. So, I mean, one has to think
Speaker 1: that in that environment, ceo is are gonna be more
Speaker 1: laser like focused on returns irrespective of what they're saying.
Speaker 1: Agree with that. I know, I know that a loss
Speaker 1: can happen from now until November in the U S election.
Speaker 1: But the popularity of President Trump, I think is plateauing
Speaker 1: at it's not there it is that Is that enough
Speaker 1: to to win? I mean it's first of all, depends
Speaker 1: on who the Democratic nominee is That Bernie Sanders worth
Speaker 1: the nominee. I don't think that's gonna happen. I think
Speaker 1: it's enough to win. UM, if it's you know, Joe Biden,
Speaker 1: it it might not be. But let's keep in mind
Speaker 1: this is an unprecedented election, not only because it's about
Speaker 1: Trump and turnout is likely to be very high, also
Speaker 1: because there's massive amounts of money that Bloomberg is planning
Speaker 1: on spending irrespective of who the Democratic nominee is. Apt
Speaker 1: to say that um, And because the role that Trump
Speaker 1: is likely to play in terms of his willingness to
Speaker 1: abuse power when impeachment has been broken, is also going
Speaker 1: to be new. So it's hard to make that call.
Speaker 1: One more questionnaire with Dr Breimer before we move on.
Speaker 1: Through this important Now in the president Michael Bloomberg is
Speaker 1: for a president. We're fighting over who's going to do
Speaker 1: the disclaimer. Well, I want to do it. No, I
Speaker 1: could do it. Michael Bloomberg is running for president. There's
Speaker 1: a undertime we should be. He's a founder of Bloomberg
Speaker 1: LP and also uh this TV and radio operation as well. Bremer,
Speaker 1: this is so important. You say, CEOs cannot affect an
Speaker 1: attachment to the American public with words and with lip service.
Speaker 1: What is the prescriptive policy that is going to reattach
Speaker 1: America to capitalism. What's the to do list for Washington
Speaker 1: to get this done? Well, I mean I would say
Speaker 1: that almost every American CEO I know tells me in
Speaker 1: the next five ten years that they can make more
Speaker 1: money with fewer people. Um, that reality somehow is going
Speaker 1: to need to be changed by coming up with jobs
Speaker 1: for more people. They're going to have to invest much
Speaker 1: more in training. They're going to have to hire more,
Speaker 1: not less. They're gonna have to raise wages for the
Speaker 1: working in the middle class. They have to do that
Speaker 1: as a reality when the government is not stepping in,
Speaker 1: and it doesn't again, it doesn't really matter what they say,
Speaker 1: and they're they're gonna be fighting upstream member the fourth
Speaker 1: Industrial Revolution that has come up with here by claud
Speaker 1: Schwab a few years ago. But for the average worker
Speaker 1: that says capitalism doesn't work, it's not fourth Industrial Revolution,
Speaker 1: it's a post industrial revolution because they are not part
Speaker 1: of it. Ian Bremer, thank you so much for starting
Speaker 1: us off in this important hour. Here's with Eraser group.
Speaker 1: I can't say enough about their top ross. Dr Bremer
Speaker 1: here where this all this week as well? Steve Schwartzman
Speaker 1: of Blackstone, who was that speech too? Was it for
Speaker 1: the U. S Citizens back home so they get him
Speaker 1: reelected or was it for the participants of devils? I
Speaker 1: think it was for several different constituencies. I think here
Speaker 1: here's somebody who is having the impeachment process start with
Speaker 1: the trial today. And I think this was a speech
Speaker 1: to basically say, I think we need some perspective, uh,
Speaker 1: and let's look at what's happened under this administration. And
Speaker 1: I think that's not just for domestic consumption. I think
Speaker 1: it's it's it's meant to be heard in a broader context.
Speaker 1: Could the US China Phase one deal have been signed
Speaker 1: twelve months ago. Um, it would have been if it
Speaker 1: could have been, but that it couldn't have been done. Uh.
Speaker 1: And you know, part of the issue on the trade
Speaker 1: agreement Fran saying is is that you know, you need
Speaker 1: two countries, and each country has its own politics and
Speaker 1: and China is not a monolithic country in that sense.
Speaker 1: They have their hardliners, they have their reformers, and and
Speaker 1: what's happened over the last it's actually been three years
Speaker 1: that the the US and China have been discussing changes
Speaker 1: uh in trade. That it takes a while, uh for
Speaker 1: a country that's got a very particular system like China
Speaker 1: to basically make a decision to start changing the system
Speaker 1: that's been very successful for them. So so I think
Speaker 1: that the fact that a phase one deal was done
Speaker 1: meant that both parts in China have come together, along
Speaker 1: with the U. S side itself had ambitions uh that
Speaker 1: ranged from from exceptionally comprehensive uh to not so much
Speaker 1: so uh. And so everybody met in the middle. C
Speaker 1: Shrunkesman with us with Blackstone, our chief executive officer. And
Speaker 1: I might point out author the Belvedere Hotel was the
Speaker 1: ancient hotel here. It's where you came years ago, if
Speaker 1: you were to have for the tuperculosis treatment and all,
Speaker 1: there's a wonderful photograph of Robert Louis Stevenson in the
Speaker 1: background of that. And to get to the rub the
Speaker 1: Magic mount the Thomas Man, the Magic Mountain, and to
Speaker 1: get to uh, those photographs of Robert Louis Stevenson, you've
Speaker 1: got to walk through the lobby and the bookstore. Notice
Speaker 1: the Steven Schwartzman bookstore is well, how are book sales
Speaker 1: here in Davos. Well, you know, actually, uh, we're giving
Speaker 1: them away. That sounds like private equity is just your
Speaker 1: idea over here. You let him give away books. There
Speaker 1: goes a profit margin, is what they wouldn't let us
Speaker 1: sell them, And I wanted people to read them. So
Speaker 1: it's interesting Tom. This morning I always said something. At
Speaker 1: seven o'clock, four or five people walked up, said could
Speaker 1: you please sign my book? Uh, you know, I just
Speaker 1: picked it up. I'm excited to read it. Just Tim
Speaker 1: Cooker's Bezos read your book. If you're run into Tim
Speaker 1: Cooker Jeff Bezos about the Schwartzman theme, Well, it's interesting. Um.
Speaker 1: I saw Jeff before the book was published, and I said,
Speaker 1: Jeff here's what I'm doing, here's the theme. Could you
Speaker 1: be helpful with Amazon? And he said, sure, send it
Speaker 1: to me h and we'll take care of it. This
Speaker 1: is so important, Steven, I want to make this point.
Speaker 1: I went down to the offices of Jeff wins LinkedIn
Speaker 1: the other day at the Empire State Building and you're
Speaker 1: stuck in traffic and you look over and you're right
Speaker 1: as you go down Fifth Avenue is a Schwartzman Library,
Speaker 1: the New York Public Library. You, more than anybody in
Speaker 1: America know the new technology of cook in Bezos versus
Speaker 1: the old technology of what you've donated millions of dollars to.
Speaker 1: What is what is the focus of technology that you
Speaker 1: see right now? Is it a benefit to Americans or
Speaker 1: all of the tension of the selection and all. Is
Speaker 1: it because they're technological halves and there are too many
Speaker 1: technological have nots. Well, we've got to get everybody to
Speaker 1: be a technological have. Technologies is benefiting American enormous number
Speaker 1: of ways. For example, you know, you take your smartphone.
Speaker 1: You know YouTube would be lost without that, as would I,
Speaker 1: uh and uh we're also lost with it. But that's
Speaker 1: the whole of your state you want to go back.
Speaker 1: There's that track photo of you running around doing a
Speaker 1: three minute mile a few years ago. I want to
Speaker 1: go back long agoing far away. You supported this president
Speaker 1: because the Republicans had the vision with Democrats to build
Speaker 1: the interstate highway system in the fifties. Can't you help
Speaker 1: the president support an interstate highway of technology in America
Speaker 1: where we take the whole country and get all this fixed.
Speaker 1: I think that they're is enormous need and it's bipartisan, uh,
Speaker 1: Tom that you know, Chuck Schumer, for example, along with
Speaker 1: many people in Congress, want to make a major step forward,
Speaker 1: as does the administration UM in terms of providing money
Speaker 1: for AI UH and UH what made me even more
Speaker 1: consequential quantum UH in the future. UH. And and you know,
Speaker 1: the universities that are doing this advanced research, the companies
Speaker 1: who are who are sort of the American flagship carriers
Speaker 1: UH in technology all want more research funds UH to
Speaker 1: increase competitiveness. Now, this really will end up benefiting regular people,
Speaker 1: whether it's with diagnoses of illnesses with much more reliability, UH,
Speaker 1: development of drugs which could end up being half the
Speaker 1: cost as a result of it. UH. Huge breakthroughs in
Speaker 1: education where you'll be able to to instruct students of
Speaker 1: all different types of backgrounds. So so technology uh has
Speaker 1: gotten some enormous benefits. What's the biggest unknown for the markets?
Speaker 1: Is it the U S election? Is it global growth
Speaker 1: or is it geopolitics? Well, it's not global growth. I
Speaker 1: think global growth will continue. The biggest risk uh. You know,
Speaker 1: for for markets are are two types of things. One
Speaker 1: is US domestic politics and the second is the black
Speaker 1: swan effects that can happen. I mean, we just had
Speaker 1: an incident for example, Uh in in Iraq, I was
Speaker 1: watching television. Almost everyone who's declaring World War three starting.
Speaker 1: They all happened to be wrong. But if they were right, uh,
Speaker 1: and the straits of hormones were closed, and we ended
Speaker 1: up uh. You know, with a huge dislocation. You could
Speaker 1: get thrown accidentally into a slow growth to recession. But
Speaker 1: it's quite amazing how the market quickly discounted once there
Speaker 1: there was no immediate threat of war. They kind of
Speaker 1: moved on. We have asset prises really priced to perfection.
Speaker 1: So how do the two kind of match up? Well,
Speaker 1: usually perfection doesn't last. Uh. And you know this has
Speaker 1: been an amazing run. Usually you expect some type of adjustment. Uh.
Speaker 1: But but if if, if, if we don't have a
Speaker 1: really um discontinuest event with US politics and we avoid
Speaker 1: um the kinds of major international type of of risks,
Speaker 1: geopolitical risks. I think we'll go on with variability up
Speaker 1: and down over today's levels. Do you think out what
Speaker 1: time for one more question? Because I know you're going
Speaker 1: off to go skiing on this perfect day, and I'm
Speaker 1: going to ask you the same question I would ask
Speaker 1: Mr Rubinstein and the others. Richard Edelman's come out with
Speaker 1: a study that that would be the president leading right now.
Speaker 1: Those sirens you here in the background. Richard Edelman's come
Speaker 1: out with a study of how capitalism is removed from
Speaker 1: so many people in America. Is it time for private equity,
Speaker 1: Time for private equity to change its text treatment that's
Speaker 1: been in place over the years. Like I leave that
Speaker 1: one tom to uh uh to to the political people, uh,
Speaker 1: every one of whom has their own unique solution uh
Speaker 1: for the ills of the world. What I'd say is
Speaker 1: part of the Edelman's study also had to do with
Speaker 1: overall trust in institutions, And I think there's a real
Speaker 1: need to address what's going wrong with our society where
Speaker 1: so many people question almost every every institution in society.
Speaker 1: How much pressure are you feeling? One final question, because
Speaker 1: we couldn't hear Tom's questions, it was the last question.
Speaker 1: It doesn't count. How much pressure are you feeling from
Speaker 1: investors to put cash to use? We don't have that
Speaker 1: kind of pressure. They don't They don't want to go
Speaker 1: in now. We've We've invested a lot of money over
Speaker 1: the years. When when when prices are high, you're trying
Speaker 1: and invest less um, when they're low, you try to
Speaker 1: invest more. We we sell a lot of things. When
Speaker 1: prices are high, we try and find things. It's harder.
Speaker 1: So I got to make some sty Are you buying
Speaker 1: or selling right now? I mean the market watch we
Speaker 1: got we gotta go. The ski lift is waiting for
Speaker 1: Mr Schwartzman, But quickly, are you buying or selling? We
Speaker 1: do both, Tom, we do Bothett have the stage. I'm
Speaker 1: unplugged him and throwing a money right now. What is
Speaker 1: the an economist on the one hand and on the
Speaker 1: other hand, ste thank you so much. We'll go sell
Speaker 1: a book with Blackstone. This morning City Group at the
Speaker 1: most original path is arguably our most international bank. We
Speaker 1: begin our banking coverage here, John and I of Michael Corbett.
Speaker 1: He's the chief executive officer of City Group, and we
Speaker 1: need a most timely update. Now give me an international
Speaker 1: view from our most international bank. What is the state
Speaker 1: of City Group globally? Stated? City Group, Tom, is that
Speaker 1: you know, we're coming off of a strong year and
Speaker 1: a strong close to the year. And if you look
Speaker 1: at both at a product level, at a geography level,
Speaker 1: solid performance across our consumer and institutional businesses. And as
Speaker 1: you go to Latin America, as you go to Europe, Asia,
Speaker 1: around the globe, strong uniform performance. The happy talk of
Speaker 1: Davos is best practices. What is the worst practice you're
Speaker 1: trying to avoid? Now as you look back at the
Speaker 1: heritage of OH seven from a Davos perspective or from
Speaker 1: a city from a City Group perspective, what's the worst
Speaker 1: practice you're trying to avoid each and every day is
Speaker 1: to we You know, we don't come to work. We
Speaker 1: can't be No one can be everything to everybody. So
Speaker 1: the financial supermarket mentality, I think that permeated the first
Speaker 1: part of the two thousand to two thousand seven era,
Speaker 1: and to come to work to do the things that
Speaker 1: we can do best. And as you say, we are
Speaker 1: the most international, certainly of the U S. And we're
Speaker 1: in fact probably the most international of really any list
Speaker 1: of banks in the world. And as we think about
Speaker 1: the fact that today, around the things the President discussed,
Speaker 1: the trade deals and things that have gone on, our
Speaker 1: clients need just more than every well, let's talk about that.
Speaker 1: You hear it from the President this morning through the afternoon, optimism,
Speaker 1: I hear it from you Upbate optimism. I don't feel
Speaker 1: that walking around the wholes of this particular event at
Speaker 1: the moment, there is some real pessimism that despite the
Speaker 1: fact unemployments of multi decade lowest, despite the fact we
Speaker 1: have the longest recovery on record, why not, what are
Speaker 1: we missing here? Well, if we were here, and we
Speaker 1: were here a year ago, there was pessimists of them.
Speaker 1: If you remember the way that ended. I talked about
Speaker 1: a real fundamental disconnect between what the consumers behaviors were
Speaker 1: saying and what the markets were saying. The markets as
Speaker 1: we were here, we're giving pretty strong shigns of forthcoming downturn,
Speaker 1: and in fact we didn't see it. We're here a
Speaker 1: year later, UM, the smps up, city stocks up, the
Speaker 1: markets had pretty broad based good performance, and by the way,
Speaker 1: the consumers still in good shape. The consumer has been
Speaker 1: the backbone of this recovery. He's standing up for capitalism
Speaker 1: this week. I think, I think all the firms, do
Speaker 1: you get that sense? I don't get that sense at
Speaker 1: the moment. I get a sense that things are changing,
Speaker 1: that the guardians of the States has quite realized they
Speaker 1: can't protect it anymore and they need to change before
Speaker 1: someone changes them. Do you not get that feeling? Mike, Well,
Speaker 1: you know again, I think we get we were We
Speaker 1: get in this nuance between capitalism and what's responsible. And
Speaker 1: I think today what you're hearing from companies around stakeholders
Speaker 1: right is something I think in many cases that's been
Speaker 1: embraced for years. It just wasn't necessarily talked about. You
Speaker 1: think in today's age is coming to work as a company, UM,
Speaker 1: one of your stakeholders, your employees. If your employees don't
Speaker 1: feel good about who you are and what you do,
Speaker 1: you're not going to keep him. If your customers and
Speaker 1: clients don't feel good about what you do, you're not
Speaker 1: gonna come, Michael. I want to go back to a
Speaker 1: Harvard discussion your folks, and I've been told Corbette will
Speaker 1: walk off the set if I bring up Harvard Yale football,
Speaker 1: which is beyond ugly, uh this past November. I want
Speaker 1: to go back to Michael Porter one on one. I'm
Speaker 1: sure you've been in many classrooms of the wonderful Michael
Speaker 1: Porter over the years, and that is too many Americans
Speaker 1: feel a barrier to entry to prosperity. They feel a
Speaker 1: barrier of entry to society. People are looking. Richard Edelman
Speaker 1: clearly sees that people are looking to elites and are
Speaker 1: too big to fail banks to assist those people to
Speaker 1: get through those barriers. How do you affect that, Well,
Speaker 1: it's a real problem and in there when you think
Speaker 1: of the fact that we're eleven twelve years into quantitative easing,
Speaker 1: quantitative easing adds to queie is for the elite. Ben
Speaker 1: Bernanke said, we had to save the banks. We saved
Speaker 1: the banks. You were advantaged by that. Every bank was different.
Speaker 1: I get that. What do we do for the people
Speaker 1: out there that there's at City Group retail they're worried
Speaker 1: about fees and that what do we do to help
Speaker 1: them get to within society Now, well, I think all
Speaker 1: the pieces that not just City but the industry is
Speaker 1: working on in terms of inclusive finance. Right if you
Speaker 1: look at the programs were out there, we're getting ready
Speaker 1: to launch a program probably in the springtime with Google
Speaker 1: goal in terms of being able to bring more people
Speaker 1: in the digitization of banking, compression, removal of fees, frictions
Speaker 1: in people's lives. And by the way, it's the mindset
Speaker 1: in the mantra of being able to create for people
Speaker 1: best in life experiences. And that's not best in banking,
Speaker 1: but that's how do we create that best in life
Speaker 1: experience and bring more people in to have the access.
Speaker 1: And if you look at what's going on at City,
Speaker 1: not just in the US, but around the world, we're
Speaker 1: bringing people, were bringing business, We're bringing small business, we're
Speaker 1: bringing women, were bringing all of those things to bear
Speaker 1: in terms of inclusive finance. I'm gonna ask the question
Speaker 1: that I know really winds up. CEO is on Wall
Speaker 1: Street at the moment, so forgive me for doing it.
Speaker 1: Eighteen billion that's how much was saved by the six
Speaker 1: biggest banks on Wall Street for last year. Because of
Speaker 1: the tax cut, and people keep passing the same question.
Speaker 1: And I'm not sure that big banks on Wall Street
Speaker 1: have done a great job of telling us where the
Speaker 1: money's gone. Where's it gone? Well, one is we are
Speaker 1: a taxpayer, in a significant taxpayer off of our twenty
Speaker 1: billion dollars of net income that we earned in it's
Speaker 1: gone into our infrastructure, it's gone into technology, it's gone
Speaker 1: into people, it's gone into lending. Yep, it's gone into investing.
Speaker 1: We just announced a initiative where we're going to be
Speaker 1: actually investing around clean and green technology. Uh. And you know,
Speaker 1: we just announced launched a hundred and fifty million dollar
Speaker 1: program over the next few years in terms of putting
Speaker 1: some of those money's back returns to shareholders. Last year,
Speaker 1: what were the point three billion. I'm not sitting here
Speaker 1: a post to buy backs. That's not my position. It's
Speaker 1: not my job to have a position. I'm just wondering
Speaker 1: how we reconcile some of the things we hear at
Speaker 1: an event like this from CEOs on Wall Street about
Speaker 1: moving away from shareholder primacy. When we see record profits
Speaker 1: and monster returns to shareholders year after year, how do
Speaker 1: we reconcile those two things in the years to come.
Speaker 1: One as I think the holders accountable for what we do.
Speaker 1: And in there, yes, we did return twenty two billion
Speaker 1: dollars to shareholders, but we also grew our loan at
Speaker 1: four LEO at a pace faster than Global GDP, and
Speaker 1: I think we did it systemically responsible. You know, if
Speaker 1: you were to take that twenty two billion dollars and
Speaker 1: be forced to reinvest it. Tommy asked the question about
Speaker 1: what you do different. You've got to be you've got
Speaker 1: to be scaled to serve your market. And if you're
Speaker 1: putting all those moneys back in, I would argue that
Speaker 1: it's it's tough to keep your responsibility in that. We
Speaker 1: welcome all over your here for the meetings of the
Speaker 1: World Economic Forum. I'm Bloomberg Radio and I'm Bloomberg Television
Speaker 1: or with Michael Corbett. He's the chief executive officer of
Speaker 1: City Group. Within City Group, and you mentioned earlier technology
Speaker 1: you just brought in dragged in, I should say, a
Speaker 1: new head of retail. What a challenge five and ten
Speaker 1: years forward is you and every other bank, regional banks,
Speaker 1: the small banks survived the technological demands of retail. What's
Speaker 1: the Corbette strategy for retail. What are the marching orders
Speaker 1: to your new guy running retail banking. Well, we've got
Speaker 1: a new gal running retail, excuse me, And the marching
Speaker 1: orders are to make sure that we are pushing ourselves
Speaker 1: to be offering tom that best in life experience. It's
Speaker 1: not about being best in bank, but if you can
Speaker 1: match the ride hailing app, the retail app, whatever is
Speaker 1: exactly take frictions out of people's lives and reimagine what
Speaker 1: banking can bes. Frictions mean job cuts, No, not at all.
Speaker 1: What are you gonna do with all those bodies and
Speaker 1: retraditional retail banking? Um One is that the pace of
Speaker 1: change is probably slower than people think, meaning that we
Speaker 1: cover a continuum of people and we are today running
Speaker 1: an analog any digital bank. That will change over time.
Speaker 1: But um we have a large cohort of people that
Speaker 1: actually want there, I want it now mentality in terms
Speaker 1: of their digital banking on their app. They want to
Speaker 1: come in our branch. They want to speak to people,
Speaker 1: and when you can provide that and segment that in
Speaker 1: the right way, it's very powerful. So it's not necessarily
Speaker 1: using less people, it's being smarter about how and where
Speaker 1: and the ways that you use. How proud would you
Speaker 1: be to hand over the reins to Jane Fraser and
Speaker 1: be the first bank on wall straight to break the
Speaker 1: glass the link? How proud would you be to do that?
Speaker 1: Of course I'd be very proud. But you know two
Speaker 1: things is that you know, One is that that decision
Speaker 1: is not mine. It's the boards, my job and my
Speaker 1: responsibilities to make sure that we're preparing people. And you know,
Speaker 1: you know, Jane has had a phenomenal career with us,
Speaker 1: and you know we continue that that role of making
Speaker 1: sure that if and when the time comes, she's ready
Speaker 1: and and it might be in your hands. Mike, you
Speaker 1: felt good now the five years So we hear from
Speaker 1: Jamie Diamond all the time it's a five year rolling Well,
Speaker 1: isn't it? Just keep just keep going? Mind is mine?
Speaker 1: Is is that I'm a I'm a believer in term
Speaker 1: limits and I did every every horse has its course?
Speaker 1: Is the term limit? Um? What do you think? Again?
Speaker 1: I think that's dictated by the environment and the strengths
Speaker 1: and skill sets of the person in the job and
Speaker 1: the applicability. And at some point my course will have
Speaker 1: run and then it's somebody else's turned to grab the
Speaker 1: Briton and go. This day, we had President Trump speaking.
Speaker 1: You and I did a panel two or three years
Speaker 1: ago here. It was hugely invigorating about global banking and
Speaker 1: global finance. Do you need a Trumpian unilateral America or
Speaker 1: do you need to get back to a more multilateral
Speaker 1: global system? Does that assist you for which way do
Speaker 1: you cut on that? Well, one is I would I
Speaker 1: wouldn't necessarily describe it as Trumpian, But you know, any
Speaker 1: time that we can move towards across the aisle bipartisanship
Speaker 1: to get things done, I think that's healthy because when
Speaker 1: you think of the business community, the business community just
Speaker 1: doesn't want lower rates like certainty, likes clarity, and I
Speaker 1: think the more divide you have, not just in the
Speaker 1: US but around the world and political parties, the more
Speaker 1: uncertainty you have. Just got an email in from New York, John,
Speaker 1: I have to apologize for the brain freeze on Miss Fraser.
Speaker 1: It's sitting room that was Can I explain why that occurred?
Speaker 1: Folks had a little bit to do with the sequence
Speaker 1: of one Am and the piano party, you know, but
Speaker 1: it looks I got a text from Tom Kine last
Speaker 1: night at about one I am I think just said
Speaker 1: Ballavadere and I woke up and I replied, one of
Speaker 1: us is in bed. I've done the reading. You're gonna
Speaker 1: get an early night. No, no, it's exciting. Thank you.
Speaker 1: If you say Tom on the streets, please look after
Speaker 1: it might go about that. And I'm to show you
Speaker 1: know from the Harvard game it was a spectacular fifty
Speaker 1: eight minutes and thirty Was it wonderful? Truly one of
Speaker 1: the greatest games for those of you globally Harvard and
Speaker 1: Yale in November? Was it everything sport needs to be
Speaker 1: about in America? Michael, thank you, Thank you very much.
Speaker 1: As always talking about commercial bankers and central bankers, there's
Speaker 1: other people in investment. Why don't you bring in the
Speaker 1: steam guest any place to say, we can bring in
Speaker 1: Marty Flanagan, the investo. See mighty great to see you.
Speaker 1: I want to read out a quote from you at
Speaker 1: the end of last year because it really jumped out
Speaker 1: to me. We're going through a once in a generation change.
Speaker 1: Every single client we deal with around the world is
Speaker 1: using fewer and fewer money managers. What does that mean
Speaker 1: to you, Well, yeah, I've been in the industry. There's
Speaker 1: been a discussion that is going to consolidate since that period.
Speaker 1: It just hasn't until right now. And I'd say this
Speaker 1: is really a post crisis phenomena driving it. Just the
Speaker 1: cost for money managers through technology regulation is much higher.
Speaker 1: But also clients are demanding much more from their money managers.
Speaker 1: They want a broad range investment, keep it at least,
Speaker 1: but also more, they want thought leadership, they want support
Speaker 1: in anything that they might be doing, and ultimates. A
Speaker 1: good news story for those managers that can deliver that,
Speaker 1: but it's a great news story for the clients. They
Speaker 1: get more, they'll get economies to scale a lot of it.
Speaker 1: It's a win win story. It's been tough for you.
Speaker 1: Last year was tough, stock cut in half, bleeding money,
Speaker 1: a u M sliding. What can you do this year
Speaker 1: to start to stabilize things. Yeah, so we're on that
Speaker 1: track right now. It's early into the year, but we're
Speaker 1: looking forward to a very good year right now. Much
Speaker 1: of that is we talked a minute ago. We went
Speaker 1: through the third largest combination in the industry, and typically
Speaker 1: what happens is that when you're going through that combination
Speaker 1: the the clients. Until the combination is done, they step
Speaker 1: back so mighty for our audience, just so they can
Speaker 1: follow if they're not familiar with the story. Integrated Oppenheimer
Speaker 1: around about two billion dollars of the sets. Traditionally, what
Speaker 1: we see when you start to absorb that size, you
Speaker 1: start to get some money, go out swhere. Things stopped
Speaker 1: for a little while. It's exactly does this remind you
Speaker 1: of what happened with the company at the tournament the
Speaker 1: millennium when you absorb perpetual it took a couple of
Speaker 1: years just to get things going. Will this be the
Speaker 1: same story? There's no question about it. So what's the measure?
Speaker 1: So who are you talking to? The clients that we
Speaker 1: talked to, they're very supportive the transaction. They say, what
Speaker 1: you all are doing is exactly what should be happening
Speaker 1: in the industry. And you know, very much supportive of us.
Speaker 1: And we completed in a very short period of time
Speaker 1: with yesterday. We're really on January one. We're off to
Speaker 1: the races. I want to go to those moments in
Speaker 1: a year where you just stop. One of them was,
Speaker 1: of course, the headline of the ECB saying that they're
Speaker 1: gonna stay on hold forever. Another one was sitting on
Speaker 1: the set in New York and opening one newspaper. The
Speaker 1: first ad we're giving it away for free. I turned
Speaker 1: the page. It was another discount broker, we're giving it
Speaker 1: away for free. And then there was a third ad,
Speaker 1: three ads in a row in the in that retail
Speaker 1: space saying we're gonna give it away for free. Is
Speaker 1: a bond house of your great distinction? And frankly with
Speaker 1: the Oppenheimer equity management internationally, how are you going to
Speaker 1: make profit knowing you're gonna give it away for free? Industry? Yeah,
Speaker 1: so nothings for free. First of all, I think that's
Speaker 1: one point to make. But when we look at the
Speaker 1: range of capabilities and we're they were those focuses were
Speaker 1: on were CAPUITD indexes, and uh, they've grown enormously post
Speaker 1: the crisis. And when you look at the spectrum of
Speaker 1: how people build portfolios, cap waited indexcess earn it, they're
Speaker 1: very cheap. But as you keep goin up to factors
Speaker 1: active alternatives, you get better returns, excess returns, you get
Speaker 1: downside protection. You're going to pay more for that. So
Speaker 1: clients are literally using the spectrum of assets classes like
Speaker 1: they've never had before to get the outcome. Are you
Speaker 1: going to affect this with a close approach, we said
Speaker 1: Lawrence Fincon from black Rock. Are you gonna do with
Speaker 1: so called our squared folks, which is a statistic on
Speaker 1: this tight up against what the indexes are doing? Are
Speaker 1: you going to bring that our square down and really differentiate?
Speaker 1: So that's really been what's been going on here, and
Speaker 1: this also was really coming out of i'd say regulation
Speaker 1: and really the focus on there were active managers that
Speaker 1: really index huggers, right, So you're paying an active fee
Speaker 1: for not much I did. That's the surveillance by exclusive folks.
Speaker 1: I did not know that occurred. Okay, there you go.
Speaker 1: So the point is, you know you're seeing a lot
Speaker 1: of you know, this movement of money away from that
Speaker 1: to those people that can generate excess returns and and
Speaker 1: you can, but you really want the full range of
Speaker 1: capabilities when you're building those portfolios. Might we want to
Speaker 1: talk about some of the problems that you have as
Speaker 1: an index provider as well. There's a lot of concern
Speaker 1: that paper start to think there's liquidity and set in
Speaker 1: indexes that the underlying securities that they track aren't very
Speaker 1: liquid at all. Leverage Alliance, big leverage alone house, you've
Speaker 1: got the A t F. Does that not concern you? Yeah,
Speaker 1: so when you talk about at that level, you would.
Speaker 1: But when you have to look into the portfolio, what
Speaker 1: happens in the in the bank loan portfolio, there is
Speaker 1: probably liquidity and there's backstops to it. So it is
Speaker 1: not an illiquid portfolio that is open ended in the market.
Speaker 1: But John went right where I wanted to go. Is
Speaker 1: your true expertise and overslones I should point out, folks
Speaker 1: that the investor has been a huge support of what
Speaker 1: I've done for years and has been a supporter of
Speaker 1: Bloomberg surveillance in the old days. I go back to
Speaker 1: David Gouldan at Bank of America. It wasn't the garbage
Speaker 1: trenches that god us in trouble, it was the quality trunch.
Speaker 1: Just coming from nine two down to an eighty nine
Speaker 1: or an eighty five. Are we setting ourselves up for
Speaker 1: that same risk? Again, it's hard for me to answer
Speaker 1: that question. But again that's the world of the portfolio managers, right,
Speaker 1: And if you have high quality portfolio managers, they're the
Speaker 1: ones that are making that assessment. Don't you worry, though,
Speaker 1: Marty that those portfolio managers at the moment are being
Speaker 1: forced into quite a liquid parts of the markets into
Speaker 1: private markets. Wood Foot former colleague, if your South got
Speaker 1: cota out of early legendary investor pushed into the wrong stuff. So, uh,
Speaker 1: that is probably one of the current concerns. When I
Speaker 1: look at the market, all the money is going into uh,
Speaker 1: private credit at the moment, it is sort of it's
Speaker 1: everybody's answered to the question. And I've been in the
Speaker 1: industry long enough now too. When everybody's going the same way,
Speaker 1: good things don't happen with that. That's a sweeping comment.
Speaker 1: The reality is you have to look at a manager
Speaker 1: by manager, the quality of the managers, their expertise, the
Speaker 1: ones have been doing it for a long time that
Speaker 1: are thoughtful and highly talented, they'll do okay. John and
Speaker 1: I are humbled by the success of our podcast. Folks
Speaker 1: were targeting a million downloads a month. We're not theory trying,
Speaker 1: We're trying to get there. If I look at them,
Speaker 1: invest next do a shameless plugs plug us go to
Speaker 1: sponsor podcast so we can get home. Is it free?
Speaker 1: But it won't be free if you help us. With
Speaker 1: the people that listen to the podcast, there's an intellectual
Speaker 1: group that want to be in your business, but they
Speaker 1: want to know. Is there a future to the cif
Speaker 1: A institute. Is there a future to active managers? Is
Speaker 1: there a future to security research? What do you see?
Speaker 1: Thank you for saying happiness. So all people talk about
Speaker 1: is a change in the industry now and they look
Speaker 1: at the downside, right, So there's no absolutely this industry
Speaker 1: is gonna thrive. What's happening. It continues to grow, It's
Speaker 1: gonna be It's almost a hundred trillion dollar industry right now.
Speaker 1: Who's talked about that. It is not going away. And
Speaker 1: the need for cf as and smart people who do
Speaker 1: the work, it's always going to exist. Okay, it's gonna
Speaker 1: be there with the Nappenheimer combination. How do you meld
Speaker 1: those two cultures together? Because I'm sorry, I remember the
Speaker 1: open I'm a target fund from a few years ago, folks,
Speaker 1: it's like decades old and their international excellence. How do
Speaker 1: you culturally mild all those egos together? Yeah, so that's
Speaker 1: a very good question. So I've been through a number
Speaker 1: of transactions in my career and the first conversation. Everything
Speaker 1: looks good on a piece of paper, that's not what matters.
Speaker 1: It's spending time with the people understanding the culture in
Speaker 1: our you cultural a line, that's the If you don't
Speaker 1: get that right, you have a problem. I don't when
Speaker 1: you do, but you will. Each team is separate and distinct.
Speaker 1: They continue to do do exactly what they did when they
Speaker 1: came to invest go and that will not change. Our
Speaker 1: whole goal has given greater resources to do what they've
Speaker 1: done in the past, is to make them even better
Speaker 1: than Let's get some targets if we can aum how
Speaker 1: much of that is passive about a quarter? Yeah, it's
Speaker 1: two billion of it in and around any targets to
Speaker 1: get that up to a certain level. What's the ultimate
Speaker 1: balance for an asset manager at the moment? So I
Speaker 1: get asked that all the all the time. So the
Speaker 1: answers clients determine that. Okay. So at the other hand,
Speaker 1: we have amost two hundred billion dollars in alternatives, and
Speaker 1: it really is your expertise and where the clients are
Speaker 1: are moving in. So I feel really good about the
Speaker 1: talent that we have, and it's really us spending time
Speaker 1: with our clients and making that drift different. What about
Speaker 1: the international mix? What are you seeing in flows of
Speaker 1: fun Q four was finally an Oppenheimer and Invesco Oppenheimer quarter.
Speaker 1: Is that from where you sit with your knowledge base,
Speaker 1: is the international joy of the last quarter are going
Speaker 1: to continue? So it's a fundamental strength of the firm
Speaker 1: right now. You talk about emerging markets, are expertise in China, uh,
Speaker 1: you know, staying on China loan. Just the growth in
Speaker 1: China for the money management industry and the interest in
Speaker 1: China is at peak level as you would imagine, and
Speaker 1: we see that. It's again it's early in the year.
Speaker 1: That's what's going on right now. Well, it's gonna going
Speaker 1: on right now. But the strategy forward here to compete
Speaker 1: in you you're you're in Everybody likes to talk about
Speaker 1: scale and we do touchy philia Davos. You're in a
Speaker 1: brutal industry right now. What's gonna be your best practice forward?
Speaker 1: So international pus this one E merchant markets, very very
Speaker 1: talented China for us, you know, just a fundamental strength
Speaker 1: of us. We managed seventy billion dollars in Chinese securities.
Speaker 1: We have fifty billion dollars of money that we managed
Speaker 1: for local Chinese. Uh. The alternative business, the factor business
Speaker 1: where the second largest factor provider in the world. These
Speaker 1: are all areas that are going to continue to grow.
Speaker 1: And you talk to the issue about active management, those
Speaker 1: that generate ALFAR can do very fine and it's going
Speaker 1: to be an asset classes like a merchant markets and global.
Speaker 1: In two thousand and six, everybody was running around trying
Speaker 1: to make fourteen basis points on every transaction. Are we
Speaker 1: back to that right now? Within the traditional investco bunch up?
Speaker 1: Are we back to oh six where everybody's getting stupid
Speaker 1: about fourteen point one four percentage points? Itsy bitsy amounts.
Speaker 1: Oh boy, I succeeded. Are we back to this? I
Speaker 1: hope not? And look, I think you know when you
Speaker 1: put on the business. At first of all, we're legal fiduciaries,
Speaker 1: So you've got to be responsible your clients in the
Speaker 1: first place if you're not game over at some point
Speaker 1: in time. So it's literally making sure that you know
Speaker 1: your your in line with your clients when you have
Speaker 1: those conversations. Flag. Thank you so much for joining us
Speaker 1: today Investco as well. What a perfect time to bring
Speaker 1: in the Director General of the w c O, Robertto
Speaker 1: as a Vedo. Great to see Robetto. It's a pleasure.
Speaker 1: Can we talk about phase one? Absolutely? I want to
Speaker 1: understand whether there's going to be any complaints sent to
Speaker 1: the w t O about the agreement between the United
Speaker 1: States and China that was secured in the last couple
Speaker 1: of weeks. What's your first take on that, Well, there
Speaker 1: is that first take is good. I think it's good
Speaker 1: that you see some degree of they don't between the two.
Speaker 1: It's about time that we see some of those tensions,
Speaker 1: you know, at least contained and hopefully rolled back. I
Speaker 1: think this is a kind of agreement that is going
Speaker 1: to be looked into by all do W two members
Speaker 1: with very very carefully, with magnifying lenses and checking whether
Speaker 1: everything is in accordance with the two disciplines and multilateral agreements. UM.
Speaker 1: They will be watching very closely. So if there's something
Speaker 1: that is a miss, will know, well, you're the DJ,
Speaker 1: So let's talk about it. Some of the content and
Speaker 1: the agreement. The optics might be encouraging that we settle
Speaker 1: some of the issues between the two biggest economies in
Speaker 1: the world. The detail agreeing to increase trade by two
Speaker 1: billions and basically targeting a fixed amount of agricultural product
Speaker 1: imports out of the United States into China at a
Speaker 1: level of forty billions. What's Brazil going to say to that?
Speaker 1: What do what the suppliants of Soy being city, You'll
Speaker 1: have to you have to ask Brazil. But I would
Speaker 1: suppose that to the extent that some of those tariffs
Speaker 1: are rolled back and some of the impedments are taken away,
Speaker 1: it is natural that those imports are going to go on.
Speaker 1: But it's the Director General I'm asking you, how do
Speaker 1: you reconcile everything that w t O stands for and
Speaker 1: a deal between the United States and China that has
Speaker 1: socialist style central planning elements to it between the United
Speaker 1: States and China depends on how you implement that as
Speaker 1: Director General. I'm not going to be pointing fingers, so
Speaker 1: you know that. But I suppose that, for example, if
Speaker 1: you're buying food or products under state contracts, that's okay.
Speaker 1: That's not governed by w t rules. They have a
Speaker 1: special agreement that is valid only to the signatories. China
Speaker 1: is not part of that, but the other double two
Speaker 1: members cannot complain with what happens in terms of government purchases, however,
Speaker 1: UM most Favored Nation UH, tariff supply and nondiscrimination and
Speaker 1: applies UM. So people will be looking at that very carefully. Now,
Speaker 1: the agreement is very general, Uh, it doesn't specify how
Speaker 1: those purchases are going to happen, what mechanisms are going
Speaker 1: to use, what kind of preference is going to be
Speaker 1: granted to US products of US origin vis a vis
Speaker 1: the others. I suppose Brazili and the others are going
Speaker 1: to be looking very closely at all that. But we're
Speaker 1: pretty familiar with the enforcement mechanism. If the Chinese don't
Speaker 1: reached those targets, the tariffs gut back on don Night. Well,
Speaker 1: that's very unusual mechanism actually, because it's normal that in
Speaker 1: these agreements to have some kind of dispute settlement vision,
Speaker 1: something that looks at whether the two sides are complying
Speaker 1: with what has been agreed. This one, however, doesn't have
Speaker 1: any kind of arbitration or any kind of third party oversight.
Speaker 1: It is about, you know, directly dealing with perceived shortcomings.
Speaker 1: So if one side is not happy happy with what
Speaker 1: the other is doing, it will complain, they will have consultations,
Speaker 1: and at the end of the day, unilaterally, the party
Speaker 1: that is complaining if it if it's not satisfied with
Speaker 1: the actions of the other side corrective actions of the
Speaker 1: other side, it may, you know, impose sanctions of whatever
Speaker 1: it is. It's very Um, it's not very usual to
Speaker 1: see something like that. I can see that it hasitant
Speaker 1: taken if you wanted at the moment you did mention
Speaker 1: dispute resolution. Now, let's talk about the dispute resolution mechanism
Speaker 1: at the w t O. For our audience right now,
Speaker 1: who maybe haven't been following this very carefully, walk us
Speaker 1: through what's happened and what's happening with the dispute resolution
Speaker 1: mechanism at the w t R. Well, they're two things
Speaker 1: are separate. I think what's happening between the US and China,
Speaker 1: it's US that doesn't affect the W two dispute settlement
Speaker 1: mechanism at all. Um. What is happening now is that
Speaker 1: clearly the US um that has been complaining for quite
Speaker 1: some time. So this is not a Trump administration complaint.
Speaker 1: This has been there before about the appellate body and
Speaker 1: the way that the appelloate body has been conducting itself.
Speaker 1: Whether you agree or not with those complaints, that's a
Speaker 1: different conversation. But they have been complaining for quite some
Speaker 1: time that in this administration that said enough, it's enough,
Speaker 1: we need to change this. I think that's where we
Speaker 1: are now. We are now sitting in Geneva with others
Speaker 1: and say, okay, so we need to change the system.
Speaker 1: How is it doable? Do do the changes that the
Speaker 1: US want to see? Would the others live with it
Speaker 1: or not? I mean, this is this is where we
Speaker 1: are at this point in time. We cannot take too
Speaker 1: long though we talk about some of the issues. They
Speaker 1: think that some of the people on that Dispute Resolution
Speaker 1: Body that WUS have a paid too much there what
Speaker 1: they are paid too much? They are too much money.
Speaker 1: They're incentivized to drag on some of the disputes because
Speaker 1: they can earn more money. That's one of the issues
Speaker 1: out there. And so you're aware if it's an important issue,
Speaker 1: but I think it's a small Do you think they
Speaker 1: paid too much? I think it was agreed by members.
Speaker 1: I mean I didn't decide that the United States pushback
Speaker 1: at the United States agreed to that the United States
Speaker 1: agreed to that. The EU and all the other members
Speaker 1: one and sixty four of them decided these are the
Speaker 1: terms of the payments. But over time inefficiencies were introduced.
Speaker 1: I mean those spots were supposed to be taken care
Speaker 1: of in ninety days. Now the Appealate Body has been
Speaker 1: taking six months sometimes more to to to finalize it's appreciation.
Speaker 1: My understanding is that only ap Palate body at the moment.
Speaker 1: But I don't think they're doing that because of the money.
Speaker 1: I think they're doing the money. The money is a
Speaker 1: feature of this administration. The US administration under President Donald Trump,
Speaker 1: as you know, have been very unhappy about the way
Speaker 1: some of these bodies have been run. And as I
Speaker 1: understand that you can earn north of three thousand Swiss
Speaker 1: Franks sitting on the Appaliate body, you can, can't you
Speaker 1: Now for the US administration, they're looking at that situation
Speaker 1: right now and saying that's too much. We need a
Speaker 1: more efficient mechanism, and we need to incentivize it to
Speaker 1: be more efficient as well. What's your thoughts as the
Speaker 1: director and along that particular issue, what if if that
Speaker 1: were the only issue, we could do it like that
Speaker 1: that's easy, not a problem. That is not a problem.
Speaker 1: What do you think the bigger issue is. The bigger
Speaker 1: issue is how to make it run faster, how to
Speaker 1: make it more efficient, how to make it responsive to
Speaker 1: those disputes in a way that they're not setting precedents
Speaker 1: or they're not according to the US, for example, they
Speaker 1: do not behave as a court where you have five
Speaker 1: or seven seven guys there who believe that they are
Speaker 1: international judges. They're above you know, they above right or wrong,
Speaker 1: whatever they decide, it's it's the divine rule or something
Speaker 1: that that's the way the US sees it um. So
Speaker 1: I think we have to change that kind of perception.
Speaker 1: That's that's for me. Is is the trickiest part. Let's
Speaker 1: run things up by into one of the disputes the
Speaker 1: United States getting together with the European Union, the Japanese
Speaker 1: to complain to you guys that China is subsidizing its
Speaker 1: industries unfairly. Can you deal with these kind of issues? Absolutely?
Speaker 1: How easy make the rules? One of the one of
Speaker 1: the problems we have is that the US and Japan
Speaker 1: and the EU claim, and rightly so, by the way,
Speaker 1: that the rules are not perfect. That for example, the
Speaker 1: exports subsidies or prohibited subsidies rules, they don't capture many
Speaker 1: of the things that are happening out there, and therefore
Speaker 1: we need to update the rules to begin to be
Speaker 1: more responsive to today's reality. Now, the problem with that
Speaker 1: is that why do we not have that. We do
Speaker 1: not have those rules as as perfect as they wish
Speaker 1: they were, because in the past, before China even got
Speaker 1: into the scene, the big powers, the US, the EU, Japan, Canada,
Speaker 1: Australian and the other they could not agree amongst themselves
Speaker 1: on those rules. So they said, you know what, put
Speaker 1: the put that aside for the moment. Let's let's go
Speaker 1: on and do other stuff. China came in the two
Speaker 1: two thousand and one and since then they have been
Speaker 1: doing things that others are saying, well, that's not what
Speaker 1: what the what we were expecting before? We need to
Speaker 1: I think if members are unhappy with that, they have
Speaker 1: to talk about it. And I don't think that China
Speaker 1: is against having this conversation. I think they already told
Speaker 1: me directly that they're fine with negotiations. If the people
Speaker 1: want to change the rules, exchange the rules, but let's
Speaker 1: sit down and have a conversation about that. As your
Speaker 1: experience has been, as many people's experience has been over
Speaker 1: the last twenty years. The Chinese often talk about getting
Speaker 1: around the table to do things. We don't get the
Speaker 1: follow up. Are you really confident that the Chinese would
Speaker 1: agree to the pressure that the US, EU and China
Speaker 1: is putting on them right now to pull back from
Speaker 1: subsidizing their industries when they've been pretty clear over the
Speaker 1: last few years that they've got a plan dominate certain
Speaker 1: interest industries by it doesn't matter to the expense of
Speaker 1: any expense of anyone else, and we're going to subsidize
Speaker 1: those industries until it happens. Why would they sign up
Speaker 1: to any rules at the w t O when we
Speaker 1: know that's their mission. We've got things change, and I
Speaker 1: think that the degree of of rejection that you see today,
Speaker 1: uh in the international community, for you know, against certain
Speaker 1: practices that are happening in China, whether they are true
Speaker 1: accusations or not, that's a different conversation. Uh, those are
Speaker 1: real and I don't think China can close their eyes
Speaker 1: on this, and they realize that it's better to have
Speaker 1: a negotiated solution and deal than to be subject to
Speaker 1: unilateral you know, terroriffs the way that they have been
Speaker 1: in the recent past. It's been great to catch up
Speaker 1: with you. A lot of topics to get fress and
Speaker 1: I know you've got a busy way ahead better. Thank
Speaker 1: you very much. That was Rebetta as a data they
Speaker 1: will Tried Organization director General. Thanks for listening to the
Speaker 1: Bloomberg Surveillance podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud,
Speaker 1: or whichever podcast platform you prefer. I'm on Twitter at
Speaker 1: Tom Keane before the podcast. You can always catch us worldwide.
Speaker 1: I'm Bloomberg Radio.