WEBVTT - HS2 Indecision & JPMorgan CEO Interview

0:00:02.400 --> 0:00:04.880
<v Speaker 1>Good morning. It's Tuesday, the third of October in London.

0:00:04.960 --> 0:00:08.160
<v Speaker 1>This is the Bloomberg Daybreak EUROP podcast. I'm Stephen Carroll.

0:00:08.240 --> 0:00:11.480
<v Speaker 1>Coming up today reports a key part of HS two

0:00:11.680 --> 0:00:14.560
<v Speaker 1>is about to be scrapped, throw Rishi Sunak's pre election

0:00:14.720 --> 0:00:15.760
<v Speaker 1>narrative off track.

0:00:15.880 --> 0:00:18.840
<v Speaker 2>And I'm Caroline Hipkett at the Conservative Party conference here

0:00:18.880 --> 0:00:21.520
<v Speaker 2>in Manchester with the latest on that decision and the

0:00:21.600 --> 0:00:23.920
<v Speaker 2>divisions that it's creating in the party.

0:00:24.120 --> 0:00:28.280
<v Speaker 1>Plus is there anything AI can't do? Jp Morgan's CEO

0:00:28.360 --> 0:00:32.000
<v Speaker 1>tells Bloomberg artificial intelligence could lead to a three and

0:00:32.040 --> 0:00:35.159
<v Speaker 1>a half day working week. Let's start with a roundup

0:00:35.200 --> 0:00:39.560
<v Speaker 1>of our top stories. The Prime Minister is facing backlash

0:00:39.560 --> 0:00:43.199
<v Speaker 1>from his Conservative Party, businesses and Northern leaders over a

0:00:43.240 --> 0:00:47.519
<v Speaker 1>possible announcement to scrap part of the flagship infrastructure project

0:00:47.760 --> 0:00:51.199
<v Speaker 1>HS two. Their speculation announcement could come as soon as

0:00:51.240 --> 0:00:54.080
<v Speaker 1>today to ditch the northern leg of the one hundred

0:00:54.120 --> 0:00:57.680
<v Speaker 1>billion pound high speed rail project. The decision now threatens

0:00:57.680 --> 0:01:01.840
<v Speaker 1>to overshadow the whole Conservative Party conference. Toy West Midlands

0:01:01.840 --> 0:01:06.000
<v Speaker 1>Mayor Andy Street made his view clear, but Joyce very stark.

0:01:06.400 --> 0:01:09.720
<v Speaker 3>Either of the rumors say go on, cancel Newston cancel

0:01:09.800 --> 0:01:12.959
<v Speaker 3>to Manchester, but you will be turning your back on

0:01:13.040 --> 0:01:17.080
<v Speaker 3>an opportunity to level up a once in a generation opportunity.

0:01:17.400 --> 0:01:22.720
<v Speaker 3>You will indeed be damaging our international reputation as a place.

0:01:22.760 --> 0:01:24.200
<v Speaker 4>To invest or.

0:01:24.240 --> 0:01:28.560
<v Speaker 3>The alternative is to work with us, engage with us, fully,

0:01:28.840 --> 0:01:32.600
<v Speaker 3>embrace the private sector. Hear out what they could do

0:01:32.920 --> 0:01:35.600
<v Speaker 3>to find a way that we can still build this

0:01:35.800 --> 0:01:38.959
<v Speaker 3>national piece of infrastructure in a way in which we

0:01:39.000 --> 0:01:42.640
<v Speaker 3>can afford and at a cost which we're all comfortable with.

0:01:43.480 --> 0:01:46.280
<v Speaker 1>Despite those pleas from Andy Streets, reports suggests that if

0:01:46.319 --> 0:01:48.880
<v Speaker 1>a decision is made to ditch the project, it could

0:01:48.880 --> 0:01:51.840
<v Speaker 1>feature in the Prime Minister's speech to the conference tomorrow.

0:01:52.960 --> 0:01:55.840
<v Speaker 1>Back of England policymaker Catherine Mann says interest rates have

0:01:55.880 --> 0:01:59.559
<v Speaker 1>only just reached restrictive territory. Speaking at an event hosted

0:01:59.600 --> 0:02:03.040
<v Speaker 1>by red Burn Atlantic and Rothschild, Man disparage the Central

0:02:03.040 --> 0:02:06.960
<v Speaker 1>Bank's forecasts, saying quote they've been telling a story fundamentally

0:02:07.000 --> 0:02:10.280
<v Speaker 1>different from the ones I consider likely. Catherine Mann is

0:02:10.320 --> 0:02:13.360
<v Speaker 1>widely viewed as the boees most hookish rate setter, but

0:02:13.520 --> 0:02:17.680
<v Speaker 1>was outvoted last month when she backed continuing increasing rates

0:02:17.720 --> 0:02:22.760
<v Speaker 1>to stamp out sticky inflation. Louretta Master says the Federal

0:02:22.800 --> 0:02:26.000
<v Speaker 1>Reserve will probably need to raise rates once more this year.

0:02:26.120 --> 0:02:28.799
<v Speaker 1>Speaking to business leaders, the Bank of Cleveland president said

0:02:28.840 --> 0:02:32.080
<v Speaker 1>the final decision will depend on how the US economy

0:02:32.080 --> 0:02:33.600
<v Speaker 1>evolves in the coming months.

0:02:33.919 --> 0:02:36.320
<v Speaker 5>At this point, I suspect we may well need to

0:02:36.400 --> 0:02:39.160
<v Speaker 5>raise the Fed Fund rate once more this year, and

0:02:39.200 --> 0:02:41.840
<v Speaker 5>then hold it there for some time as we accumulate

0:02:41.880 --> 0:02:45.920
<v Speaker 5>more information on economic developments and assess the effects of

0:02:45.960 --> 0:02:48.840
<v Speaker 5>the tightening at financial conditions that has already occurred.

0:02:50.480 --> 0:02:53.480
<v Speaker 1>Mester's comments come as several of the central Bank's policymakers

0:02:53.480 --> 0:02:56.000
<v Speaker 1>have weighed in with their views on the future rate path.

0:02:56.160 --> 0:02:59.320
<v Speaker 1>Federal Reserve Vice Chair for Supervision Michael Barr says the

0:02:59.440 --> 0:03:02.800
<v Speaker 1>US Central Bank is likely at or very near a

0:03:02.880 --> 0:03:06.440
<v Speaker 1>level that's sufficiently restrictive that echoes charge their own palace,

0:03:06.440 --> 0:03:10.519
<v Speaker 1>message that officials can proceed carefully on whether to hike again.

0:03:11.919 --> 0:03:16.000
<v Speaker 1>This weekend's temporary US government funding bill may have averted

0:03:16.040 --> 0:03:19.360
<v Speaker 1>a shutdown, but it also left out something many wanted,

0:03:19.600 --> 0:03:23.959
<v Speaker 1>six billion dollars for Ukraine. Bloomberg understands President Biden is

0:03:24.000 --> 0:03:27.000
<v Speaker 1>now planning to call allies to discuss the ongoing war.

0:03:27.400 --> 0:03:29.120
<v Speaker 1>At Baxter Reports.

0:03:29.000 --> 0:03:31.720
<v Speaker 6>The President says he wants to assure the Allies that

0:03:31.760 --> 0:03:35.720
<v Speaker 6>the US support will continue. You cannot, under any circumstances

0:03:35.920 --> 0:03:39.080
<v Speaker 6>allow America's support for Ukraine to be interrupted.

0:03:39.600 --> 0:03:42.400
<v Speaker 4>Too many lives of stake, too many children, too many people.

0:03:42.840 --> 0:03:45.760
<v Speaker 6>A call with Allies could happen as early as today,

0:03:45.800 --> 0:03:48.720
<v Speaker 6>and the White House says it will announce an additional

0:03:48.840 --> 0:03:53.360
<v Speaker 6>aid package for Ukraine soon. I'm at Baxter Bloomberg Radio.

0:03:54.400 --> 0:03:57.800
<v Speaker 1>The Republican Matt Gates has officially moved to out the

0:03:58.000 --> 0:04:01.640
<v Speaker 1>Speaker of the US House, Kevin McCarry. The Florida congressman

0:04:01.760 --> 0:04:06.320
<v Speaker 1>cited McCarthy's weekend embrace of a bipartisan deal to avert

0:04:06.400 --> 0:04:10.480
<v Speaker 1>a government shutdown as provocation for the mutiny. The move

0:04:10.560 --> 0:04:13.760
<v Speaker 1>tees up a high stakes vote which could dramatically shift

0:04:13.800 --> 0:04:17.160
<v Speaker 1>the balance of power in Washington. McCarthy must call a

0:04:17.240 --> 0:04:20.720
<v Speaker 1>vote within two legislative days, and Gates would only need

0:04:20.720 --> 0:04:23.919
<v Speaker 1>the support of a handful of ultra conservative colleagues to

0:04:24.000 --> 0:04:29.479
<v Speaker 1>overthrow McCarthy if Democrats support them. The JP Morgan CEO

0:04:29.560 --> 0:04:33.160
<v Speaker 1>Jamie Diamond says artificial intelligence is already being used by

0:04:33.279 --> 0:04:36.440
<v Speaker 1>thousands of employees at his bank. In an exclusive interview

0:04:36.480 --> 0:04:39.160
<v Speaker 1>with Bloomberg, Diamond thinks that AI is likely to make

0:04:39.240 --> 0:04:42.800
<v Speaker 1>dramatic improvements in workers' quality of life, even if it

0:04:42.839 --> 0:04:44.080
<v Speaker 1>eliminates some jobs.

0:04:44.640 --> 0:04:47.599
<v Speaker 7>Technologies always replace jobs. Your children will live to one

0:04:47.680 --> 0:04:50.679
<v Speaker 7>hundred and not have cancer because of technology, and literally

0:04:50.720 --> 0:04:52.840
<v Speaker 7>they'll probably be working three and a half days a week.

0:04:53.200 --> 0:04:56.479
<v Speaker 7>So technology has done unbelievable things from mankind. But you know,

0:04:56.600 --> 0:05:00.120
<v Speaker 7>planes crash, pharmacies getting misused. There are negatives. This one

0:05:00.000 --> 0:05:02.320
<v Speaker 7>one of the biggest negative of my view is AI

0:05:02.480 --> 0:05:05.120
<v Speaker 7>being used by bad people to do bad things. You

0:05:05.120 --> 0:05:07.080
<v Speaker 7>know the fact, and I do think you know, eventually

0:05:07.160 --> 0:05:09.320
<v Speaker 7>have legal guardrails around. It's kind of hard to do

0:05:09.360 --> 0:05:12.760
<v Speaker 7>because it's new, but it will add a huge value.

0:05:13.200 --> 0:05:15.839
<v Speaker 1>Diamond has previously said the technology can be used to

0:05:15.960 --> 0:05:20.279
<v Speaker 1>help the bank develop new products and improve productivity. And

0:05:20.320 --> 0:05:21.800
<v Speaker 1>if you want to hear that interview with the JP

0:05:21.920 --> 0:05:24.800
<v Speaker 1>Morgan CEO, you can find it on the Bloomberg Talks podcast,

0:05:24.920 --> 0:05:29.280
<v Speaker 1>all our most important conversations in one place. Jamie Diamond's

0:05:29.279 --> 0:05:31.360
<v Speaker 1>comments around a three and a half day work week

0:05:31.360 --> 0:05:33.760
<v Speaker 1>getting a lot of attention, but we're thinking about a

0:05:33.839 --> 0:05:35.920
<v Speaker 1>very different three and a half days and that's the

0:05:35.960 --> 0:05:39.279
<v Speaker 1>Conservative Party conference. We heard yesterday from the Chancellor there's

0:05:39.320 --> 0:05:41.880
<v Speaker 1>no money for tax cuts despite clamoring for the likes

0:05:42.000 --> 0:05:44.880
<v Speaker 1>of former Prime Minister Liz Truss. But the future of

0:05:44.880 --> 0:05:47.479
<v Speaker 1>the HS two rail project taking up a lot of

0:05:47.680 --> 0:05:50.960
<v Speaker 1>attention at the conference. That reports the Prime Minister could

0:05:51.080 --> 0:05:54.360
<v Speaker 1>scrap the leg from Birmingham to Manchester as soon as today.

0:05:54.960 --> 0:05:57.440
<v Speaker 1>Let's talk about what's in store at the conference today.

0:05:57.480 --> 0:06:00.559
<v Speaker 1>Carolyn Hepger is in Manchester and she joins us now

0:06:00.680 --> 0:06:04.480
<v Speaker 1>from the conference. Good morning to you, Caroline. So still

0:06:04.520 --> 0:06:07.400
<v Speaker 1>no formal announcement over HS two. But are those the

0:06:07.520 --> 0:06:10.400
<v Speaker 1>three biggest letters, well, two letters in a number that

0:06:10.440 --> 0:06:11.960
<v Speaker 1>everyone's talking about in Manchester.

0:06:12.600 --> 0:06:15.080
<v Speaker 2>It certainly is one of them. Look is worse than

0:06:15.320 --> 0:06:19.520
<v Speaker 2>scrapping the line to Manchester for high speed rail? It's indecision.

0:06:19.600 --> 0:06:22.359
<v Speaker 2>Michie Sunac has refused to say whether to build the

0:06:22.400 --> 0:06:25.240
<v Speaker 2>line to Manchester where we are at conference or not.

0:06:25.279 --> 0:06:28.120
<v Speaker 2>Perhaps he's waiting for his big speech, but that's not

0:06:28.240 --> 0:06:31.919
<v Speaker 2>until tomorrow. So that leaves the rumor mill and pretty

0:06:31.960 --> 0:06:35.719
<v Speaker 2>much every conversation with ministers asking for an answer. It

0:06:35.880 --> 0:06:39.960
<v Speaker 2>worries Conservatives about sunak's ability to make tough decisions toys

0:06:40.000 --> 0:06:42.680
<v Speaker 2>remember some twenty points behind the Labor polls. It has

0:06:42.880 --> 0:06:47.279
<v Speaker 2>hugely angered Northern mayors, including the Conservative leader Andy Street

0:06:47.279 --> 0:06:49.680
<v Speaker 2>that you heard just earlier you'll be turning your back

0:06:49.720 --> 0:06:52.560
<v Speaker 2>on an opportunity to level up once in a generation.

0:06:52.680 --> 0:06:57.160
<v Speaker 2>It'll damage the UK's international reputation his view. The Chancellor

0:06:57.200 --> 0:07:00.040
<v Speaker 2>in his big speech yesterday, though, did talk about the

0:07:00.080 --> 0:07:02.400
<v Speaker 2>reasoning behind this. You know, why does it cost ten

0:07:02.480 --> 0:07:05.000
<v Speaker 2>times more to build rail infrastructure in the UK than

0:07:05.040 --> 0:07:08.599
<v Speaker 2>it does in France, the Labor mayor of Manchester telling

0:07:08.640 --> 0:07:11.440
<v Speaker 2>us here on Bloomberg Radio yesterday, that's a question for

0:07:11.480 --> 0:07:14.960
<v Speaker 2>the government. He said that the Conservative Party can't avoid

0:07:15.000 --> 0:07:18.760
<v Speaker 2>responsibility for the cost overrun. So HS two really does

0:07:18.960 --> 0:07:23.080
<v Speaker 2>definitely threaten to derail the message for long term decision

0:07:23.120 --> 0:07:26.200
<v Speaker 2>making for a brighter future. That's the slogan here at

0:07:26.200 --> 0:07:27.560
<v Speaker 2>the Conservative Party conference.

0:07:28.040 --> 0:07:31.240
<v Speaker 1>Yeah, that moved to insert long term into that slogan.

0:07:31.400 --> 0:07:34.400
<v Speaker 1>Very interesting as well as we think about the long

0:07:34.480 --> 0:07:37.360
<v Speaker 1>road to the next election as well. Lots of talk

0:07:37.440 --> 0:07:40.800
<v Speaker 1>too at the conference Caroline yesterday about tax cuts. Did

0:07:40.840 --> 0:07:44.720
<v Speaker 1>the Chancellor manage to put speculation or hope that there

0:07:44.720 --> 0:07:46.400
<v Speaker 1>could be tax cuts on the way to bed on

0:07:46.440 --> 0:07:47.240
<v Speaker 1>his speech.

0:07:47.680 --> 0:07:51.200
<v Speaker 2>Stephen, the short answer is no. He talked about wanting

0:07:51.360 --> 0:07:54.200
<v Speaker 2>a lot of tax cuts, but his speech yesterday was

0:07:54.400 --> 0:07:59.239
<v Speaker 2>noted for its sobriety and the length which was pretty short.

0:07:59.720 --> 0:08:02.760
<v Speaker 2>The main thing that he talked about is the IFS

0:08:02.800 --> 0:08:05.760
<v Speaker 2>Institute for Fiscal Studies, a influential think tank in the UK.

0:08:06.520 --> 0:08:09.200
<v Speaker 2>He said that the IFS said last week we are

0:08:09.240 --> 0:08:13.800
<v Speaker 2>moving definitively to a higher tax economy. They are wrong.

0:08:14.040 --> 0:08:17.480
<v Speaker 2>That was the line that got a big reaction to

0:08:17.600 --> 0:08:20.960
<v Speaker 2>the fairly sedate crowd for the Chancellor yesterday at the UK,

0:08:21.560 --> 0:08:24.120
<v Speaker 2>having said that is already seeing the highest tax levels

0:08:24.120 --> 0:08:28.520
<v Speaker 2>in around sixty years. Also in that speech, the Chancellor

0:08:28.600 --> 0:08:31.760
<v Speaker 2>talked about this being an elemental choice between sound money

0:08:31.800 --> 0:08:36.160
<v Speaker 2>the Conservatives or running out of money the Labor Party.

0:08:36.320 --> 0:08:38.319
<v Speaker 2>We have to be honest about taxes is what the

0:08:38.400 --> 0:08:42.560
<v Speaker 2>Chancellor was saying. So his main points were quite small,

0:08:42.640 --> 0:08:46.880
<v Speaker 2>really cutting increases in the civil service leading to savings

0:08:46.880 --> 0:08:49.920
<v Speaker 2>of a billion pounds, increasing productivity in the UK, which

0:08:49.960 --> 0:08:53.400
<v Speaker 2>really is a huge long term issue that takes investment

0:08:53.440 --> 0:08:56.760
<v Speaker 2>that doesn't seem available, and performing the welfare state to

0:08:56.760 --> 0:08:59.720
<v Speaker 2>get more people back to work. But again critics would

0:08:59.720 --> 0:09:01.960
<v Speaker 2>say that ignores part of the problem, which is an

0:09:02.000 --> 0:09:06.480
<v Speaker 2>increasingly unwell workforce. So those were the sort of key

0:09:06.559 --> 0:09:08.840
<v Speaker 2>lines that came out of the Chances of speech yesterday

0:09:08.880 --> 0:09:13.160
<v Speaker 2>talked about taking on the declinists. But Liz Truss's speech,

0:09:13.320 --> 0:09:18.000
<v Speaker 2>in contrast, got a packed crowd queuing around the block

0:09:18.360 --> 0:09:21.040
<v Speaker 2>nearly a year after her disaster's mini budget. She gave

0:09:21.120 --> 0:09:26.160
<v Speaker 2>no TV or radio interviews, no, just that big speech,

0:09:26.200 --> 0:09:29.680
<v Speaker 2>but she talked about cutting corporation tax, building half a

0:09:29.679 --> 0:09:33.600
<v Speaker 2>million new homes, and resuming fracking in order to cut

0:09:33.679 --> 0:09:36.520
<v Speaker 2>energy bills. She talked about we want to stop taxing

0:09:36.559 --> 0:09:39.319
<v Speaker 2>things and banning things. I mean, she got a really

0:09:39.440 --> 0:09:42.720
<v Speaker 2>rapturous welcome, even though her policies are more to the

0:09:42.840 --> 0:09:46.880
<v Speaker 2>right of the Sunac Hunt government right now, and you know,

0:09:47.520 --> 0:09:51.520
<v Speaker 2>the government's line, one former minister for example, saying to

0:09:51.600 --> 0:09:54.760
<v Speaker 2>us it is what it is. It is a side show,

0:09:55.040 --> 0:09:59.280
<v Speaker 2>literally that. So that's the sort of a view against

0:09:59.360 --> 0:10:01.480
<v Speaker 2>Liz trust But you know she does now have quite

0:10:01.520 --> 0:10:03.760
<v Speaker 2>a number of MP's backing her growth plan.

0:10:04.480 --> 0:10:06.920
<v Speaker 1>Yeah, that'd be fascinating to watch the dynamics playing out

0:10:06.960 --> 0:10:11.079
<v Speaker 1>among Conservative Party big wigs. I suppose our supercorded a

0:10:11.160 --> 0:10:14.240
<v Speaker 1>phrase Carlin Hepger at the Conservative Party conference at Manchester.

0:10:14.800 --> 0:10:17.480
<v Speaker 1>Thank you very much. I wanted to bring you some

0:10:17.520 --> 0:10:20.320
<v Speaker 1>more of our interview at the JP Morgan CEO Jamie Diamond.

0:10:20.360 --> 0:10:22.480
<v Speaker 1>Next you talked about the state of the US economy,

0:10:22.480 --> 0:10:25.080
<v Speaker 1>why he thinks rates could go to seven percent, but

0:10:25.160 --> 0:10:27.640
<v Speaker 1>his comments and artificial intelligence and its impact on the

0:10:27.679 --> 0:10:30.800
<v Speaker 1>workforce having an impact too. Been speaking to Emily Chang.

0:10:31.120 --> 0:10:32.840
<v Speaker 4>Technologies always replaced jobs.

0:10:33.040 --> 0:10:35.080
<v Speaker 7>Your children will live to one hundred and not have

0:10:35.160 --> 0:10:38.560
<v Speaker 7>cancer because of technology, and literally they'll probably be working three.

0:10:38.480 --> 0:10:39.400
<v Speaker 4>And a half days a week.

0:10:39.720 --> 0:10:43.000
<v Speaker 7>So technology has done unbelievable things from mankind. But you know,

0:10:43.120 --> 0:10:46.360
<v Speaker 7>planes crash, pharmacies get misused. There are negatives. This is

0:10:46.400 --> 0:10:48.840
<v Speaker 7>one of the biggest negative of my view, is AI

0:10:49.000 --> 0:10:51.840
<v Speaker 7>being used by bad people to do bad things. Think

0:10:51.880 --> 0:10:56.680
<v Speaker 7>of cyber You know, Henry Kischenerho talks about warfare, but

0:10:56.840 --> 0:10:57.520
<v Speaker 7>you know the fact.

0:10:57.360 --> 0:10:59.720
<v Speaker 4>And I do think you know, eventually have legal guard

0:10:59.760 --> 0:11:00.360
<v Speaker 4>with around.

0:11:00.400 --> 0:11:02.720
<v Speaker 7>It's kind of hard to do because it's new, but

0:11:02.760 --> 0:11:04.480
<v Speaker 7>it will add a huge value.

0:11:04.760 --> 0:11:07.720
<v Speaker 4>And you know, for JP Morgan, if it replaces.

0:11:07.200 --> 0:11:10.360
<v Speaker 7>Jobs, and we hope to redeploy people like at First Republic.

0:11:10.760 --> 0:11:13.000
<v Speaker 7>You know, we've offered jobs to like ninety percent of

0:11:13.000 --> 0:11:14.160
<v Speaker 7>the people they accepted.

0:11:15.240 --> 0:11:17.720
<v Speaker 4>But we also you know, we've told them as we

0:11:18.000 --> 0:11:18.560
<v Speaker 4>some of those.

0:11:18.480 --> 0:11:21.439
<v Speaker 7>Jobs are transitory, but we hire thirty thousand people a year,

0:11:21.840 --> 0:11:23.640
<v Speaker 7>so we expect to be able to get them a

0:11:23.720 --> 0:11:26.160
<v Speaker 7>job somewhere local and a different brandch or a different

0:11:26.400 --> 0:11:28.160
<v Speaker 7>function if we can do that. So and we'll be

0:11:28.200 --> 0:11:31.640
<v Speaker 7>doing that with any dislocation that takes place as a result.

0:11:31.720 --> 0:11:34.959
<v Speaker 8>AI, I want the Jamie Dimon forecast on the broader economy.

0:11:35.080 --> 0:11:37.400
<v Speaker 8>First it was hurricanes and then it was storm clouds

0:11:37.440 --> 0:11:40.000
<v Speaker 8>in your annual letter what's the weather now receipt?

0:11:40.040 --> 0:11:42.880
<v Speaker 7>You guys have consistently got this wrong. Okay, I'm not

0:11:42.960 --> 0:11:47.920
<v Speaker 7>giving a forecast. I'm trying to I blame myself, Okay.

0:11:48.200 --> 0:11:51.880
<v Speaker 7>The US has been very strong for a while, no surprise.

0:11:51.960 --> 0:11:55.000
<v Speaker 7>Five trillion dollars was pump pumped in fiscally, you know,

0:11:55.080 --> 0:11:57.760
<v Speaker 7>three trillion or four trillion of QI, and now that's

0:11:57.760 --> 0:12:00.240
<v Speaker 7>being reversed. The consumer is still in good shape. There's

0:12:00.280 --> 0:12:02.680
<v Speaker 7>still spending money. There's still have more money than pre COVID.

0:12:02.960 --> 0:12:05.920
<v Speaker 7>It's spending down home prize has gone for fifteen years,

0:12:06.120 --> 0:12:08.640
<v Speaker 7>ASCID prizes are gone for fifteen years. They're in pretty

0:12:08.640 --> 0:12:11.240
<v Speaker 7>good shape. And then the people are talking about deterioration.

0:12:12.000 --> 0:12:14.800
<v Speaker 7>Credit is not to tearing credit card all time highs,

0:12:14.920 --> 0:12:18.880
<v Speaker 7>not inflation adjusted or GDP adjusted or income adjusted, And

0:12:18.960 --> 0:12:22.400
<v Speaker 7>yeah it's deterrians. We think there's normalizing and corporate credit

0:12:22.400 --> 0:12:24.280
<v Speaker 7>has been quite good. So you have a strong economy.

0:12:24.640 --> 0:12:27.000
<v Speaker 7>That's the here now, and all the data is a

0:12:27.000 --> 0:12:29.400
<v Speaker 7>little distorted because of COVID and things like that. When

0:12:29.440 --> 0:12:31.320
<v Speaker 7>you ask the question about a forecast, and I don't

0:12:31.320 --> 0:12:33.920
<v Speaker 7>make forecasts, I look out there and say, what are

0:12:34.040 --> 0:12:34.640
<v Speaker 7>the range of.

0:12:34.600 --> 0:12:36.880
<v Speaker 8>Outcomes from hurricane to storm clouds?

0:12:37.000 --> 0:12:39.840
<v Speaker 7>No, I put several storm clouds, I said. When I

0:12:39.840 --> 0:12:43.400
<v Speaker 7>said hurricane, I was correcting. Soon said the storm clouds dissipate.

0:12:43.600 --> 0:12:45.960
<v Speaker 7>I said, no, that one may be a hurricane. We

0:12:46.040 --> 0:12:49.120
<v Speaker 7>don't know what it is. Here's what they are. There're

0:12:49.160 --> 0:12:52.080
<v Speaker 7>two of them that are different than other things. So

0:12:52.120 --> 0:12:54.240
<v Speaker 7>we always have you know, I don't worry about the weather,

0:12:54.320 --> 0:12:56.000
<v Speaker 7>and I honestly, I spend a lot of time guessing

0:12:56.040 --> 0:12:58.680
<v Speaker 7>about the economy, and that to me is.

0:12:58.679 --> 0:13:00.800
<v Speaker 4>The sun her rainier. I don't worry about that.

0:13:00.840 --> 0:13:03.800
<v Speaker 7>We run the company to serve clients through thick and thin.

0:13:04.360 --> 0:13:06.800
<v Speaker 7>That's what we do, to serve governments to you know,

0:13:06.920 --> 0:13:08.199
<v Speaker 7>satisfy our regulators.

0:13:08.520 --> 0:13:09.720
<v Speaker 4>And that that's all weather.

0:13:09.960 --> 0:13:12.760
<v Speaker 7>But there are two things which are extraordinary today which

0:13:12.800 --> 0:13:15.640
<v Speaker 7>may have different outcomes. And think of them as storm clouds.

0:13:15.760 --> 0:13:18.000
<v Speaker 7>We don't know if they're going to hit, when they're

0:13:18.000 --> 0:13:20.439
<v Speaker 7>going to hit, what they're going to do, Okay, so

0:13:20.480 --> 0:13:22.360
<v Speaker 7>I'm not predicting that, but I'll tell you what I

0:13:22.559 --> 0:13:25.680
<v Speaker 7>worry about. So one is the fiscal money being spent

0:13:25.840 --> 0:13:30.200
<v Speaker 7>is so big, largest in peacetime ever in America and

0:13:30.280 --> 0:13:33.040
<v Speaker 7>kind of around the world, with already very high deficits

0:13:33.240 --> 0:13:36.120
<v Speaker 7>and QT we've never had, so I know some people

0:13:36.120 --> 0:13:38.080
<v Speaker 7>think QT will be uneventful.

0:13:38.480 --> 0:13:39.440
<v Speaker 4>I'm not so sure.

0:13:39.880 --> 0:13:43.320
<v Speaker 7>At a minimum, I expect volatile markets and then you've

0:13:43.320 --> 0:13:46.200
<v Speaker 7>got and then all the long term fiscal things are

0:13:46.240 --> 0:13:49.880
<v Speaker 7>kind of inflationary. You know, oil prices, certain commodity prices,

0:13:49.920 --> 0:13:53.400
<v Speaker 7>the green economy, you know, the restruction of trade, you

0:13:53.559 --> 0:13:56.840
<v Speaker 7>name it. I see it's add inflation, not subtracting inflation.

0:13:56.920 --> 0:13:59.480
<v Speaker 7>So I don't think inflationary will be that, you know,

0:13:59.600 --> 0:14:02.320
<v Speaker 7>keep on going down. It may not, and therefore rates

0:14:02.320 --> 0:14:05.600
<v Speaker 7>may go higher. But the biggest dorm claus geopolitical, it's Ukraine,

0:14:05.679 --> 0:14:08.440
<v Speaker 7>the humanitarian crisis. You know, it's a war not far

0:14:08.440 --> 0:14:11.679
<v Speaker 7>from here. It's along six hundred miles, five hundred thousand

0:14:11.720 --> 0:14:15.480
<v Speaker 7>people killed. It's nuclear blackmail. It's going to affect old

0:14:15.480 --> 0:14:18.600
<v Speaker 7>global relationships in America and China trade alliances. We don't

0:14:18.600 --> 0:14:20.120
<v Speaker 7>know how it's going to start either. So I just

0:14:20.120 --> 0:14:22.800
<v Speaker 7>put those two things. Is I keep a close eye on.

0:14:23.120 --> 0:14:25.480
<v Speaker 7>And then how it affects the economy is different. And

0:14:25.520 --> 0:14:27.560
<v Speaker 7>what I've been talking about that is I just.

0:14:27.520 --> 0:14:30.840
<v Speaker 4>Tell you be prepared for higher rates and slower te percent.

0:14:31.000 --> 0:14:32.080
<v Speaker 8>Are we really going there?

0:14:32.080 --> 0:14:33.000
<v Speaker 4>And I don't know.

0:14:33.040 --> 0:14:35.200
<v Speaker 7>When I said five percent, they said are we going there? Yes,

0:14:35.200 --> 0:14:37.520
<v Speaker 7>it's possible, you know, so I when I talk to

0:14:37.560 --> 0:14:39.480
<v Speaker 7>my board, I say, yeah, can.

0:14:39.440 --> 0:14:40.360
<v Speaker 4>It go to seven percent?

0:14:40.440 --> 0:14:43.120
<v Speaker 7>The answers yes, are the factors that would drive it,

0:14:43.240 --> 0:14:45.560
<v Speaker 7>you know, higher than you know where it is today?

0:14:45.880 --> 0:14:48.160
<v Speaker 7>You know four A four six or four semnob aout

0:14:48.160 --> 0:14:51.800
<v Speaker 7>ten year bond. Now, yes, is supply and demand could

0:14:51.800 --> 0:14:55.320
<v Speaker 7>push I yes, I'm just saying be prepared for it.

0:14:56.160 --> 0:14:59.920
<v Speaker 7>And then the worst case is stacklation, you know, high

0:15:00.120 --> 0:15:01.720
<v Speaker 7>race because you have a booming economy and there's a

0:15:01.720 --> 0:15:03.280
<v Speaker 7>lot of competition for capital.

0:15:03.320 --> 0:15:04.880
<v Speaker 4>It's not the same thing as dagflation.

0:15:05.360 --> 0:15:07.760
<v Speaker 8>What are what are the ripple effects of the stress

0:15:07.800 --> 0:15:11.160
<v Speaker 8>of that seven percent rates on business, on your growth?

0:15:11.440 --> 0:15:14.440
<v Speaker 7>Well, I'm not worried about japing Morgan shaping world. You know,

0:15:14.920 --> 0:15:17.560
<v Speaker 7>we are prepared. We can handle seven percent. We can

0:15:17.640 --> 0:15:20.480
<v Speaker 7>handle two percent again, Yeah, we can.

0:15:20.360 --> 0:15:20.960
<v Speaker 4>Handle that too.

0:15:21.200 --> 0:15:24.280
<v Speaker 7>I mean that's I mean, that's risk management is not

0:15:24.320 --> 0:15:26.520
<v Speaker 7>the same thing as guests in the future, when risk

0:15:26.560 --> 0:15:29.080
<v Speaker 7>managers look at the range of potential outcomes and being

0:15:29.080 --> 0:15:30.800
<v Speaker 7>able to say yourself, we can handle this, we can

0:15:30.840 --> 0:15:31.080
<v Speaker 7>handle this.

0:15:31.200 --> 0:15:33.360
<v Speaker 4>Weever we expect it, and we can handle it in between.

0:15:33.440 --> 0:15:34.840
<v Speaker 7>You know, if you bet your company and you know

0:15:34.920 --> 0:15:37.480
<v Speaker 7>one outcome, So I think all companies do that. You know,

0:15:37.920 --> 0:15:40.640
<v Speaker 7>every company's got different exposures. You know, input prices and

0:15:40.640 --> 0:15:43.080
<v Speaker 7>output prices. You know, some interst rates don't matter it.

0:15:43.200 --> 0:15:46.440
<v Speaker 7>Some it's the price of mozzarella. So what's your business?

0:15:46.600 --> 0:15:49.960
<v Speaker 7>Your business is different. So, but I think we don't

0:15:50.000 --> 0:15:51.840
<v Speaker 7>know the effect of these things in the economy. So

0:15:51.880 --> 0:15:54.320
<v Speaker 7>they may we may have a soft landing, we may

0:15:54.360 --> 0:15:57.480
<v Speaker 7>have a mild recession, may have a harder recession. Obviously

0:15:57.560 --> 0:16:00.360
<v Speaker 7>there are potential bid outcomes. You know, the worst would

0:16:00.360 --> 0:16:04.640
<v Speaker 7>be economically is staflation, where you have low growth, high

0:16:04.680 --> 0:16:07.200
<v Speaker 7>interest rates, and obviously if that happens, you're going to see,

0:16:07.360 --> 0:16:08.560
<v Speaker 7>you know, a lot of people struggling.

0:16:09.680 --> 0:16:12.360
<v Speaker 1>This is Bloomberg Daybreak Europe, your morning brief on the

0:16:12.400 --> 0:16:15.480
<v Speaker 1>stories making news from London to Wall Street and beyond.

0:16:15.560 --> 0:16:18.400
<v Speaker 1>Look for us on your podcast feed every morning on Apple,

0:16:18.480 --> 0:16:21.360
<v Speaker 1>Spotify and anywhere you get your podcasts. You can also

0:16:21.400 --> 0:16:25.400
<v Speaker 1>listen live each morning on London Dab Radio, Bloomberg Business App,

0:16:25.560 --> 0:16:28.640
<v Speaker 1>and Bloomberg dot Com. Our flagship New York station is

0:16:28.640 --> 0:16:32.320
<v Speaker 1>also available on your Amazon Alexa device. Just say Alexa

0:16:32.480 --> 0:16:36.040
<v Speaker 1>play Bloomberg eleven thirty. I'm Stephen Carol. Join us again

0:16:36.080 --> 0:16:38.120
<v Speaker 1>tomorrow for all the news you need.

0:16:37.960 --> 0:16:51.640
<v Speaker 9>To start your day right here on Bloomberg day Break Europe.

0:16:51.720 --> 0:16:53.960
<v Speaker 1>We bring you news and analysis every day on the

0:16:53.960 --> 0:16:56.880
<v Speaker 1>Bloomberg Daybreak Europe podcast, but now you can hear the

0:16:56.960 --> 0:17:00.360
<v Speaker 1>latest news on demand whenever you want it. Tribe to

0:17:00.360 --> 0:17:02.920
<v Speaker 1>Bloomberg News Now to get the latest headlines at the

0:17:03.000 --> 0:17:05.879
<v Speaker 1>click of a button. You can listen and subscribe to

0:17:05.880 --> 0:17:09.200
<v Speaker 1>Bloomberg News noow on the Bloomberg Business app, Bloomberg dot

0:17:09.240 --> 0:17:13.400
<v Speaker 1>com plus Apple, Spotify, and anywhere else you get your podcasts.

0:17:13.680 --> 0:17:16.320
<v Speaker 1>Search Bloomberg News Now and subscribe today