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Speaker 1: This is Bloomberg Wall Street Week. We turn our attention

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Speaker 1: to the markets this week at U S CPI members

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Speaker 1: reinforcing concerns about inflation. The financial stories that chiep are

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Speaker 1: worth a really different reaction to mark its more indications

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Speaker 1: of just how hot the U. S. Economy really is.

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Speaker 1: Through the eyes of the most influential voices Larry Summers,

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Speaker 1: the former Tretory Secretary, Katherine Keening, CEO of the n

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Speaker 1: Y Mollins Sam's l Sharmon and founder of Equatic Group

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Speaker 1: Investment in Bloomberg Wall Street Week with David Weston from

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Speaker 1: Bloomberg Radio, do we know which way we're headed? Markets

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Speaker 1: don't believe the Fed, the U S isn't sure about

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Speaker 1: paying all those bills that it's wracked up, and earnings, well,

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Speaker 1: earnings are just all over the place. This is Bloomberg

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Speaker 1: Wall Street Week. I'm David west this week's special contributor

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Speaker 1: Larry Summers of Harvard on a FED sending mixed signals.

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Speaker 1: I think the FEDS doing a good job of portraying

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Speaker 1: substantial uncertainty in the account. To me and Musher Sharma

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Speaker 1: of Rockefeller International on whether India is finally coming into

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Speaker 1: its own for investors. This is a country that has

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Speaker 1: consistently disappointing the optimist and defaceims. It was a week

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Speaker 1: of contradictions the Federal Reserve height rates and other twenty

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Speaker 1: five basis points, and warned that more is coming and

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Speaker 1: continue to anticipate that ongoing increases will be appropriate in

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Speaker 1: order to attain a stance of monetary policy that is

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Speaker 1: sufficiently restrictive to return inflation to two over time. Whatever

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Speaker 1: Chair Pile said, the markets apparently heard only that things

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Speaker 1: may be getting better. I think there are opportunities for

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Speaker 1: this rally to go longer and higher, while the European

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Speaker 1: Central Bank and the Bank of England continue to play

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Speaker 1: catch up, with both raising rates the expected fifty basis points.

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Speaker 1: We know we have ground to cover. We know that

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Speaker 1: we are not don't. President Biden met with Speaker McCarthy

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Speaker 1: at the White House and afterward they agreed only on

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Speaker 1: continuing to talk with no resolution in sight of the

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Speaker 1: debt ceiling dilemma. My role right now is to make

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Speaker 1: sure we have a sensible, responsible ability to raise the

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Speaker 1: debt ceiling, but not continue this runaway spin. Earnings were

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Speaker 1: all over the place, with snaps selling off while metas

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Speaker 1: surprise to the upside. It is a good sign that

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Speaker 1: both daily active users and monthly active users for platform

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Speaker 1: like Facebook that is you know, quite quite old in

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Speaker 1: social network terms, is still gaining. Caterpillar miss on profits

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Speaker 1: while GM scored big. Where we see consumer demand for

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Speaker 1: our vehicles at our price points is really strong. We

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Speaker 1: just need to make sure we get production up to

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Speaker 1: be able to meet that demand. But over in India,

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Speaker 1: the Adane conglomerate had bigger problems than just earnings as

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Speaker 1: it tried to stabilize with a stock offer after being

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Speaker 1: hit hard by a short seller, only to have to

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Speaker 1: cancel the offering as the company lost over one hundred

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Speaker 1: billion dollars in market value. Hey, it's all about good

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Speaker 1: having a company and its associates heavily and bad and

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Speaker 1: that's what hits away. And then came Friday with US

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Speaker 1: jobs numbers coming in far above what anyone had predicted,

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Speaker 1: adding five seventeen thousand new jobs to an already type market,

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Speaker 1: dropping the unemployment rate to three point four percent, which

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Speaker 1: drove bond yields up, with the yield on the tenure

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Speaker 1: adding thirteen basis points on Friday alone, but remaining nearly

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Speaker 1: flat for the week overall, ending up at three point

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Speaker 1: five to while the SMB five hundred climbed one point

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Speaker 1: six percent over the week and the NASDAC gained a

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Speaker 1: robust three point three percent today through a very busy

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Speaker 1: week in the markets, we welcome now Bob Michael He's

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Speaker 1: JP Morgan Asset Management, Head of Global fixed Income, Currency

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Speaker 1: and Commodities, and Aaron Brown, Pimco portfolio manager for multi

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Speaker 1: asset Strategies. Welcome both of you for being back with us. Aaron,

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Speaker 1: I'll start with you. This is a very busy week

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Speaker 1: and the markets were not always clear about what they thought.

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Speaker 1: What did you make of what happened over the course

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Speaker 1: of the week, in particularly jobs numbers. I think that

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Speaker 1: the jobs numbers came well above consensus expectations and certainly

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Speaker 1: underpinned the fact that the economy is not in a

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Speaker 1: recession right now. The job growth still remains quite strong,

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Speaker 1: and the labor market is still quite tight. And it

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Speaker 1: probably also underscores the fact that the Fed has more

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Speaker 1: work to do with respect to, you know, keeping rates

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Speaker 1: in restrictive territory. The FED has already indicated that they're

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Speaker 1: likely hike and at least an additional time one time

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Speaker 1: in March, and then after that, I think, you know,

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Speaker 1: certainly there's scope for the Fed to potentially hike an

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Speaker 1: additional one time or pause there, but in either case,

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Speaker 1: the Fed will likely not cut rates for an extended period,

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Speaker 1: continue to remain restrictive for quite some time time, and

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Speaker 1: then really observe and see how the data unfolds from there.

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Speaker 1: And so while the market has been romancing this idea

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Speaker 1: of the Federal Reserve starting to cut at the tail

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Speaker 1: end of three, the Federal Reserve, at least for now,

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Speaker 1: is likely to continue to keep rates on hold for

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Speaker 1: an extended period of time and not meet the market's

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Speaker 1: expectations for rate hikes as soon as the market is expecting. Bob, Yeah, David,

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Speaker 1: I wasn't confused at all. Actually, for the first time,

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Speaker 1: I think the Federal Reserve and the labor data confirmed

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Speaker 1: what the average investor, the average consumer is seeing. The

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Speaker 1: Federal Reserve could have walked in and said, inflation is

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Speaker 1: nowhere near our target. We've got to raise rates indefinitely

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Speaker 1: and push FED rates expectations much higher, maybe the terminal

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Speaker 1: rate to five and have even five and three quarters percent. Instead,

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Speaker 1: they came in and said, what I see, which is

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Speaker 1: inflation is moderating. We can see an end two rate hikes.

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Speaker 1: They confirm that. You look at the jobs data, and

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Speaker 1: yes it was a very big number, but how many

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Speaker 1: times have we been here and we've said everywhere we

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Speaker 1: go in the services economy there's a shortage of worker.

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Speaker 1: You look at airports, you look at restaurants, they're complaining

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Speaker 1: about not being able to hire enough workers. And this

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Speaker 1: confirm that this labor for this labor report confirmed that

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Speaker 1: the economy has shifted consumption from work from home sort

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Speaker 1: of expenditures to things that are more services, travel and leisures.

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Speaker 1: And what about that, because that's one of the things

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Speaker 1: that struck everybody that you added so many jobs got

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Speaker 1: tighter and tighter, and labor market at the same time,

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Speaker 1: actually the wages came down a little bit. Where is

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Speaker 1: the wage pressure and is it coming and when? Well,

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Speaker 1: I think part of it is a mix shift issue,

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Speaker 1: and we know that average hourly earnings does have some

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Speaker 1: distortions with respect to the mix shift, and so looking

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Speaker 1: at e c I Atlantic wage data is probably more

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Speaker 1: appropriate indicators. You know that said, I do think that

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Speaker 1: there is continued pressure, particularly on some of the services

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Speaker 1: UM side, and particularly some of the areas that Bob

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Speaker 1: mentioned with respect to leisure, travel transportation, which saw some

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Speaker 1: of the you know, significant job gains this last month.

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Speaker 1: UM that said, you know, we are starting to see

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Speaker 1: peak inflation. On the wage side. We are starting to

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Speaker 1: see measures of inflation start to move lower with respect

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Speaker 1: to wage growth, and I think that that's likely to

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Speaker 1: continue as we move through you know, the course of

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Speaker 1: three will still see wage gains, but at a slower pace.

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Speaker 1: And I think that's what they've FED is really keyed

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Speaker 1: in on in terms of you know, setting and determining

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Speaker 1: their policy. If they continue to see wage growth move

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Speaker 1: lower UM, which we're starting to see, that will allow

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Speaker 1: the FED to eventually back off and and really pause.

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Speaker 1: And so I think that's what the key thing to

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Speaker 1: watches is the pace of wage gage which is slowing

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Speaker 1: from here so soon I pick up on that very

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Speaker 1: point because I think most people agree. Certainly j Pal said,

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Speaker 1: we're starting to see some disinflationary forces. We're starting to

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Speaker 1: see seven inflation come off. But there's a question about

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Speaker 1: whether that's going to continue as you suggested, or whether

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Speaker 1: you're really gonna be able to get down to anything

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Speaker 1: like two without a lot more increases on the FED.

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Speaker 1: So I don't think the FED is likely to hike rates,

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Speaker 1: you know, significantly higher than here. I think one additional

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Speaker 1: basis point hiker potentially two is probably the most that's

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Speaker 1: in the cards for the FED at this time. And

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Speaker 1: then they're going to sit and wait. And you know,

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Speaker 1: we all know that Federal reserve policy, you know, moves

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Speaker 1: with variable and lagged effects, and so I still think

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Speaker 1: that the FED thinks that that the effects of the

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Speaker 1: tightening last year will still continue to make their way

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Speaker 1: through the economy uh this year, and therefore, you know,

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Speaker 1: there may not be future rate hikes that are necessary.

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Speaker 1: But you know, I think that they're willing to to

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Speaker 1: wait and see whether or not future rate hikes are

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Speaker 1: are necessary after another one or two hikes. And so,

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Speaker 1: you know, I do think that the FED right now,

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Speaker 1: you know, does expect that they're at least not there's

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Speaker 1: not significantly more hikes that are necessary, and as a

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Speaker 1: result of that, they're you know, willing to take a

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Speaker 1: little bit of a weight and see approach. You know

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Speaker 1: that said, um, you know, we have seen some disinflation

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Speaker 1: will likely see more, but to expect that we're going

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Speaker 1: to move, you know, close to two percent by year end.

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Speaker 1: I don't think you know, many are expecting that. And

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Speaker 1: you know, I think that at this point the FED

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Speaker 1: will think of anything less than three percent. Uh, you know,

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Speaker 1: in terms of core PC inflation is a win. So

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Speaker 1: I think that's the number to be looking for. Not

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Speaker 1: to percent is really sub three percent? Well, last one,

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Speaker 1: last one two on this subject, and that is what

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Speaker 1: do you expect the Fed to do? And number two,

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Speaker 1: what are the bond markets anticipating? Those could be two

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Speaker 1: different things. Well, we expected two different things. So I

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Speaker 1: agree with Aaron. The FED is setting us up to

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Speaker 1: do one or two more rate hikes, and as she said,

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Speaker 1: they pause, they wait for the cumulative and lagged effects

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Speaker 1: to hit. Our analysis shows that from the last rate

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Speaker 1: hike until recession, it's roughly a year, so you're gonna

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Speaker 1: have to wait out several quarters to see are you

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Speaker 1: going to have that mythical soft landing? Are you headed

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Speaker 1: into recession? The market is starting to front run that.

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Speaker 1: We've all done the work. We know at the time

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Speaker 1: of the Fed's last rate hike, that's the peak in

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Speaker 1: yields and things rally like crazy, particularly the front end

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Speaker 1: of the yield curve. That's what we're seeing in bond

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Speaker 1: markets absent today. We think that's what we're going to

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Speaker 1: see going forward. Okay, thank you so much, Aaron Brown

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Speaker 1: PIMCO and Bob Michael JP Morgan. They're gonna be staying

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Speaker 1: with us as we turn to some of the other

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Speaker 1: big issues out there for the market. That's gonna be

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Speaker 1: up next on Wall Street Week on Bloomberg. This is

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Speaker 1: Bloomberg Wall Street Week with David Weston from Bloomberg Radio.

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Speaker 1: The market has disappointed the bulls. It is disappointed the bears.

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Speaker 1: It has been, if anything, a cat on a hot

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Speaker 1: ten economy. Those who believe, against all the evidence that

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Speaker 1: the market is always efficient, sophisticated and prescient may have

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Speaker 1: a little trouble explaining the last two weeks when the

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Speaker 1: market first sword in its best day in ten months

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Speaker 1: and then two sessions later panicked for its worst day

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Speaker 1: in five months. That, of course, is luifer has around

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Speaker 1: Wall Street Week back in February when the number one

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Speaker 1: movie was on Golden Pond and the top song was

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Speaker 1: Centerfold by the j Giles. But I have to say

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Speaker 1: people to remind me what that song was, but I

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Speaker 1: remember it now. Aaron Brown of PIMCO and Bob Michael

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Speaker 1: from JP Morgan are still with the soul. Let me

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Speaker 1: start with you, Bob. We've talked about the central banks,

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Speaker 1: We've talked about jobs. I don't know if we have

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Speaker 1: a market on a hot tin economy is that we've

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Speaker 1: just learned from. But apart from the center bank and

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Speaker 1: central bank, and apart from the jobs, one of the

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Speaker 1: things that you're looking at that there and now they

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Speaker 1: could have fixed investors. Well. I think that's a very

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Speaker 1: good clip to go to because that's a reminder of

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Speaker 1: the era when the Fed declared victory on inflation too

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Speaker 1: And for us, that's the biggest risk that that happens again.

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Speaker 1: We're looking at a number of things. I think the

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Speaker 1: one most recently that's occurred is China is reopening and

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Speaker 1: suddenly you're going to have a billion for consumers out

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Speaker 1: there consuming that's twice the size of the US and

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Speaker 1: Europe put together. That could create a lot of pressure

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Speaker 1: on the price of goods and services. The other thing

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Speaker 1: out there that we're very mindful of is that the

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Speaker 1: US and Europe got away with a very mild winter

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Speaker 1: and that kept energy prices low, as did releasing the

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Speaker 1: strategic petroleum Reserve. So Aaron, what about those are two

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Speaker 1: very interesting risks, one of those that inflation is not

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Speaker 1: going away, that federill actually have to keep raising or

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Speaker 1: after pausing, after raise again maybe because of China. How

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Speaker 1: big a risk is China in terms of inflation. I

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Speaker 1: think that China, with respect to global inflation and particularly

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Speaker 1: developed market inflation, is actually going to be quite small.

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Speaker 1: The way that we think about it. From a growth perspective,

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Speaker 1: it probably has about a point to percentage point increase

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Speaker 1: to US growth and maybe point three increase to European

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Speaker 1: growth just because of the trade effects, and pretty similar

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Speaker 1: impact to inflation, albeit potentially even a little bit smaller

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Speaker 1: than those impacts. And that's because you know, typically in

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Speaker 1: an environment where you see China growth really rebounding, those

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Speaker 1: tend to be the typical effects to growth and inflation

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Speaker 1: to global Developed market GDP and inflation. This time around,

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Speaker 1: it could be even a little bit smaller, given the

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Speaker 1: fact that the reflation story and the and the growth

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Speaker 1: story in China is going to be really centered in

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Speaker 1: domestic growth drivers and more service reopening drivers rather than

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Speaker 1: what you typically see, which tends to be more investment

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Speaker 1: in infrastructure. Lad So this time it's going to be

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Speaker 1: really focused on travel, getting back to work, getting back

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Speaker 1: to you know, typical service oriented economy, which is very domestic,

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Speaker 1: China focused. It probably has a bigger impact into the

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Speaker 1: region than the region and sort of the country's closest

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Speaker 1: to China rather than to the US and into Europe,

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Speaker 1: into more developed market economies in the Western world. And

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Speaker 1: so I think that the effects are going to be

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Speaker 1: good for for China, good for maybe Korea, for Thailand,

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Speaker 1: to Singapore, to Hong Kong, but but not as strong

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Speaker 1: as a driver for growth and inflation, you know, in

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Speaker 1: the US or in Europe. Well, although we did see

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Speaker 1: the price of copper shoot up pretty smartly once China

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Speaker 1: started to reopen, so they're out there competing for the

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Speaker 1: same resources that the Western world is. Now that's inflationary pressure. Well,

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Speaker 1: what about broke broadly to want to think you taking

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Speaker 1: into account of emerging markets in your decisions about bond investing.

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Speaker 1: We're gonna have sure, Shama. On a few minutes, you're

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Speaker 1: talking about India is that a factor is making investment decisions, Bob,

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Speaker 1: It's an enormous factor. As we look across bond markets,

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Speaker 1: we've been very impressed with the emerging markets. We like

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Speaker 1: to track the cumulative number of rate hikes since the

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Speaker 1: start of the development markets have done close to four

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Speaker 1: thousand basis points. The emerging markets have done over twenty

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Speaker 1: two thousand basis points of rate hikes. They got in

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Speaker 1: front of this, they raised rates. Real yields are high,

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Speaker 1: they slay slowed growth and inflationary pressures. We can go

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Speaker 1: into those markets, get high real yields and you know what,

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Speaker 1: we do. Think the dollar has topped, it will come

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Speaker 1: down over the balance of the year. That's a pretty

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Speaker 1: nice tail went to local emerging market debt, and I

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Speaker 1: think I cut you off. No, what I was gonna

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Speaker 1: say was the biggest driver for inflation, particularly in the

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Speaker 1: US from a commodity perspective, tends to be energy. And

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Speaker 1: we've seen even since the China reopening which started in

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Speaker 1: early in early October, we've seen energy prices come down,

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Speaker 1: you know, fairly significantly, and gas prices also fall pretty

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Speaker 1: precipitously as well. So while typically you would think that

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Speaker 1: if it was going to have a significant commodity impact

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Speaker 1: from China reopening, you would see that occurrent in energy costs.

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Speaker 1: We've actually seen the opposite occur, which is why I

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Speaker 1: don't think, you know, just looking at the data and

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Speaker 1: looking what's transpired and looking at how China is reopening

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Speaker 1: and the sectors is going to be impacted. It's why

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Speaker 1: I don't think you're going to see a huge, you know,

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Speaker 1: sort of impact to inflation from China real winning. I

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Speaker 1: hope that's right. I hope the Fed engineers a soft landing,

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Speaker 1: but China is going to be out there consuming and spending.

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Speaker 1: And we also have to look at Europe. Europe did

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Speaker 1: not go through the pain that we all feared over

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Speaker 1: the last several months. That's put them in a much

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Speaker 1: better position to consume as well. Fascinating. Thank you so

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Speaker 1: very much. It's great to have both of you back

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Speaker 1: with us. It's always a treat, that is Bob Michael

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Speaker 1: of JP Morgan and also Aaron Brown of Pimco. Well,

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Speaker 1: this week was hedge fund Week down in Miami, and

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Speaker 1: our very own Shinelle Boss went down to report on

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Speaker 1: this really important event for hedge funds. Were welcoming now

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Speaker 1: to Wall Street. We great to have your Chanelle. I'm

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Speaker 1: glad you were down there for it. So talk to

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Speaker 1: the smart long term investor who's looking at their portfolio.

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Speaker 1: Why do why do I need hedge fund in my portfolio?

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Speaker 1: I mean, it looks like some make money, some lose money.

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Speaker 1: And as a whole, the industry has lost more than

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Speaker 1: two hundred billion dollars last year. So it's not like

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Speaker 1: the hedge funds at large are doing so well. But

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Speaker 1: there are select few that I've had some of their

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Speaker 1: best years in history. Take Citadel for example, which not

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Speaker 1: only had sixteen billion dollars in profit last year, they

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Speaker 1: surpassed on Paulson with the greatest trades ever. And so

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Speaker 1: single trades as well as larger funds have had amazing years.

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Speaker 1: But what strategy, I think is what you're asking here,

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Speaker 1: What what is a hedge fund? I wanna take a

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Speaker 1: listen here really quickly to seem to lead the black

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Speaker 1: Swan author who was famous for navigating these types of events,

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Speaker 1: because even in universe of the fund that he advises

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Speaker 1: didn't have a favorable year. But this is what's ahead,

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Speaker 1: is what he has to say. We have more debt

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Speaker 1: than we ever did in history. We have the weirdest

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Speaker 1: valuations in history, and we have a lot more connectivity

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Speaker 1: than we did before. So these things up and realized that, hey,

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Speaker 1: you know what, disney Land is over, the children go

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Speaker 1: back to school and then make sure you're so now

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Speaker 1: we're gonna go back to the war. It's a humbling time.

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Speaker 1: But listen, I spoke to both to lead as well

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Speaker 1: as Jim Chainos, for example, who expects that over time

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Speaker 1: corporate profits could drop another fifty And so whether you're

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Speaker 1: going short in the market like Jim Chainos is known for,

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Speaker 1: or whether you're buying options likeness seems teleb or whether

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Speaker 1: you're cliff fastness and believe that trend following will get

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Speaker 1: you there. There are a lot of strategies that are

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Speaker 1: coming back to the surface now and at a humbling time,

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Speaker 1: as you call it. We have a new leader at

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Speaker 1: the top of the largest head fund, a new co

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Speaker 1: c i O for Bridgewater. Tell us about her. Yeah,

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Speaker 1: remember Ray Dalio just stepped down from this post about

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Speaker 1: four months ago and he was co c i O.

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Speaker 1: But as he transitions, remember their two new CEOs as

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Speaker 1: well at Bridgewater that started early last year and this

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Speaker 1: is their new leadership team. This is a big change.

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Speaker 1: It comes at a tough time, David, because remember I

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Speaker 1: was talking about Citadel. You have Citadel surpassing Bridgewater as

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Speaker 1: the highest grossing hedge fund firm of all time according

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Speaker 1: to l c H Investments. So Karen Carneal Tambor will

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Speaker 1: take them into this new generation. She's only thirty seven

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Speaker 1: years old, but started her career there being recruited there

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Speaker 1: by Greg Jensen. Thank you so much to Shay Bask

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Speaker 1: who reports on all things Wall Street right here for

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Speaker 1: Wall Street Week coming up. We wrap up the week

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Speaker 1: with our special contributor Larry Summers of Harvard. That's next

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Speaker 1: on Wall Street Week on Bloomberg. This is Bloomberg Wall

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Speaker 1: Street Week with David Weston from Bloomberg Radio. This is

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Speaker 1: Wall Street Week. I'm David Western. We are joined once

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Speaker 1: again by our very special contributor here on Wall Street Week.

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Speaker 1: He is Larry Summers of Harvard. So, Larry, I gotta

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Speaker 1: start with those jobs and never was out on Friday

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Speaker 1: when they crossed. I actually thought maybe they were wrong.

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Speaker 1: It is extraordinary FID jobs were adding given where we

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Speaker 1: are already. It's a huge miss relative to the consensus,

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Speaker 1: it's way out of line with what you'd expected with

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Speaker 1: a DP. The labor mark, it's running very differently then

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Speaker 1: lots of other indicators in the economy where you see

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Speaker 1: some signs, particularly in manufacturing, of real slowing. So it's

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Speaker 1: a pretty confused uh picture. UH. One idea would be

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Speaker 1: that people are still worried about how much work they're

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Speaker 1: going to get out of their workforces, given people UH

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Speaker 1: working at home, given increased steps and teasm, given a

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Speaker 1: variety of UH post COVID changes, and so they just

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Speaker 1: feel that whenever they can get workers, they should take

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Speaker 1: the opportunity. But it sure does seem like we have

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Speaker 1: a lot of workers relative to the amount of demand

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Speaker 1: we have or amount of production we have in UH

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Speaker 1: the economy. And the question is, is all this gonna

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Speaker 1: be income that's gonna be spent that's gonna lift the

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Speaker 1: economy up a bunch? Is it going to turn out

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Speaker 1: that at some point people realize they've got too much

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Speaker 1: inventory and labor and we're gonna see a fairly sudden stop.

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Speaker 1: I think it's as difficult to an economy to read

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Speaker 1: as I can remember a year ago. At this time,

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Speaker 1: I was pretty confident about what the principal imbalances were

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Speaker 1: and how things we're gonna play out. I don't have

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Speaker 1: that kind of confidence right now. Can we have this

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Speaker 1: sort of addition to the job market and not have

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Speaker 1: wages go up more than we thought? They went up

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Speaker 1: four point four percent as a year over year now

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Speaker 1: on the monthly, which was a tenth of a percent

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Speaker 1: more than expected, but it wasn't that dramatic. Are we

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Speaker 1: going to have wage inflation kick in here that will

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Speaker 1: really give us problems once again on Terrey policy? David,

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Speaker 1: that's a basic question. I went back and looked at

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Speaker 1: forecasting model emphasizing vacancies that I had used a year

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Speaker 1: ago to predict that we were headed for significant wage

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Speaker 1: inflation problems, and what I found was quite interesting to me.

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Speaker 1: What I found was that that model is predicting wage

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Speaker 1: inflation right now, just about right, but it's substantially under

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Speaker 1: predicted wage inflation in the latter part of two. So

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Speaker 1: we saw an acceleration beyond what models would have predicted

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Speaker 1: that in two. We saw that, I now realized with

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Speaker 1: respect to wages, just as we saw that with respect

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Speaker 1: to prices. And the central question is we had some

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Speaker 1: easy come and now it's come off very quickly inflation.

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Speaker 1: And the question now is whether that inflation is going

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Speaker 1: to continue to decline rapidly, continuing the trend of the

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Speaker 1: last few months, or whether the inflation that was never

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Speaker 1: really predicted by models wasn't a sense ultimately transitory. But

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Speaker 1: now we're left with an underlying inflation that's gonna be

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Speaker 1: much more difficult to have get out of the economy.

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Speaker 1: And the difficult you described, Larry sit right on the

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Speaker 1: desk of J. Powell, the Chair of the FED, from

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Speaker 1: whom we heard, of course this week, in connection with

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Speaker 1: their decision. Last week, before we heard from him, you

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Speaker 1: were on this program saying it's what the FED has.

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Speaker 1: It's sort of like a car on a foggy night,

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Speaker 1: and basically you got to keep the foot close to

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Speaker 1: the accelerated and close to break. And this is actually

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Speaker 1: what your friend and colleague Paul Krugman had to say

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Speaker 1: reacting to what you had to say. It This really

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Speaker 1: disturbs me to say this, but I think I agree

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Speaker 1: with Larry. Yeah, we could. You know, we will get

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Speaker 1: it wrong one way or the other. There's a reasonable

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Speaker 1: chance in either direction. So there are you disturbed your

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Speaker 1: friend Paul Groom because he actually agreed with you. But

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Speaker 1: at the same time, do you think Paul did exactly

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00:25:08,640 --> 00:25:11,159
Speaker 1: what you were describing, didn't keep his foot sort of

433
00:25:11,200 --> 00:25:13,159
Speaker 1: close to both the brick and he started without going

434
00:25:13,240 --> 00:25:17,040
Speaker 1: too far either direction. I think of FEDS doing a

435
00:25:17,080 --> 00:25:26,480
Speaker 1: good job of portraying substantial uncertainty UH in the economy,

436
00:25:26,840 --> 00:25:30,800
Speaker 1: recognizing that it's going to be very hard and one's

437
00:25:30,800 --> 00:25:33,720
Speaker 1: going to have to try to interpret the data month

438
00:25:33,800 --> 00:25:40,280
Speaker 1: by month, and that there are a lot of uh surprises.

439
00:25:41,119 --> 00:25:48,080
Speaker 1: I think they're having a difficult time uh convincing markets

440
00:25:48,800 --> 00:25:54,440
Speaker 1: on their determination and with respect to the path towards

441
00:25:54,520 --> 00:26:00,639
Speaker 1: the end of the the year, I probably will think,

442
00:26:00,920 --> 00:26:06,479
Speaker 1: uh the risks that the two part theory I just

443
00:26:06,600 --> 00:26:12,400
Speaker 1: laid out is true and that the inflation reductions will

444
00:26:12,960 --> 00:26:19,120
Speaker 1: be transitory. I think that risk is greater than I

445
00:26:19,160 --> 00:26:23,600
Speaker 1: think the FED thinks it is. I do still think

446
00:26:23,680 --> 00:26:27,560
Speaker 1: there is the risk that I've talked about earlier on

447
00:26:27,600 --> 00:26:31,440
Speaker 1: the show of a kind of wildly coyote moment where

448
00:26:31,880 --> 00:26:38,879
Speaker 1: firms realize they've got too much inventory and uh too many,

449
00:26:39,640 --> 00:26:43,480
Speaker 1: too many people, and that you see a more economy

450
00:26:43,640 --> 00:26:48,280
Speaker 1: wide turned to adjustment of the kind you've seen in

451
00:26:48,359 --> 00:26:55,119
Speaker 1: the relatively limited in terms of employment technology sector. But

452
00:26:55,920 --> 00:27:01,119
Speaker 1: that's not that's certainly anything but a confident predict. Let's

453
00:27:01,160 --> 00:27:03,280
Speaker 1: turn from the Central Bank actually the executive branch in

454
00:27:03,359 --> 00:27:05,680
Speaker 1: the White House, where there's a big change going on

455
00:27:06,080 --> 00:27:08,720
Speaker 1: in the staff there. Ron Claim, the chief of the staff,

456
00:27:08,760 --> 00:27:10,800
Speaker 1: has left also Brian DEAs with whom you I know

457
00:27:10,840 --> 00:27:13,280
Speaker 1: you've worked personally very closely. What do you think about

458
00:27:13,320 --> 00:27:16,280
Speaker 1: their tenure and as important, what is present by now

459
00:27:16,480 --> 00:27:20,639
Speaker 1: need going forward? I think Ron Claim as chief of

460
00:27:20,720 --> 00:27:25,640
Speaker 1: Staff and Brian Deese as head of the any city,

461
00:27:25,840 --> 00:27:31,520
Speaker 1: have very proud legacies. They can look back on. This

462
00:27:31,680 --> 00:27:36,560
Speaker 1: administration with a very small set of margins in the

463
00:27:36,640 --> 00:27:40,760
Speaker 1: Senate and in the end in the House, probably passed

464
00:27:40,840 --> 00:27:45,000
Speaker 1: more economic legislation in its first two years than any

465
00:27:45,080 --> 00:27:51,359
Speaker 1: administration in more than two generations. There are, to be sure,

466
00:27:51,520 --> 00:27:55,880
Speaker 1: real and serious issues with inflation. But I don't think

467
00:27:55,920 --> 00:27:59,760
Speaker 1: anybody would have predicted an economy quite as strong as

468
00:28:00,119 --> 00:28:03,880
Speaker 1: is the one in the labor market at least uh

469
00:28:04,000 --> 00:28:08,000
Speaker 1: that we are seeing, uh that we're that we're seeing

470
00:28:08,240 --> 00:28:12,359
Speaker 1: right now. So they've got an enormous amount to be

471
00:28:12,960 --> 00:28:19,760
Speaker 1: uh proud of, as does Treasury Secretary UH Janet Yellen,

472
00:28:20,200 --> 00:28:27,000
Speaker 1: who UH will fortunately be continuing UH in her position

473
00:28:27,080 --> 00:28:32,800
Speaker 1: and will provide I think some hugely important stability for

474
00:28:32,840 --> 00:28:37,720
Speaker 1: the for the economy. But Ron Klane and Brian Deese

475
00:28:38,520 --> 00:28:44,360
Speaker 1: should be and are leaving with their heads held very high.

476
00:28:44,480 --> 00:28:49,240
Speaker 1: And of course one has to give enormous UH credit

477
00:28:49,360 --> 00:28:55,520
Speaker 1: to the President who relied on them to really push

478
00:28:55,680 --> 00:29:02,040
Speaker 1: forward a set of very bold policies. And finally, Larry,

479
00:29:02,080 --> 00:29:04,000
Speaker 1: give us a minute on anti trust. We've talked in

480
00:29:04,000 --> 00:29:06,040
Speaker 1: the past about Lynda Kahn, the chair of the FTC,

481
00:29:06,200 --> 00:29:08,280
Speaker 1: and her new approach and interest. She tried it out

482
00:29:08,280 --> 00:29:10,920
Speaker 1: in court trying to stop actually Meta from making an

483
00:29:10,920 --> 00:29:14,680
Speaker 1: accussion of a small virtuality startup and was rebuffed by

484
00:29:14,680 --> 00:29:17,000
Speaker 1: the court. What do you make of that. I'm worried

485
00:29:17,000 --> 00:29:24,520
Speaker 1: about overambition in antitrust policy. This isn't the first or

486
00:29:24,600 --> 00:29:29,080
Speaker 1: the second or the third time that our anti trust

487
00:29:29,120 --> 00:29:35,560
Speaker 1: authorities have lost in court for overstepping I've heard stories

488
00:29:35,680 --> 00:29:41,680
Speaker 1: that they are trying to ask so many questions about

489
00:29:41,840 --> 00:29:44,720
Speaker 1: mergers even when they don't think they're going to have

490
00:29:44,920 --> 00:29:49,480
Speaker 1: a strong legal argument. The deadlines are past, and the

491
00:29:49,560 --> 00:29:52,520
Speaker 1: mergers don't happen. Okay, Thank you so very much to

492
00:29:52,680 --> 00:29:55,440
Speaker 1: Larry Summers here a very special contributor here on Wall

493
00:29:55,440 --> 00:30:00,000
Speaker 1: Street Week coming up, it's the country with the large

494
00:30:00,080 --> 00:30:02,760
Speaker 1: just population in the world and the fifth largest economy.

495
00:30:03,120 --> 00:30:06,000
Speaker 1: We talked with the ser Shama of Rockefeller International about

496
00:30:06,000 --> 00:30:09,160
Speaker 1: whether investors should be taking a fresh look at India.

497
00:30:10,200 --> 00:30:24,440
Speaker 1: That's next on Wall Street Week on Bloomberg. India the

498
00:30:24,480 --> 00:30:28,040
Speaker 1: fifth largest economy in the world, with more people than China,

499
00:30:28,440 --> 00:30:30,680
Speaker 1: and as the head of the State Bank of India

500
00:30:30,720 --> 00:30:34,080
Speaker 1: told Us and Davos, it's growing faster. We are quite

501
00:30:34,080 --> 00:30:37,520
Speaker 1: hopeful that this year will witness a growth of about

502
00:30:37,560 --> 00:30:41,600
Speaker 1: seven and going forward even next year also on the

503
00:30:41,680 --> 00:30:44,400
Speaker 1: higher base, we expect the growth to be about six person.

504
00:30:44,920 --> 00:30:48,760
Speaker 1: India is benefiting from supply chain concerns with China. For

505
00:30:48,960 --> 00:30:53,760
Speaker 1: too long, countries around the world have been overly dependent

506
00:30:54,240 --> 00:30:58,680
Speaker 1: on risky countries for a single source for critical inputs,

507
00:30:58,880 --> 00:31:06,320
Speaker 1: over corrected economic integration, trusted trading partners like India, and

508
00:31:06,440 --> 00:31:09,960
Speaker 1: it's moving fast on everything from electric vehicles from companies

509
00:31:10,000 --> 00:31:13,200
Speaker 1: like Tata. I think the transition in India is coming

510
00:31:13,200 --> 00:31:16,280
Speaker 1: through very strong and very fast, much much faster than

511
00:31:16,360 --> 00:31:19,280
Speaker 1: what people are expecting it to be to the expansion

512
00:31:19,320 --> 00:31:22,360
Speaker 1: of five g O objective is by master twining four

513
00:31:22,480 --> 00:31:25,000
Speaker 1: to cover the entire country on five, all of which

514
00:31:25,040 --> 00:31:27,920
Speaker 1: is leading investors like Steve Ratner of Will and Advisers

515
00:31:28,120 --> 00:31:31,920
Speaker 1: to take another look at opportunities in India. It does

516
00:31:32,000 --> 00:31:35,560
Speaker 1: feel at the moment like India really is starting to

517
00:31:35,640 --> 00:31:38,240
Speaker 1: move forward for a whole variety of reasons, including China

518
00:31:38,400 --> 00:31:41,840
Speaker 1: moving back, and so India is interesting on a number

519
00:31:41,880 --> 00:31:47,240
Speaker 1: of levels. And to bring us up to speed on

520
00:31:47,320 --> 00:31:50,160
Speaker 1: where India is today and where it maybe going for investors,

521
00:31:50,160 --> 00:31:52,840
Speaker 1: Welcome to Stony who knows the country terribly well. He

522
00:31:52,960 --> 00:31:55,640
Speaker 1: is Russia Sharma. He is the chairman of Rockefeller International,

523
00:31:55,680 --> 00:31:58,480
Speaker 1: also founder of Breakout Capital. Sure, great to have you

524
00:31:58,520 --> 00:32:00,600
Speaker 1: back on Wall Street Week. I mean, I hear a

525
00:32:00,640 --> 00:32:03,280
Speaker 1: lot of talk about maybe India is the next China

526
00:32:04,000 --> 00:32:07,240
Speaker 1: in terms of investment here, the next great opportunity. How

527
00:32:07,280 --> 00:32:10,360
Speaker 1: what's your reaction to that thought? Well, David, I guess

528
00:32:10,360 --> 00:32:12,120
Speaker 1: this is a legacy of the fact that I've covered

529
00:32:12,160 --> 00:32:16,320
Speaker 1: India now for nearly three decades. Uh and my consistent

530
00:32:16,360 --> 00:32:19,760
Speaker 1: observation about India has been that this is a country

531
00:32:19,800 --> 00:32:23,920
Speaker 1: that has consistently disappointed the optimists and the pessimists. So

532
00:32:23,960 --> 00:32:26,320
Speaker 1: this is not the first time that I've heard India

533
00:32:26,360 --> 00:32:29,280
Speaker 1: being the next China. India will be India, which is

534
00:32:29,280 --> 00:32:32,840
Speaker 1: that it's a complicated story. There are many nuances out here,

535
00:32:33,280 --> 00:32:36,880
Speaker 1: and there will possibly never be next China. Just because

536
00:32:36,920 --> 00:32:42,680
Speaker 1: what China achieved over its UH four decade long economic expansion,

537
00:32:42,720 --> 00:32:46,760
Speaker 1: where it grew at a pace of nearly ten percent,

538
00:32:47,280 --> 00:32:50,000
Speaker 1: I think it's something which we've never seen in history

539
00:32:50,160 --> 00:32:53,200
Speaker 1: and we're unlikely to see ever again. Because an extraordinary

540
00:32:53,240 --> 00:32:57,040
Speaker 1: set of circumstances and leaders brought China to the position

541
00:32:57,080 --> 00:32:59,080
Speaker 1: it is. And as you know that China has been

542
00:32:59,120 --> 00:33:03,120
Speaker 1: reversing many of its policies over the last few years. Sosa.

543
00:33:03,120 --> 00:33:07,200
Speaker 1: As India's concerned, I think that it UH offers many

544
00:33:07,240 --> 00:33:11,040
Speaker 1: great prospects. But to project China on it is a

545
00:33:11,080 --> 00:33:14,240
Speaker 1: story I've seen in the past, and unfortunately, I feel

546
00:33:14,960 --> 00:33:17,400
Speaker 1: that people who think that are likely to be a

547
00:33:17,400 --> 00:33:21,000
Speaker 1: bit disappointed. Sure, as you so wisely suggest, you really

548
00:33:21,000 --> 00:33:23,800
Speaker 1: can't compare any two countries at the same time. Is

549
00:33:23,800 --> 00:33:26,840
Speaker 1: there one parallel part of the reason for the amazing

550
00:33:26,920 --> 00:33:28,960
Speaker 1: economic privrecs of China is they started from a very

551
00:33:29,000 --> 00:33:31,600
Speaker 1: low base, and you actually cause me to go back

552
00:33:31,600 --> 00:33:34,800
Speaker 1: and look at per capita GDP for India and it's

553
00:33:34,800 --> 00:33:37,840
Speaker 1: something like a year as opposed to China was just

554
00:33:37,880 --> 00:33:40,080
Speaker 1: like five times that much. Does that offer actual an

555
00:33:40,080 --> 00:33:42,200
Speaker 1: opportunity because there's a lot of headroom there, you can

556
00:33:42,240 --> 00:33:44,720
Speaker 1: grow in awful lot. Yes. So I think that India

557
00:33:45,120 --> 00:33:47,560
Speaker 1: in terms of because of its low base, will remain

558
00:33:47,640 --> 00:33:49,960
Speaker 1: one of the fastest growing economies on the in the world.

559
00:33:50,000 --> 00:33:53,200
Speaker 1: It's been so over the last three or four decades.

560
00:33:53,280 --> 00:33:57,160
Speaker 1: Just said, its success has been overshadowed by what China

561
00:33:57,240 --> 00:33:59,200
Speaker 1: has been able to achieve. But if you look at

562
00:33:59,280 --> 00:34:02,880
Speaker 1: India's grow it is consistently grown at a pace of

563
00:34:02,920 --> 00:34:06,280
Speaker 1: about two and a half to three percentage points faster

564
00:34:06,360 --> 00:34:10,640
Speaker 1: than the global economy. UH. That's been the link. China's

565
00:34:10,680 --> 00:34:16,000
Speaker 1: growth street UH during the similar income levels was far

566
00:34:16,080 --> 00:34:19,640
Speaker 1: greater than the average of the global economy. India's average

567
00:34:19,680 --> 00:34:21,440
Speaker 1: has been about two and a half to three percentage

568
00:34:21,480 --> 00:34:24,160
Speaker 1: points faster than the global economy has consistently been there

569
00:34:24,600 --> 00:34:27,440
Speaker 1: and there's nothing to suggest that that's about to change.

570
00:34:27,719 --> 00:34:29,719
Speaker 1: So if you expect the global economy to grow at

571
00:34:29,719 --> 00:34:31,560
Speaker 1: about two two and a half percent, which is what

572
00:34:31,600 --> 00:34:35,040
Speaker 1: I expected to for the foreseeable future. Then I think

573
00:34:35,040 --> 00:34:37,680
Speaker 1: that India's growth strate is likely to be five five

574
00:34:37,719 --> 00:34:40,360
Speaker 1: and a half percenter. So anything more than that to

575
00:34:40,440 --> 00:34:43,640
Speaker 1: expect out of India is far too ambitious and something

576
00:34:43,680 --> 00:34:47,280
Speaker 1: we have never seen UH in its UH post reform

577
00:34:47,400 --> 00:34:50,960
Speaker 1: history which began. Thank you so much, for sure, it's

578
00:34:51,000 --> 00:34:52,680
Speaker 1: always great to have you with us on Wall Street Week,

579
00:34:52,680 --> 00:34:55,879
Speaker 1: that's for sure, Sherman. He is chairman of Rockefeller International.

580
00:34:57,160 --> 00:34:58,839
Speaker 1: That does it for this episode of Wall Street Week.

581
00:34:58,880 --> 00:35:01,719
Speaker 1: I'm David Weston. This is Bloomberg. See you next week.

582
00:35:03,360 --> 00:35:03,400
Speaker 1: M