WEBVTT - Bloomberg Wall Street Week - December 1st, 2023 0:00:00.240 --> 0:00:02.440 This is Bloomberg Wall Street Week. 0:00:02.480 --> 0:00:04.400 I mean may not have an overall recesion, we're having 0:00:04.400 --> 0:00:06.680 a rolling recession to kind of role looks pretty strongly 0:00:06.680 --> 0:00:07.640 it is when it comes to jobs. 0:00:07.680 --> 0:00:09.879 The financial stories that shape our world. 0:00:09.960 --> 0:00:13.600 Three major regional bank failures send shockwaves through the banking system. 0:00:13.680 --> 0:00:15.480 We're all trying to figure out what to make of 0:00:15.560 --> 0:00:17.320 generative AI through. 0:00:17.160 --> 0:00:19.280 The eyes of the most influential voices. 0:00:19.440 --> 0:00:22.400 Welcome down, Doctor Paul Krugman, Ryan Moynihan, a Bank of America, 0:00:22.520 --> 0:00:25.320 Zebra Lair of the Paulson Institute, Glen Hubbard of the 0:00:25.320 --> 0:00:26.280 Columbia Business School. 0:00:26.280 --> 0:00:30.120 Bloomberg Wall Street Week with David Weston from Bloomberg Radio. 0:00:30.240 --> 0:00:33.440 War in Israel takes a pause, the world takes another 0:00:33.520 --> 0:00:36.040 shot at dealing with climate, and we say goodbye to 0:00:36.080 --> 0:00:39.480 two giants, one in diplomacy and the other an investment. 0:00:39.880 --> 0:00:43.440 This is Bloomberg Wall Street Week. I'm David Weston. This 0:00:43.560 --> 0:00:46.600 week's secial contributor. Larry Summers on the legacies of Henry 0:00:46.640 --> 0:00:50.280 Kissinger and Charlie Munger. Johnny Fion of B and P 0:00:50.479 --> 0:00:52.800 Paraba on what his clients are telling him. 0:00:52.920 --> 0:00:56.480 Part of them are expecting actually to access Captain Walkeet. 0:00:56.320 --> 0:01:00.120 At a later time when waits normalized. 0:00:59.720 --> 0:01:02.960 And Joe said of thor equities on the investment opportunities 0:01:03.080 --> 0:01:04.240 in Mexico. 0:01:04.120 --> 0:01:07.400 We think this is another one of those golden opportunities 0:01:07.560 --> 0:01:08.080 where we're. 0:01:08.040 --> 0:01:22.960 For all the global Wall Street watched this week as 0:01:23.040 --> 0:01:27.000 Israel's warld Hamas went on a temporary hiatus as Israel 0:01:27.080 --> 0:01:29.800 stopped its military operations in a deal that brought some 0:01:29.880 --> 0:01:31.080 of the hostages home. 0:01:31.600 --> 0:01:34.600 The approach that we're taken with Israel and quite frankly 0:01:34.640 --> 0:01:36.760 with our partners in the region is working. 0:01:36.800 --> 0:01:38.840 It's getting aid into people that needed. 0:01:38.959 --> 0:01:41.640 And Elon Musk used the opportunity to travel to the 0:01:41.640 --> 0:01:44.800 war zone to counter accusations that his post on X 0:01:44.880 --> 0:01:48.240 was anti Semitic and to offer to help rebuild Gaza 0:01:48.480 --> 0:01:49.160 once things. 0:01:48.960 --> 0:01:52.000 Are over, those who are intentioned motor must be inutralized. 0:01:52.120 --> 0:01:54.040 Then the propaganda west. 0:01:53.880 --> 0:01:57.040 Off the world gathered in Dubai for COP twenty eight 0:01:57.200 --> 0:01:59.600 and the latest efforts to get a move on in 0:01:59.680 --> 0:02:03.520 dealing with climate, with US officials once again expressing hope. 0:02:03.600 --> 0:02:09.079 I'm confident that Copple provided an opportunity both to identify 0:02:09.360 --> 0:02:13.080 the opportunities that this energy transition is providing and to 0:02:13.080 --> 0:02:14.799 build the broad international coalition. 0:02:15.040 --> 0:02:17.959 Even as more than seventy thousand delegates we're talking about 0:02:17.960 --> 0:02:21.480 fossil fuels opiqu plus met in Vienna to review restrictions 0:02:21.480 --> 0:02:22.320 on all production. 0:02:22.680 --> 0:02:26.320 It could be simply that OPEC plus decides to curtail 0:02:26.680 --> 0:02:29.040 supply and we get a bread going back up to 0:02:29.080 --> 0:02:30.959 the low nineties as a result of that. It's a 0:02:31.040 --> 0:02:33.239 question of how much they curtail supply by, but that's 0:02:33.280 --> 0:02:34.680 the biggest risk right now. 0:02:34.840 --> 0:02:38.240 Two towering figures on Global Wall Street said goodbye this 0:02:38.280 --> 0:02:42.280 week as America's foremost diplomat for a generation and more. 0:02:42.560 --> 0:02:45.440 Henry Kissinger left us at the age of one hundred, 0:02:45.720 --> 0:02:49.079 and Warren Buffett's longtime partner, Charlie Munger, passed away at 0:02:49.080 --> 0:02:52.560 age ninety nine. On the economic front, the United States 0:02:52.600 --> 0:02:55.639 continued its strong performance, with GDP growing at a robust 0:02:55.760 --> 0:02:58.840 five point two percent clip. And when you put that 0:02:58.960 --> 0:03:02.040 strong economic perform together with a FED that seems to 0:03:02.040 --> 0:03:04.160 be sickly it may well be done with hiking. Well, 0:03:04.200 --> 0:03:06.600 what you get are some pretty happy markets, as the 0:03:06.639 --> 0:03:08.600 S and P five hundred added another eight tens of 0:03:08.760 --> 0:03:11.800 percent to end the week at forty fifth five ninety four, 0:03:11.840 --> 0:03:14.480 which is above where the Bloomberg Elves Equities and the 0:03:14.560 --> 0:03:16.560 analysts thought we would end up twenty twenty three, and 0:03:16.560 --> 0:03:18.560 by that way above even where they think we're going 0:03:18.639 --> 0:03:20.240 to end up at the end of twenty twenty four, 0:03:20.240 --> 0:03:22.919 which is forty five hundred. The Nasdaq was up four 0:03:22.919 --> 0:03:25.079 tens of percent for the week, while the yield on 0:03:25.120 --> 0:03:28.320 the tenure was down nearly twenty six basis points for 0:03:28.440 --> 0:03:30.600 the week to end at four point two one. For 0:03:30.720 --> 0:03:33.040 her perspective on these markets and what they are telling 0:03:33.120 --> 0:03:36.280 us about investing today, we welcome now Catherine Keating. She's 0:03:36.360 --> 0:03:39.560 bny MELON, Global head of Wealth Management Casin. Welcome back. 0:03:39.560 --> 0:03:40.600 Great to have you back on wallshreet. 0:03:40.680 --> 0:03:41.840 Great to be here, David, thank you. 0:03:42.000 --> 0:03:43.640 So let's start with some of those data. I mean, 0:03:43.640 --> 0:03:46.119 we got some really robust data we talked about this week, 0:03:46.160 --> 0:03:48.240 but it's it's just the latest and quite a few 0:03:48.600 --> 0:03:50.960 series of data that are pretty encouraging with the economy. 0:03:51.240 --> 0:03:51.400 Yeah. 0:03:51.440 --> 0:03:53.119 So the real story in markets has been the month 0:03:53.120 --> 0:03:57.120 of November, obviously, and the market's digesting really four pieces 0:03:57.160 --> 0:04:01.040 of important data. The first one, of course, inflationation continues 0:04:01.080 --> 0:04:04.280 to go down, but we see disinflation broadening. We see 0:04:04.280 --> 0:04:06.280 it in goods, we see it in services, and we 0:04:06.320 --> 0:04:09.280 see it in big ticket items like shelter and automobiles. 0:04:09.320 --> 0:04:12.600 So that's the first thing inflation. Second thing, labor market 0:04:12.880 --> 0:04:16.719 softening a bit. That's a good sign for lower inflation 0:04:16.960 --> 0:04:20.520 as well. We see the unemployment rate drifting up a 0:04:20.560 --> 0:04:24.200 bit three point nine percent, still very low historically, unemployment 0:04:24.200 --> 0:04:27.240 claims drifting up a bit. And then the real news, 0:04:27.279 --> 0:04:30.400 I think was the following the bond market digesting that 0:04:31.000 --> 0:04:34.520 huge move in tenure treasury rates in the month of November, 0:04:34.720 --> 0:04:38.840 sixty basis points down from a four eighty eight down 0:04:38.880 --> 0:04:40.279 sixty to twenty eight. 0:04:40.320 --> 0:04:41.840 That's an enormous. 0:04:41.520 --> 0:04:44.520 Move in financing costs, not just for the federal government, 0:04:44.520 --> 0:04:48.320 of course, but for anyone who borrows consumers with mortgages 0:04:48.320 --> 0:04:53.520 and car loans, local governments, companies, very big news. And 0:04:53.560 --> 0:04:55.720 then the last thing that the market was digesting is 0:04:55.760 --> 0:04:59.440 after three quarters in a row of negative earnings growth 0:04:59.440 --> 0:05:01.800 in the SMP five hundred, we actually had positive earnings 0:05:01.839 --> 0:05:05.479 this quarter, four percent growth, eighty percent of companies beating expectations. 0:05:05.480 --> 0:05:07.600 So the market digested all of that, and you said it, 0:05:07.839 --> 0:05:09.040 we had a rally at everything. 0:05:09.400 --> 0:05:10.680 So I'm going to say I find this a little 0:05:10.720 --> 0:05:13.000 humbling because if you go back to the end of 0:05:13.000 --> 0:05:14.920 twenty twenty two, I'm not sure we would have predicted 0:05:15.000 --> 0:05:17.000 any of this. So why did so many of us 0:05:17.000 --> 0:05:17.839 get this so wrong? 0:05:18.520 --> 0:05:20.800 So, David, as you know, history has taught us that 0:05:20.839 --> 0:05:23.159 when you have inflation in the economy and you have 0:05:23.240 --> 0:05:27.360 the Federal Reserve raising interest rates to slow the economy, 0:05:27.760 --> 0:05:30.240 ninety percent of the time you end up in a recession. 0:05:30.640 --> 0:05:31.440 So here we are. 0:05:31.680 --> 0:05:35.240 We're twenty months in to a very fast and very 0:05:35.240 --> 0:05:39.480 aggressive FED hiking cycle, and there's no recession in sight. 0:05:39.600 --> 0:05:40.240 Why is that? 0:05:40.720 --> 0:05:45.880 I think many people underappreciated the change in two pillars 0:05:45.920 --> 0:05:49.719 of the economy, consumers and large companies. Consumers, of course 0:05:49.760 --> 0:05:52.920 seventy percent of the economy. The consumer balance sheet has 0:05:52.960 --> 0:05:56.760 changed dramatically since the financial crisis. First, consumers are twice 0:05:56.800 --> 0:05:59.760 as wealthy twenty percent wealthy or just since the beginning 0:05:59.760 --> 0:06:02.920 of this decade, thanks to stock markets and real estate appreciation. 0:06:03.640 --> 0:06:06.599 Second of all, they've been borrowing less. The financial crisis 0:06:06.640 --> 0:06:09.640 was a terrible crisis for the consumer. They've been borrowing 0:06:09.680 --> 0:06:12.880 much more prudently. You see ten percent or so of 0:06:12.880 --> 0:06:16.040 their disposable income now going to borrowing costs. That was 0:06:16.040 --> 0:06:19.240 close to fifteen percent before the financial crisis. But the 0:06:19.279 --> 0:06:21.839 most important thing when you look at consumer balance seats 0:06:21.920 --> 0:06:26.360 is two thirds of consumer borrowing is their mortgage. Those 0:06:26.400 --> 0:06:29.440 mortgages have been refinanced at very low rates. They're going 0:06:29.520 --> 0:06:32.080 to stay that way for a while. Corporate America sort 0:06:32.080 --> 0:06:34.719 of the same thing. Big companies before the crisis. They 0:06:34.760 --> 0:06:37.600 would borrow in short term markets commercial paper. Those rates 0:06:37.640 --> 0:06:41.000 are very high. Now companies aren't doing that. Instead, they 0:06:41.040 --> 0:06:44.000 did what consumers did, and they took advantage of low rates. 0:06:44.040 --> 0:06:46.599 In twenty twenty and twenty twenty one, the SMP five 0:06:46.680 --> 0:06:51.040 hundred taking refinancing debt, issuing new debt at low rates 0:06:51.160 --> 0:06:54.159 and terming it four years, five years, six years, ten years, 0:06:54.880 --> 0:06:57.520 and so that has made both the consumer and large 0:06:57.560 --> 0:06:59.719 companies less sensitive to interest rate increase. 0:07:00.160 --> 0:07:01.520 Great to have you back on, Thank you so much, 0:07:01.520 --> 0:07:03.320 says Cosiarkidi of Nymelan. 0:07:03.680 --> 0:07:06.560 We have always thought of foreign policy and economic policy 0:07:07.000 --> 0:07:11.040 as something that has clear cut terminal dates, and that 0:07:11.080 --> 0:07:13.120 you are either in a condition of conflict or in 0:07:13.160 --> 0:07:16.680 a condition of blissful peace in the nineties. If we 0:07:16.720 --> 0:07:20.320 do it properly, we will live in a less dangerous world, 0:07:20.400 --> 0:07:23.880 but one which will never be totally without problems, and 0:07:23.920 --> 0:07:27.960 in which the subtlety of American of American statesmanship in 0:07:28.040 --> 0:07:32.640 adjusting the various balances both political and economic, will be 0:07:32.720 --> 0:07:37.480 severely tested. But if we do it well, it could 0:07:37.560 --> 0:07:39.720 be an extraordinarily creative period. 0:07:40.560 --> 0:07:44.600 Henry Kissinger defined the world of diplomacy for two generations, 0:07:44.880 --> 0:07:48.239 remaking the geopolitical map of Asia and the Middle East. 0:07:48.640 --> 0:07:51.760 A Jewish refugee who fled Nazi Germany for the United States, 0:07:52.000 --> 0:07:55.320 Kissinger returned as a US Army private to serve in 0:07:55.360 --> 0:07:58.600 the Battle of the Bulge. After the war, Kissinger became 0:07:58.720 --> 0:08:01.880 doctor Kissinger when he earned a PhD in political science, 0:08:02.080 --> 0:08:05.800 and then joined the Harvard faculty. When Richard Nixon became 0:08:05.880 --> 0:08:09.160 president in nineteen sixty nine, he appointed Henry Kissinger as 0:08:09.200 --> 0:08:12.200 his national security advisor and used him to open a 0:08:12.240 --> 0:08:16.120 window to China that made the current economic miracle possible. 0:08:16.840 --> 0:08:17.760 To most people. 0:08:18.240 --> 0:08:22.200 In nineteen sixty eight sixty nine, it seemed inconceivable that 0:08:22.280 --> 0:08:25.920 the US could have a relationship with such an extreme, 0:08:26.680 --> 0:08:32.480 zealous regime as Mao Zedong's remember, the Cultural Revolution was 0:08:32.960 --> 0:08:37.720 in full space and most people thought the regime was 0:08:37.920 --> 0:08:41.800 just nots so the very idea of trying to establish 0:08:42.040 --> 0:08:45.440 a relationship was a minority pursuit. 0:08:46.320 --> 0:08:49.520 Kausinger also negotiate a peace treaty between Israel and Egypt 0:08:49.840 --> 0:08:53.200 and a ceasefire with Syria that brought calm to a 0:08:53.200 --> 0:08:55.920 region that had been upended by wars since the end 0:08:55.960 --> 0:08:58.960 of World War Two. Kasinger also played the lead role 0:08:58.960 --> 0:09:01.400 and negotiating an end to the United States involvement in 0:09:01.400 --> 0:09:04.520 a conference in Vietnam, which earned him the Nobel Peace 0:09:04.559 --> 0:09:08.280 Prize in nineteen seventy three. Doctor Kissinger's role in the 0:09:08.280 --> 0:09:11.840 world was not without controversy. He was accused of pursuing 0:09:11.840 --> 0:09:15.240 an illegal military offensive and laois in Cambodia, as well 0:09:15.280 --> 0:09:18.280 as playing a role in coups in Chile and Argentina 0:09:18.320 --> 0:09:21.760 that resulted in repressive regimes. And this is the thing. 0:09:21.640 --> 0:09:25.280 That critics of Henry Kistinger have always struggled with. They've 0:09:25.400 --> 0:09:30.440 been very bad at setting the crimes of the Pinitiate 0:09:30.880 --> 0:09:33.480 in the context of the Cold War. When you see 0:09:33.480 --> 0:09:36.000 it in the context of the Cold War. To realize 0:09:36.120 --> 0:09:40.520 that the war crimes the crimes against humanity being perpetrated 0:09:40.559 --> 0:09:43.440 by communist regimes or at a much larger scale than 0:09:43.480 --> 0:09:47.000 those that were perpetrated by regimes of the right. And 0:09:47.040 --> 0:09:49.120 this is really the important thing one has to bear 0:09:49.120 --> 0:09:52.240 in mind. Henry Kistinger said even before he went into 0:09:52.280 --> 0:09:56.920 government that foreign policy was very often a choice between evils, 0:09:57.160 --> 0:09:59.880 and the job was to try to choose the lesser evil. 0:10:00.440 --> 0:10:03.840 Every president since Nixon turned to Henry Kissinger for advice 0:10:03.880 --> 0:10:07.040 on foreign policy. He was the author of influential books, 0:10:07.080 --> 0:10:09.720 from his first on Europe in the Wake of Napoleon, 0:10:09.800 --> 0:10:13.520 published in nineteen fifty seven, up to Leadership six Studies 0:10:13.520 --> 0:10:18.439 in World Strategies, published last year. Just last month, Henry 0:10:18.520 --> 0:10:21.520 Kissinger appeared to give a speech at the annual Al 0:10:21.600 --> 0:10:24.600 Smith Dinner in New York. At the end of that speech, 0:10:24.679 --> 0:10:27.960 he said, quote, A great leader is the giver and 0:10:28.040 --> 0:10:33.400 protector of our hopes. Henry Kissinger dead at age one hundred. 0:10:34.559 --> 0:10:37.400 Coming up Riturn to our special CONTRIBITTERA Larry Sumrso Harvard 0:10:37.400 --> 0:10:39.920 for his thoughts on the lives and legacies of two 0:10:39.960 --> 0:10:42.960 towering figures, Henry Kissinger and Charlie Munger. That's next on 0:10:43.000 --> 0:10:44.320 Wall Street Week on Bloomberg. 0:10:53.280 --> 0:10:57.520 This is Bloomberg Wall Street Week with David Weston from 0:10:57.640 --> 0:11:00.679 Bloomberg Radio. 0:11:04.760 --> 0:11:06.560 This is Wall Street Week. I'm David Weston, and were 0:11:06.559 --> 0:11:08.880 welcome to our very special contributor here in Wall Streetek. 0:11:08.880 --> 0:11:10.640 He is Larry Summons of Harvard. Larry, thank you so 0:11:10.720 --> 0:11:12.640 much for being with us here in New York. It 0:11:12.679 --> 0:11:16.240 has been quite a week where we lost Charlie Munger, 0:11:16.440 --> 0:11:20.520 we lost we lost Henry Kissinger, and then on Friday 0:11:20.520 --> 0:11:22.960 we actually lost Saturday O'Connor as well. I know you 0:11:23.080 --> 0:11:27.120 knew Henry, well you knew Charlie Munger. Talk about Henry 0:11:27.160 --> 0:11:28.280 Kissinger in your experience. 0:11:28.640 --> 0:11:29.840 He was an extraordinary man. 0:11:30.960 --> 0:11:35.600 It was extraordinary to see somebody in their eighties and 0:11:35.640 --> 0:11:39.280 then in their nineties, and then one hundred years old, 0:11:40.000 --> 0:11:47.600 so incredibly intellectually vital looking to learn about AI, speaking 0:11:47.640 --> 0:11:52.600 to most of the world's leading statesman every several months. 0:11:53.040 --> 0:11:55.720 He was fully engaged. 0:11:55.160 --> 0:11:59.040 And active in the way that many people half his 0:11:59.120 --> 0:12:01.320 age wouldn't. 0:12:00.880 --> 0:12:06.400 Have had the energy and the drive to do. He 0:12:06.559 --> 0:12:09.400 was somebody who always thought. 0:12:10.679 --> 0:12:17.120 In the large verst understanding broad historical forces or shaping 0:12:17.200 --> 0:12:23.960 relationships between countries that forming a conception of strategy. From 0:12:24.000 --> 0:12:31.400 that conception of strategy working to tactics. It was anything 0:12:31.640 --> 0:12:36.840 but the day to day political thrust of statements that 0:12:36.960 --> 0:12:43.520 so often seems to preoccupy leaders these days. He surely 0:12:43.559 --> 0:12:48.600 didn't get everything right, but he certainly was always trying 0:12:49.280 --> 0:12:56.000 to reason from the large to reason down. And I 0:12:56.120 --> 0:13:03.880 learned from his deep, li in a way tragic. 0:13:04.920 --> 0:13:07.079 Sensibility. 0:13:07.200 --> 0:13:11.760 He was the idealist as realist he and the realist 0:13:12.000 --> 0:13:17.040 as idealist Henry, maybe because of how and where he 0:13:17.080 --> 0:13:23.720 grew up in Germany in the nineteen thirties, feared disorder, 0:13:24.280 --> 0:13:30.480 feared chaos, feared the complete triumph of passion over reason. 0:13:31.200 --> 0:13:37.520 And his determination was to bring about stability, not because 0:13:37.559 --> 0:13:41.960 he somehow thought that the pride of nations and strength 0:13:42.160 --> 0:13:47.440 was what was most important, but because when there was 0:13:48.160 --> 0:13:52.719 the containment of evil, that was when people had an 0:13:52.720 --> 0:13:56.920 opportunity to live and flourish. 0:13:57.480 --> 0:14:00.960 The partner of Warren Buffett important. What effect did he 0:14:01.120 --> 0:14:03.800 have on writ large? 0:14:04.400 --> 0:14:04.520 You know? 0:14:04.640 --> 0:14:08.240 I think the first thing to say is that Charlie 0:14:08.240 --> 0:14:12.079 and Henry had something very important in common. They had 0:14:12.160 --> 0:14:17.800 different interests, they had different styles, they had different ways 0:14:17.840 --> 0:14:22.440 of speaking, but they both had a deep commitment to 0:14:22.560 --> 0:14:26.160 seeing the world as it was, not as they wanted 0:14:26.240 --> 0:14:30.800 it to be. And they began by trying to see 0:14:30.880 --> 0:14:37.440 things as realistically, as clinically accurately as possible. And that 0:14:37.600 --> 0:14:42.160 was the basis for decision, whether it was political and 0:14:42.240 --> 0:14:46.320 diplomatic decision in Henry's case, whether it was financial and 0:14:46.400 --> 0:14:52.400 investment decision in Charlie's case. What I got from both 0:14:52.440 --> 0:14:58.440 of them was this commitment to detached observation as a 0:14:58.480 --> 0:15:08.560 prelude to taking action, you know, buy Warren's testimony. Charlie 0:15:08.600 --> 0:15:14.760 provided a really extraordinary insight, he said, and it's different 0:15:14.800 --> 0:15:19.400 than the old fashioned and traditional value investing credo. Charlie 0:15:19.880 --> 0:15:25.960 rejected the idea of buying fair companies at great prices. 0:15:26.480 --> 0:15:31.160 He thought you'd ultimately do better buying great companies at 0:15:31.400 --> 0:15:37.520 fair prices. And that philosophy of finding the best, making 0:15:37.600 --> 0:15:42.120 sure you weren't overpaying, and then sticking with it is 0:15:42.200 --> 0:15:46.120 one that has certainly served certainly served him, and certainly 0:15:46.200 --> 0:15:51.880 served warn well. But I saw it. Charlie was in 0:15:51.960 --> 0:15:55.120 a lat wasn't involved a law of Harvard Law School 0:15:55.560 --> 0:16:00.360 while I was the president of Harvard, and he had 0:16:00.400 --> 0:16:04.080 a view. It was clear there was a logic, he 0:16:04.200 --> 0:16:06.400 was prepared to argue and. 0:16:07.960 --> 0:16:13.560 Defend it. He too was an extraordinary figure. 0:16:13.640 --> 0:16:16.240 And you have to also look at both Henry and 0:16:16.360 --> 0:16:22.240 Charlie and see the power of staying curious. They stayed 0:16:22.280 --> 0:16:26.280 with it to the very end, and I think their curiosity, 0:16:26.360 --> 0:16:29.440 their love of reading, their love of discussion, their love 0:16:29.440 --> 0:16:32.800 of argument, was part of what caused them to flourish 0:16:32.920 --> 0:16:33.840 for so very long. 0:16:33.960 --> 0:16:37.120 Well, maybe a reach, but I think you're really emulating 0:16:37.200 --> 0:16:40.040 that and staying curious as you've now taken this role 0:16:40.080 --> 0:16:42.560 with Open Ai. You talk about Henry Kissinger with Open Air. 0:16:42.680 --> 0:16:44.960 You're taking it on. Let me ask you, frankly, why 0:16:45.000 --> 0:16:46.680 did you take the job and what do you hope 0:16:46.680 --> 0:16:47.240 to do with it? 0:16:48.320 --> 0:16:52.000 I thought that, as I said on your show, that 0:16:52.080 --> 0:16:56.880 this was something that was extraordinarily important. You know, no 0:16:56.920 --> 0:17:01.040 one can be certain whether this is once a decade technology, 0:17:01.080 --> 0:17:05.359 a once a half century technology, a once a century technology, 0:17:05.720 --> 0:17:09.159 a once a millennium technology. You know and can know 0:17:09.240 --> 0:17:13.800 that for sure, but it sure looks like it's awfully 0:17:13.920 --> 0:17:23.119 important to develop rapidly and safely and to disseminate effectively. 0:17:23.240 --> 0:17:26.960 And well so, when I was offered an opportunity to 0:17:27.080 --> 0:17:32.280 be part of contributing to that and overseeing to make 0:17:32.320 --> 0:17:37.840 sure that that was effectively done, and to do it 0:17:37.960 --> 0:17:40.959 working with some very great people. I thought it was 0:17:41.000 --> 0:17:43.800 a real opportunity and I was glad to do it. 0:17:43.840 --> 0:17:46.320 I don't want to take anything way for your technological expertise, 0:17:46.440 --> 0:17:49.239 but when what you just said safely strikes me as 0:17:49.280 --> 0:17:51.119 probably part of what you're going to be focused on, 0:17:51.480 --> 0:17:54.160 and that gets to questions of governance about how you 0:17:54.200 --> 0:17:56.840 handle this technology wherever it's going and how a powerful 0:17:56.880 --> 0:17:59.040 may be. Do you have an overall sense of what 0:17:59.119 --> 0:18:01.760 you need to do to government to get this safely 0:18:01.840 --> 0:18:02.280 part right? 0:18:03.359 --> 0:18:05.520 You know, David, I've been on the job two days 0:18:05.560 --> 0:18:08.760 and they're going to send me the onboarding packet for 0:18:09.680 --> 0:18:13.640 the board on Sunday. So I shouldn't be saying too 0:18:13.720 --> 0:18:17.960 much at all because I don't know enough. 0:18:18.560 --> 0:18:20.760 Here's some things I think I know. 0:18:21.440 --> 0:18:24.880 I think I know that a company like this has 0:18:24.960 --> 0:18:30.199 to be prepared to cooperate doesn't mean always agree with, 0:18:30.760 --> 0:18:36.960 but cooperate with key government officials on regulatory issues, on 0:18:37.160 --> 0:18:47.520 national security issues, on development of technology issues. I think 0:18:47.560 --> 0:18:51.080 I know also, and this is integral to the structure 0:18:51.520 --> 0:18:57.800 of open AI, where the for profit entity is itself 0:18:57.920 --> 0:19:04.760 a creature of a not for profit ENTITYE that this 0:19:04.840 --> 0:19:09.480 needs to be a corporation with a conscience, and that 0:19:09.520 --> 0:19:14.320 we need to be always thinking about the multiple stakeholders 0:19:14.320 --> 0:19:18.000 in the development of this technology, and as a board member, 0:19:18.080 --> 0:19:22.360 that will be part of my responsibility working with other 0:19:23.280 --> 0:19:25.320 board members to. 0:19:27.040 --> 0:19:28.560 Make that certain. 0:19:28.960 --> 0:19:33.200 You know, my colleague at Harvard Lake, colleague Ken Galbret, 0:19:33.400 --> 0:19:36.840 said that conscious is the knowledge that someone is watching, 0:19:37.520 --> 0:19:41.040 and I think it's the responsibility for everybody involved in 0:19:41.119 --> 0:19:47.360 this to be thinking very carefully always about both opportunities 0:19:47.880 --> 0:19:52.600 and uncertainties and to make sure that those are balanced 0:19:53.160 --> 0:19:55.879 in the best way that's possible. 0:19:56.080 --> 0:19:57.760 Claria, it's really great to have you with us, as 0:19:57.760 --> 0:20:00.439 it always is. There's a very special contributor, Lary Summers 0:20:00.440 --> 0:20:03.280 of Harvard and this is Wall Street Week on Bloomberg. 0:20:10.560 --> 0:20:14.720 This is Bloomberg Wall Street Week with David Weston from 0:20:14.880 --> 0:20:21.359 Bloomberg Radio. 0:20:23.320 --> 0:20:26.280 Supply chains. Until the pandemic struck, most of us gave 0:20:26.320 --> 0:20:29.680 them little thought, apart from those working in shipping and procurement. 0:20:30.160 --> 0:20:32.400 But then we were hit with the reality that critical 0:20:32.400 --> 0:20:36.240 supplies for healthcare and much more came from one country China, 0:20:36.600 --> 0:20:40.080 presenting the need to diversify any supply chains are complicated. 0:20:40.119 --> 0:20:42.560 Your viewers know this from the business world that look 0:20:42.680 --> 0:20:44.320 the semiconductor value chain. 0:20:44.400 --> 0:20:46.640 It stretches across the globe and goes around at least 0:20:46.640 --> 0:20:47.240 three times. 0:20:47.600 --> 0:20:50.760 Now, companies and countries are moving quickly to reinforce and 0:20:50.800 --> 0:20:54.520 diversify their supply chains, with President Biden this week announcing 0:20:54.520 --> 0:20:57.480 a White House Council on Supply Chain Resilience. 0:20:57.880 --> 0:21:01.280 Let me be clear, in any corporation that's not brought 0:21:01.280 --> 0:21:04.840 their prices back down even as inflations come down, even 0:21:04.880 --> 0:21:08.439 the supply chains have been rebuilt, It's time to stop 0:21:08.520 --> 0:21:09.880 the price gouging. 0:21:10.400 --> 0:21:13.240 And with the new emphasis on alternative suppliers comes the 0:21:13.280 --> 0:21:17.520 movement of capital and investment, creating investment alternatives to China. 0:21:17.920 --> 0:21:20.359 I think some of the emerging markets outside of China 0:21:20.800 --> 0:21:24.960 have done relatively well. These include places like India, include 0:21:24.960 --> 0:21:29.480 places like Indonesia, Mexico, Brazil, and even some places in 0:21:29.480 --> 0:21:33.320 Eastern Europe like Greece and even Poland. These countries have 0:21:33.400 --> 0:21:37.200 done well, still relatively small to absorb too much capital. 0:21:37.520 --> 0:21:39.960 Where you can see that this sort of new era 0:21:40.320 --> 0:21:40.919 is beginning. 0:21:41.000 --> 0:21:44.440 It ticks a while one of the beneficiaries is Mexico, 0:21:44.720 --> 0:21:45.679 whether it's in trade. 0:21:45.920 --> 0:21:49.560 The main issue with China is exports. They declined significantly 0:21:49.600 --> 0:21:51.920 in terms of what they export to the US over 0:21:51.920 --> 0:21:54.560 the last five years, and that I think until they 0:21:54.600 --> 0:21:56.560 can turn that around, that's going to be an issue. 0:21:56.600 --> 0:21:59.159 And there's other countries that are benefiting from this, like 0:21:59.280 --> 0:22:00.280 Mexico with. 0:22:00.240 --> 0:22:02.520 Its near shoring or in real estate. 0:22:02.840 --> 0:22:06.119 I would say there's great opportunity is in Mexico in 0:22:06.160 --> 0:22:09.960 the industrial space and particularly along the border, and you 0:22:10.080 --> 0:22:13.240 have a lot of multinational companies that are located there 0:22:13.560 --> 0:22:17.440 looking for logistics and distribution type space. 0:22:17.600 --> 0:22:18.720 Or in manufacturing. 0:22:18.920 --> 0:22:20.760 There are going to be markets that kind of in 0:22:20.840 --> 0:22:24.240 Mexico where you know, more things are being made there. Again, 0:22:24.280 --> 0:22:27.359 and some of the restrictions that have been applied to 0:22:27.440 --> 0:22:29.520 China have benefited the Mexican economy. 0:22:29.880 --> 0:22:34.000 Putting Mexico high end Jamie Diamond's list of investment opportunities, 0:22:34.280 --> 0:22:35.240 We've doubled. 0:22:34.880 --> 0:22:37.119 A triple or capital here in the last six years. 0:22:37.400 --> 0:22:42.320 We cover more clients in private banking, investment banking, sm management, so. 0:22:42.640 --> 0:22:43.760 Our is total. 0:22:44.040 --> 0:22:45.920 I think it's one of the great opportunities I put 0:22:45.920 --> 0:22:48.239 in Mexico if you had to pick a country, this 0:22:48.320 --> 0:22:57.320 might be the number one opportunity to give us the 0:22:57.359 --> 0:23:01.080 investors perspective on Mexico. We welcome now Joseph Sitt. He's 0:23:01.119 --> 0:23:04.480 founder and chairman of Thor Equity, who's Sore Urban Unit 0:23:04.640 --> 0:23:07.280 is the largest real estate developer in Mexico. So, Joe, 0:23:07.320 --> 0:23:08.720 thank you so much for being here. It's great to 0:23:08.720 --> 0:23:10.199 have you. First of all, give us a sense of 0:23:10.240 --> 0:23:11.880 just how big you are in Mexico. 0:23:12.640 --> 0:23:16.560 In terms of the company, we're probably the largest individual 0:23:16.600 --> 0:23:20.800 developer in the retail asset class and the hospitality asset class. 0:23:21.160 --> 0:23:26.760 And then because we're in so many things from industrial, manufacturing, condominiums, etc. 0:23:27.000 --> 0:23:27.200 Etc. 0:23:27.640 --> 0:23:30.840 We're probably top two, top three developer in the country today. 0:23:31.000 --> 0:23:31.880 So why are you there? 0:23:33.560 --> 0:23:37.720