1 00:00:00,560 --> 00:00:03,720 Speaker 1: This is Bloomberg Wall Street Week. We turn our attention 2 00:00:03,880 --> 00:00:07,600 Speaker 1: to the markets this week. Us CPI embers reinforcing concerns 3 00:00:07,600 --> 00:00:10,800 Speaker 1: about inflation. The financial stories that sheep are were a 4 00:00:10,840 --> 00:00:13,760 Speaker 1: really different reaction to mark. Its more indications of just 5 00:00:13,960 --> 00:00:16,360 Speaker 1: how hot the U. S economy really is through the 6 00:00:16,400 --> 00:00:19,520 Speaker 1: eyes of the most influential voices. Larry Summer was the 7 00:00:19,560 --> 00:00:22,960 Speaker 1: former Treachery Secretary Katherine Keening, CEO of v n Y Moms, 8 00:00:22,960 --> 00:00:26,880 Speaker 1: Sam's l Shairman, and founder of Equity Group Investment. Bloomberg 9 00:00:26,920 --> 00:00:31,280 Speaker 1: Wall Street Week with David Weston from Bloomberg Radio. A 10 00:00:31,520 --> 00:00:35,320 Speaker 1: Ukraine war even more brutal than we imagined, putting in 11 00:00:35,360 --> 00:00:38,160 Speaker 1: perspective other news of a regime change at the FED 12 00:00:38,520 --> 00:00:41,800 Speaker 1: and the ambitions of the world's richest man. This is 13 00:00:41,800 --> 00:00:58,280 Speaker 1: Bloomberg Wall Street Week. I'm David Weston. A lot happened 14 00:00:58,280 --> 00:01:01,480 Speaker 1: this week, but it all aided in the glaring light 15 00:01:01,560 --> 00:01:04,280 Speaker 1: at the images of alleged war crimes committed by Russian 16 00:01:04,280 --> 00:01:09,160 Speaker 1: troops in northern Ukraine. Remember I got criticized for calling 17 00:01:09,440 --> 00:01:12,520 Speaker 1: proved the war criminals. All the truths of the matter, 18 00:01:13,080 --> 00:01:15,840 Speaker 1: saw what happens. He is a war crimine. We have 19 00:01:15,920 --> 00:01:19,399 Speaker 1: to continue to provide Ukraine with the weapons they need 20 00:01:19,480 --> 00:01:22,480 Speaker 1: to continue to fight, which led to calls on both 21 00:01:22,520 --> 00:01:25,920 Speaker 1: sides of the Atlantic for even more sanctions against Russia. 22 00:01:26,640 --> 00:01:29,200 Speaker 1: The U. S Treasury has holted dollar debt payments from 23 00:01:29,280 --> 00:01:33,560 Speaker 1: Russian government accounts at US financial institutions. It's the first 24 00:01:33,600 --> 00:01:37,920 Speaker 1: known sanctions since alleged atrocities committed by Russian troops in 25 00:01:37,959 --> 00:01:41,720 Speaker 1: the Ukrainian town of were discovered. The US, EU and 26 00:01:41,760 --> 00:01:44,640 Speaker 1: G seven A coordinating a fresh line of sanctions on 27 00:01:44,720 --> 00:01:48,720 Speaker 1: Moscow following the discovery of civilian murders in Ukrainian times. 28 00:01:48,720 --> 00:01:51,760 Speaker 1: But despite the horror unfolding in Europe, the week did 29 00:01:51,760 --> 00:01:55,840 Speaker 1: hold other news like Elon Musk using a small piece 30 00:01:55,880 --> 00:01:58,200 Speaker 1: of his two undred and seventy billion dollar fortune to 31 00:01:58,320 --> 00:02:02,560 Speaker 1: plant his flag on Twitter. Of course, on the not 32 00:02:02,720 --> 00:02:05,600 Speaker 1: so surprising news that Elon Musk is now joining the board, 33 00:02:05,600 --> 00:02:10,520 Speaker 1: so his nine stake not so passive as expected, with 34 00:02:10,639 --> 00:02:14,200 Speaker 1: Katie Stanton of Moxi Ventures suggesting what may come next 35 00:02:14,280 --> 00:02:17,120 Speaker 1: for Twitter, well, I think it's a very expensive way 36 00:02:17,240 --> 00:02:20,440 Speaker 1: to get yourself an edit button. We even had President 37 00:02:20,440 --> 00:02:23,280 Speaker 1: Biden welcoming his former boss back to the White House 38 00:02:23,320 --> 00:02:26,200 Speaker 1: for the first time celebrating the anniversary of the Affordable 39 00:02:26,280 --> 00:02:29,800 Speaker 1: Care Act that they got passed together. Welcome back to 40 00:02:29,880 --> 00:02:32,400 Speaker 1: the White House. Man feels like the good old days, 41 00:02:34,280 --> 00:02:36,560 Speaker 1: and no week would be complete without a focus on 42 00:02:36,600 --> 00:02:39,160 Speaker 1: the FED and where it goes next. And we heard 43 00:02:39,200 --> 00:02:41,880 Speaker 1: from a range of FED officials like Esther George at 44 00:02:41,919 --> 00:02:45,520 Speaker 1: the Kansas City Fed about rate hikes and the balance sheet. 45 00:02:45,840 --> 00:02:48,160 Speaker 1: I think fifty basis points is going to be an 46 00:02:48,160 --> 00:02:51,160 Speaker 1: option that will have to consider along with other things. 47 00:02:51,200 --> 00:02:54,440 Speaker 1: And again I'm very focused on thinking about how the 48 00:02:54,480 --> 00:03:01,320 Speaker 1: balance sheet moves in conjunction with policy, very increases. All 49 00:03:01,360 --> 00:03:03,520 Speaker 1: that talk about rates the balance sheet, well, they took 50 00:03:03,520 --> 00:03:06,600 Speaker 1: their toll, especially on bonds with a tenure adding nearly 51 00:03:06,680 --> 00:03:09,360 Speaker 1: thirty two basis points, ending up the week at two 52 00:03:09,400 --> 00:03:12,840 Speaker 1: point seven and that inverted yield curve we talked about 53 00:03:12,919 --> 00:03:15,480 Speaker 1: last Friday, will it turned around by some twenty eight 54 00:03:15,480 --> 00:03:18,840 Speaker 1: basis points. Though bonds moved the most this week, stocks 55 00:03:18,840 --> 00:03:21,880 Speaker 1: were hit as well, particularly tech stocks, with the NASDAC 56 00:03:21,960 --> 00:03:24,440 Speaker 1: down nearly three point nine percent for the week and 57 00:03:24,440 --> 00:03:27,799 Speaker 1: the SMP five giving up nearly one point three As 58 00:03:27,840 --> 00:03:31,760 Speaker 1: you might expect, those higher yields strengthened the dollar on Friday, 59 00:03:31,800 --> 00:03:34,480 Speaker 1: it was up for the seventh straight day, leaving the 60 00:03:34,520 --> 00:03:38,600 Speaker 1: index around its highest level since. To sort all of 61 00:03:38,600 --> 00:03:41,240 Speaker 1: this out for us, we welcome now Rebecca Patterson Bridgewater 62 00:03:41,320 --> 00:03:45,440 Speaker 1: Chief investment Strategist and Greg Peters PGIM Fixed Income close 63 00:03:45,480 --> 00:03:47,280 Speaker 1: c I. Oh, so welcome both of you. Gregg. I 64 00:03:47,280 --> 00:03:49,400 Speaker 1: have to start with you fixed incomes in your title 65 00:03:49,600 --> 00:03:51,880 Speaker 1: fixed incomes to a lot of movement. What caused it 66 00:03:51,920 --> 00:03:55,520 Speaker 1: this week? It's just a change in the FED. Uh so, 67 00:03:55,720 --> 00:04:00,840 Speaker 1: just a repricing and central banks that's responding to inflation 68 00:04:01,200 --> 00:04:04,080 Speaker 1: and stronger growth. So I think the Dix and Com 69 00:04:04,120 --> 00:04:07,440 Speaker 1: market is telling you that the FED has to hike 70 00:04:07,680 --> 00:04:11,320 Speaker 1: even more than initially anticipated and it's just been a 71 00:04:12,080 --> 00:04:16,479 Speaker 1: radical shift. And to put that in perspective, David, the 72 00:04:16,560 --> 00:04:22,520 Speaker 1: Austrian hundred year bond is down eighty two points since December. Wow, 73 00:04:22,560 --> 00:04:26,200 Speaker 1: that's some perspective, Rebecca. Was it just the FED talk? 74 00:04:26,279 --> 00:04:27,719 Speaker 1: Is that? What did it? Were? There are other factors 75 00:04:27,720 --> 00:04:30,359 Speaker 1: as well behind the scenes. Well, the FED was definitely 76 00:04:30,680 --> 00:04:33,359 Speaker 1: the front and center driver of what's going on in bonds. 77 00:04:33,440 --> 00:04:37,520 Speaker 1: But link back to what's happening in Ukraine. What we 78 00:04:37,560 --> 00:04:40,240 Speaker 1: saw last year was a demand shock helped by all 79 00:04:40,240 --> 00:04:43,120 Speaker 1: the stimulus that came through the pandemic. But now what 80 00:04:43,200 --> 00:04:46,039 Speaker 1: the war has done is it's created or exacerbated the 81 00:04:46,080 --> 00:04:49,800 Speaker 1: supply shock, and both of those things together have continued 82 00:04:49,839 --> 00:04:51,960 Speaker 1: to push up not just inflation. We're going to get 83 00:04:51,960 --> 00:04:53,960 Speaker 1: a cp I print out of the US next week. 84 00:04:54,120 --> 00:04:56,360 Speaker 1: I think we're looking for around eight point four eight 85 00:04:56,360 --> 00:04:59,440 Speaker 1: point five percent for headline inflation. I know it's really 86 00:04:59,520 --> 00:05:01,560 Speaker 1: it takes you back to the good old days, um, 87 00:05:01,760 --> 00:05:05,440 Speaker 1: but it's also pushing up commodity prices, and the outlook 88 00:05:05,480 --> 00:05:08,680 Speaker 1: for those commodity prices, it's hard to see them were 89 00:05:08,680 --> 00:05:12,080 Speaker 1: tracing quickly with the supply imbalances there that are created 90 00:05:12,120 --> 00:05:14,800 Speaker 1: by cutting off Russian and to a degree, Ukraine exports. 91 00:05:14,880 --> 00:05:17,520 Speaker 1: So I think what the FEDS reacting to is not 92 00:05:17,600 --> 00:05:19,839 Speaker 1: just what's happening here at home in the United States, 93 00:05:20,160 --> 00:05:23,560 Speaker 1: but also the likely inflation that's going to be imported 94 00:05:23,600 --> 00:05:25,880 Speaker 1: from what's happening overseas. And Greg one of the things 95 00:05:25,920 --> 00:05:27,960 Speaker 1: we've heard about this week was not just the rates issue, 96 00:05:27,960 --> 00:05:29,880 Speaker 1: but also the balance sheet, with Leo Brainerd saying, you know, 97 00:05:29,920 --> 00:05:31,440 Speaker 1: we're really gonna have to take it down a lot 98 00:05:31,480 --> 00:05:34,159 Speaker 1: and fastened. We thought how much is that driving the market. 99 00:05:34,279 --> 00:05:37,000 Speaker 1: It's a combination of the two. Uh and I agree 100 00:05:37,000 --> 00:05:41,839 Speaker 1: with Rebecca that the inflation picture has shifted given the 101 00:05:41,880 --> 00:05:45,200 Speaker 1: events in Ukraine and the supply shocks. It's just the 102 00:05:45,240 --> 00:05:49,760 Speaker 1: one to punch. So I think it's a confluence of events. David, 103 00:05:50,320 --> 00:05:53,320 Speaker 1: uh And, Um, you know, there is a repricing the 104 00:05:53,360 --> 00:05:56,720 Speaker 1: balance sheet is almost an afterthought, but the minutes came 105 00:05:56,720 --> 00:05:59,200 Speaker 1: out and suggested that's even going to be more aggressive, 106 00:05:59,640 --> 00:06:03,240 Speaker 1: and so the Fed basically signal to the market that 107 00:06:03,320 --> 00:06:06,560 Speaker 1: they're behind the curve and they have to hike more 108 00:06:06,640 --> 00:06:10,800 Speaker 1: dramatically than initially anticipated. Fifties on the table, maybe not 109 00:06:10,920 --> 00:06:14,200 Speaker 1: just once but twice in multiple times, and they're rolling 110 00:06:14,240 --> 00:06:17,400 Speaker 1: off the balance sheet uh in a more aggressive way 111 00:06:17,400 --> 00:06:20,320 Speaker 1: as well. So there's been a real shift by the 112 00:06:20,320 --> 00:06:23,520 Speaker 1: Fed and trying to catch up to this inflation picture. 113 00:06:23,640 --> 00:06:26,440 Speaker 1: And just adding to Greg's point, you know, often people 114 00:06:26,520 --> 00:06:29,160 Speaker 1: look at what's priced in for Fed funds future is 115 00:06:29,200 --> 00:06:31,520 Speaker 1: to say, Okay, how much tightening should we be expecting. 116 00:06:31,960 --> 00:06:35,040 Speaker 1: We've only seen quantitative tightening the reduction of the balance 117 00:06:35,080 --> 00:06:39,279 Speaker 1: sheet once in to nineteen, so not much sample size 118 00:06:39,279 --> 00:06:41,080 Speaker 1: to go off of. But what we're hearing now is 119 00:06:41,080 --> 00:06:44,080 Speaker 1: the Fed is thinking about reducing that balance sheet at 120 00:06:44,080 --> 00:06:46,880 Speaker 1: twice the rate that it did the last time around, 121 00:06:47,000 --> 00:06:49,240 Speaker 1: and so it's not enough to look at what's priced 122 00:06:49,279 --> 00:06:51,760 Speaker 1: in for rates. You have to think about that rolloff 123 00:06:51,760 --> 00:06:54,119 Speaker 1: of the balance sheet as well, and it's feeding into 124 00:06:54,160 --> 00:06:56,960 Speaker 1: the floes into bonds. Rebecca Patterson of Bridgewater and Gregg 125 00:06:56,960 --> 00:06:59,440 Speaker 1: Peter's of p GEM will be staying with us as 126 00:06:59,480 --> 00:07:01,560 Speaker 1: we turn and from what the markets did this week 127 00:07:01,600 --> 00:07:04,800 Speaker 1: to what investors should do with these markets. That's next 128 00:07:04,839 --> 00:07:11,480 Speaker 1: on Wall Street League on Bloomberg. This is Bloomberg Wall 129 00:07:11,560 --> 00:07:16,600 Speaker 1: Street Week with David Weston from Bloomberg Radio. That was, 130 00:07:16,640 --> 00:07:18,960 Speaker 1: to be sure, the odd sliver of good news for 131 00:07:19,080 --> 00:07:23,880 Speaker 1: US human beings too, the oil price dive below a 132 00:07:23,920 --> 00:07:28,200 Speaker 1: barrel amid on again off again hopes of peaceful Midi settlement, 133 00:07:28,680 --> 00:07:31,600 Speaker 1: and that added to the outlook for lower inflation than 134 00:07:31,600 --> 00:07:35,000 Speaker 1: interest rates. That was Lewis rock Hazer, of course, on 135 00:07:35,000 --> 00:07:39,280 Speaker 1: Wall Street Week back in early janu Pyral Oral delivered 136 00:07:39,360 --> 00:07:41,240 Speaker 1: or not. That was when we were still hoping to 137 00:07:41,280 --> 00:07:43,720 Speaker 1: avoid a war with the Rock over its invasion of 138 00:07:43,800 --> 00:07:46,160 Speaker 1: Kuwait at the time. Now we're dealing with a very 139 00:07:46,200 --> 00:07:49,600 Speaker 1: different war. But once again oil and commodities more generally 140 00:07:49,800 --> 00:07:52,160 Speaker 1: are in the forefront. To go over how to manage 141 00:07:52,200 --> 00:07:55,400 Speaker 1: your portfolio in these uncertain times, Carry Peters of PGIM 142 00:07:55,400 --> 00:07:58,120 Speaker 1: and Rebecca Patterson Bridgewater have stayed with us. So Rebecca, 143 00:07:58,160 --> 00:07:59,920 Speaker 1: let me come back to you. You You mentioned commodities earl 144 00:08:00,080 --> 00:08:03,520 Speaker 1: your here. Given what's going on, does the portfolio makes 145 00:08:03,560 --> 00:08:05,920 Speaker 1: sense right now? And should I have commodities in my 146 00:08:06,000 --> 00:08:09,320 Speaker 1: portfolio given where the prices are? You should absolutely have 147 00:08:09,360 --> 00:08:14,160 Speaker 1: commodities in your portfolio. What's given us diversification in portfolios 148 00:08:14,160 --> 00:08:16,960 Speaker 1: for the last forty years is not working now. We 149 00:08:17,000 --> 00:08:19,400 Speaker 1: don't know if if bonds is a diverse fire are 150 00:08:19,480 --> 00:08:21,240 Speaker 1: dead or in a coma. I think they're probably in 151 00:08:21,240 --> 00:08:23,400 Speaker 1: a coma. But the point is it could last for 152 00:08:23,440 --> 00:08:25,320 Speaker 1: a while, and in the interim, what are you gonna 153 00:08:25,360 --> 00:08:27,960 Speaker 1: do To have balance in your portfolio? You need something 154 00:08:28,000 --> 00:08:31,360 Speaker 1: that will protect you against inflation that's higher than expected 155 00:08:31,400 --> 00:08:34,280 Speaker 1: for longer than expected. And what we've found is when 156 00:08:34,320 --> 00:08:36,520 Speaker 1: we look back at tightening cycles going back to the 157 00:08:36,559 --> 00:08:40,240 Speaker 1: nineteen sixties, especially early in the tightening cycle, you see 158 00:08:40,240 --> 00:08:45,320 Speaker 1: commodities consistently outperforming both stocks and bonds and giving you 159 00:08:45,360 --> 00:08:48,720 Speaker 1: that balance. Right now bonds just can't do so, Greg, 160 00:08:48,920 --> 00:08:50,640 Speaker 1: she just said the bonds are in a coma. I 161 00:08:50,679 --> 00:08:53,240 Speaker 1: think them's fighting words for you here at fixed income. 162 00:08:53,360 --> 00:08:56,600 Speaker 1: Do you agree they're in a coma for the time being. Also, 163 00:08:56,679 --> 00:09:02,199 Speaker 1: I think starting point matter. So in retrospect, with you know, hindsight, 164 00:09:02,440 --> 00:09:05,720 Speaker 1: you know, perhaps the tenure fifty basis points wasn't the 165 00:09:05,840 --> 00:09:10,079 Speaker 1: proper entry point, but we've repriced dramatically since then. Uh, 166 00:09:10,120 --> 00:09:13,000 Speaker 1: and so the carry aspect of yield aspect of what 167 00:09:13,200 --> 00:09:18,120 Speaker 1: is much better today. So maybe it's not right this second, 168 00:09:18,200 --> 00:09:23,120 Speaker 1: but it is increasingly attractive here. Uh. And so at 169 00:09:23,240 --> 00:09:27,520 Speaker 1: some point, David, you'll see this flip where investors want 170 00:09:27,600 --> 00:09:31,680 Speaker 1: to shield themselves from risk assets as the FED hikes 171 00:09:31,760 --> 00:09:35,520 Speaker 1: rates and slows down the economy and the bond portfolio 172 00:09:35,720 --> 00:09:38,440 Speaker 1: really asserts itself. So it's a delicate balance. But I 173 00:09:38,480 --> 00:09:42,920 Speaker 1: will say bonds are increasingly attractive here, not less attractive. 174 00:09:43,640 --> 00:09:46,080 Speaker 1: I agree with you. As as it sells off and 175 00:09:46,120 --> 00:09:48,720 Speaker 1: the yield rises, that's certainly the case, as it would 176 00:09:48,720 --> 00:09:51,640 Speaker 1: be with any asset. The question I'm having is, with 177 00:09:51,760 --> 00:09:54,720 Speaker 1: real yield still negative, how high do you need to 178 00:09:54,720 --> 00:09:58,200 Speaker 1: see a nominal treasury yield to see that switch flip. 179 00:09:58,840 --> 00:10:00,640 Speaker 1: Do you have a number in mind? Is it timing 180 00:10:00,679 --> 00:10:04,160 Speaker 1: in mind? What would make you put pounder fist on 181 00:10:04,200 --> 00:10:08,319 Speaker 1: the table and say time to get back in treasuries. Yeah, well, Rebecca, 182 00:10:08,320 --> 00:10:11,320 Speaker 1: I wish I had that golden number, so to speak. 183 00:10:11,400 --> 00:10:14,160 Speaker 1: But the history does tell you that. You know, when 184 00:10:14,200 --> 00:10:17,480 Speaker 1: bond yields approached three and a half percent, Uh, it 185 00:10:17,559 --> 00:10:21,120 Speaker 1: starts to assert itself visa v equity risk. But as 186 00:10:21,160 --> 00:10:24,320 Speaker 1: the Fed is hiking rate, so I'm not sure it's 187 00:10:24,360 --> 00:10:26,199 Speaker 1: three and a half percent today. It might be a 188 00:10:26,280 --> 00:10:30,360 Speaker 1: little lower just given the starting point at zero FED funds. 189 00:10:30,400 --> 00:10:33,200 Speaker 1: But alternately, it could be a little higher just given 190 00:10:33,240 --> 00:10:35,160 Speaker 1: the fact that the Fed has so much work to 191 00:10:35,240 --> 00:10:40,760 Speaker 1: do to get inflation and growth in check here. So, um, 192 00:10:40,800 --> 00:10:43,040 Speaker 1: I don't know what the exact number is per se, 193 00:10:43,080 --> 00:10:47,240 Speaker 1: but we're getting closer. Uh. And as we approach three percent, 194 00:10:47,920 --> 00:10:52,400 Speaker 1: I am increasingly bullish on the bond market, absolutely, And 195 00:10:52,440 --> 00:10:55,760 Speaker 1: it takes me back to commodities again because one of 196 00:10:55,800 --> 00:10:59,520 Speaker 1: the things that we're wrestling with is can inflation get 197 00:10:59,559 --> 00:11:01,640 Speaker 1: back to at the markets pricing in you know, as 198 00:11:01,720 --> 00:11:04,280 Speaker 1: as Greg said earlier, it has shifted a little bit, 199 00:11:04,320 --> 00:11:06,480 Speaker 1: but still within the next two years, the market is 200 00:11:06,520 --> 00:11:11,440 Speaker 1: discounting inflation back to around three. That could happen, absolutely, 201 00:11:11,480 --> 00:11:13,800 Speaker 1: But then when you think about the commodity input to that, 202 00:11:14,559 --> 00:11:18,200 Speaker 1: fixing the supply we've lost from Russia and Ukraine across 203 00:11:18,240 --> 00:11:21,840 Speaker 1: a range of commodities, not just energy, but metals, even agriculture, 204 00:11:22,400 --> 00:11:25,200 Speaker 1: it looks like it's going to take years, not months, 205 00:11:25,240 --> 00:11:29,000 Speaker 1: not quarters. And so you've seen a new supply equilibrium. 206 00:11:29,120 --> 00:11:31,840 Speaker 1: So yes, demand would come down if the economy slows, 207 00:11:31,880 --> 00:11:34,839 Speaker 1: but with a new supply equilibrium, what is the price 208 00:11:34,880 --> 00:11:37,560 Speaker 1: we settle at and could that be inflationary longer? As 209 00:11:37,559 --> 00:11:40,720 Speaker 1: an input um and I think that also bodes well 210 00:11:40,840 --> 00:11:44,319 Speaker 1: for not counting on bonds coming back in your favor quickly, 211 00:11:44,600 --> 00:11:47,199 Speaker 1: but making sure as you balance your portfolio, you're also 212 00:11:47,240 --> 00:11:53,959 Speaker 1: thinking about inflation sensitive assets again, a diversified basket of commodities, oil, metals, gold, 213 00:11:54,040 --> 00:11:56,480 Speaker 1: et cetera. So, so, Greg again to come back to 214 00:11:56,480 --> 00:11:59,599 Speaker 1: fix income for you, what are the inflation moves and 215 00:11:59,679 --> 00:12:01,880 Speaker 1: bond if any? I mean, are there things you can 216 00:12:01,920 --> 00:12:03,880 Speaker 1: do that are inflation protected in the bond the fixed 217 00:12:03,920 --> 00:12:08,920 Speaker 1: income area? I think so, David, I'll tell you up 218 00:12:08,920 --> 00:12:12,640 Speaker 1: front it's not tips. So that provides a little to 219 00:12:13,200 --> 00:12:17,480 Speaker 1: no inflation protection, notwithstanding the name. But I think there's 220 00:12:17,520 --> 00:12:20,840 Speaker 1: lots of values still in the credit markets spread market, 221 00:12:20,960 --> 00:12:25,520 Speaker 1: so mining that risk premium UH still still is attractive 222 00:12:25,600 --> 00:12:29,600 Speaker 1: to us. UH. There's various parts of structure products that 223 00:12:29,640 --> 00:12:33,160 Speaker 1: look really attractive to us. So being a fixed income 224 00:12:33,200 --> 00:12:38,000 Speaker 1: investor isn't just about buying yields and duration. There's so 225 00:12:38,040 --> 00:12:42,199 Speaker 1: many complexities and aspects to it. UH, And honestly, we're 226 00:12:42,240 --> 00:12:45,800 Speaker 1: seeing more alpha opportunities today than we have in quite 227 00:12:45,840 --> 00:12:52,120 Speaker 1: some times. So someone perversely, we're pretty excited about the 228 00:12:52,200 --> 00:12:57,160 Speaker 1: alpha prospects in here. So Bridgewater obviously is very diversified. 229 00:12:57,280 --> 00:12:59,240 Speaker 1: And the things you invest in, what are the other 230 00:12:59,320 --> 00:13:03,319 Speaker 1: inflation related asset universe beyond commodities? Is it real estate? 231 00:13:03,320 --> 00:13:05,400 Speaker 1: Where else do you go? Sure, so we do like 232 00:13:05,559 --> 00:13:09,520 Speaker 1: inflation linked bonds in our portfolios, but beyond that, we're 233 00:13:09,559 --> 00:13:13,040 Speaker 1: also looking for geographic diversification. So there's going to be 234 00:13:13,120 --> 00:13:17,559 Speaker 1: some economies that are benefiting from higher commodity prices and 235 00:13:17,720 --> 00:13:20,200 Speaker 1: the global trends taking place. If you look at equity 236 00:13:20,200 --> 00:13:22,920 Speaker 1: markets here to date, for example, you are seeing positive 237 00:13:22,920 --> 00:13:29,240 Speaker 1: returns from places like Brazil, Um, Mexico, Australia, big commodity exporters, 238 00:13:29,240 --> 00:13:32,439 Speaker 1: so that's one place to look. Also in the commodity 239 00:13:32,480 --> 00:13:35,440 Speaker 1: linked currencies. I know that might be gaining a little esoteric, 240 00:13:35,480 --> 00:13:38,720 Speaker 1: but things like the Canadian or Australian dollars they're posting 241 00:13:38,800 --> 00:13:42,600 Speaker 1: strong gains against a strong dollar this year. They're outperforming. 242 00:13:42,920 --> 00:13:45,520 Speaker 1: I think the other thing we're looking for in diversification 243 00:13:45,640 --> 00:13:47,760 Speaker 1: is economies that are in a different place in their 244 00:13:47,800 --> 00:13:51,600 Speaker 1: economic cycle. So Japan is a country. Whenever we write 245 00:13:51,600 --> 00:13:56,440 Speaker 1: about Japanese equities, we we get stairs and yawns. But um, 246 00:13:56,480 --> 00:13:59,120 Speaker 1: when you think about what's happening there the Bank of Japan, 247 00:14:00,000 --> 00:14:02,440 Speaker 1: it's a little inflation. They don't have it nearly as 248 00:14:02,480 --> 00:14:05,280 Speaker 1: badly as we do, and so they're keeping their yields 249 00:14:05,280 --> 00:14:09,599 Speaker 1: extremely low. They're getting additional fiscal stimulus into the system, 250 00:14:09,679 --> 00:14:12,640 Speaker 1: and China as they stimulate to try to achieve their 251 00:14:12,679 --> 00:14:16,760 Speaker 1: growth target, especially with COVID hitting them again. Decent nominal 252 00:14:16,800 --> 00:14:20,920 Speaker 1: growth in the US, improving growth in China. Um a 253 00:14:21,040 --> 00:14:25,640 Speaker 1: very weekend. The Japanese yen has sold off tremendously against 254 00:14:25,640 --> 00:14:27,840 Speaker 1: the dollar this year, and the Japanese are fine with it, 255 00:14:27,920 --> 00:14:30,720 Speaker 1: which helps all their exporting companies. So they're in a 256 00:14:30,800 --> 00:14:35,080 Speaker 1: position again, different place in the economic cycle, geographic diversification. 257 00:14:35,440 --> 00:14:37,600 Speaker 1: That also can be a way to play what's going 258 00:14:37,640 --> 00:14:39,920 Speaker 1: on right now? Terrific. Thank you so much for Rebecca 259 00:14:39,920 --> 00:14:44,480 Speaker 1: Patterson of Bridgewater and Gregg Peers of Peaching. Coming up. 260 00:14:44,720 --> 00:14:48,080 Speaker 1: As the United States and China face economic headwinds, is 261 00:14:48,120 --> 00:14:51,080 Speaker 1: its time for emerging markets to step up, or at 262 00:14:51,160 --> 00:14:54,720 Speaker 1: least some emerging markets, We hear from Usher Sharma of 263 00:14:54,800 --> 00:14:59,120 Speaker 1: Rockefeller International. That's next on Wall Street Week on Bloomberg. 264 00:15:01,280 --> 00:15:04,360 Speaker 1: It has been a two horse race between the United 265 00:15:04,440 --> 00:15:07,520 Speaker 1: States as the largest economy in the world and China 266 00:15:07,640 --> 00:15:10,680 Speaker 1: as the one catching up. But now the two lead 267 00:15:10,720 --> 00:15:14,560 Speaker 1: horses may be struggling, with indications of a slowdown or 268 00:15:14,640 --> 00:15:17,760 Speaker 1: even a recession in the United States, As former New 269 00:15:17,800 --> 00:15:20,960 Speaker 1: York Fed President Bill Dudley warns, if you're gonna try 270 00:15:20,960 --> 00:15:23,720 Speaker 1: to get inflation under control, you're gonna have to push 271 00:15:23,800 --> 00:15:26,200 Speaker 1: up the unemployer rate. And if you push up the 272 00:15:26,280 --> 00:15:29,120 Speaker 1: unemployer rates, it's almost impossible to avoid a recession at 273 00:15:29,160 --> 00:15:32,520 Speaker 1: that point. While China has to cope with shutdowns from COVID, 274 00:15:32,720 --> 00:15:36,080 Speaker 1: high debt, and a weakening property market. Let's be clear, though, 275 00:15:36,080 --> 00:15:37,840 Speaker 1: I mean the real issue in China really isn't the 276 00:15:37,880 --> 00:15:39,800 Speaker 1: de listings in the Here in the U S. It's upfront, 277 00:15:39,840 --> 00:15:41,800 Speaker 1: in your face. It's not need two billion dollars of 278 00:15:42,040 --> 00:15:44,920 Speaker 1: foreign denominated debt as coming due in the property sector. 279 00:15:45,160 --> 00:15:46,800 Speaker 1: We know they're feeling the pain. If you look at 280 00:15:46,800 --> 00:15:49,440 Speaker 1: the p m I data. Just this week, the economy 281 00:15:49,480 --> 00:15:52,120 Speaker 1: clipped back into contractions. So things are tough on the 282 00:15:52,120 --> 00:15:54,840 Speaker 1: ground in China. But even with all that and the 283 00:15:54,840 --> 00:15:58,360 Speaker 1: war in Ukraine's continued effect on the global economy, the 284 00:15:58,480 --> 00:16:01,760 Speaker 1: one thing that is coming up roses right now is commodities, 285 00:16:02,200 --> 00:16:05,160 Speaker 1: which raises the specter of the future belonging more to 286 00:16:05,240 --> 00:16:07,840 Speaker 1: some of the emerging economies rich and things like oil 287 00:16:08,080 --> 00:16:12,000 Speaker 1: and wheat and minerals. Well, we do favor commodities really 288 00:16:12,120 --> 00:16:13,920 Speaker 1: more for the longer view. We think we're at the 289 00:16:14,000 --> 00:16:18,280 Speaker 1: beginning of a supercycle reflecting under investment over the past 290 00:16:18,320 --> 00:16:24,480 Speaker 1: couple of years. And to take us through this comparison 291 00:16:24,520 --> 00:16:26,680 Speaker 1: between the economies in the United States and China on 292 00:16:26,720 --> 00:16:28,960 Speaker 1: the one hand, and emerging markets on the other, we're 293 00:16:28,960 --> 00:16:31,080 Speaker 1: welcome now, We're sure. Sharma he is the chairman of 294 00:16:31,160 --> 00:16:35,080 Speaker 1: Rockefeller International and the author of Ten Rules of Successful nations. 295 00:16:35,080 --> 00:16:36,640 Speaker 1: We're sure. Thank you so much for being with us. 296 00:16:36,760 --> 00:16:39,240 Speaker 1: Before we talk about emerging nations, let's talk about US 297 00:16:39,240 --> 00:16:41,760 Speaker 1: and China, Because in recent years the story has all 298 00:16:41,840 --> 00:16:45,040 Speaker 1: been about US and China and the strength of those economies. 299 00:16:45,240 --> 00:16:47,800 Speaker 1: Why is that not going to continue? Well, I think, David, 300 00:16:47,840 --> 00:16:50,640 Speaker 1: if you look at the pattern of economic history, what 301 00:16:50,840 --> 00:16:53,680 Speaker 1: you find is that when nations do very well in 302 00:16:53,760 --> 00:16:57,040 Speaker 1: one decade, it is very hard to repeat that kind 303 00:16:57,040 --> 00:17:01,280 Speaker 1: of success in the subsequent decade. And the last decade, 304 00:17:01,320 --> 00:17:05,439 Speaker 1: as you pointed out, really belonged to America and China. 305 00:17:05,800 --> 00:17:09,119 Speaker 1: America emerged from that as a financial superpower in a 306 00:17:09,200 --> 00:17:12,399 Speaker 1: way that it almost never was, as you well know 307 00:17:12,560 --> 00:17:16,360 Speaker 1: now that of all transactions in the world are done 308 00:17:16,359 --> 00:17:21,359 Speaker 1: through the US dollar. As a financial superpower, America reached 309 00:17:21,440 --> 00:17:23,960 Speaker 1: new heights by the end of the decade, and China 310 00:17:24,080 --> 00:17:26,560 Speaker 1: too had an amazing decade, with its share in the 311 00:17:26,600 --> 00:17:30,879 Speaker 1: global economy expanding very rapidly. But I think that both 312 00:17:30,920 --> 00:17:34,320 Speaker 1: those nations now are gonna hit or are hitting, some 313 00:17:34,400 --> 00:17:39,119 Speaker 1: significant roadblocks. In China, we're seeing the challenges of demographics 314 00:17:39,119 --> 00:17:42,520 Speaker 1: in debt for the first time now, the Chinese population 315 00:17:42,600 --> 00:17:46,000 Speaker 1: is beginning to shrink. I think that's a huge development, 316 00:17:46,400 --> 00:17:49,280 Speaker 1: and there has been no growth story that has been 317 00:17:49,320 --> 00:17:52,680 Speaker 1: able to sustain itself where the population of a country 318 00:17:53,160 --> 00:17:56,600 Speaker 1: is shrinking, and China is now exhibit a of that. 319 00:17:57,040 --> 00:18:00,000 Speaker 1: And the United States, I think after a great decade 320 00:18:00,000 --> 00:18:02,119 Speaker 1: eight I wrote a lot about how the US was 321 00:18:02,119 --> 00:18:03,960 Speaker 1: going to be the combat nation of the two thousand 322 00:18:04,000 --> 00:18:07,080 Speaker 1: and tens. The U S seems pretty overstretched as well, 323 00:18:07,480 --> 00:18:09,760 Speaker 1: and the way it has weaponized the U S dollars 324 00:18:09,840 --> 00:18:12,800 Speaker 1: just now in the fight against Russia, I think we'll 325 00:18:12,840 --> 00:18:15,840 Speaker 1: also have consequences where the rest of the world is 326 00:18:15,920 --> 00:18:18,960 Speaker 1: fighting or looking how to get off this dollar standard. 327 00:18:19,640 --> 00:18:22,280 Speaker 1: So for sure, that explains why perhaps the United States 328 00:18:22,320 --> 00:18:24,480 Speaker 1: and China won't do as well in the next ten years, 329 00:18:24,480 --> 00:18:26,600 Speaker 1: and they didn't last. What makes you think that the 330 00:18:26,680 --> 00:18:29,760 Speaker 1: emerging markets in a place to pick up the slack, well, 331 00:18:29,800 --> 00:18:31,600 Speaker 1: I think a couple of things going on for emerging 332 00:18:31,640 --> 00:18:34,160 Speaker 1: markets here. One. I think it's really important to put 333 00:18:34,160 --> 00:18:37,720 Speaker 1: this in perspective that these emerging markets that we're talking about, 334 00:18:37,760 --> 00:18:43,119 Speaker 1: whether it's India, Indonesia, or even the likes of Eastern Europe, 335 00:18:43,320 --> 00:18:47,440 Speaker 1: these countries did not have the resources to spend that 336 00:18:47,520 --> 00:18:51,520 Speaker 1: much on stimulus when the pandemic hit, so these countries 337 00:18:51,760 --> 00:18:55,520 Speaker 1: really were forced to carry out some more fundamental reform. 338 00:18:55,600 --> 00:18:59,080 Speaker 1: In India, the priety seems to have shifted again towards 339 00:18:59,080 --> 00:19:04,160 Speaker 1: economic growth. They're focusing more on issues like privatization. Indonesia, 340 00:19:04,240 --> 00:19:06,640 Speaker 1: they're changing the labor laws. So I think what you're 341 00:19:06,640 --> 00:19:10,240 Speaker 1: seeing in emerging markets is the difference between stibulus, which 342 00:19:10,240 --> 00:19:13,720 Speaker 1: the western countries adopted in great measure, and in emerging 343 00:19:13,760 --> 00:19:17,159 Speaker 1: markets which did substibulus but not with the same extent. 344 00:19:17,280 --> 00:19:20,080 Speaker 1: So they were forced to carry out more productivity enhancing 345 00:19:20,080 --> 00:19:23,480 Speaker 1: reforms to try and revive the animal spirits. So I 346 00:19:23,480 --> 00:19:26,240 Speaker 1: think that's one very important factor. The second has to 347 00:19:26,280 --> 00:19:28,760 Speaker 1: do with commodities. That if you look at the history 348 00:19:28,800 --> 00:19:32,640 Speaker 1: of emerging markets, typically emerging markets to very well when 349 00:19:32,640 --> 00:19:36,960 Speaker 1: commodity prices rise because so many emerging markets in Latin America, 350 00:19:37,119 --> 00:19:40,720 Speaker 1: Middle East Africa are big exporters of commodities. And one 351 00:19:40,760 --> 00:19:43,160 Speaker 1: of the big themes of this decade which is shaping up, 352 00:19:43,600 --> 00:19:45,199 Speaker 1: is that we seem to be in the start of 353 00:19:45,200 --> 00:19:49,119 Speaker 1: a new commodity supercycle because we cut investment backs so 354 00:19:49,200 --> 00:19:53,440 Speaker 1: sharply in commodities and now it seems as if demands 355 00:19:53,440 --> 00:19:55,879 Speaker 1: got to still be strong for commodities, even for building 356 00:19:55,880 --> 00:19:59,600 Speaker 1: a new green infrastructure, yet the supplies being severely constrained. 357 00:19:59,680 --> 00:20:02,040 Speaker 1: So I think that that's why this could end up 358 00:20:02,040 --> 00:20:04,440 Speaker 1: being a pretty good taked for commodities, and that's very 359 00:20:04,480 --> 00:20:07,560 Speaker 1: helpful for many emerging markets. Thank you so much for sure. 360 00:20:07,560 --> 00:20:12,960 Speaker 1: Sherman is the chairman of Rockefeller International. Coming up, we 361 00:20:13,040 --> 00:20:15,120 Speaker 1: wrap up the week with our special contributor to Larry 362 00:20:15,160 --> 00:20:19,360 Speaker 1: Summers of Harvard. That's next on Walfree Week on Bloomberg. 363 00:20:20,920 --> 00:20:24,159 Speaker 1: Right now, we all might feel a little disconnected. For 364 00:20:24,240 --> 00:20:27,560 Speaker 1: seniors living alone with smaller social circles, feelings of loneliness 365 00:20:27,560 --> 00:20:30,600 Speaker 1: and isolation can feel overwhelming. But there's something we can 366 00:20:30,640 --> 00:20:32,879 Speaker 1: all do to help connect with your older loved one 367 00:20:32,960 --> 00:20:36,240 Speaker 1: virtually and have the conversation of a lifetime. With Story 368 00:20:36,280 --> 00:20:39,520 Speaker 1: Corp Connect, anyone can conduct an interview and every interview 369 00:20:39,520 --> 00:20:42,160 Speaker 1: will be archived at the Library of Congress, becoming part 370 00:20:42,200 --> 00:20:46,000 Speaker 1: of American History. Connect, honor share at story Corp connect 371 00:20:46,040 --> 00:20:48,680 Speaker 1: dot org. Slash a ARP a mess from a ARP, 372 00:20:48,920 --> 00:20:52,879 Speaker 1: Story Corps and the Ad Council. This is Bloomberg Wall 373 00:20:52,920 --> 00:20:56,720 Speaker 1: Street Week with David Weston from Bloomberg Radio. This is 374 00:20:56,760 --> 00:20:58,880 Speaker 1: Wall Street. Wee cl I'm David Weston. We were joined 375 00:20:58,880 --> 00:21:01,040 Speaker 1: once again this week by our very special contributor Larry 376 00:21:01,080 --> 00:21:04,400 Speaker 1: Summers of Harvard. So, Larry, the big issue everyone's discussing 377 00:21:04,520 --> 00:21:06,399 Speaker 1: is can the FED bring about what it's called a 378 00:21:06,520 --> 00:21:09,480 Speaker 1: soft landing. I guess that's to say, avoid a recession. 379 00:21:09,600 --> 00:21:11,840 Speaker 1: As you know, Bloomberg did a survey of seventy two 380 00:21:11,840 --> 00:21:14,760 Speaker 1: economists the show. The economist are getting more and more skeptical. 381 00:21:14,880 --> 00:21:18,480 Speaker 1: It's at the twenty seven point five in April. Before 382 00:21:18,560 --> 00:21:22,160 Speaker 1: it was if you go two months back, it was fifteent. Look, 383 00:21:22,200 --> 00:21:25,240 Speaker 1: I think the risks are going way up twenty seven 384 00:21:25,280 --> 00:21:28,560 Speaker 1: and a half percent this year because next year is 385 00:21:28,680 --> 00:21:32,720 Speaker 1: riskier than this year. Translates to something getting towards two 386 00:21:32,760 --> 00:21:36,679 Speaker 1: thirds for a two year period, and I'd be a 387 00:21:36,760 --> 00:21:40,879 Speaker 1: bit above that in my judgment. Here's the key fact. 388 00:21:41,640 --> 00:21:44,280 Speaker 1: We have never had a moment in the United States 389 00:21:44,880 --> 00:21:49,200 Speaker 1: when inflation was above for and unemployment was below four 390 00:21:49,480 --> 00:21:52,639 Speaker 1: when we didn't have a recession two years within the 391 00:21:52,680 --> 00:21:56,840 Speaker 1: next two years. So we may pull it off, and 392 00:21:56,920 --> 00:22:01,240 Speaker 1: certainly it's hugely important that we succeed in pulling it off. 393 00:22:01,640 --> 00:22:08,880 Speaker 1: But the combination of overheating followed by policy delay followed 394 00:22:08,920 --> 00:22:12,520 Speaker 1: by supply shocks means I think it's a very difficult 395 00:22:12,560 --> 00:22:18,199 Speaker 1: set of challenges, and recession in the next couple of 396 00:22:18,359 --> 00:22:21,639 Speaker 1: years is clearly more likely than not. Some of the 397 00:22:21,680 --> 00:22:24,960 Speaker 1: banks are starting to move in that direction. Your survey 398 00:22:25,040 --> 00:22:28,080 Speaker 1: moved in that direction, and I suspect that's how the 399 00:22:28,119 --> 00:22:31,600 Speaker 1: consensus will evolve. And Larry, I feel like we're caught 400 00:22:31,600 --> 00:22:33,280 Speaker 1: a little bit betwind the rock of the hard place, 401 00:22:33,359 --> 00:22:35,600 Speaker 1: that is between inflation on the one hand and recession 402 00:22:35,600 --> 00:22:37,720 Speaker 1: on the other, and we worry, particularly about how the 403 00:22:37,720 --> 00:22:40,560 Speaker 1: people who are less fortunate are affected. You have a 404 00:22:40,600 --> 00:22:43,360 Speaker 1: research paper from the National Period of Economic Research this 405 00:22:43,440 --> 00:22:46,320 Speaker 1: week talking about what happens with wage growth. You would 406 00:22:46,359 --> 00:22:49,400 Speaker 1: like to think that when wages grow that helps everybody, 407 00:22:49,440 --> 00:22:54,480 Speaker 1: not necessarily. So here's the here's the fact, David. If 408 00:22:54,520 --> 00:22:59,560 Speaker 1: you just look at nominal wage growth, just measured wage 409 00:22:59,600 --> 00:23:04,520 Speaker 1: growth and growth and workers purchasing power up to a point, 410 00:23:05,160 --> 00:23:09,360 Speaker 1: perhaps four pent four and a half percent, they moved together. 411 00:23:10,240 --> 00:23:14,400 Speaker 1: But past that point because when inflations running above four percent, 412 00:23:15,240 --> 00:23:19,960 Speaker 1: you start to have inflation, serious inflation. Things move in 413 00:23:19,960 --> 00:23:24,199 Speaker 1: the high opposite direction, and higher wage growth seems to 414 00:23:24,280 --> 00:23:28,880 Speaker 1: go with lower growth in workers purchasing power. That's why 415 00:23:28,960 --> 00:23:32,280 Speaker 1: I was so anxious on this show over the last 416 00:23:32,359 --> 00:23:37,679 Speaker 1: year about the possibility of overheating labor markets. And unfortunately 417 00:23:38,119 --> 00:23:43,520 Speaker 1: that's what seems to be uh materializing, with average real 418 00:23:43,600 --> 00:23:47,399 Speaker 1: wages having one of their worst performances over the last 419 00:23:47,560 --> 00:23:50,760 Speaker 1: year UH that we have seen. And then we've got 420 00:23:50,760 --> 00:23:52,320 Speaker 1: a big event coming up on the weekend that's the 421 00:23:52,359 --> 00:23:55,240 Speaker 1: first round of in the presidential election. Over in France, 422 00:23:55,240 --> 00:23:57,520 Speaker 1: we have Marine Le Penn, who was often thought to 423 00:23:57,560 --> 00:24:00,240 Speaker 1: be just almost impossible elect, although it's a closer race 424 00:24:00,320 --> 00:24:01,760 Speaker 1: at the moment that we would have thought, what's going 425 00:24:01,800 --> 00:24:07,280 Speaker 1: on there. Look, I'm not a political expert on France, 426 00:24:07,440 --> 00:24:14,320 Speaker 1: but what I see is eerily reminiscent of the period 427 00:24:14,359 --> 00:24:17,760 Speaker 1: before Brexit in the US, in the in the u k. 428 00:24:18,560 --> 00:24:22,960 Speaker 1: And the period before Donald Trump's election in the United States. 429 00:24:23,760 --> 00:24:26,919 Speaker 1: I think, by far the more likely thing is that 430 00:24:27,000 --> 00:24:31,040 Speaker 1: President McCrone will win, but we have to recognize that 431 00:24:31,119 --> 00:24:35,479 Speaker 1: the fact that Marie Lepenn will ultimately be elected looks 432 00:24:35,920 --> 00:24:40,240 Speaker 1: at least as plausible now as Donald Trump's election did 433 00:24:40,680 --> 00:24:44,359 Speaker 1: a bit before the US election, or as Brexit did 434 00:24:44,880 --> 00:24:49,840 Speaker 1: a bit before the British election, So I think we 435 00:24:49,920 --> 00:24:54,560 Speaker 1: need to be nervous as we watched that situation, and 436 00:24:54,760 --> 00:25:00,560 Speaker 1: all people of goodwill have to be standing with UH, 437 00:25:00,680 --> 00:25:05,440 Speaker 1: the French UH people. But I think this shows UH 438 00:25:05,480 --> 00:25:12,879 Speaker 1: the power of UM pocketbook issues for regular people and 439 00:25:13,000 --> 00:25:18,919 Speaker 1: frustration with elites, which has been a potent political force 440 00:25:19,080 --> 00:25:22,080 Speaker 1: all over the world. Again, I think this is gonna 441 00:25:22,320 --> 00:25:27,480 Speaker 1: end with President UH McCrone, but nobody should be serene 442 00:25:27,560 --> 00:25:30,080 Speaker 1: or complacent that that's the case. And to some extent, 443 00:25:30,160 --> 00:25:33,240 Speaker 1: larry that come and takes us actually to Ukraine and Russia. 444 00:25:33,280 --> 00:25:36,040 Speaker 1: In this sense, Mr mccron has really focused a lot 445 00:25:36,119 --> 00:25:39,280 Speaker 1: on Ukraine on international issues. Marine Lapan, on the other hand, 446 00:25:39,280 --> 00:25:41,399 Speaker 1: says how much is your gas cost? How much does 447 00:25:41,440 --> 00:25:44,120 Speaker 1: it cost to go to the supermarket, and that appears 448 00:25:44,119 --> 00:25:46,280 Speaker 1: to be part of what's lifting her up. When it 449 00:25:46,320 --> 00:25:48,880 Speaker 1: comes to Russia, though, I wonder how are we doing 450 00:25:48,880 --> 00:25:50,560 Speaker 1: in the if I can call it the economic war 451 00:25:50,560 --> 00:25:53,720 Speaker 1: against Russia, the economic sanctions, because we've seen the rules 452 00:25:53,720 --> 00:25:56,480 Speaker 1: come back now the Russian spent central back on Friday 453 00:25:56,480 --> 00:25:59,360 Speaker 1: actually cut their rates. There are we at a salemate 454 00:25:59,359 --> 00:26:01,240 Speaker 1: at least if we're not losing that wark. Just the 455 00:26:01,280 --> 00:26:03,960 Speaker 1: way Russia appears to be losing our assail me in 456 00:26:04,000 --> 00:26:07,320 Speaker 1: the military war. I think we're gonna need to UH 457 00:26:07,560 --> 00:26:11,359 Speaker 1: ratchet it up if we want to do grave damage 458 00:26:11,480 --> 00:26:16,520 Speaker 1: to the Russian economy. We can't allow it to continue 459 00:26:16,520 --> 00:26:20,840 Speaker 1: to be the case that Russia is able to get 460 00:26:21,440 --> 00:26:26,760 Speaker 1: huge levels of hard currency from the sale of products. 461 00:26:27,240 --> 00:26:29,960 Speaker 1: It can't continue to be the case that there's a 462 00:26:30,000 --> 00:26:34,600 Speaker 1: way that the Russian financial system can connect in a 463 00:26:34,640 --> 00:26:40,240 Speaker 1: global context. But that is going to mean UH some sacrifice, 464 00:26:40,920 --> 00:26:44,560 Speaker 1: And I think the question is whether the West is 465 00:26:44,600 --> 00:26:51,040 Speaker 1: going to be prepared to make UH those UH sacrifices. UH. 466 00:26:51,160 --> 00:26:54,080 Speaker 1: I certainly hope so, and I think President Biden has 467 00:26:54,119 --> 00:27:00,679 Speaker 1: shown wonderful leadership on this. But a huge amount depends 468 00:27:01,000 --> 00:27:07,760 Speaker 1: on Europe right now. I hope we will be prepared 469 00:27:07,960 --> 00:27:13,880 Speaker 1: to spend a dollar on arming Ukraine for every two 470 00:27:13,960 --> 00:27:17,639 Speaker 1: or three dollars that we allow Russia to get in 471 00:27:17,760 --> 00:27:23,840 Speaker 1: hard currency by exporting energy products UH to UH Europe. 472 00:27:24,480 --> 00:27:26,880 Speaker 1: If we do that, Ukraine would be in a much 473 00:27:26,920 --> 00:27:31,199 Speaker 1: stronger position to win this UH, win this war and 474 00:27:31,640 --> 00:27:38,920 Speaker 1: repel this UH barbaric UH invasion and learny. In the meantime, 475 00:27:38,960 --> 00:27:41,240 Speaker 1: the code pandemic is not over. Just ask the people 476 00:27:41,280 --> 00:27:43,840 Speaker 1: in Shanghai. Look at what's happened in Shangha, so dramatic. 477 00:27:43,960 --> 00:27:45,960 Speaker 1: Who would have thought this would happen. At the same time, 478 00:27:46,200 --> 00:27:48,199 Speaker 1: China seems to be backing off a little bit some 479 00:27:48,320 --> 00:27:51,159 Speaker 1: of its distance from the West. For example, with inspect 480 00:27:51,160 --> 00:27:55,040 Speaker 1: to the audit position with publicly traded companies from China. 481 00:27:55,680 --> 00:27:58,680 Speaker 1: Is President she feeling the pressure there. I think there 482 00:27:59,400 --> 00:28:07,200 Speaker 1: must be sweaty palms behind the facade in China right now. David, 483 00:28:07,200 --> 00:28:10,800 Speaker 1: I've been saying for some time that it's a mistake 484 00:28:10,960 --> 00:28:18,000 Speaker 1: to view China as a rampaging economic giant in the 485 00:28:18,040 --> 00:28:22,200 Speaker 1: way that many in the United States viewed Japan at 486 00:28:22,240 --> 00:28:27,640 Speaker 1: the end of the nineteen eighties. That between exit from COVID, 487 00:28:28,400 --> 00:28:38,600 Speaker 1: profound financial strains, internal issues around UH inequality, tension over 488 00:28:38,680 --> 00:28:46,200 Speaker 1: state enterprises, China has real economic vulnerabilities. And Larry final, 489 00:28:46,240 --> 00:28:49,200 Speaker 1: let's have at least two rapid fire questions. First of 490 00:28:49,240 --> 00:28:52,040 Speaker 1: them has to do with Elon Musk Big News this 491 00:28:52,080 --> 00:28:54,720 Speaker 1: week he took that big position and Twitter. What do 492 00:28:54,760 --> 00:28:57,760 Speaker 1: you make of that? Elon Musk and Twitter seemed almost 493 00:28:58,200 --> 00:29:02,520 Speaker 1: made for each other. It's hard to imagine a less 494 00:29:02,920 --> 00:29:07,800 Speaker 1: UH passive shareholder. I suspect that's going to give the 495 00:29:07,800 --> 00:29:11,120 Speaker 1: business press a lot of stuff to cover going forward. 496 00:29:11,680 --> 00:29:14,320 Speaker 1: And finally, Larry, I'm used to seeing your name when 497 00:29:14,400 --> 00:29:17,160 Speaker 1: it comes to The New York Times in the front section, 498 00:29:17,560 --> 00:29:19,680 Speaker 1: not so much in the sports section. But I found 499 00:29:19,720 --> 00:29:21,720 Speaker 1: you in the sports section this week. What was that about? 500 00:29:22,040 --> 00:29:27,080 Speaker 1: They quoted me on the subject of momentous subject of 501 00:29:27,240 --> 00:29:31,920 Speaker 1: record inflation at Augusta in the Pimento and cheese, uh 502 00:29:32,320 --> 00:29:36,160 Speaker 1: sandwich h dimension. I only wish it had been in 503 00:29:36,200 --> 00:29:40,080 Speaker 1: connection with the course record, but unfortunately the course record 504 00:29:40,240 --> 00:29:43,920 Speaker 1: is safe from me by about forty strokes. Well, you've 505 00:29:43,960 --> 00:29:46,080 Speaker 1: got another year to work on it. Actually, if Tiger 506 00:29:46,080 --> 00:29:48,720 Speaker 1: Woods can come back, I'm sure you can. Larry Summers, 507 00:29:48,720 --> 00:29:50,480 Speaker 1: thank you so much for joining us once again. That's 508 00:29:50,480 --> 00:29:52,960 Speaker 1: our special contributor for Wall Street Week. He is Larry 509 00:29:53,000 --> 00:29:57,640 Speaker 1: Summers of Harvard. Finally, one more thought, Maybe space isn't 510 00:29:57,640 --> 00:30:01,440 Speaker 1: the final frontier after all. Elon Musk took on the 511 00:30:01,520 --> 00:30:05,240 Speaker 1: challenge of climate change by building himself an electric car company, 512 00:30:05,440 --> 00:30:08,040 Speaker 1: and he created a two D seventy billion dollar personal 513 00:30:08,080 --> 00:30:10,880 Speaker 1: fortune in the process. Elon has a big picture guy, 514 00:30:10,960 --> 00:30:13,520 Speaker 1: and I think what he's simply saying is I'm an innovator. 515 00:30:14,280 --> 00:30:18,440 Speaker 1: I have transformed the American auto industry the global auto industry. 516 00:30:18,760 --> 00:30:21,640 Speaker 1: Then he took on space what's Star Trek called the 517 00:30:21,720 --> 00:30:25,600 Speaker 1: Final Frontier, creating a profitable SpaceX that so far has 518 00:30:25,680 --> 00:30:29,120 Speaker 1: launched two thousand satellites into orbit, already has permission for 519 00:30:29,120 --> 00:30:32,560 Speaker 1: another twelve thousand, and is seeking permission for even more 520 00:30:33,040 --> 00:30:36,800 Speaker 1: some thirty thousand more. Now to Elon Musk's turn to 521 00:30:36,880 --> 00:30:39,280 Speaker 1: make space history with the first spaceship to launch an 522 00:30:39,320 --> 00:30:43,080 Speaker 1: all civilian crew into orbit, and oh yes, he wants 523 00:30:43,120 --> 00:30:46,080 Speaker 1: to lead a manned mission to Mars before the decade 524 00:30:46,160 --> 00:30:50,120 Speaker 1: is out. It is very important essential that over the 525 00:30:50,160 --> 00:30:52,880 Speaker 1: long term that we've become a multi planet species and 526 00:30:52,960 --> 00:30:56,320 Speaker 1: ultimately even go beyond the Solar System and bring life 527 00:30:56,320 --> 00:30:59,880 Speaker 1: with us. But not content to master climate and space 528 00:31:00,200 --> 00:31:02,920 Speaker 1: and for that matter, tunneling under our cities with his 529 00:31:03,040 --> 00:31:07,160 Speaker 1: boring company and connecting our cities through hyperloops. Elon Musk 530 00:31:07,200 --> 00:31:09,680 Speaker 1: may now have taken on his biggest challenge of all, 531 00:31:10,040 --> 00:31:14,560 Speaker 1: taming or at least influencing the world of information and 532 00:31:14,720 --> 00:31:18,640 Speaker 1: one stock taking sense of stage it is twitter Alon 533 00:31:18,720 --> 00:31:21,760 Speaker 1: Musk becoming the lanchest Shadhold to taking a nine point 534 00:31:21,800 --> 00:31:25,200 Speaker 1: two percent stake. Initially, he said he'd be a passive investor, 535 00:31:25,320 --> 00:31:27,720 Speaker 1: something that no one from Dan Eyes of Wedbush to 536 00:31:27,800 --> 00:31:31,240 Speaker 1: Kathy would have arc believed even for one minute. This 537 00:31:31,440 --> 00:31:35,360 Speaker 1: is just a start of Musk on Twitter. I mean, ultimately, 538 00:31:35,400 --> 00:31:37,720 Speaker 1: it's not going to just end with a passive steak. 539 00:31:38,000 --> 00:31:40,400 Speaker 1: I do think for the moment it's passive, but he's 540 00:31:40,680 --> 00:31:44,840 Speaker 1: certainly making a statement, and it's a statement about censorship. 541 00:31:45,200 --> 00:31:47,160 Speaker 1: And sure enough, by the middle of the week, Mr 542 00:31:47,240 --> 00:31:51,160 Speaker 1: Musk had moved from passive to active, joining the Twitter 543 00:31:51,200 --> 00:31:55,680 Speaker 1: board and promising what he calls significant improvements. And who knows, 544 00:31:56,000 --> 00:31:59,480 Speaker 1: maybe he really can change the face of social media. 545 00:31:59,640 --> 00:32:02,280 Speaker 1: But then again, he should be careful that he doesn't 546 00:32:02,280 --> 00:32:05,720 Speaker 1: follow in the footsteps of another legendary mogul who dreamed 547 00:32:05,760 --> 00:32:12,400 Speaker 1: of dominating the media world. Could the rosebud of Citizen 548 00:32:12,480 --> 00:32:16,360 Speaker 1: Kane become the Twitter of Citizen Musk? That does it? 549 00:32:16,440 --> 00:32:18,640 Speaker 1: For this episode of Wall Street Week, I'm David Weston. 550 00:32:18,720 --> 00:32:21,680 Speaker 1: This is Bloomberg. See you next week.