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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 us CPI members reinforcing concerns

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Speaker 1: about inflation. The financial stories that sheep are worth a

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Speaker 1: really different reaction to mark. Its more indications of just

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Speaker 1: how hot the U. S economy really is. Through the

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

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Speaker 1: Treachery Secretary, Katherine Keating, CEO of d n Y mom

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Speaker 1: Sam's l Sharmon and founder of Equatic Group Investment in

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Speaker 1: Bloomberg Wall Street Week with David Weston from Bloomberg Radio. Inflation, Ukraine, Climate, China,

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Speaker 1: you name it and investors have faced it. In two.

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Speaker 1: This is a special year end version of Bloomberg Wall

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Speaker 1: Street Week. I'm David Weston. Whatever else you might say

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Speaker 1: about two, you cannot in that call it boring. We

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Speaker 1: began the year with the first major ground war in

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Speaker 1: Europe since World War Two. I would like to remind

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Speaker 1: you of the words that United Kingdom already heard. We

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Speaker 1: will not give up, We will not lose. We will

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Speaker 1: fight till the end at sea, in the air, we

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Speaker 1: will continue fighting for our land, whatever the cost. We

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Speaker 1: will fight in the forests, in the fields on the shores,

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Speaker 1: in the streets, and inflation rising rapidly to test the

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Speaker 1: resolve of central bankers all around the world. It's unconditional.

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Speaker 1: Our commitment is we really need to restore price stability,

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Speaker 1: get inflation back down to two because without that, we're

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Speaker 1: not going to be able to have a sustained period

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Speaker 1: of maximum employment. With even the Bank of Japan making

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Speaker 1: moves that some took as tightening hints, though Governor Coroda

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Speaker 1: denied it, the b o J intends to aim for

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Speaker 1: price stability by increasing the sustainability of this monetary easing.

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Speaker 1: It's not the beginning of an exit strategy. And we

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Speaker 1: are in the year dealing with the aftermath of a

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Speaker 1: crypto collapse triggered by one of the biggest financial scandals

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Speaker 1: of all time, as ft X is in bankruptcy, billions

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Speaker 1: of dollars have gone missing, and founder Samuel Bankman Freed

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Speaker 1: faces multiple fraud and conspiracy charges. Not sophisticated at all,

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Speaker 1: sophisticated perhaps in the way they were able to sort

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Speaker 1: of hide it from people, frankly right in front of

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Speaker 1: their eyes. Then there were the risks left over from

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Speaker 1: the year before, like climate change. We're not in a

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Speaker 1: good track right now. The world. It's not serious enough

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Speaker 1: about reducing our missions fast enough, and we've had to

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Speaker 1: deal with continuing effects of COVID as China pursued a

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Speaker 1: zero COVID policy that hurt its economy. What does euro

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Speaker 1: COVID policy mean for recession and inflation? And unfortunately it

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Speaker 1: means stagflation. Not surprisingly, the markets reacted to all this

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Speaker 1: risk with some trepidation, with the stock market moving into

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Speaker 1: bear territory. The SMP five at one point was off

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Speaker 1: some twenty percent for the year, The NAZAC down over,

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Speaker 1: while the yield on the tenure climbed from under two

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Speaker 1: percent at the start of the year to hover around

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Speaker 1: three point five percent by year's end. Through the ups

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Speaker 1: and downs of the year, Wall Street Week invited the

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Speaker 1: most experienced experts and investors to rise above the day

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Speaker 1: to day and week to week and give us a

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Speaker 1: broader perspective on where we are and where we're likely going.

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Speaker 1: We begin this year interview with the smart investor, and

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Speaker 1: that's the person we're trying to speak to and speak

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Speaker 1: with every week, starting with one of the most distinctive

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Speaker 1: and successful that there is, Sam's ll of Equity Group

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Speaker 1: Investments who told us what tighter money meant for deal flow,

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Speaker 1: at least for those with the cash. We're seeing more

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Speaker 1: deal flow. We're seeing more situations where companies are having

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Speaker 1: difficulty figuring out what to do. Uh. We're seeing situations

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Speaker 1: where nine months ago, financing a transaction of X y

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Speaker 1: Z size was nothing. You know, it was you know,

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Speaker 1: as you said, money was free. Uh, what's changed dramatically?

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Speaker 1: I mean, think about the impact of the doubling of

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Speaker 1: interest rates in eight weeks double you know, it's just

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Speaker 1: eight weeks earlier. Uh, interest rates were you know, two

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Speaker 1: and a half to three, and now they're five and

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Speaker 1: a half to six. That's an enormous uh change. And

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Speaker 1: and and it's gonna slow down everybody's activity. It's gonna

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Speaker 1: for sure, uh impact getting deals done. But in our

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Speaker 1: particular case, because frankly, I've I've oftentime told the world

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Speaker 1: that you know, when I'm liquid, the stock market can't

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Speaker 1: go down. It only goes down when I'm ire liquid.

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Speaker 1: And here I am sitting there with a level of

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Speaker 1: liquidity I've never experienced in my life. Because my focus

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Speaker 1: for the last three and a half years has been

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Speaker 1: nothing more important than liquidity. So you've got a significant

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Speaker 1: deal flow. If anything, it's bigger than it was before.

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Speaker 1: What about the quality of deals? Are they different from

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Speaker 1: what they were, for example, preach pandemic. I think they

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Speaker 1: are because I think they're a little more realistic. I

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Speaker 1: think in pre pandemic when money was free, Uh, they

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Speaker 1: were transaction. I mean, the whole spack market was. You know,

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Speaker 1: we did its back and chose not to take it

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Speaker 1: to the next level because when we did this back,

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Speaker 1: spac seemed like a very interesting way to in effect

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Speaker 1: monetize opportunity. Uh, it very quickly became a highly speculative

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Speaker 1: scenario dependent on preposterous valuation shans that ultimately led to

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Speaker 1: the crash of the whole spack market. Uh. You know,

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Speaker 1: the world has changed a lot since then, and and

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Speaker 1: the change is basically modifying what you can do. On

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Speaker 1: the other hand, is always demand for capital. Sam's el

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Speaker 1: sees an advantage to his liquidity as rates go up.

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Speaker 1: Steve Rattner's will It Advisors manages the personal and philanthropic

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Speaker 1: funds from Michael Bloomberg. He's the man who founded and

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Speaker 1: owns most of the shares in our parent company Steve

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Speaker 1: sees some of the same challenges and rising rates, but

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Speaker 1: also keeps an eye on the regulatory environment. With a

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Speaker 1: Biden administration committed to more regulation, even if it hasn't

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Speaker 1: quite gotten there yet, you may see more activity by

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Speaker 1: the regulators because they might feel like the clock is

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Speaker 1: running out on their tournament office or whatever, and they

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Speaker 1: might want to get stuff done. I've been a little

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Speaker 1: surprised in that I would expect a very robust regulatory

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Speaker 1: environment out of this administration. They have appointed people too,

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Speaker 1: many of the top regulatory positions who are very much

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Speaker 1: pro regulation, and you can see it's starting to happen

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Speaker 1: at the SEC in places like that. So I do

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Speaker 1: think you're going to see a lot of regulatory activity

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Speaker 1: over the next two years, regardless of what happens in

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Speaker 1: the election. One of the things that this administration said

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Speaker 1: they really want to go after, if I can put

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Speaker 1: it that way, private equity, using things like Clayton next

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Speaker 1: Section eight and intellecting directors, things like that. They think

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Speaker 1: that there's some and a trust things going on. There

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Speaker 1: is there a chilling effect on private equity right now

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Speaker 1: because they also have other things. There are headwinds for

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Speaker 1: them well The biggest headwind for private equity at the

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Speaker 1: moment is the fact that in an environment like this,

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Speaker 1: deals tend to slow down or even stop. And you

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Speaker 1: can see if you look at the overall M and

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Speaker 1: A volumes, how how much slower it is now than

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Speaker 1: it was because the sellers all want yesterday's prices, the

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Speaker 1: buyers want to pay today or tomorrow's prices. So you

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Speaker 1: have a disconnect there. Um. I think I think the

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Speaker 1: problem in in general with mergers over the last really

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Speaker 1: twenty years or more has been a pretty benign anti

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Speaker 1: trust environment. And when I was in when I was

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Speaker 1: in the M and A business, clients would come in

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Speaker 1: and immediately they want to talk about which of their

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Speaker 1: competitors they could buy, and that game I think in

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Speaker 1: this environment is starting to wear out, and that and

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Speaker 1: and so that relates a bit to private equity in

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Speaker 1: terms of their portfolio companies. But I don't think private

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Speaker 1: equity in and of itself is an anitrust problem. Steve

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Speaker 1: Rattner manages a very large and very diversified portfolio of investments,

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Speaker 1: but Jeff Blause, CEO of Related Companies, focuses specifically on

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Speaker 1: real estate, running one of the largest firms in the

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Speaker 1: United States. He came on Wall Street Week to explain

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Speaker 1: what is happening in commercial real estate in the aftermath

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Speaker 1: of the pandemic. What we have seen is a real

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Speaker 1: dispersion in values between older buildings and brand new buildings. UM.

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Speaker 1: And it's not just new, it's new with the right features,

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Speaker 1: the right amenities that tenants are looking for today. UM.

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Speaker 1: So we're seeing more and more corporations thinking about how

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Speaker 1: do they get people back to their office and thinking

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Speaker 1: about using the physical space as attraction to bring people back.

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Speaker 1: But truthfully, people don't want to go back to old

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Speaker 1: kind of quiet offices that are dark and have bad

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Speaker 1: air circulation and long weights and the elevators and no amenities.

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Speaker 1: So what corporations are doing is investing in their office

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Speaker 1: space not for occupancy, but for talent attraction and retention.

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Speaker 1: And I think that's where you're really seeing, uh, the

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Speaker 1: A buildings and the new buildings that are focused on this,

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Speaker 1: that have the right amenities, that have the right H,

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Speaker 1: B A C circulation, that have hospitality type services, that

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Speaker 1: have great air and light um and the right type

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Speaker 1: of build out. The build out in office space is

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Speaker 1: changing tremendously where we used to see kind of the

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Speaker 1: old mad Max version of a build out with you know,

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Speaker 1: private offices on the exterior wall and assistance offices or

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Speaker 1: cubes inside. That's really not the way office is built today.

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Speaker 1: We're seeing much more collaboration space, teeming space, meeting space,

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Speaker 1: food service tables around food where people are using for

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Speaker 1: gathering and working as opposed to private offices. So this

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Speaker 1: type of office of the future, UM, we think can

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Speaker 1: be successful and is successful. The data is there today,

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Speaker 1: UM for these new buildings. So we compared brand new

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Speaker 1: buildings across markets in the United States, UM, not just

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Speaker 1: here in New York, and you look at new modern

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Speaker 1: buildings with the right features, the right amenities, and the

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Speaker 1: demand for those buildings is tremendous. That was Jeff blau

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Speaker 1: CEO of Related Companies. Coming up, we'll take a look

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Speaker 1: at what three may have in store for Global Wall Street.

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Speaker 1: This is a special year end version of Wall Street

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Speaker 1: Week on Bloomberg from New York. Another up day on

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Speaker 1: Wall Street. In fact, records to London, UK businesses are

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Speaker 1: feeding the effects of part prices to home. The Hanks

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Speaker 1: sang down about one point three right now twenty four

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Speaker 1: seven Business and market news that expands your worldviewmail always

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Speaker 1: nice to see you, French Finance Minister. I'm much more

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Speaker 1: concerned about how things slow out of China. Bloomberg Radio,

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Speaker 1: the Bloomberg Business App, and Bloomberg Radio dot Com. Bloomberg

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Speaker 1: The world is listening. This is Bloomberg Wall Street Week

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Speaker 1: with David Weston from Bloomberg Radio. This is a special

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Speaker 1: year in the edition of Wall Street Week. I'm David Weston.

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Speaker 1: China has loomed large once again this year in the

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Speaker 1: thinking of investors as it is pursued a zero COVID policy,

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Speaker 1: triggering public resistance to the shutdowns that followed. It is

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Speaker 1: seen its growth slow, raising questions for the global economy,

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Speaker 1: and in the middle of it all, Presidents she sought

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Speaker 1: and god an historic third term at the twentieth Party Congress.

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Speaker 1: Debra Layer, vice chair of the Pulse and Institute and

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Speaker 1: CEO of Edelman Advisory, has been a pioneer in understanding

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Speaker 1: Chinese economic policy since her days in the Trade Representatives

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Speaker 1: Office negotiating China's accession to the w t O, and

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Speaker 1: she talked to Wall Street Week at the time of

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Speaker 1: the Party Congress about the significance of it for us all.

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Speaker 1: We are all focused on President g and what's going

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Speaker 1: on over in Beijing this week. Give us your sense

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Speaker 1: about what we're learning. It strikes me that one of

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Speaker 1: the biggest challenges he has is the economy and growing

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Speaker 1: the economy. And yet I'm not sure we're hearing much

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Speaker 1: about his economic policy. I hear a lot about politics,

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Speaker 1: a lot about security, that's right. I mean she Didn'ping

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Speaker 1: gave his all important work report at the beginning of

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Speaker 1: the planeum, and it gave up a few previews of

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Speaker 1: how he's going to start to look at the economy.

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Speaker 1: One of the things that he's emphasizing is common prosperity.

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Speaker 1: His slogan about how he brings greater equality. Uh. One

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Speaker 1: of the things that he's looking at is also how

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Speaker 1: the party can continue to play an important role in

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Speaker 1: the economy. And also he did give reassurance to foreign

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Speaker 1: companies that they will continue to push for market opening

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Speaker 1: in key areas. So will we get a sense from

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Speaker 1: the personnel that sur ound him of where it might

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Speaker 1: be headed, Because as I understand it, eventually we will

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Speaker 1: see him come out from behind the curtain. And we

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Speaker 1: assume everybody assumes that he will get his third term,

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Speaker 1: but there's gonna be a critical question of who's with

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Speaker 1: him and he comes out absolutely the important thing. And

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Speaker 1: we're all watching for this weekend when the new party

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Speaker 1: lineup is going to be announced. There's a lot of

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Speaker 1: rumors starting to fly around, although not as many as

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Speaker 1: there usually are, But it's a big guessing game because

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Speaker 1: that will give us really our first clue into what

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Speaker 1: the third term is going to look like. And I

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Speaker 1: think there are three important things to watch. One is

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Speaker 1: going to be what happens to Lee Ka Chung, the

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Speaker 1: current premiere. Does he continue to stay on the Standing Committee.

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Speaker 1: He's termed out of staying on as the premiere, but

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Speaker 1: could they make him the number two and head of

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Speaker 1: the National People's Congress to who will be in the

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Speaker 1: lineup to then take the premiere position, And the two

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Speaker 1: leading candidates appear to be Wang Yang, who's viewed as

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Speaker 1: being more open on the economic issues, and Wang Hunning,

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Speaker 1: who really isn't ideologue. And the third to watch is

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Speaker 1: what happens to Leoja, who is currently the Vice Premier,

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Speaker 1: who's in charge of the economy and finance. Does he

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Speaker 1: stay He has good relations with many foreign firms or

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Speaker 1: who really comes in to take his portfolio. They were

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Speaker 1: one of the things that we watch in the West,

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Speaker 1: and we may be right or wrong, and watching it

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Speaker 1: is the extent to which the markets in some way

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Speaker 1: play a substantial role in economic policy over there. It

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Speaker 1: strikes me that it's possible to interpret presidency thus far

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Speaker 1: is moving somewhat away from the markets. A lot of

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Speaker 1: what do you emphasis right now is ideology, and I

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Speaker 1: think it's what he came out of more than perhaps

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Speaker 1: we've seen in the past. Absolutely, we're seeing much more

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Speaker 1: emphasis on ideology um under Shi Jimping, and if we

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Speaker 1: look back under John Zamin, Jack Zaman was saying the

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Speaker 1: party is big enough to include business. She takes it

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Speaker 1: in a different way. He says the party is all

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Speaker 1: encompassing and it should be forced into business, and so

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Speaker 1: ideology is playing a much bigger role. Also, we need

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Speaker 1: to keep an eye on how she's favorite slogan, common

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Speaker 1: prosperity is going to be implemented. China surprisingly is actually

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Speaker 1: much more unequal than the United States, and one of

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Speaker 1: the things that he's trying to do through this common

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Speaker 1: prosperity UH slogan is saying there should be a cap

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Speaker 1: on executive salaries. We should be looking at big companies,

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Speaker 1: particularly the private sector, giving back to the community, and

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Speaker 1: how that's going to be implemented at the same time

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Speaker 1: when he's trying to grow the economy, when he's trying

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Speaker 1: to encourage entrepreneurship and create jobs. Is going to be

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Speaker 1: a very tough thing for him to balance. Well, I

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Speaker 1: was going to ask exactly about that debora, because through history,

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Speaker 1: a lot of people have said we should have a

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Speaker 1: more equality, less inequality, whether it's income or wealth, but

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Speaker 1: a lot of attempts to get that done. Actually you

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Speaker 1: get in the way of growth overall. Absolutely. I mean

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Speaker 1: in China, and we've talked about this before, the overwhelming

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Speaker 1: majority of Chinese companies or small and medium sized enterprises,

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Speaker 1: it's up into the nineties, they are responsible for about

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Speaker 1: six of China's growth and about six of john creation.

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Speaker 1: And so if you can't create the right atmosphere for

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Speaker 1: them to grow, you're going to have a significant impact

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Speaker 1: on China's ability. And right now she's facing a lot

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Speaker 1: of headwinds when it comes to the economy. He's got

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Speaker 1: issues still to deal with with the real estate market.

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Speaker 1: It's one of the only places that Chinese people can invest,

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Speaker 1: and obviously housing prices are going down at the moment,

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Speaker 1: the world is facing a global recession, and she is

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Speaker 1: still very dependent on exports to grow the economy. He

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Speaker 1: needs to find a way to unlock consumer spending, and

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Speaker 1: that's very hard to do when you don't have confidence

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Speaker 1: in the path of the economy, and particularly when you

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Speaker 1: don't have the kind of social safety nets in place,

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Speaker 1: particularly around health, that make people feel comfortable enough and

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Speaker 1: have confidence to spend their money. If you put in

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Speaker 1: a longer course of Chinese history, because you've been really

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Speaker 1: very active in China for a good long time. Now,

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Speaker 1: are we seeing something of a turn back toward male

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Speaker 1: and away from Duncho Ping. Well, certainly we're seeing a

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Speaker 1: difference in the way that she is governing the economy.

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Speaker 1: You know, the Chinese Communist Party has about ninety three

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Speaker 1: million members, and to put that in context, that's ten

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Speaker 1: million more people than the whole population of Germany. And

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Speaker 1: he'd used this as the way to govern the economy,

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Speaker 1: and so therefore the party is involved in every aspect.

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Speaker 1: As we look at this new leadership coming in, watching

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Speaker 1: the ideology versus the technocrats is going to be really

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Speaker 1: important and give us a sense of what the government

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Speaker 1: appointees which will take place next March, will look like

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Speaker 1: and how they're going to approach the economy. Is there

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Speaker 1: going to be this this on a more socialist economy

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Speaker 1: or are they going to be more emphasis in what

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Speaker 1: they call the socialist market economy. The fact that they

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Speaker 1: didn't put out the GDP numbers on time, I think

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Speaker 1: is very disconcerting. For the world's second largest economy to

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Speaker 1: place politics over just the standard transparency and publication of

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Speaker 1: data is not an encouraging sign. Debra, looking into your

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Speaker 1: crystal ball there, what do you think this might mean

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Speaker 1: for US China relations? I mean, it strikes me at

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Speaker 1: least that going back five or ten years, a lot

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Speaker 1: of it was about economics, it was about trade, things

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Speaker 1: like that, increasingly from Beijing but also from Washington. When

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Speaker 1: they talk about one another, it's about geopolitics, it's about Taiwan,

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Speaker 1: it's about Russia, it's about security in the Asia area.

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Speaker 1: We national security definitely dominates the headlines, and there are

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Speaker 1: some very serious issues that we're dealing with. I was

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Speaker 1: just in the UK and they were telling me Taiwan

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Speaker 1: didn't even used to really be on their agen to

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Speaker 1: and now they're spending about se at their time. These

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Speaker 1: are the China experts focused on this, So those are

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Speaker 1: absolutely definite important issues to watch. But I think the

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Speaker 1: real story here is going to be what happens with

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Speaker 1: the economic and trade relationship. Traditionally it's been the foundation

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Speaker 1: of the relationship and it's created the people, the people

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Speaker 1: ties and built some levels of trust. Without these exchanges,

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Speaker 1: with the Western companies reconsidering both because of the politics,

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Speaker 1: but also because of the state of the Chinese economy

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Speaker 1: and the complications that have come with dealing with COVID zero,

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Speaker 1: they're reconsidering their strategies and not having that level of

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Speaker 1: trust I think really is going to have an impact

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Speaker 1: and ensure that they're going to continue to be fraught

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Speaker 1: relations between the United States and China. That was Debora

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Speaker 1: Lair of the Pulse and Institute and Edelman Global Advisory.

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Speaker 1: Coming up, we turned to the subject of inflation and

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Speaker 1: our special contribute to Law Street Week Larry Summers of

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Speaker 1: Harvard who got it early and got it right. That's

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

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

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Speaker 1: is our year end edition of Wall Street Week. I'm

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Speaker 1: David Weston, special contributor to Larry Summers of Harvard. Has

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Speaker 1: been our Wall Street Week mused throughout the year on

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Speaker 1: a range of subjects, but just as two will go

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Speaker 1: down as the year inflation came to stay, Larry will

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Speaker 1: be remembered as one of the leading economists who saw

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Speaker 1: it early and kept insisting something needed to be done.

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Speaker 1: Here's Larry in Wall Street Week way back in February.

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Speaker 1: I don't understand why people keep being so surprised when

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Speaker 1: there's evidence that inflation is entrenched. This confirms, Uh, just

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Speaker 1: how far behind the curve the FED has gotten. And

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Speaker 1: this along with the fact that it now looks like

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Speaker 1: build back batter is in trouble. UH couldn't firms what

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Speaker 1: a serious error the excessive stimulus of last March was.

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Speaker 1: Here's what I think the FED should do. I think

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Speaker 1: the FED should have a special meeting right now to

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Speaker 1: end quee. It is nothing short of preposterous that in

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Speaker 1: an economy was seven and a half percent inflation in

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Speaker 1: an economy with the tightest labor markets we've seen in

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Speaker 1: more than two generations that the Central Bank is still

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Speaker 1: as we speak, growing its bound sheet, and I think

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Speaker 1: the FED could show that at last it really gets

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Speaker 1: it by having a special meeting for the purpose of

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Speaker 1: simply ending quee. And by May we started to see

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Speaker 1: the results. The FED moved towards a series of seventy

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Speaker 1: basis point rate hikes, and we asked Laurie whether that

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Speaker 1: was enough. Do you think that they really have made

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Speaker 1: a turn towards really regaining their credibility when it comes

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Speaker 1: to inflation. This is certainly the most dramatic action UH

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Speaker 1: they've taken, UH, both the fact of a basis point

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Speaker 1: move and what was clearly a calling of an audible

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Speaker 1: just before the play at at the meeting, and I

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Speaker 1: think that was welcome and appropriate. I still think that

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Speaker 1: the Fed and most market participants are underestimating the gravity

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Speaker 1: of our situation. UH. The FED moved its forecast by

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Speaker 1: an epic amount, both up on inflation and down on

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Speaker 1: the economy. But their current view that they're going to

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Speaker 1: get to two and a half percent UH inflation or

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Speaker 1: below with unemployment just above four strikes me as an

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Speaker 1: optimistic tail outcome, not a central tendency in a forecast.

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Speaker 1: I think a better judgment is that there's no reduction

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Speaker 1: to UH normality without a significant increase in unemployment of

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Speaker 1: perhaps two percentage points or more at some point UH

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Speaker 1: down the road. And when Chair Pale suggested in July

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Speaker 1: that maybe the Fed was already at the neutral rate,

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Speaker 1: Larry did not mince words. I think J. Powell said

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Speaker 1: things that, to be blunts, were analytically indefensible. He claimed

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Speaker 1: twice in his press conference that the Fed was now

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Speaker 1: at the neutral UH interest rate, calling it two and

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Speaker 1: a half. It's elementary that the level of the neutral

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Speaker 1: interest rate depends upon the inflation rate. We've got on

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Speaker 1: the most quoted measure, a nine point one percent inflation

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Speaker 1: measure he extrapolated off core or something it's four or

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Speaker 1: five percent inflation. There is no conceivable way that a

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Speaker 1: two and a half percent interest rate in an economy

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Speaker 1: inflating like this is anywhere near neutral. And if you

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Speaker 1: think it is neutral, you are misjudging the posture of

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Speaker 1: policy in a fundamental way. So I was very sorry,

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Speaker 1: UH to hear him UH say that, and frankly surprised.

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Speaker 1: He said back in that the neutral interest rate that

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Speaker 1: the Fed was approaching the neutral interest rate at a

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Speaker 1: time when the inflation rate was one point nine percent.

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Speaker 1: How he could be saying the same thing today when

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Speaker 1: the inflation rate is where it is is inexplicable. But

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Speaker 1: by year's end, with a series of rate hikes behind

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Speaker 1: the Fed and the promise of more yet to come,

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Speaker 1: Larry said that they were moving in the right direction.

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Speaker 1: The Chairman is in about the right place. He's recognizing

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Speaker 1: that we can't forecast the economy with precision. He's recognizing

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Speaker 1: that it would be a terrible error if we were

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Speaker 1: to fail to stop inflation. In this episode, he's rejecting

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Speaker 1: the talk about this being a moment to change the

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Speaker 1: placition target, and he's maintaining substantial flexibility with respect to

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Speaker 1: the future. I think that is broadly, UH, the right

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Speaker 1: place for him to be. UH. But I think we've

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Speaker 1: got a very difficult challenge ahead of us, because I

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Speaker 1: think the old adage about things taking longer to happen

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Speaker 1: than you think they will, and then they happen faster

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Speaker 1: than you thought they could is really operating. With respect

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Speaker 1: to the forecasted UH recession. It does look like it's

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Speaker 1: pushed back a bit in time, but there are reasons

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Speaker 1: to think and this is what makes the chairman's job

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Speaker 1: so hard. That the economy could have a kind of

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Speaker 1: widely coyote UH moment, that recession induced slow earnings could

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Speaker 1: pop into focus for stock market investors, with verse consequences

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Speaker 1: for the market, that consumers could deplete their hoard of

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Speaker 1: post COVID savings. As outspoken as Larry Summers was on

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Speaker 1: Wall Street weeks throughout the year, he didn't hesitate to

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Speaker 1: say what he thought about other subjects as well as inflation,

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Speaker 1: such as the disastrous Many budget that the short lived

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Speaker 1: Prime Minister Liz Trust put forward and that nearly broke

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Speaker 1: the market in guilt. When do you make of what's

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Speaker 1: going on in the UK. It makes me very sorry

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Speaker 1: to say, but I think the UK is behaving a

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Speaker 1: bit like an emerging market turning itself into a submerging

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Speaker 1: UH market. There's nothing in the pattern of market response

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Speaker 1: in the UK that suggests anything but fear rather than

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Speaker 1: confidence in the policy approaches UH being taken. It would

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Speaker 1: not surprise me if the pound eventually gets below a

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Speaker 1: dollar if the current policy path is maintained. This is

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Speaker 1: simply not a moment for the kind of naive uh,

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Speaker 1: wishful thinking supply side economics uh. That is being pursued

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Speaker 1: in Britain. And even the subject of artificial intelligence caught

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Speaker 1: the eye of our special contributor, who thinks something truly

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Speaker 1: profound maybe afoot with chat GPT. The great computer scientist

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Speaker 1: Alan Turing seven years ago said that it was going

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Speaker 1: to be a threshold for humanity when a machine could SEPT,

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Speaker 1: could it could imitate human beings answers to questions in

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Speaker 1: a way where another human being wouldn't be to tell

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Speaker 1: the difference. We're somewhere in the territory of that right now,

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Speaker 1: and that is a profound thing for humanity. It points

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Speaker 1: to a profound change in the way we're all going

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00:29:15,760 --> 00:29:19,040
Speaker 1: to be working. We're all gonna have a kind of

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Speaker 1: caddy that or many of us are going to have

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Speaker 1: a kind of caddy that is going to augment our creativity,

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Speaker 1: augment our capacities, to bring knowledge to bear on what

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Speaker 1: we do, augment our accuracy. That was special contributor to

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Speaker 1: Wall Street Week Larry Summer's commenting throughout an eventful year

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Speaker 1: for global Wall Street coming up, we looked back to

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Speaker 1: how Lewis ruckheiserre wrapped up the year two thousand on

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Speaker 1: his version of Wall Street Week. This is Wall Street

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

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Speaker 1: David Weston from Bloomberg Radio. Finally, one more thought, Well,

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Speaker 1: it's actually the one more thought of Lewis Ruckheiser from

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Speaker 1: two decades ago, when, at the end of a difficult

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Speaker 1: year of two thousand, he reflected back over the aftermath

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Speaker 1: of a market downturn led by a collapse of tech,

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Speaker 1: showing once again the wisdom of Mark Twain that history

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00:30:20,280 --> 00:30:25,520
Speaker 1: doesn't repeat itself, but it often rhymes. Much of the

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Speaker 1: world of investors regards two thousand as a year of mourning.

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Speaker 1: For profits past, the bubbles burst, for bulls de horned,

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Speaker 1: and for certainties crumbled. And let's face it, it wasn't

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Speaker 1: always fun. As Winston Churchill put it, I'm always ready

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Speaker 1: to learn, although I do not always like to be taught.

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Speaker 1: Virtually nobody except the NonStop pessimists who are still stone

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Speaker 1: losers over the past decade foresaw the viciousness of this

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Speaker 1: year's declines, although the year was country victory even there.

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Speaker 1: For example, is this a bear market? Well, yes and no,

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Speaker 1: even from their highest heights in early two thousand, the

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Speaker 1: Dow Jones Industrial Average and the SMP five hundred have

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00:31:14,480 --> 00:31:18,520
Speaker 1: declined far less than the twenty percent that traditionally has

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Speaker 1: defined a bear market. But for the formerly high flying

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Speaker 1: technology stocks personified by the NASDAC, this has not only

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Speaker 1: been a bear but the growley of all time. NAZDAK,

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Speaker 1: which never does things moderately, fell nearly forty percent this

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Speaker 1: year and is off more than fifty one from its

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Speaker 1: March tenth high. That makes this not only the worst

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Speaker 1: year ever for the twenty nine year old NASDAK, but

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Speaker 1: the biggest decline for any of the three major indexes

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Speaker 1: since the SMP five hundred lost forty seven percent in

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Speaker 1: nineteen thirty one during the Great Depression. So devastating was

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Speaker 1: this latest and most severe tech wreck that any attempt

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Speaker 1: to put it in perspective by pointing out say that

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Speaker 1: NASDAC has been the bullish phenomenon in the past decade

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Speaker 1: and that it gained more than eighty five in nine alone,

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00:32:16,960 --> 00:32:21,560
Speaker 1: is likely to seem like irrelevant ancient history to today's

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00:32:21,640 --> 00:32:25,760
Speaker 1: bleeding tech investors. Are they right? Is this just a

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00:32:25,840 --> 00:32:30,200
Speaker 1: temporary reversal of a fantastically promising uptrend or Is it

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00:32:30,320 --> 00:32:34,160
Speaker 1: truly the end of a booming era? Were the downward

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Speaker 1: catalysts of two thousand a fierce federal reserve, a steeply

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Speaker 1: weakening economy, and a nation driven to embarrassing self doubt

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Speaker 1: by the election that would not die passing phenomena or

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Speaker 1: orderies of enduring change. We'll try to get you some

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Speaker 1: meaningful answers tonight, and we will try and get you

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Speaker 1: answers in the new year. That does it for Wall

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Speaker 1: Street Week for this year. I'm David Weston. This is Bloomberg.

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Speaker 1: See you next year. M