Speaker 1: This is Bloomberg Wall Street Week. We turn our attention
Speaker 1: to the markets this week us CPI members reinforcing concerns
Speaker 1: about inflation. The financial stories that sheep are worth a
Speaker 1: really different reaction to mark. Its more indications of just
Speaker 1: how hot the U. S economy really is. Through the
Speaker 1: eyes of the most influential voices. Larry Summers, the former
Speaker 1: Treachery Secretary, Katherine Keating, CEO of d n Y mom
Speaker 1: Sam's l Sharmon and founder of Equatic Group Investment in
Speaker 1: Bloomberg Wall Street Week with David Weston from Bloomberg Radio. Inflation, Ukraine, Climate, China,
Speaker 1: you name it and investors have faced it. In two.
Speaker 1: This is a special year end version of Bloomberg Wall
Speaker 1: Street Week. I'm David Weston. Whatever else you might say
Speaker 1: about two, you cannot in that call it boring. We
Speaker 1: began the year with the first major ground war in
Speaker 1: Europe since World War Two. I would like to remind
Speaker 1: you of the words that United Kingdom already heard. We
Speaker 1: will not give up, We will not lose. We will
Speaker 1: fight till the end at sea, in the air, we
Speaker 1: will continue fighting for our land, whatever the cost. We
Speaker 1: will fight in the forests, in the fields on the shores,
Speaker 1: in the streets, and inflation rising rapidly to test the
Speaker 1: resolve of central bankers all around the world. It's unconditional.
Speaker 1: Our commitment is we really need to restore price stability,
Speaker 1: get inflation back down to two because without that, we're
Speaker 1: not going to be able to have a sustained period
Speaker 1: of maximum employment. With even the Bank of Japan making
Speaker 1: moves that some took as tightening hints, though Governor Coroda
Speaker 1: denied it, the b o J intends to aim for
Speaker 1: price stability by increasing the sustainability of this monetary easing.
Speaker 1: It's not the beginning of an exit strategy. And we
Speaker 1: are in the year dealing with the aftermath of a
Speaker 1: crypto collapse triggered by one of the biggest financial scandals
Speaker 1: of all time, as ft X is in bankruptcy, billions
Speaker 1: of dollars have gone missing, and founder Samuel Bankman Freed
Speaker 1: faces multiple fraud and conspiracy charges. Not sophisticated at all,
Speaker 1: sophisticated perhaps in the way they were able to sort
Speaker 1: of hide it from people, frankly right in front of
Speaker 1: their eyes. Then there were the risks left over from
Speaker 1: the year before, like climate change. We're not in a
Speaker 1: good track right now. The world. It's not serious enough
Speaker 1: about reducing our missions fast enough, and we've had to
Speaker 1: deal with continuing effects of COVID as China pursued a
Speaker 1: zero COVID policy that hurt its economy. What does euro
Speaker 1: COVID policy mean for recession and inflation? And unfortunately it
Speaker 1: means stagflation. Not surprisingly, the markets reacted to all this
Speaker 1: risk with some trepidation, with the stock market moving into
Speaker 1: bear territory. The SMP five at one point was off
Speaker 1: some twenty percent for the year, The NAZAC down over,
Speaker 1: while the yield on the tenure climbed from under two
Speaker 1: percent at the start of the year to hover around
Speaker 1: three point five percent by year's end. Through the ups
Speaker 1: and downs of the year, Wall Street Week invited the
Speaker 1: most experienced experts and investors to rise above the day
Speaker 1: to day and week to week and give us a
Speaker 1: broader perspective on where we are and where we're likely going.
Speaker 1: We begin this year interview with the smart investor, and
Speaker 1: that's the person we're trying to speak to and speak
Speaker 1: with every week, starting with one of the most distinctive
Speaker 1: and successful that there is, Sam's ll of Equity Group
Speaker 1: Investments who told us what tighter money meant for deal flow,
Speaker 1: at least for those with the cash. We're seeing more
Speaker 1: deal flow. We're seeing more situations where companies are having
Speaker 1: difficulty figuring out what to do. Uh. We're seeing situations
Speaker 1: where nine months ago, financing a transaction of X y
Speaker 1: Z size was nothing. You know, it was you know,
Speaker 1: as you said, money was free. Uh, what's changed dramatically?
Speaker 1: I mean, think about the impact of the doubling of
Speaker 1: interest rates in eight weeks double you know, it's just
Speaker 1: eight weeks earlier. Uh, interest rates were you know, two
Speaker 1: and a half to three, and now they're five and
Speaker 1: a half to six. That's an enormous uh change. And
Speaker 1: and and it's gonna slow down everybody's activity. It's gonna
Speaker 1: for sure, uh impact getting deals done. But in our
Speaker 1: particular case, because frankly, I've I've oftentime told the world
Speaker 1: that you know, when I'm liquid, the stock market can't
Speaker 1: go down. It only goes down when I'm ire liquid.
Speaker 1: And here I am sitting there with a level of
Speaker 1: liquidity I've never experienced in my life. Because my focus
Speaker 1: for the last three and a half years has been
Speaker 1: nothing more important than liquidity. So you've got a significant
Speaker 1: deal flow. If anything, it's bigger than it was before.
Speaker 1: What about the quality of deals? Are they different from
Speaker 1: what they were, for example, preach pandemic. I think they
Speaker 1: are because I think they're a little more realistic. I
Speaker 1: think in pre pandemic when money was free, Uh, they
Speaker 1: were transaction. I mean, the whole spack market was. You know,
Speaker 1: we did its back and chose not to take it
Speaker 1: to the next level because when we did this back,
Speaker 1: spac seemed like a very interesting way to in effect
Speaker 1: monetize opportunity. Uh, it very quickly became a highly speculative
Speaker 1: scenario dependent on preposterous valuation shans that ultimately led to
Speaker 1: the crash of the whole spack market. Uh. You know,
Speaker 1: the world has changed a lot since then, and and
Speaker 1: the change is basically modifying what you can do. On
Speaker 1: the other hand, is always demand for capital. Sam's el
Speaker 1: sees an advantage to his liquidity as rates go up.
Speaker 1: Steve Rattner's will It Advisors manages the personal and philanthropic
Speaker 1: funds from Michael Bloomberg. He's the man who founded and
Speaker 1: owns most of the shares in our parent company Steve
Speaker 1: sees some of the same challenges and rising rates, but
Speaker 1: also keeps an eye on the regulatory environment. With a
Speaker 1: Biden administration committed to more regulation, even if it hasn't
Speaker 1: quite gotten there yet, you may see more activity by
Speaker 1: the regulators because they might feel like the clock is
Speaker 1: running out on their tournament office or whatever, and they
Speaker 1: might want to get stuff done. I've been a little
Speaker 1: surprised in that I would expect a very robust regulatory
Speaker 1: environment out of this administration. They have appointed people too,
Speaker 1: many of the top regulatory positions who are very much
Speaker 1: pro regulation, and you can see it's starting to happen
Speaker 1: at the SEC in places like that. So I do
Speaker 1: think you're going to see a lot of regulatory activity
Speaker 1: over the next two years, regardless of what happens in
Speaker 1: the election. One of the things that this administration said
Speaker 1: they really want to go after, if I can put
Speaker 1: it that way, private equity, using things like Clayton next
Speaker 1: Section eight and intellecting directors, things like that. They think
Speaker 1: that there's some and a trust things going on. There
Speaker 1: is there a chilling effect on private equity right now
Speaker 1: because they also have other things. There are headwinds for
Speaker 1: them well The biggest headwind for private equity at the
Speaker 1: moment is the fact that in an environment like this,
Speaker 1: deals tend to slow down or even stop. And you
Speaker 1: can see if you look at the overall M and
Speaker 1: A volumes, how how much slower it is now than
Speaker 1: it was because the sellers all want yesterday's prices, the
Speaker 1: buyers want to pay today or tomorrow's prices. So you
Speaker 1: have a disconnect there. Um. I think I think the
Speaker 1: problem in in general with mergers over the last really
Speaker 1: twenty years or more has been a pretty benign anti
Speaker 1: trust environment. And when I was in when I was
Speaker 1: in the M and A business, clients would come in
Speaker 1: and immediately they want to talk about which of their
Speaker 1: competitors they could buy, and that game I think in
Speaker 1: this environment is starting to wear out, and that and
Speaker 1: and so that relates a bit to private equity in
Speaker 1: terms of their portfolio companies. But I don't think private
Speaker 1: equity in and of itself is an anitrust problem. Steve
Speaker 1: Rattner manages a very large and very diversified portfolio of investments,
Speaker 1: but Jeff Blause, CEO of Related Companies, focuses specifically on
Speaker 1: real estate, running one of the largest firms in the
Speaker 1: United States. He came on Wall Street Week to explain
Speaker 1: what is happening in commercial real estate in the aftermath
Speaker 1: of the pandemic. What we have seen is a real
Speaker 1: dispersion in values between older buildings and brand new buildings. UM.
Speaker 1: And it's not just new, it's new with the right features,
Speaker 1: the right amenities that tenants are looking for today. UM.
Speaker 1: So we're seeing more and more corporations thinking about how
Speaker 1: do they get people back to their office and thinking
Speaker 1: about using the physical space as attraction to bring people back.
Speaker 1: But truthfully, people don't want to go back to old
Speaker 1: kind of quiet offices that are dark and have bad
Speaker 1: air circulation and long weights and the elevators and no amenities.
Speaker 1: So what corporations are doing is investing in their office
Speaker 1: space not for occupancy, but for talent attraction and retention.
Speaker 1: And I think that's where you're really seeing, uh, the
Speaker 1: A buildings and the new buildings that are focused on this,
Speaker 1: that have the right amenities, that have the right H,
Speaker 1: B A C circulation, that have hospitality type services, that
Speaker 1: have great air and light um and the right type
Speaker 1: of build out. The build out in office space is
Speaker 1: changing tremendously where we used to see kind of the
Speaker 1: old mad Max version of a build out with you know,
Speaker 1: private offices on the exterior wall and assistance offices or
Speaker 1: cubes inside. That's really not the way office is built today.
Speaker 1: We're seeing much more collaboration space, teeming space, meeting space,
Speaker 1: food service tables around food where people are using for
Speaker 1: gathering and working as opposed to private offices. So this
Speaker 1: type of office of the future, UM, we think can
Speaker 1: be successful and is successful. The data is there today,
Speaker 1: UM for these new buildings. So we compared brand new
Speaker 1: buildings across markets in the United States, UM, not just
Speaker 1: here in New York, and you look at new modern
Speaker 1: buildings with the right features, the right amenities, and the
Speaker 1: demand for those buildings is tremendous. That was Jeff blau
Speaker 1: CEO of Related Companies. Coming up, we'll take a look
Speaker 1: at what three may have in store for Global Wall Street.
Speaker 1: This is a special year end version of Wall Street
Speaker 1: Week on Bloomberg from New York. Another up day on
Speaker 1: Wall Street. In fact, records to London, UK businesses are
Speaker 1: feeding the effects of part prices to home. The Hanks
Speaker 1: sang down about one point three right now twenty four
Speaker 1: seven Business and market news that expands your worldviewmail always
Speaker 1: nice to see you, French Finance Minister. I'm much more
Speaker 1: concerned about how things slow out of China. Bloomberg Radio,
Speaker 1: the Bloomberg Business App, and Bloomberg Radio dot Com. Bloomberg
Speaker 1: The world is listening. This is Bloomberg Wall Street Week
Speaker 1: with David Weston from Bloomberg Radio. This is a special
Speaker 1: year in the edition of Wall Street Week. I'm David Weston.
Speaker 1: China has loomed large once again this year in the
Speaker 1: thinking of investors as it is pursued a zero COVID policy,
Speaker 1: triggering public resistance to the shutdowns that followed. It is
Speaker 1: seen its growth slow, raising questions for the global economy,
Speaker 1: and in the middle of it all, Presidents she sought
Speaker 1: and god an historic third term at the twentieth Party Congress.
Speaker 1: Debra Layer, vice chair of the Pulse and Institute and
Speaker 1: CEO of Edelman Advisory, has been a pioneer in understanding
Speaker 1: Chinese economic policy since her days in the Trade Representatives
Speaker 1: Office negotiating China's accession to the w t O, and
Speaker 1: she talked to Wall Street Week at the time of
Speaker 1: the Party Congress about the significance of it for us all.
Speaker 1: We are all focused on President g and what's going
Speaker 1: on over in Beijing this week. Give us your sense
Speaker 1: about what we're learning. It strikes me that one of
Speaker 1: the biggest challenges he has is the economy and growing
Speaker 1: the economy. And yet I'm not sure we're hearing much
Speaker 1: about his economic policy. I hear a lot about politics,
Speaker 1: a lot about security, that's right. I mean she Didn'ping
Speaker 1: gave his all important work report at the beginning of
Speaker 1: the planeum, and it gave up a few previews of
Speaker 1: how he's going to start to look at the economy.
Speaker 1: One of the things that he's emphasizing is common prosperity.
Speaker 1: His slogan about how he brings greater equality. Uh. One
Speaker 1: of the things that he's looking at is also how
Speaker 1: the party can continue to play an important role in
Speaker 1: the economy. And also he did give reassurance to foreign
Speaker 1: companies that they will continue to push for market opening
Speaker 1: in key areas. So will we get a sense from
Speaker 1: the personnel that sur ound him of where it might
Speaker 1: be headed, Because as I understand it, eventually we will
Speaker 1: see him come out from behind the curtain. And we
Speaker 1: assume everybody assumes that he will get his third term,
Speaker 1: but there's gonna be a critical question of who's with
Speaker 1: him and he comes out absolutely the important thing. And
Speaker 1: we're all watching for this weekend when the new party
Speaker 1: lineup is going to be announced. There's a lot of
Speaker 1: rumors starting to fly around, although not as many as
Speaker 1: there usually are, But it's a big guessing game because
Speaker 1: that will give us really our first clue into what
Speaker 1: the third term is going to look like. And I
Speaker 1: think there are three important things to watch. One is
Speaker 1: going to be what happens to Lee Ka Chung, the
Speaker 1: current premiere. Does he continue to stay on the Standing Committee.
Speaker 1: He's termed out of staying on as the premiere, but
Speaker 1: could they make him the number two and head of
Speaker 1: the National People's Congress to who will be in the
Speaker 1: lineup to then take the premiere position, And the two
Speaker 1: leading candidates appear to be Wang Yang, who's viewed as
Speaker 1: being more open on the economic issues, and Wang Hunning,
Speaker 1: who really isn't ideologue. And the third to watch is
Speaker 1: what happens to Leoja, who is currently the Vice Premier,
Speaker 1: who's in charge of the economy and finance. Does he
Speaker 1: stay He has good relations with many foreign firms or
Speaker 1: who really comes in to take his portfolio. They were
Speaker 1: one of the things that we watch in the West,
Speaker 1: and we may be right or wrong, and watching it
Speaker 1: is the extent to which the markets in some way
Speaker 1: play a substantial role in economic policy over there. It
Speaker 1: strikes me that it's possible to interpret presidency thus far
Speaker 1: is moving somewhat away from the markets. A lot of
Speaker 1: what do you emphasis right now is ideology, and I
Speaker 1: think it's what he came out of more than perhaps
Speaker 1: we've seen in the past. Absolutely, we're seeing much more
Speaker 1: emphasis on ideology um under Shi Jimping, and if we
Speaker 1: look back under John Zamin, Jack Zaman was saying the
Speaker 1: party is big enough to include business. She takes it
Speaker 1: in a different way. He says the party is all
Speaker 1: encompassing and it should be forced into business, and so
Speaker 1: ideology is playing a much bigger role. Also, we need
Speaker 1: to keep an eye on how she's favorite slogan, common
Speaker 1: prosperity is going to be implemented. China surprisingly is actually
Speaker 1: much more unequal than the United States, and one of
Speaker 1: the things that he's trying to do through this common
Speaker 1: prosperity UH slogan is saying there should be a cap
Speaker 1: on executive salaries. We should be looking at big companies,
Speaker 1: particularly the private sector, giving back to the community, and
Speaker 1: how that's going to be implemented at the same time
Speaker 1: when he's trying to grow the economy, when he's trying
Speaker 1: to encourage entrepreneurship and create jobs. Is going to be
Speaker 1: a very tough thing for him to balance. Well, I
Speaker 1: was going to ask exactly about that debora, because through history,
Speaker 1: a lot of people have said we should have a
Speaker 1: more equality, less inequality, whether it's income or wealth, but
Speaker 1: a lot of attempts to get that done. Actually you
Speaker 1: get in the way of growth overall. Absolutely. I mean
Speaker 1: in China, and we've talked about this before, the overwhelming
Speaker 1: majority of Chinese companies or small and medium sized enterprises,
Speaker 1: it's up into the nineties, they are responsible for about
Speaker 1: six of China's growth and about six of john creation.
Speaker 1: And so if you can't create the right atmosphere for
Speaker 1: them to grow, you're going to have a significant impact
Speaker 1: on China's ability. And right now she's facing a lot
Speaker 1: of headwinds when it comes to the economy. He's got
Speaker 1: issues still to deal with with the real estate market.
Speaker 1: It's one of the only places that Chinese people can invest,
Speaker 1: and obviously housing prices are going down at the moment,
Speaker 1: the world is facing a global recession, and she is
Speaker 1: still very dependent on exports to grow the economy. He
Speaker 1: needs to find a way to unlock consumer spending, and
Speaker 1: that's very hard to do when you don't have confidence
Speaker 1: in the path of the economy, and particularly when you
Speaker 1: don't have the kind of social safety nets in place,
Speaker 1: particularly around health, that make people feel comfortable enough and
Speaker 1: have confidence to spend their money. If you put in
Speaker 1: a longer course of Chinese history, because you've been really
Speaker 1: very active in China for a good long time. Now,
Speaker 1: are we seeing something of a turn back toward male
Speaker 1: and away from Duncho Ping. Well, certainly we're seeing a
Speaker 1: difference in the way that she is governing the economy.
Speaker 1: You know, the Chinese Communist Party has about ninety three
Speaker 1: million members, and to put that in context, that's ten
Speaker 1: million more people than the whole population of Germany. And
Speaker 1: he'd used this as the way to govern the economy,
Speaker 1: and so therefore the party is involved in every aspect.
Speaker 1: As we look at this new leadership coming in, watching
Speaker 1: the ideology versus the technocrats is going to be really
Speaker 1: important and give us a sense of what the government
Speaker 1: appointees which will take place next March, will look like
Speaker 1: and how they're going to approach the economy. Is there
Speaker 1: going to be this this on a more socialist economy
Speaker 1: or are they going to be more emphasis in what
Speaker 1: they call the socialist market economy. The fact that they
Speaker 1: didn't put out the GDP numbers on time, I think
Speaker 1: is very disconcerting. For the world's second largest economy to
Speaker 1: place politics over just the standard transparency and publication of
Speaker 1: data is not an encouraging sign. Debra, looking into your
Speaker 1: crystal ball there, what do you think this might mean
Speaker 1: for US China relations? I mean, it strikes me at
Speaker 1: least that going back five or ten years, a lot
Speaker 1: of it was about economics, it was about trade, things
Speaker 1: like that, increasingly from Beijing but also from Washington. When
Speaker 1: they talk about one another, it's about geopolitics, it's about Taiwan,
Speaker 1: it's about Russia, it's about security in the Asia area.
Speaker 1: We national security definitely dominates the headlines, and there are
Speaker 1: some very serious issues that we're dealing with. I was
Speaker 1: just in the UK and they were telling me Taiwan
Speaker 1: didn't even used to really be on their agen to
Speaker 1: and now they're spending about se at their time. These
Speaker 1: are the China experts focused on this, So those are
Speaker 1: absolutely definite important issues to watch. But I think the
Speaker 1: real story here is going to be what happens with
Speaker 1: the economic and trade relationship. Traditionally it's been the foundation
Speaker 1: of the relationship and it's created the people, the people
Speaker 1: ties and built some levels of trust. Without these exchanges,
Speaker 1: with the Western companies reconsidering both because of the politics,
Speaker 1: but also because of the state of the Chinese economy
Speaker 1: and the complications that have come with dealing with COVID zero,
Speaker 1: they're reconsidering their strategies and not having that level of
Speaker 1: trust I think really is going to have an impact
Speaker 1: and ensure that they're going to continue to be fraught
Speaker 1: relations between the United States and China. That was Debora
Speaker 1: Lair of the Pulse and Institute and Edelman Global Advisory.
Speaker 1: Coming up, we turned to the subject of inflation and
Speaker 1: our special contribute to Law Street Week Larry Summers of
Speaker 1: Harvard who got it early and got it right. That's
Speaker 1: next on Wall Street Week on Bloomberg. This is Bloomberg
Speaker 1: Wall Street Week with David Weston from Bloomberg Radio. This
Speaker 1: is our year end edition of Wall Street Week. I'm
Speaker 1: David Weston, special contributor to Larry Summers of Harvard. Has
Speaker 1: been our Wall Street Week mused throughout the year on
Speaker 1: a range of subjects, but just as two will go
Speaker 1: down as the year inflation came to stay, Larry will
Speaker 1: be remembered as one of the leading economists who saw
Speaker 1: it early and kept insisting something needed to be done.
Speaker 1: Here's Larry in Wall Street Week way back in February.
Speaker 1: I don't understand why people keep being so surprised when
Speaker 1: there's evidence that inflation is entrenched. This confirms, Uh, just
Speaker 1: how far behind the curve the FED has gotten. And
Speaker 1: this along with the fact that it now looks like
Speaker 1: build back batter is in trouble. UH couldn't firms what
Speaker 1: a serious error the excessive stimulus of last March was.
Speaker 1: Here's what I think the FED should do. I think
Speaker 1: the FED should have a special meeting right now to
Speaker 1: end quee. It is nothing short of preposterous that in
Speaker 1: an economy was seven and a half percent inflation in
Speaker 1: an economy with the tightest labor markets we've seen in
Speaker 1: more than two generations that the Central Bank is still
Speaker 1: as we speak, growing its bound sheet, and I think
Speaker 1: the FED could show that at last it really gets
Speaker 1: it by having a special meeting for the purpose of
Speaker 1: simply ending quee. And by May we started to see
Speaker 1: the results. The FED moved towards a series of seventy
Speaker 1: basis point rate hikes, and we asked Laurie whether that
Speaker 1: was enough. Do you think that they really have made
Speaker 1: a turn towards really regaining their credibility when it comes
Speaker 1: to inflation. This is certainly the most dramatic action UH
Speaker 1: they've taken, UH, both the fact of a basis point
Speaker 1: move and what was clearly a calling of an audible
Speaker 1: just before the play at at the meeting, and I
Speaker 1: think that was welcome and appropriate. I still think that
Speaker 1: the Fed and most market participants are underestimating the gravity
Speaker 1: of our situation. UH. The FED moved its forecast by
Speaker 1: an epic amount, both up on inflation and down on
Speaker 1: the economy. But their current view that they're going to
Speaker 1: get to two and a half percent UH inflation or
Speaker 1: below with unemployment just above four strikes me as an
Speaker 1: optimistic tail outcome, not a central tendency in a forecast.
Speaker 1: I think a better judgment is that there's no reduction
Speaker 1: to UH normality without a significant increase in unemployment of
Speaker 1: perhaps two percentage points or more at some point UH
Speaker 1: down the road. And when Chair Pale suggested in July
Speaker 1: that maybe the Fed was already at the neutral rate,
Speaker 1: Larry did not mince words. I think J. Powell said
Speaker 1: things that, to be blunts, were analytically indefensible. He claimed
Speaker 1: twice in his press conference that the Fed was now
Speaker 1: at the neutral UH interest rate, calling it two and
Speaker 1: a half. It's elementary that the level of the neutral
Speaker 1: interest rate depends upon the inflation rate. We've got on
Speaker 1: the most quoted measure, a nine point one percent inflation
Speaker 1: measure he extrapolated off core or something it's four or
Speaker 1: five percent inflation. There is no conceivable way that a
Speaker 1: two and a half percent interest rate in an economy
Speaker 1: inflating like this is anywhere near neutral. And if you
Speaker 1: think it is neutral, you are misjudging the posture of
Speaker 1: policy in a fundamental way. So I was very sorry,
Speaker 1: UH to hear him UH say that, and frankly surprised.
Speaker 1: He said back in that the neutral interest rate that
Speaker 1: the Fed was approaching the neutral interest rate at a
Speaker 1: time when the inflation rate was one point nine percent.
Speaker 1: How he could be saying the same thing today when
Speaker 1: the inflation rate is where it is is inexplicable. But
Speaker 1: by year's end, with a series of rate hikes behind
Speaker 1: the Fed and the promise of more yet to come,
Speaker 1: Larry said that they were moving in the right direction.
Speaker 1: The Chairman is in about the right place. He's recognizing
Speaker 1: that we can't forecast the economy with precision. He's recognizing
Speaker 1: that it would be a terrible error if we were
Speaker 1: to fail to stop inflation. In this episode, he's rejecting
Speaker 1: the talk about this being a moment to change the
Speaker 1: placition target, and he's maintaining substantial flexibility with respect to
Speaker 1: the future. I think that is broadly, UH, the right
Speaker 1: place for him to be. UH. But I think we've
Speaker 1: got a very difficult challenge ahead of us, because I
Speaker 1: think the old adage about things taking longer to happen
Speaker 1: than you think they will, and then they happen faster
Speaker 1: than you thought they could is really operating. With respect
Speaker 1: to the forecasted UH recession. It does look like it's
Speaker 1: pushed back a bit in time, but there are reasons
Speaker 1: to think and this is what makes the chairman's job
Speaker 1: so hard. That the economy could have a kind of
Speaker 1: widely coyote UH moment, that recession induced slow earnings could
Speaker 1: pop into focus for stock market investors, with verse consequences
Speaker 1: for the market, that consumers could deplete their hoard of
Speaker 1: post COVID savings. As outspoken as Larry Summers was on
Speaker 1: Wall Street weeks throughout the year, he didn't hesitate to
Speaker 1: say what he thought about other subjects as well as inflation,
Speaker 1: such as the disastrous Many budget that the short lived
Speaker 1: Prime Minister Liz Trust put forward and that nearly broke
Speaker 1: the market in guilt. When do you make of what's
Speaker 1: going on in the UK. It makes me very sorry
Speaker 1: to say, but I think the UK is behaving a
Speaker 1: bit like an emerging market turning itself into a submerging
Speaker 1: UH market. There's nothing in the pattern of market response
Speaker 1: in the UK that suggests anything but fear rather than
Speaker 1: confidence in the policy approaches UH being taken. It would
Speaker 1: not surprise me if the pound eventually gets below a
Speaker 1: dollar if the current policy path is maintained. This is
Speaker 1: simply not a moment for the kind of naive uh,
Speaker 1: wishful thinking supply side economics uh. That is being pursued
Speaker 1: in Britain. And even the subject of artificial intelligence caught
Speaker 1: the eye of our special contributor, who thinks something truly
Speaker 1: profound maybe afoot with chat GPT. The great computer scientist
Speaker 1: Alan Turing seven years ago said that it was going
Speaker 1: to be a threshold for humanity when a machine could SEPT,
Speaker 1: could it could imitate human beings answers to questions in
Speaker 1: a way where another human being wouldn't be to tell
Speaker 1: the difference. We're somewhere in the territory of that right now,
Speaker 1: and that is a profound thing for humanity. It points
Speaker 1: to a profound change in the way we're all going
Speaker 1: to be working. We're all gonna have a kind of
Speaker 1: caddy that or many of us are going to have
Speaker 1: a kind of caddy that is going to augment our creativity,
Speaker 1: augment our capacities, to bring knowledge to bear on what
Speaker 1: we do, augment our accuracy. That was special contributor to
Speaker 1: Wall Street Week Larry Summer's commenting throughout an eventful year
Speaker 1: for global Wall Street coming up, we looked back to
Speaker 1: how Lewis ruckheiserre wrapped up the year two thousand on
Speaker 1: his version of Wall Street Week. This is Wall Street
Speaker 1: Week on Bloomberg. This is Bloomberg Wall Street Week with
Speaker 1: David Weston from Bloomberg Radio. Finally, one more thought, Well,
Speaker 1: it's actually the one more thought of Lewis Ruckheiser from
Speaker 1: two decades ago, when, at the end of a difficult
Speaker 1: year of two thousand, he reflected back over the aftermath
Speaker 1: of a market downturn led by a collapse of tech,
Speaker 1: showing once again the wisdom of Mark Twain that history
Speaker 1: doesn't repeat itself, but it often rhymes. Much of the
Speaker 1: world of investors regards two thousand as a year of mourning.
Speaker 1: For profits past, the bubbles burst, for bulls de horned,
Speaker 1: and for certainties crumbled. And let's face it, it wasn't
Speaker 1: always fun. As Winston Churchill put it, I'm always ready
Speaker 1: to learn, although I do not always like to be taught.
Speaker 1: Virtually nobody except the NonStop pessimists who are still stone
Speaker 1: losers over the past decade foresaw the viciousness of this
Speaker 1: year's declines, although the year was country victory even there.
Speaker 1: For example, is this a bear market? Well, yes and no,
Speaker 1: even from their highest heights in early two thousand, the
Speaker 1: Dow Jones Industrial Average and the SMP five hundred have
Speaker 1: declined far less than the twenty percent that traditionally has
Speaker 1: defined a bear market. But for the formerly high flying
Speaker 1: technology stocks personified by the NASDAC, this has not only
Speaker 1: been a bear but the growley of all time. NAZDAK,
Speaker 1: which never does things moderately, fell nearly forty percent this
Speaker 1: year and is off more than fifty one from its
Speaker 1: March tenth high. That makes this not only the worst
Speaker 1: year ever for the twenty nine year old NASDAK, but
Speaker 1: the biggest decline for any of the three major indexes
Speaker 1: since the SMP five hundred lost forty seven percent in
Speaker 1: nineteen thirty one during the Great Depression. So devastating was
Speaker 1: this latest and most severe tech wreck that any attempt
Speaker 1: to put it in perspective by pointing out say that
Speaker 1: NASDAC has been the bullish phenomenon in the past decade
Speaker 1: and that it gained more than eighty five in nine alone,
Speaker 1: is likely to seem like irrelevant ancient history to today's
Speaker 1: bleeding tech investors. Are they right? Is this just a
Speaker 1: temporary reversal of a fantastically promising uptrend or Is it
Speaker 1: truly the end of a booming era? Were the downward
Speaker 1: catalysts of two thousand a fierce federal reserve, a steeply
Speaker 1: weakening economy, and a nation driven to embarrassing self doubt
Speaker 1: by the election that would not die passing phenomena or
Speaker 1: orderies of enduring change. We'll try to get you some
Speaker 1: meaningful answers tonight, and we will try and get you
Speaker 1: answers in the new year. That does it for Wall
Speaker 1: Street Week for this year. I'm David Weston. This is Bloomberg.
Speaker 1: See you next year. M