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Speaker 1: Ye. Welcome to the Bloomberg Surveillance Podcast. I'm term Keene

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Speaker 1: Jay Leye. We bring you insight from the best in economics, finance, investment,

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Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,

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Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. To

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Speaker 1: start the conversation right there, let's bring in David Paige.

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Speaker 1: Shall we access investment managers US and the UK senior economists.

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Speaker 1: Good daily, David, Good to see you. So let's start

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Speaker 1: with the federal reserves quote, shall we We'll take it

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Speaker 1: from there. We are closely monitoring the implications of these

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Speaker 1: developments for the US econom account look and as always,

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Speaker 1: we will act as appropriate to sustain the expansion with

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Speaker 1: a strong labor market and inflation near US symmetric two

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Speaker 1: percent objective markets off to the races. My first thought

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Speaker 1: is anything new here? David? Yeah, No, I think it's

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Speaker 1: interesting markets have reacted to that one paragraph in in

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Speaker 1: empower speech. But if and you know that paragraph that

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Speaker 1: that talk of expand or continuing the expansion is exactly

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Speaker 1: how he started the May press conference. So to some extent,

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Speaker 1: there's nothing new and what he said, perhaps there's something

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Speaker 1: new and what he didn't saying that we've heard previously

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Speaker 1: talk about there being no convincing signs for a need

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Speaker 1: for a short term movement one way or the other,

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Speaker 1: and he didn't say that. And then I think if

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Speaker 1: you layer on top of that the wealth of FED

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Speaker 1: speakers that are coming out as we approached the Purdah

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Speaker 1: period for the fom C, the message seems to be,

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Speaker 1: we are concerned about trade. There are uncertainties brewing and

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Speaker 1: that might impact the economy further along, and if it does,

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Speaker 1: we will react, but for the short term. And bear

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Speaker 1: in mind this is a message that has to govern

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Speaker 1: for the Fed's meeting into nearly two weeks time. Now

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Speaker 1: that I think the message there is for now no change. Well,

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Speaker 1: the risk is David, two weeks out from a Federal

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Speaker 1: Reserve meeting, the market standing to hear what it wants

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Speaker 1: to hear. The problem is, are we assuming a rate

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Speaker 1: cut in two weeks? No? No, no, no, no, no,

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Speaker 1: We're not assuming a rate cut in two weeks. I

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Speaker 1: think the risk is here that the market starts to

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Speaker 1: believe the bulk of market participants begin to believe that

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Speaker 1: the Federal Reserve is coming their way. The risk is

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Speaker 1: we go into the June meeting in two weeks and

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Speaker 1: the summary of economic projections comes out and it hasn't

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Speaker 1: come in enough down to market positioning. David, do you

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Speaker 1: anticipate that spread coming in and to what degree? I

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Speaker 1: think the lesser that that's going to be the lesser

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Speaker 1: shock over the next month. I think that the two

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Speaker 1: shocks that we're going to be watching at is firstly,

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Speaker 1: what happens with Mexico. Do we get these tariffs coming

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Speaker 1: through and bear in mind yesterday we were also hearing

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Speaker 1: a lot of news about the resistance to these tariffs

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Speaker 1: and from the Republicans. And secondly, what happens to that

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Speaker 1: G twenty meeting. So in that context, I would imagine

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Speaker 1: the SEP is going to that summary economic projections are

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Speaker 1: going to suggest that the Fed is considering lower rates

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Speaker 1: by the end of the year. But that's not something

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Speaker 1: that's going to be hard coded, and certainly, of trade

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Speaker 1: moves in a different direction, the Fed will be flexible.

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Speaker 1: First of all, I want to suggest, folks, for those

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Speaker 1: of you in America, the major risk, which is how

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Speaker 1: many days does it take to have your body changed? Sean,

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Speaker 1: if you have a full English breakfast every day? Are

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Speaker 1: you having a stupid piece of sausage I won't eat

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Speaker 1: and that when you live here, tom you do that

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Speaker 1: on a Sunday once a week after a big night out. Okay,

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Speaker 1: it's not something you should try and do everything tomorrow,

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Speaker 1: David Page. The risk here, seriously of all this is

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Speaker 1: we have central bankers adapting to political philosophy and political

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Speaker 1: policy as well. Where in the history books do we

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Speaker 1: show that that can be successful. I'm not sure they

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Speaker 1: are reacting to any political philosophy. I think they're really

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Speaker 1: reacting to economic risks. And I think what the FED assumes,

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Speaker 1: and what we certainly assume, is that if you see

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Speaker 1: terasterizing against Mexico, arristterizing against China, and you get an

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Speaker 1: escalation of the trade war, you're going to have a

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Speaker 1: negative shock to the economy. What what kind of US

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Speaker 1: number do you get? Your own pilot interstrates maybe cuts

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Speaker 1: interest speeds in two weeks. I mean, is it a

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Speaker 1: one handle? You know? I think there is a risk,

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Speaker 1: there is a small risk that if you see the

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Speaker 1: Mexican tarists going ahead now and you see markets react

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Speaker 1: negatively to that, that the FED could be moving in

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Speaker 1: a two weeks tign but we think that's very unlikely.

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Speaker 1: So you think June could well be a live meeting.

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Speaker 1: I've heard this a couple of times over the last week.

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Speaker 1: It's not an original thought. I just think it's still

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Speaker 1: slightly contrarian. Do you think June could be alive meeting?

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Speaker 1: You like to practice original thoughts, but no, I think

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Speaker 1: if you see developments moving, if you see Mexico seeing

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Speaker 1: Harrison posed on it, and you see a negative reaction

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Speaker 1: with markets, yes, I think the FED would consider cutting

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Speaker 1: at that point. So do you think it happens. No.

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Speaker 1: We have two interviews in the next ninety minutes or

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Speaker 1: so right here on Bloomberg Radio. One will be with

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Speaker 1: the Dallas FED president Robert Kaplan. Michael McKie will be

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Speaker 1: catching up with him. Also catching up with the Chicago

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Speaker 1: FED President Charles Evans as well. What do you want

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Speaker 1: to hear from the remaining FED speakers through the next

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Speaker 1: twenty four hours, because so far, the only one in

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Speaker 1: the last week that has actually tied up the prospect

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Speaker 1: of a rate cut and directly referenced it is Jim Blood. Yeah,

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Speaker 1: and we've seen Evans and Caplan previously talking about need

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Speaker 1: more time, so we would expect that's the message that

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Speaker 1: the Fed is delivering, and that's what we go into

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Speaker 1: this meeting expecting. What I'm saying is two weeks is

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Speaker 1: a while. Markets are moving quite quickly. We could see,

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Speaker 1: we could see events change, but that's not our expectation.

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Speaker 1: I think the FED wants to see what happens with

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Speaker 1: trade and it will react accordingly, and we expect a

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Speaker 1: relatively benign outlook from trade. We don't necessarily expected Mexican

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Speaker 1: tariffs to come through as they as they look at

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Speaker 1: the moment, we think there's a good chance you see

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Speaker 1: some resolution with China. In that case, the Feds in

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Speaker 1: an awkward situation. You could see financial conditions ease, but

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Speaker 1: the Fed still considering insurance cuts. What is extraordinary to

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Speaker 1: me the John's mention of two good central bank interviews

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Speaker 1: is are different. Those central bankers are. Evans is a

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Speaker 1: frontline monetary theorists as his vice German clarator, and uh

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Speaker 1: Dr Caplan is an interesting guy out of education, his

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Speaker 1: his important books and leadership and his work at Harvard

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Speaker 1: as well. Is Powell beginning to learn how the Evans

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Speaker 1: and the Clarators of the world think and operate very much.

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Speaker 1: So I think Clarata has had quite a marked impact.

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Speaker 1: And I think when we look at the pivot that

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Speaker 1: the Fed put through at the back end of last year,

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Speaker 1: other than being governed by significant tightly in financial conditions,

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Speaker 1: they looked like there was some evidence of a Clard

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Speaker 1: review m starting to come through the see. I think

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Speaker 1: PAL very much reflects the underlying statement rather than perhaps

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Speaker 1: driving policy individually in quite the same way as Yellen

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Speaker 1: potentially didn't, ban Anke did and Greenspan. We see a

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Speaker 1: further asset inflation with lower interest rates if they actually

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Speaker 1: do rate cut, whether it's what is the two weeks

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Speaker 1: show in June nine, or it's after that it is September.

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Speaker 1: Do you just assume you follow on with the worry

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Speaker 1: of Steve Roach, which is asset inflation Now, I think

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Speaker 1: we're starting to worry a little bit more the other way.

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Speaker 1: I think the Fed is going to struggle to get

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Speaker 1: ahead of the market. The market is already pricing in

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Speaker 1: three cuts for the Fed by early next year, possibly

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Speaker 1: three by the end of this year. I think the

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Speaker 1: Fed has got to see some significant bad news to

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Speaker 1: get that um And if it doesn't cut by as

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Speaker 1: much as that the market is going to start to

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Speaker 1: worry that it's still behind the curve, and I think

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Speaker 1: that that becomes more initial David thinking so much, David

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Speaker 1: Page of ACTE. Here was some very thoughtful discussion. Stephanie

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Speaker 1: Baker joins us right now and without question stuff And

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Speaker 1: the site GUIST in Washington is not in Portsmouth, It's

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Speaker 1: in Mexico City. And the likelihood of terroriffs. Republicans are

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Speaker 1: saying to the President. No, are people in the White

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Speaker 1: House saying to the President no, Well, it doesn't the

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Speaker 1: message from the Hill doesn't seem to be getting through

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Speaker 1: to Trump. Um. You know, he's tweeted out that he's

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Speaker 1: got this morning, Yeah, the support of Republicans, but you know,

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Speaker 1: we're not seeing that on the Hill. I think Lindsay

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Speaker 1: Graham UM. Senator Lindsay Graham has been the most vocal

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Speaker 1: supporter of him. But it does look like the issue

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Speaker 1: where the Republicans might finally bring ache with Trump and

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Speaker 1: oppose Um either through an over you know, they you know,

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Speaker 1: they could override Um his veto on this. They may

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Speaker 1: have the numbers for it. It does look like they could. Um.

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Speaker 1: What's so important, and John, I think this really bears repeating,

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Speaker 1: because I think a lot of Americans, including Tom King,

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Speaker 1: don't get it. Our trade with Mexico compared to China, China, China,

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Speaker 1: China is ginormous. There's no other way to put it.

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Speaker 1: The scale of this relationship is something I think so

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Speaker 1: many of us don't understand exactly. Um, you know, this

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Speaker 1: could have a huge impact because I think people don't

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Speaker 1: really appreciate how much trade goes across the border, you know,

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Speaker 1: and how complex the supply chain is. This is not

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Speaker 1: just things that are made in Mexico and being shipped

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Speaker 1: to the USC, their parts going back and forth, being reassembled,

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Speaker 1: um you know. And and I think that the fallout

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Speaker 1: from it will you know, in packed American consumers in

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Speaker 1: a huge way. This can work both ways. Of course,

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Speaker 1: it's important for Mexico too. And actually, think what's really

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Speaker 1: interesting in the last twenty four hours, the Mexicans believe

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Speaker 1: they can satisfy satisfy the President's demands in the next

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Speaker 1: week or so. Stephanie, do you think they can Well,

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Speaker 1: I'm not clear what would satisfy Trump's demand, and that's important,

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Speaker 1: and I don't think he's actually spelled out exactly what

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Speaker 1: Mexico needs to do to head off these tariffs. Um.

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Speaker 1: You know, is it a complete shutdown of immigration on

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Speaker 1: the border? Well, exactly, it's three bullet points when this

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Speaker 1: brooke John, and one of them was to, as you say, Steph,

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Speaker 1: and you shut down the southern border of Mexico with

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Speaker 1: the three Central American states. I don't know how they

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Speaker 1: affect that, but that was the granularity where the president

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Speaker 1: was at one point. But how does he assess that? Exactly? Yeah, exactly.

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Speaker 1: I mean, you know, I do think that there are

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Speaker 1: a lot of question marks over if he really wants

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Speaker 1: to press ahead with us, shouldn't he be clearer what

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Speaker 1: exactly they need to do? Um? Which makes the question

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Speaker 1: why the Mexicans seem to be so confident on the

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Speaker 1: surface of things. Of course, we've got no ideas what's

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Speaker 1: happening behind closed closed doors, but certainly in the statements

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Speaker 1: they've made in the last couple of days, Tom may

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Speaker 1: sound very optimistic about getting something done and things being

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Speaker 1: chanistic or collegial. I'm not you know, I agree with you.

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Speaker 1: The tone has been very positive from Mexico, but to me,

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Speaker 1: it's more collegial waiting for the president to get back

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Speaker 1: from the uh, the pomp and circumstance of your Great Britain.

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Speaker 1: So the other thing we have to consider, we've hurt

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Speaker 1: the Republican push back. We have to consider how realistic

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Speaker 1: it is that they formalize that push back, stephanitiely simply

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Speaker 1: saying it is one thing. Doing something about it is

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Speaker 1: quite different. Do you see them actually following through and

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Speaker 1: formalizing that effort. Well, they could just pass a bill, um,

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Speaker 1: you know, a fairly narrowly worded and defined bill trying

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Speaker 1: to stop him from using tariffs like this, um. And

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Speaker 1: that might be the simplest way forward. Um. And I

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Speaker 1: would expect, given the fallout that that you know, everyone

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Speaker 1: is looking at from this, that they would press ahead

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Speaker 1: with something like this. We have to help, Stephanie. You

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Speaker 1: have to help us with our surveillance. Question of the day.

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Speaker 1: How many times a week should you have a full

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Speaker 1: English breakfast? I've said once, John said once mix on

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Speaker 1: the weekend after a big nine ten, after three days

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Speaker 1: in a row. I'm being chastised by any and all.

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Speaker 1: I am the wrong person to ask this. I don't

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Speaker 1: ever eat a full English I'm I'm I'm too healthy

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Speaker 1: conscious because I keep. What's the thing do you have

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Speaker 1: everything fried? Don't? Do you have a Friday as well?

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Speaker 1: I have them over medium? But what's the thing that

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Speaker 1: looks unedible? You think you're talking about the black pudding?

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Speaker 1: Have you had the black pudding, Stephanie? I have. It's

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Speaker 1: not my favorite, but yes, yes, you know I'm well

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Speaker 1: versed in the black You haven't. You haven't tried? No, God, no,

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Speaker 1: it's actually not bad. You might like it, suggest folks,

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Speaker 1: tomorrow morning, I'm having a full English, and I mean

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Speaker 1: full Stephanie Baker, have you had a phil Scottish? She

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Speaker 1: could have some haggis with that, with iceer without ice.

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Speaker 1: Stephanie Baker, thank you so much. Let's see is in

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Speaker 1: here an important conversation. The problem with Victoria Houston is

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Speaker 1: every time she's on, we want to go longer, longer, longer,

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Speaker 1: because she actually knows John what she's talking about about trade,

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Speaker 1: like kel A Dover, will I get my Stilton? She's

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Speaker 1: unlike now is the stuff that you're interested in? Unlike

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Speaker 1: the politicians, she's actually experienced in trade. Wants to bring

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Speaker 1: in politicians that didn't know how important Calais Dover was

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Speaker 1: at one point. But that's a very different story. Victoria.

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Speaker 1: Great to see you into the TUDE of Economic Affairs

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Speaker 1: Senior Accounts or International Trade and Competition Unit, Victoria. I

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Speaker 1: want to reflect on what we've heard so far this morning.

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Speaker 1: There are various FEDE officials that are worried about the

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Speaker 1: trade story. They're worried about the heightened risk that emanate

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Speaker 1: from US trade policy. The difficulty around this is the

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Speaker 1: tensions persist, but it's unclear whether the risks materialize. How

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Speaker 1: do you frame that at the moment. Well, it's really

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Speaker 1: tough because as a supporter of free trade, there are

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Speaker 1: lots of dangers and risks lurking in US current trade policy,

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Speaker 1: and in particular, as you've alluded to, it's the things

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Speaker 1: are pretty arbitrary and unpredictable, and um President Trump is

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Speaker 1: using powers that really weren't supposed to be related to

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Speaker 1: day to day trade policy, emergency powers for example, as

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Speaker 1: as we've been hearing about in connection with the Mexican

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Speaker 1: buddher So it's it's deeply unpredictable and that's really where

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Speaker 1: the risk is. In conjunction, of course, it's what the

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Speaker 1: UK is doing where we can't say from essentially from

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Speaker 1: one day to the next, what UK any policy here

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Speaker 1: is going to be. And I guess that's another problem

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Speaker 1: in and of itself. Victoria For the United States, there

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Speaker 1: is an expectation almost at the moment that maybe we

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Speaker 1: get some formalized resistance to the president's executive power around trade.

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Speaker 1: Do you expect that to happen? That's a tough one

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Speaker 1: because frankly, these executive powers are actually really deeply entrenched,

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Speaker 1: and although the way they're being used at present by

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Speaker 1: President Trump is being strongly criticized, actually these powers have

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Speaker 1: been in place for decades and have equally been used

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Speaker 1: by former presidents. Again, as a supporter of free trade

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Speaker 1: and the rule of law, I would be delighted if

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Speaker 1: Congress was to take this in hand more. But I

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Speaker 1: can't particularly see that happening imminently. We have too short

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Speaker 1: time with you today, and I just have one question,

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Speaker 1: And when I knew you were coming in, I've only

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Speaker 1: have one question. How do you respond to Brexity types

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Speaker 1: who say no deal will not be a big deal?

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Speaker 1: Does life go on three months after no deal where

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Speaker 1: trade is normal between in goods and services between the

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Speaker 1: United Kingdom and everybody else. That's a That's a really

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Speaker 1: tough question because part of the reason why Brexit supporters

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Speaker 1: are taking the deeply entrenched position that they are and

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Speaker 1: trying to say, oh, no deal, no problem, is that, UM,

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Speaker 1: they're having to feel very defensive because on the other hand,

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Speaker 1: we have the remains support as the Ramona's as as

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Speaker 1: we colloquially call them, who are taking the opposite of view,

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Speaker 1: which is that no deal would be going to and

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Speaker 1: at a catastropy. So people have really retreated to very entrenched,

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Speaker 1: diametric positions UM in order to essentially defend themselves. Now,

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Speaker 1: I think the reality he clearly lies somewhere in between

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Speaker 1: those two positions, and actually no deal would be a problem.

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Speaker 1: It would cause um serious problems for businesses in the

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Speaker 1: short term. The issue that I have is that the

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Speaker 1: current government and the government we've had for the past

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Speaker 1: two years, hasn't done enough to use sensible strategies of

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Speaker 1: communication and policy that could have mitigated those effects. Okay,

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Speaker 1: I have to leave it there, just because of the news,

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Speaker 1: Lord Victoria Houston, thank you, thank you so much. Senior

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Speaker 1: Council to Trading Competition Unit in i e. A. Jim

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Speaker 1: Carroll and Morgan Stanley is a genius that Morgan Stanley

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Speaker 1: call has been extraordinary. Mike Wilson pushing against the equity

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Speaker 1: ball market, saying there will be some volatility, things will

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Speaker 1: be a bit difficult. Ellen's out there with an arch

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Speaker 1: slow down in economics call. And then there's Jim Kraren

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Speaker 1: and others driving for their fixed income. Call right now, Jim,

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Speaker 1: what do you do if you've enjoyed capital gain in bonds?

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Speaker 1: If I'm price up, yield down, and I'm a winner,

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Speaker 1: what do you do right now? Um? Very interesting question, Tom,

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Speaker 1: and thank you for the introduction. Um. The you know,

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Speaker 1: the way I look at it is that tenure treasure

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Speaker 1: yields are probably likely to hit that two percent level.

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Speaker 1: That's not too far away from where we are right now,

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Speaker 1: or at two point o nine in the tenure treasury.

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Speaker 1: But here's the way that we need to think about

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Speaker 1: it that there are four key components that drive tenure yields.

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Speaker 1: One is your changing growth expectations, two as your change

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Speaker 1: in inflation expectations, Three is your central bank outlook, and

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Speaker 1: then the fourth is the risk premia or term premia

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Speaker 1: as we call it in the bond market. All four

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Speaker 1: of those components are weakening, meaning that growth expectations are falling,

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Speaker 1: even inflation next station expectations despite some tariff maybe there

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Speaker 1: might be a one off popping inflation, but that's it.

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Speaker 1: Um in the central bank outlook has turned more DUBBSH,

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Speaker 1: which means that the demand so I'm now I'm talking

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Speaker 1: about the risk premieer, but the demand to own high

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Speaker 1: quality fixed income treasuries is actually higher, So the risk

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Speaker 1: is actually falling. So it's hard to it's hard to

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Speaker 1: point where yields actually turn around, but I will say

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Speaker 1: that you have to be very highly convicted that we

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Speaker 1: are going to get a recession at some point in

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Speaker 1: early two thousand and twenty if you want to own

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Speaker 1: ten your treasuries below what does credit and high yield signal?

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Speaker 1: If I'm a full faith in credit conservative investor, So

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Speaker 1: when we look at investment grade right now, and when

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Speaker 1: we look at high yield, high yield, default risk is

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Speaker 1: really low at this point. So we're not seeing a

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Speaker 1: very um concentrated area within the high yield markets or

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Speaker 1: even in the credit markets that are having uh, you know,

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Speaker 1: big problems at all. So what it is saying is

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Speaker 1: that what you want to do is you want to

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Speaker 1: move up in quality. You want to earn some carry,

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Speaker 1: you want to have some yield, but very very important,

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Speaker 1: you also want to have duration. And that's the gains

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Speaker 1: from own owning longer term maturity bonds or the potential

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Speaker 1: gains that you can get as as rates fall from

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Speaker 1: owning longer maturity bonds. So extending some duration, picking up

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Speaker 1: some yield, and moving up in quality is going to

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Speaker 1: be important. The high yield market and the investment grade

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Speaker 1: market are not signaling anything distressful at this point. Spreads

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Speaker 1: are tighter on the year performance so far, how yield

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Speaker 1: is up almost day percent on a year to date basis,

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Speaker 1: So we're not seeing signs of distress in those markets. So, Jim,

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Speaker 1: just to follow up on that, I'm given that you

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Speaker 1: suggest that a recession is possible in the high yeld market. Um,

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Speaker 1: how do you feel about the credit quality that you're

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Speaker 1: seeing in the high yield market right now? Well, I mean,

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Speaker 1: it really kind of depends because the high yield market

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Speaker 1: very very interesting. We've seen more credit improvement within the

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Speaker 1: high yield market. Don't forget, it's so much smaller market

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Speaker 1: than we actually have seen in the investment grade market.

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Speaker 1: In other words, investment grade markets have been have gravitated

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Speaker 1: lower in quality towards more of the triple B level,

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Speaker 1: So they've been going down in quality a little bit.

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Speaker 1: But the high yield market, oddly enough, has had more

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Speaker 1: upgrades than actually downgrades. So the high yield market, from

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Speaker 1: a technical standpoint, and given that, I believe the fundamentals

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Speaker 1: are still okay right now, fundamentally looks still strong. The

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Speaker 1: question that a lot of people have is that the

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Speaker 1: investment grade market now has a very high concentration of

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Speaker 1: triple b's and they don't have much room before they

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Speaker 1: could possibly get downgraded into the high yield space. That's

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Speaker 1: not our base case, but that's certainly a risk that's

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Speaker 1: out there in the market. So, Jim, if I wanted

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Speaker 1: more yield here aside from the high yield market, do

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Speaker 1: I even think about emerging markets? I think, yes, you do. Um,

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Speaker 1: you know, there are certain emerging markets. I would be

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Speaker 1: very specific about some. Um, there are some markets that

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Speaker 1: we like. I mean, i'd like to say I like Mexico,

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Speaker 1: but there's too much political risk there. But fundamentally I'm

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Speaker 1: okay with Mexico if I just exclude all of the

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Speaker 1: tariff you know, things that are going on right now.

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Speaker 1: So let's exclude that one. Well, you know, let's talk

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Speaker 1: about another one. Let's talk about Brazil. Brazil is a

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Speaker 1: very interesting market. Bond yields have been going down in Brazil,

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Speaker 1: and the central Bank I think there has full full

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Speaker 1: ability to cut interest rates at you know, at a

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Speaker 1: reasonably aggressive pace if they need to stimulate their economy.

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Speaker 1: And I believe that much of the dislocations with the

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Speaker 1: U S, China and trade have have have effectively played through.

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Speaker 1: And it's very strong demand from the pension fund community

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Speaker 1: in Brazil for their local bonds. So there are emerging

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Speaker 1: markets that look good. Eastern Europe, Poland Hungry, Czechoslovakia single

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Speaker 1: A rated bonds. These are all like high beta Euros

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Speaker 1: if you want to your euro bonds, if you want

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Speaker 1: to think of it in that sense, meaning that they're

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Speaker 1: exposed to Europe but don't have as much exposure to

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Speaker 1: so different parts of emerging markets. Being very selective can

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Speaker 1: actually you can actually have some very attractive opportunities too.

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Speaker 1: Short of conversation, Jim Karen, don't be a strange We

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Speaker 1: need to get you in the crack of dawn and

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Speaker 1: when we're surveillance and now joining us to begin another

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Speaker 1: season of peer to peer. David Rubinstein joins us important interviews.

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Speaker 1: As I've said many times on this air, his interview

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Speaker 1: with Jeff Bezos a years ago, I'll say a year ago,

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Speaker 1: was absolutely extraordinary. David Rubinstein joins us this morning, David,

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Speaker 1: Melinda Gates. And what I think is so outstanding about

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Speaker 1: Melinda Gates as it's never been about Melinda Gates. Her

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Speaker 1: work is, you know, in support of her husband and

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Speaker 1: the two of them at Microsoft and meeting at micro Soft,

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Speaker 1: but their approach to philanthropy literally has taught rich people

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Speaker 1: how to give away money. What did she say about

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Speaker 1: the first moment where she and Bill said this is

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Speaker 1: the way we're going to give away the pot. Well,

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Speaker 1: when they first got married, they were still focused on Microsoft.

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Speaker 1: She actually worked at Microsoft for about I think five

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Speaker 1: years after they were married, and then after their first child,

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Speaker 1: I believe she decided to retire from Microsoft, and they

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Speaker 1: were not that involved in philanthropy relatively speaking compared to

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Speaker 1: what they are today in the early year years. But

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Speaker 1: when Bill retired from Microsoft as the CEO, he became

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Speaker 1: in effect the CEO of his foundation. Which was called

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Speaker 1: the Bill and Melinda Gates Foundation, and they became partners,

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Speaker 1: and she describes in her new book how they worked together,

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Speaker 1: and it's obviously a little complicated. She points out that

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Speaker 1: sometimes there was some tension over what she was going

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Speaker 1: to do and what he was gonna do. But a

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Speaker 1: large part of the book, which is an excellent book

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Speaker 1: I highly recommended, is about how she's focused on women's

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Speaker 1: issues UM contraception, UH and among other things, helping women

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Speaker 1: learn how to be better farmers because women are often

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Speaker 1: the farmers in many parts of the world for their families,

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Speaker 1: learning women how to be avoid abusive relationships and things

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Speaker 1: like that, and so she her main point is that

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Speaker 1: if women are empowered, better educated, treated better, the world

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Speaker 1: will be better off because there'll be more productive citizens

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Speaker 1: and and so forth. So it's a really terrific book,

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Speaker 1: and the interview is very, very revealing. She reveals how

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Speaker 1: they met, which is interesting, how they get along, how

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00:24:39,800 --> 00:24:42,840
Speaker 1: they've had some of their uh marital problems like anybody

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Speaker 1: else whant to say, mariw problems and I mean things

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Speaker 1: where she would say let's do this, and Bill would say,

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Speaker 1: I'm not sure I really want to do that, and

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Speaker 1: then ultimately they work it out. So it's an now

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Speaker 1: she says, do this, Bill says no, and so then

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Speaker 1: they do what she says. Right, Well, she's managed to

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Speaker 1: work it out so that I think it's my view

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00:25:03,320 --> 00:25:08,760
Speaker 1: and extremely happy close relationship and look for being married

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Speaker 1: to the wealthiest person in the world is never probably

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Speaker 1: going to be easy, but she's managed to pull that

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Speaker 1: off as well. And they are partners in the way

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Speaker 1: that very few married couples truly are are equal partners. So, David,

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Speaker 1: the the Gates Foundation is not just the Gates money,

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Speaker 1: it's also Warm Buffets. How did that all come about?

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Speaker 1: It was a surprise to them. Warren Buffet had had

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Speaker 1: originally planned to give his money to a foundation that

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Speaker 1: his wife would oversee. She predeceased him, and so he

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Speaker 1: wasn't quite sure what to do, and ultimately, in a

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Speaker 1: typical Warm Buffet fashion, he came up with a very

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Speaker 1: creative idea he would give the money to the Gates

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Speaker 1: Foundation because he was they were doing things that he

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Speaker 1: thought were good, and they were going to be around

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Speaker 1: a lot longer than than he was to oversee the

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Speaker 1: dispensing of the money, and they were surprised. In fact,

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Speaker 1: they walked around after their words in their neighborhood and

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Speaker 1: and really cried about the fact that that he had

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Speaker 1: so much confidence in them that he was going to

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Speaker 1: give them the bulk of his fortune to give away. Um,

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Speaker 1: he didn't want his name on the foundation. He is

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Speaker 1: on the board, but he basically lets them, uh dispense

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Speaker 1: the money in the ways they think are appropriate. So, David,

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Speaker 1: what did Melinda say as to I guess the one

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Speaker 1: or two key areas that the foundation is going to

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Speaker 1: focus on going forward, given the tremendous resources that they

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Speaker 1: do have. The Foundation has focused on two main issues

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Speaker 1: over the years. One is um helping poor people, people

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Speaker 1: in the poorest parts of the world with health and

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Speaker 1: improving their health because that will enable them obviously live longer.

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Speaker 1: So vaccines, some malaria prevention, other kinds of things that

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Speaker 1: help poor people, often in Africa, sometimes in Latin America,

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Speaker 1: other parts of Southeast Asia. How these people are able

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Speaker 1: to get better health treatment and therefore enable them to

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Speaker 1: live longer and better lives. And the second major issue

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Speaker 1: has been cater twelve education. In the United States, I

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Speaker 1: think they would say they've probably made more progress on

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Speaker 1: health in the poorest areas the world, and Cata's well

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Speaker 1: in the United States. Now, Melinda has basically developed a

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Speaker 1: separate part of what they do, which is to help

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Speaker 1: um empower women, and her book is largely about that.

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Speaker 1: I think that they are trying to solve the problems

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Speaker 1: of the world. No two people can solve the problems

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Speaker 1: of the world, and they don't have enough money to

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Speaker 1: solve every problem, but they made a big impact, and

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Speaker 1: they and with Warren Buppet, came up with the idea

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Speaker 1: for the Giving Pledge. Were now more than people from

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Speaker 1: around the world have agreed to give away at least

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Speaker 1: half of their net worth to philanthropic purposes. And I

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Speaker 1: think that set a pattern for people who are not

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Speaker 1: as wealthy as the people who signed that pledge. But

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Speaker 1: many other people aren't doing work and more and philanthropy.

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Speaker 1: You know, I opened with that, David, and it's extraordinary

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Speaker 1: to me how they have changed the dialogue of philanthropy.

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Speaker 1: Have they gotten that message out? I mean, a lot

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Speaker 1: of people go after the rich people, but I would

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Speaker 1: suggest in America there's a sense of philanthropy like we

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Speaker 1: never seen. Yes, I like your mind people that philanthropy

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Speaker 1: is an ancient Greek word that means loving humanity, doesn't

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Speaker 1: mean rich people writing checks. So you can love humanity

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Speaker 1: by giving your time, your energy, your ideas, and your

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Speaker 1: money if you have it. The most valuable thing you

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00:28:13,520 --> 00:28:15,520
Speaker 1: can give is your time. You can never get your

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Speaker 1: time back. You can always make more money, presumably, but

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Speaker 1: you can't get your time back. And many people who

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Speaker 1: have done great philanthropic things are not considered philanthropists. So

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Speaker 1: Wendy Copp, who created Teach for America, in my view,

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Speaker 1: is a great philanthropist, but she didn't give him a

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Speaker 1: lot of money. Was her idea and her time and

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Speaker 1: her energy. And I think their view at Bill and

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Speaker 1: the Lindigates is everybody isn't gonna be as fortunate as

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Speaker 1: they are in terms of having financial resources, but you

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00:28:36,560 --> 00:28:39,080
Speaker 1: can do a lot more than just get away money,

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Speaker 1: and I think they encourage people to do that. This

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Speaker 1: is wonderful David Rubinstein peer to peer on the Lindie

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Speaker 1: Gates and again I can't say enough, folks is uh.

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Speaker 1: Mr Rubenstein mentions their courage and help philanthropy in particularly

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Speaker 1: in Polio. Thanks for listening to the Bloomberg Surveillance podcast.

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Speaker 1: Subscribe and listen to interviews Apple podcast, SoundCloud, or whichever

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00:29:03,360 --> 00:29:07,360
Speaker 1: podcast platform you prefer. I'm on Twitter at Tom Keene

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00:29:07,840 --> 00:29:11,520
Speaker 1: before the podcast. You can always catch us worldwide. I'm

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Speaker 1: Bloomberg Radio