1 00:00:00,560 --> 00:00:03,760 Speaker 1: This is Bloomberg Wall Street Week. We turn our attention 2 00:00:03,840 --> 00:00:07,600 Speaker 1: to the markets this week. Us CPI Nemers reinforcing concerns 3 00:00:07,600 --> 00:00:10,800 Speaker 1: about inflation. The financial stories that chief are worth a 4 00:00:10,840 --> 00:00:13,760 Speaker 1: really different reaction to Mark. It's more indications of just 5 00:00:13,960 --> 00:00:16,360 Speaker 1: how hot the U. S. Economy really is. Through the 6 00:00:16,400 --> 00:00:19,799 Speaker 1: eyes of the most influential voices Larry Summers, the former 7 00:00:19,800 --> 00:00:22,800 Speaker 1: Treachery Secretary, Katherine Keating, CEO of v n Y, mom 8 00:00:22,960 --> 00:00:26,239 Speaker 1: Sam's l Sharon and founder of Equatic Group Investment in 9 00:00:26,320 --> 00:00:30,280 Speaker 1: Bloomberg Wall Street Week with David Weston from Bloomberg Radio. 10 00:00:30,680 --> 00:00:34,360 Speaker 1: So much for the dog days of summer, to landmark 11 00:00:34,400 --> 00:00:38,000 Speaker 1: pieces of legislation, a major river runs dry, inflation takes 12 00:00:38,040 --> 00:00:41,239 Speaker 1: a holiday, and the FBI searches former President trump'st mar 13 00:00:41,320 --> 00:00:45,960 Speaker 1: Alago residents. Welcome to August. This is Bloomberg Wall Street Week. 14 00:00:46,080 --> 00:00:49,680 Speaker 1: I'm David Weston. This week's special contributor Larry Summers on 15 00:00:49,800 --> 00:00:53,800 Speaker 1: not counting our chickens too soon, on inflation We've Sarah 16 00:00:53,840 --> 00:00:57,280 Speaker 1: seen this movie before. And Melissa Carney of the University 17 00:00:57,280 --> 00:01:00,240 Speaker 1: of Maryland on the risk of running out of workers. 18 00:01:00,720 --> 00:01:03,400 Speaker 1: Our population is going to age and it's not going 19 00:01:03,440 --> 00:01:06,400 Speaker 1: to grow. Eventually, we're going to have a shrinking working 20 00:01:06,400 --> 00:01:22,520 Speaker 1: age population. Things are supposed to be quiet in August, 21 00:01:22,720 --> 00:01:25,640 Speaker 1: but the news God's haven't gone that message. The week 22 00:01:25,760 --> 00:01:29,800 Speaker 1: started off dramatically as dozens of FBI agents executed a 23 00:01:29,800 --> 00:01:34,000 Speaker 1: warrant to search former President Trump's mar Alago residents. Trump 24 00:01:34,040 --> 00:01:37,199 Speaker 1: allies were quick to comment, it's unpresidented that you would 25 00:01:37,200 --> 00:01:39,959 Speaker 1: go into a former president. Why wouldn't they just ask 26 00:01:40,040 --> 00:01:42,960 Speaker 1: the president if they have something there that they want. 27 00:01:43,200 --> 00:01:45,880 Speaker 1: But Attorney General Merrick Garland waited until the end of 28 00:01:45,920 --> 00:01:49,840 Speaker 1: the week before weighing in. I personally approved the decision 29 00:01:49,920 --> 00:01:53,680 Speaker 1: to seek a search warrant in this matter. Second, the 30 00:01:53,760 --> 00:01:57,480 Speaker 1: department does not take such a decision lightly. And then 31 00:01:57,600 --> 00:02:00,320 Speaker 1: on Friday we got to see the warrant and what 32 00:02:00,520 --> 00:02:04,480 Speaker 1: was taken. The FBI has again sees classified records, some 33 00:02:04,600 --> 00:02:07,200 Speaker 1: that were marked as top secret from former President Donald 34 00:02:07,240 --> 00:02:10,200 Speaker 1: Trump's marro Logo home. And this was a copy of 35 00:02:10,280 --> 00:02:13,919 Speaker 1: the search warrant that was seen by Bloomberg. Congress moved 36 00:02:13,960 --> 00:02:17,279 Speaker 1: forward on not one but two pieces of major legislation, 37 00:02:17,520 --> 00:02:21,240 Speaker 1: that Chips Act that's been pending forever. The United States 38 00:02:21,360 --> 00:02:23,760 Speaker 1: must lead the world in the production of these advanced hips. 39 00:02:24,280 --> 00:02:27,640 Speaker 1: This law will do exactly that. And a piece or 40 00:02:27,680 --> 00:02:30,200 Speaker 1: two of the bill back better proposal that had been 41 00:02:30,280 --> 00:02:33,560 Speaker 1: left for dead but came back like Lazarus at the 42 00:02:33,600 --> 00:02:36,280 Speaker 1: eleventh hour and the fifty ninth minute, and the bill 43 00:02:36,560 --> 00:02:41,400 Speaker 1: as amended is past. And those summer in the northern 44 00:02:41,400 --> 00:02:44,560 Speaker 1: Hemisphere is supposed to be hot, not so hot that 45 00:02:44,639 --> 00:02:48,760 Speaker 1: europe Rhine River drives up, posing yet another problem for 46 00:02:48,919 --> 00:02:53,160 Speaker 1: strained supply chains. It's also just getting extremely expensive. The 47 00:02:53,160 --> 00:02:56,400 Speaker 1: same ball general I was speaking to you before, he 48 00:02:56,520 --> 00:02:58,840 Speaker 1: said that he literally fell off his chat when he 49 00:02:58,880 --> 00:03:01,639 Speaker 1: saw the coast they're shipping on the Rhine. But as 50 00:03:01,680 --> 00:03:05,520 Speaker 1: hot as things were everywhere else. Inflation chose this week 51 00:03:05,680 --> 00:03:09,120 Speaker 1: to cool down a bit, with headline CPI numbers flat 52 00:03:09,240 --> 00:03:12,919 Speaker 1: month over month and core up less than expected. Though 53 00:03:13,000 --> 00:03:16,040 Speaker 1: to be fair, we still are facing more inflation than 54 00:03:16,120 --> 00:03:18,800 Speaker 1: anyone would like. It is good news, so though I 55 00:03:18,800 --> 00:03:21,120 Speaker 1: do think we have to be cautious as fixed that 56 00:03:21,240 --> 00:03:25,480 Speaker 1: all along, there's no silver bullet here, and after the 57 00:03:25,520 --> 00:03:28,720 Speaker 1: Producer price Index numbers reinforced the idea of the inflation 58 00:03:28,800 --> 00:03:32,040 Speaker 1: just might be softening a bit. The markets responded warmly, 59 00:03:32,280 --> 00:03:35,440 Speaker 1: with the SMP posting its fourth weekly climb in a row, 60 00:03:35,720 --> 00:03:38,760 Speaker 1: up three to six and the NASDAC back in bull 61 00:03:38,880 --> 00:03:42,560 Speaker 1: territory up over three percent, while bonds were relatively calm, 62 00:03:42,760 --> 00:03:44,800 Speaker 1: with the yield on the tenure ending the week not 63 00:03:44,920 --> 00:03:47,880 Speaker 1: far from where it started at two point eight three percent. 64 00:03:48,240 --> 00:03:50,560 Speaker 1: Here to help us sort it all out, or Joann Feeny, 65 00:03:50,640 --> 00:03:54,720 Speaker 1: portfolio manager at Advisor's Capital Management, and Christina Hooper, chief 66 00:03:54,760 --> 00:03:58,000 Speaker 1: Global market strategist at Investco. So welcome to both of you. Christina, 67 00:03:58,080 --> 00:03:59,840 Speaker 1: let me start with you on the reaction of the 68 00:04:00,000 --> 00:04:03,880 Speaker 1: markets to this. As CPI and pp I numbers some encouragement, 69 00:04:04,320 --> 00:04:06,120 Speaker 1: does it sort of suggest maybe we're heading in a 70 00:04:06,280 --> 00:04:10,840 Speaker 1: better direction. David, We're definitely heading in a better direction. Um. 71 00:04:10,920 --> 00:04:14,120 Speaker 1: It looks like we're past peak for inflation, but the 72 00:04:14,200 --> 00:04:17,280 Speaker 1: problem is inflation is still very very high. If we 73 00:04:17,360 --> 00:04:21,200 Speaker 1: think about the FEDS inflation target of two, we're way 74 00:04:21,520 --> 00:04:23,479 Speaker 1: far away from that and it's going to take us 75 00:04:23,720 --> 00:04:26,200 Speaker 1: a significant amount of time to get there. Um. But 76 00:04:26,480 --> 00:04:29,640 Speaker 1: this is the first step in that direction, and so 77 00:04:29,800 --> 00:04:32,680 Speaker 1: it's progress. Joy. I think the market start of thought, 78 00:04:32,720 --> 00:04:35,840 Speaker 1: maybe we can back off a little bit. Well, the market, 79 00:04:35,880 --> 00:04:37,880 Speaker 1: I think might be a little bit too optimistic. About 80 00:04:37,920 --> 00:04:40,680 Speaker 1: how much work the FEDS still has to do. Yes, 81 00:04:41,160 --> 00:04:43,279 Speaker 1: the numbers have been good. In fact, a core pc 82 00:04:43,400 --> 00:04:45,640 Speaker 1: inflation looks like a peaked back in March, and we 83 00:04:45,760 --> 00:04:48,479 Speaker 1: got that information and that's a positive. And we're starting 84 00:04:48,520 --> 00:04:51,040 Speaker 1: to see some of those items that were really short 85 00:04:51,080 --> 00:04:53,800 Speaker 1: supply now start to become more available and that's helping 86 00:04:53,800 --> 00:04:56,400 Speaker 1: to take the price pressure off. So christ take us 87 00:04:56,440 --> 00:04:57,920 Speaker 1: over the next month a half or so, because we 88 00:04:58,000 --> 00:05:00,480 Speaker 1: got Jackson hole first, right, well, he or from FED 89 00:05:00,520 --> 00:05:03,280 Speaker 1: speakers including j Pow, and then there's phare amount of data. 90 00:05:03,279 --> 00:05:05,280 Speaker 1: I think we get another CPI reading or two, we 91 00:05:05,360 --> 00:05:07,680 Speaker 1: get jobs numbers reading things like that. Where do you 92 00:05:07,720 --> 00:05:10,960 Speaker 1: think the FED will be come September. Well, I'm actually 93 00:05:11,000 --> 00:05:12,880 Speaker 1: going to go out on a limb, David and say 94 00:05:13,040 --> 00:05:15,240 Speaker 1: we're probably going to be in a place where the 95 00:05:15,320 --> 00:05:18,200 Speaker 1: FED feels it should air on the side of a 96 00:05:18,279 --> 00:05:21,520 Speaker 1: little more caution. Right, We've gone at a pretty breakneck 97 00:05:21,680 --> 00:05:24,360 Speaker 1: speed in terms of back to back seventy five basis 98 00:05:24,440 --> 00:05:28,320 Speaker 1: point hikes, and the FED is, as Joanne said, very 99 00:05:28,400 --> 00:05:30,640 Speaker 1: data dependent, So it's going to be looking at data 100 00:05:30,680 --> 00:05:34,000 Speaker 1: and seeing that longer term inflation expectations are better anchored 101 00:05:34,040 --> 00:05:36,440 Speaker 1: than they were um and they are going to see 102 00:05:36,640 --> 00:05:40,800 Speaker 1: inflation moving in the right direction. Uh. Inflation growth is 103 00:05:41,360 --> 00:05:44,160 Speaker 1: obviously still an issue, so they're going to be hiking rates, 104 00:05:44,360 --> 00:05:47,039 Speaker 1: but they don't have to be as aggressive. So perhaps 105 00:05:47,120 --> 00:05:49,920 Speaker 1: they signal it in a Jackson Hoole speech. That might 106 00:05:49,960 --> 00:05:51,880 Speaker 1: be too premature, but I think by the time we 107 00:05:51,960 --> 00:05:55,080 Speaker 1: get to September October, we should see a FED that 108 00:05:55,240 --> 00:05:59,680 Speaker 1: pivots to a less hawkish tightening stance. You know, I 109 00:05:59,720 --> 00:06:02,040 Speaker 1: think the critical data, in addition to what you just 110 00:06:02,120 --> 00:06:04,679 Speaker 1: mentioned Christina, is going to be the employee cost index 111 00:06:04,760 --> 00:06:06,880 Speaker 1: that e c I. But we know the labor market 112 00:06:06,960 --> 00:06:09,640 Speaker 1: is very tight, and we're concerned right that wages are 113 00:06:09,680 --> 00:06:11,839 Speaker 1: going to continue to rise and that's going to put 114 00:06:11,880 --> 00:06:15,400 Speaker 1: a floor early under price inflation as those bleed through 115 00:06:15,760 --> 00:06:17,840 Speaker 1: into prices from firms. We're seeing that a lot. We're 116 00:06:17,839 --> 00:06:20,960 Speaker 1: seeing firms actually be pretty successful at raising prices in 117 00:06:21,040 --> 00:06:23,240 Speaker 1: the face of those higher costs. So, you know, if 118 00:06:23,400 --> 00:06:26,760 Speaker 1: if job openings drop and some of the heat comes 119 00:06:26,760 --> 00:06:29,240 Speaker 1: out of the labor market and we don't get as 120 00:06:29,400 --> 00:06:33,440 Speaker 1: large increases in wages and overall employee costs, then I 121 00:06:33,520 --> 00:06:36,320 Speaker 1: could see the FED, you know, becoming a little bit 122 00:06:36,360 --> 00:06:39,440 Speaker 1: more at ease. Christina Hooper of Inbsco and joe Anfoni 123 00:06:39,600 --> 00:06:41,880 Speaker 1: Advisor's Capital Mets. We'll be staying with us as we 124 00:06:42,000 --> 00:06:44,640 Speaker 1: turn from the markets generally to what investors can do 125 00:06:44,800 --> 00:06:47,719 Speaker 1: about them. That's next on Wall Street Week on Bloomberg. 126 00:06:59,240 --> 00:07:03,159 Speaker 1: This is Bloomberg Wall Street Week with David Weston from 127 00:07:03,320 --> 00:07:13,520 Speaker 1: Bloomberg Radio. Housing start reversed to four months decline and 128 00:07:13,600 --> 00:07:16,600 Speaker 1: the overall economy grew in the spring at a modest 129 00:07:16,720 --> 00:07:20,040 Speaker 1: two point three percent annual rate, but amid signs that 130 00:07:20,160 --> 00:07:24,480 Speaker 1: inflation was again easing. That wasn't good news for everyone. 131 00:07:24,560 --> 00:07:28,840 Speaker 1: This week the oil market stepped into a poodle, with 132 00:07:29,000 --> 00:07:31,280 Speaker 1: the price taking its biggest one day hit in almost 133 00:07:31,320 --> 00:07:35,120 Speaker 1: a year, and every currency in sight took a bite 134 00:07:35,160 --> 00:07:38,160 Speaker 1: out of the dollar. That was Lewis ruck I just 135 00:07:38,240 --> 00:07:41,600 Speaker 1: take on the economy on Wall Street Week back now 136 00:07:41,760 --> 00:07:44,360 Speaker 1: thirty five years later, we're still focused on housing and 137 00:07:44,560 --> 00:07:47,680 Speaker 1: energy and growth, but from a very different vantage point 138 00:07:47,840 --> 00:07:52,320 Speaker 1: to Anfini of Capital Management and Christina Hooper of Investor 139 00:07:52,360 --> 00:07:54,000 Speaker 1: are still with So Joanne, let me start with you 140 00:07:54,120 --> 00:07:56,080 Speaker 1: if I could. Let's know what housing, because a lot 141 00:07:56,080 --> 00:07:57,640 Speaker 1: of talking about housing right now, whether we in fact 142 00:07:57,680 --> 00:08:00,000 Speaker 1: are in a bubble. Obviously, housing prices have gone up 143 00:08:00,120 --> 00:08:03,400 Speaker 1: a lot, rent costs are really in record levels places. 144 00:08:03,480 --> 00:08:05,160 Speaker 1: At the same time, the fits trying to come off 145 00:08:05,160 --> 00:08:08,360 Speaker 1: with that sugar hunt. Yeah, it's clearly a reset going 146 00:08:08,400 --> 00:08:10,840 Speaker 1: on in the housing market. Um, you know that those 147 00:08:10,920 --> 00:08:13,600 Speaker 1: low interest rates clearly created a lot of demand, a 148 00:08:13,640 --> 00:08:15,640 Speaker 1: lot of activity in the housing market. But people shouldn't 149 00:08:15,640 --> 00:08:18,080 Speaker 1: forget that there's still an awful lot of younger folks 150 00:08:18,120 --> 00:08:21,120 Speaker 1: out there who have delayed getting into their first, first home, 151 00:08:21,560 --> 00:08:23,880 Speaker 1: and and that latent demand is still out there. And 152 00:08:24,040 --> 00:08:26,560 Speaker 1: I think what we're seeing now is a reevaluation of 153 00:08:26,600 --> 00:08:28,520 Speaker 1: how much house can I afford, And so we have 154 00:08:28,640 --> 00:08:30,880 Speaker 1: seen people walk away from contracts. We've seen the builders 155 00:08:30,880 --> 00:08:33,120 Speaker 1: slow down a little bit. But given how high mortgage 156 00:08:33,160 --> 00:08:35,520 Speaker 1: rates are, the existing homeowners don't want to get out 157 00:08:35,520 --> 00:08:37,960 Speaker 1: of their old cheap mortgages. So that's going to push 158 00:08:38,040 --> 00:08:41,160 Speaker 1: demand to the new builds. So we're still pretty enthusiastic 159 00:08:41,240 --> 00:08:43,400 Speaker 1: about some of the plays in the new uh you know, 160 00:08:43,520 --> 00:08:46,120 Speaker 1: in in new building for housing like say Alinar for example, 161 00:08:46,160 --> 00:08:48,960 Speaker 1: which tends to serve that lower end, the first home 162 00:08:49,040 --> 00:08:51,160 Speaker 1: buyer or the one step up home buyer. So there 163 00:08:51,200 --> 00:08:53,760 Speaker 1: are places to be in housing. You just have to 164 00:08:53,880 --> 00:08:56,000 Speaker 1: be a little bit patient here as this reset place 165 00:08:56,040 --> 00:08:59,199 Speaker 1: through and folks renegotiate contracts and then find slightly cheaper 166 00:08:59,240 --> 00:09:02,520 Speaker 1: houses to buy. So Christian, you heard about Lenard there 167 00:09:02,600 --> 00:09:05,200 Speaker 1: maybe lower end of housing. About what are you seeing? 168 00:09:05,240 --> 00:09:07,080 Speaker 1: There's a lot of volatility in the marketplace. Where does 169 00:09:07,080 --> 00:09:10,160 Speaker 1: it create opportunities for investors at this point? Well, it 170 00:09:10,280 --> 00:09:16,120 Speaker 1: creates opportunities really at times when we see um sell offs. 171 00:09:16,280 --> 00:09:17,960 Speaker 1: Of course we haven't seen much of a sell off 172 00:09:18,120 --> 00:09:20,720 Speaker 1: in in recent weeks, but but when we do get those, 173 00:09:21,240 --> 00:09:25,280 Speaker 1: that's an opportunity for investors to reshuffle portfolios right and 174 00:09:25,520 --> 00:09:30,600 Speaker 1: and sometimes it's about exchanging lower quality um, less defensive 175 00:09:30,760 --> 00:09:34,400 Speaker 1: for higher quality, more defensive, getting a little more yield 176 00:09:34,480 --> 00:09:36,440 Speaker 1: in there. So I think the areas that I would 177 00:09:36,440 --> 00:09:39,680 Speaker 1: focus on right now or are opportunities and healthcare like pharma, 178 00:09:40,280 --> 00:09:43,120 Speaker 1: as well as as technology. The secular growth place there 179 00:09:43,880 --> 00:09:45,640 Speaker 1: joan one of the things that have been driving the 180 00:09:45,720 --> 00:09:48,880 Speaker 1: US a country. Sometimes our consumers. Consumers had a pretty 181 00:09:48,880 --> 00:09:50,800 Speaker 1: good time of it, They've had really good balance sheets, 182 00:09:50,840 --> 00:09:53,280 Speaker 1: they've got a very fair amount of income coming in. 183 00:09:53,520 --> 00:09:55,599 Speaker 1: At the same time, there's more pressure there Now, what 184 00:09:55,679 --> 00:09:58,240 Speaker 1: does that say in terms of investing in stocks if 185 00:09:58,280 --> 00:10:01,319 Speaker 1: in fact there's more pressure on the consumer. Yeah, you know, 186 00:10:01,440 --> 00:10:03,959 Speaker 1: it's become a very challenging time to invest in the 187 00:10:04,040 --> 00:10:06,360 Speaker 1: consumer space, because what we have going on now is 188 00:10:06,360 --> 00:10:09,280 Speaker 1: really a tale of two consumers. We have folks at 189 00:10:09,320 --> 00:10:12,400 Speaker 1: the lower to middle end of the income distribution really 190 00:10:12,480 --> 00:10:15,600 Speaker 1: being hurt by these high prices, this high inflation. For them, 191 00:10:15,840 --> 00:10:18,199 Speaker 1: it's making their budgets a lot tighter. And so we're 192 00:10:18,240 --> 00:10:20,040 Speaker 1: seeing that in the results of say a Walmart and 193 00:10:20,080 --> 00:10:22,800 Speaker 1: a Target, where they're finding their shoppers aren't spending less, 194 00:10:23,320 --> 00:10:26,800 Speaker 1: but they're switching away from discretionary products towards the necessities 195 00:10:26,840 --> 00:10:29,280 Speaker 1: which have lower margins, so it's hurting their profits. But 196 00:10:29,360 --> 00:10:31,280 Speaker 1: then you look at the higher end of the income distribution, 197 00:10:31,360 --> 00:10:35,199 Speaker 1: you see companies like Apple selling expensive iPhones, they're not 198 00:10:35,240 --> 00:10:38,280 Speaker 1: seeing a drop in demand. Or say Williams Sonoma, right, 199 00:10:38,360 --> 00:10:41,360 Speaker 1: they sell higher end uh you know, kitchen gear and 200 00:10:41,480 --> 00:10:44,480 Speaker 1: furnishing type stuff and they're not really seeing a drop. 201 00:10:44,640 --> 00:10:47,720 Speaker 1: So it really depends what kind of a consumer products 202 00:10:47,800 --> 00:10:50,960 Speaker 1: company you are and how much you can raise prices 203 00:10:50,960 --> 00:10:54,760 Speaker 1: because you have a resilient uh supply of shoppers or 204 00:10:54,800 --> 00:10:56,760 Speaker 1: how much you're having to really trim them back to 205 00:10:56,840 --> 00:10:58,920 Speaker 1: keep the shoppers walking in the door. And so it 206 00:10:59,000 --> 00:11:03,360 Speaker 1: does make it a selection question, and to Christina's point, 207 00:11:03,640 --> 00:11:06,480 Speaker 1: finding the higher quality companies that have the more resilient 208 00:11:06,559 --> 00:11:11,280 Speaker 1: shoppers is really going to help your portfolio. David, I 209 00:11:11,320 --> 00:11:14,960 Speaker 1: would just argue that in this environment, having seen gas 210 00:11:15,040 --> 00:11:20,000 Speaker 1: prices come down significantly, UM will incomes aren't as pressured 211 00:11:20,080 --> 00:11:22,559 Speaker 1: now that they were just a little while ago. So 212 00:11:22,679 --> 00:11:26,839 Speaker 1: I think that that chasm between those two sets of 213 00:11:26,920 --> 00:11:30,160 Speaker 1: consumers might not be as wide. Um, there's a little 214 00:11:30,200 --> 00:11:33,720 Speaker 1: alleviation of the pressure on lower and middle income American 215 00:11:33,800 --> 00:11:37,280 Speaker 1: households right now, just because energy prices have come down. 216 00:11:37,520 --> 00:11:40,640 Speaker 1: So it's certainly not a much better situation, but it 217 00:11:40,840 --> 00:11:43,559 Speaker 1: is materially better, and we saw that born out in 218 00:11:43,600 --> 00:11:46,320 Speaker 1: the most recent consumer sentiment numbers. Talk about earnings, if 219 00:11:46,320 --> 00:11:47,959 Speaker 1: you would, Christina from while we're just getting through the 220 00:11:48,000 --> 00:11:50,920 Speaker 1: earning season here, if we're seeing a tale of two consumers, 221 00:11:51,000 --> 00:11:52,719 Speaker 1: as we just heard from joining, are we seeing a 222 00:11:52,760 --> 00:11:54,920 Speaker 1: tale of two sets of companies as well, but high 223 00:11:55,000 --> 00:11:58,040 Speaker 1: quality versus less high quality? Well, certainly there are some 224 00:11:58,280 --> 00:12:01,440 Speaker 1: companies that are far better able to pass on their 225 00:12:01,520 --> 00:12:04,840 Speaker 1: costs than others. Um, there are those that are really 226 00:12:04,920 --> 00:12:07,800 Speaker 1: experiencing reduction in traffic. For example, if we're looking at 227 00:12:07,840 --> 00:12:10,800 Speaker 1: some of the retailers, UM and and others that have 228 00:12:11,080 --> 00:12:13,280 Speaker 1: have held up fairly well. So I think, you know, 229 00:12:13,400 --> 00:12:15,240 Speaker 1: going forward, what we're going to have to make an 230 00:12:15,280 --> 00:12:18,320 Speaker 1: assessment on is is which are those higher quality companies 231 00:12:18,400 --> 00:12:21,160 Speaker 1: that can defend their margins, that can pass on crisis, 232 00:12:21,760 --> 00:12:24,679 Speaker 1: that can weather this storm better, because let's face it, 233 00:12:24,679 --> 00:12:26,760 Speaker 1: it's going to be you know, um there are gonna 234 00:12:26,760 --> 00:12:28,959 Speaker 1: be some significant headwinds in the next two quarters. I 235 00:12:29,000 --> 00:12:32,280 Speaker 1: would argue Joanne as a portfolio manager, how are you 236 00:12:32,280 --> 00:12:34,440 Speaker 1: feeling about tech these days? I know text covers an 237 00:12:34,440 --> 00:12:36,000 Speaker 1: awful lot of sins, there are a lot of different 238 00:12:36,040 --> 00:12:38,640 Speaker 1: things called tech. But how are you feeling other opportunities 239 00:12:38,760 --> 00:12:42,120 Speaker 1: right now in tech? Oh? Yeah, I think there definitely are. 240 00:12:42,320 --> 00:12:44,840 Speaker 1: You know, it could take some patients really for investors 241 00:12:44,880 --> 00:12:47,439 Speaker 1: to to reap the rewards of tech. But when we 242 00:12:47,480 --> 00:12:50,040 Speaker 1: look at technology, what we look for our companies that 243 00:12:50,120 --> 00:12:52,360 Speaker 1: are in the middle of a change in the way 244 00:12:52,440 --> 00:12:55,400 Speaker 1: things are done. Demand coming from the market, whether it's 245 00:12:55,400 --> 00:12:58,840 Speaker 1: demographics or taste. But you know, the cloud area companies 246 00:12:58,920 --> 00:13:01,719 Speaker 1: shifting their active these away from internal service state of 247 00:13:01,760 --> 00:13:04,959 Speaker 1: the cloud. This is still happening, and more traffic on 248 00:13:05,040 --> 00:13:07,480 Speaker 1: the Internet is pushing data centers to have to expand 249 00:13:07,520 --> 00:13:10,320 Speaker 1: and build in faster, wider pipes. So if you look 250 00:13:10,360 --> 00:13:12,800 Speaker 1: for the companies that supply the parts to enable that, 251 00:13:13,280 --> 00:13:14,719 Speaker 1: you know they're going to be able to sell well 252 00:13:14,920 --> 00:13:17,520 Speaker 1: no matter what happens in terms of the cyclical side 253 00:13:17,559 --> 00:13:20,839 Speaker 1: of the economy. And generally if you if you pick 254 00:13:20,880 --> 00:13:23,040 Speaker 1: and choose carefully, you can find ones that have deep 255 00:13:23,120 --> 00:13:25,280 Speaker 1: moats around them that don't have a lot of competition. 256 00:13:25,600 --> 00:13:28,599 Speaker 1: You're not buying into companies that are selling commodities, so 257 00:13:28,760 --> 00:13:31,800 Speaker 1: you know, whether it's a broad Calm or an Amazon 258 00:13:31,960 --> 00:13:36,079 Speaker 1: which really enables the cloud out, or Microsoft which enables 259 00:13:36,120 --> 00:13:38,280 Speaker 1: the software to make all this work, these are companies 260 00:13:38,280 --> 00:13:40,040 Speaker 1: that are going to power through. It's gonna be a 261 00:13:40,080 --> 00:13:42,160 Speaker 1: little bit cyclical, but they're going to hold up better 262 00:13:42,200 --> 00:13:45,400 Speaker 1: than others will. Christina. Finally, let's go Overseas if we could, 263 00:13:45,600 --> 00:13:48,520 Speaker 1: because we've talked about the FED. However faster they're going 264 00:13:48,559 --> 00:13:50,600 Speaker 1: to tighten their tightening, no question about it. Europe looks 265 00:13:50,640 --> 00:13:52,800 Speaker 1: like they're tightening. There are some places like Japan and 266 00:13:52,920 --> 00:13:55,720 Speaker 1: China that maybe going the other direction, Does that create 267 00:13:55,720 --> 00:13:59,120 Speaker 1: an opportunity for investors? I think so, David. It's not 268 00:13:59,400 --> 00:14:02,560 Speaker 1: just prints in terms of monetary policy. So we both 269 00:14:02,760 --> 00:14:07,120 Speaker 1: we have China easing and we have Japan remaining very easy. Um. 270 00:14:07,240 --> 00:14:10,439 Speaker 1: But it's also fiscal stimulus. We're seeing fiscal stimulus in 271 00:14:10,559 --> 00:14:14,079 Speaker 1: both those countries, whereas in the US and other Western 272 00:14:14,120 --> 00:14:17,719 Speaker 1: developed countries they're pulling back on stimulus. And so that 273 00:14:17,960 --> 00:14:20,000 Speaker 1: sets up an environment in which there are built in 274 00:14:20,240 --> 00:14:22,920 Speaker 1: tail winds that we're just not seeing here. I think 275 00:14:22,960 --> 00:14:26,280 Speaker 1: there's potential there now when we look specifically at China equities. 276 00:14:26,480 --> 00:14:29,160 Speaker 1: There's a lot of pessimism right now around China, especially 277 00:14:29,240 --> 00:14:32,240 Speaker 1: given headlines around the property sector. But if you ring 278 00:14:32,360 --> 00:14:36,720 Speaker 1: fence the property sector and look at the broader market, 279 00:14:36,920 --> 00:14:40,520 Speaker 1: especially technology, there are a lot of opportunities in China 280 00:14:40,560 --> 00:14:43,000 Speaker 1: equities and I think there's the potential for positive surprise. 281 00:14:43,320 --> 00:14:46,120 Speaker 1: Thank you so much to Christina Hooper of Investco and 282 00:14:46,200 --> 00:14:51,080 Speaker 1: joe Anfini of Advisors Capital Management. Coming up, we ask 283 00:14:51,120 --> 00:14:54,320 Speaker 1: our special contributor Larry Summers whether those CPI members have 284 00:14:54,480 --> 00:14:59,480 Speaker 1: him feeling any better about inflation. This is Wall Street 285 00:14:59,520 --> 00:15:09,560 Speaker 1: week on Bloomberg. Okay, this is Wall Street Week. I'm 286 00:15:09,640 --> 00:15:11,560 Speaker 1: David Weston to take us through the high points of 287 00:15:11,640 --> 00:15:13,880 Speaker 1: this week. We welcome back our very special continue to 288 00:15:13,920 --> 00:15:16,520 Speaker 1: Larry Summers of Harvard. So, Larry, thank you so much 289 00:15:16,560 --> 00:15:18,720 Speaker 1: for joining us from Aspen. Actually this week we'll talk 290 00:15:18,720 --> 00:15:20,680 Speaker 1: a little later about what you're doing out there. But first, 291 00:15:20,800 --> 00:15:23,960 Speaker 1: we got CPI numbers this week on Wednesday. They came 292 00:15:24,000 --> 00:15:26,280 Speaker 1: in significantly better than a lot of people thought they would. 293 00:15:26,560 --> 00:15:28,960 Speaker 1: So do you find some relief from this? Are we 294 00:15:29,160 --> 00:15:31,200 Speaker 1: over the worst of it when it comes to inflation? 295 00:15:32,320 --> 00:15:35,520 Speaker 1: I don't think these were encouraging numbers. We we knew 296 00:15:35,600 --> 00:15:38,400 Speaker 1: that the headline number was going to be coming substantially 297 00:15:38,480 --> 00:15:42,560 Speaker 1: down because we could see what had happened with gasoline prices. 298 00:15:43,160 --> 00:15:48,120 Speaker 1: The core number was better than most people, uh expected. Uh, 299 00:15:48,520 --> 00:15:52,920 Speaker 1: that's certainly better than the alternative to that. On the 300 00:15:53,000 --> 00:15:57,160 Speaker 1: other hand, it was heavily driven by volatile sectors like 301 00:15:57,600 --> 00:16:01,680 Speaker 1: used cars, like hotels, like air airs. We've Sarah seen 302 00:16:01,720 --> 00:16:05,360 Speaker 1: this movie before. We had a terrific core number in March, 303 00:16:05,960 --> 00:16:08,600 Speaker 1: but it was from those volatile sectors, and then it 304 00:16:08,680 --> 00:16:13,120 Speaker 1: bounced back up in April, May and June so we'll 305 00:16:13,160 --> 00:16:17,480 Speaker 1: have to see, uh what happens going forward. But this 306 00:16:17,720 --> 00:16:22,400 Speaker 1: is certainly a better number than most people expected, and 307 00:16:22,480 --> 00:16:25,400 Speaker 1: it will come as a bit of relief to the FED. 308 00:16:25,960 --> 00:16:30,480 Speaker 1: But I certainly think it's nothing like we are out 309 00:16:30,520 --> 00:16:34,720 Speaker 1: of the woods. It's nothing like a fundamental change in 310 00:16:35,280 --> 00:16:42,160 Speaker 1: uh the orientation. It's nothing that means that we can 311 00:16:42,320 --> 00:16:48,000 Speaker 1: pivot away from the overwhelming paradigm being in need for 312 00:16:48,120 --> 00:16:51,200 Speaker 1: restrictive policy to contain inflation. Well, that's what I want 313 00:16:51,240 --> 00:16:53,240 Speaker 1: to ask you about some relief for the FED. You said, 314 00:16:53,640 --> 00:16:56,280 Speaker 1: is there a risk in that? And you've warned before 315 00:16:56,360 --> 00:16:59,600 Speaker 1: about backing off too quickly in the cooling of the economy. 316 00:17:00,000 --> 00:17:02,160 Speaker 1: There a risk the FED past too much attention to 317 00:17:02,280 --> 00:17:05,080 Speaker 1: numbers like these. We'll have to we'll have to see 318 00:17:05,119 --> 00:17:08,960 Speaker 1: what they do. If the FED regards this as a 319 00:17:09,119 --> 00:17:13,240 Speaker 1: major game changer, they will be making another major mistake. 320 00:17:13,960 --> 00:17:16,720 Speaker 1: I would be surprised if they regarded it that way, 321 00:17:16,920 --> 00:17:20,119 Speaker 1: because I think when you look within it, you'll see 322 00:17:20,280 --> 00:17:26,720 Speaker 1: that seasonally adjusted airfares coming out of two JULYES when 323 00:17:26,800 --> 00:17:30,440 Speaker 1: air fares were highly distorted by COVID. How could you 324 00:17:30,560 --> 00:17:36,280 Speaker 1: take that seriously as a huge harbinger of new UH trends, 325 00:17:36,760 --> 00:17:39,880 Speaker 1: So I don't think they will make UH that kind 326 00:17:39,960 --> 00:17:44,080 Speaker 1: of mistake. They certainly shouldn't make that kind of mistake. 327 00:17:44,600 --> 00:17:47,880 Speaker 1: But you know, you get out of woods and even 328 00:17:48,040 --> 00:17:51,320 Speaker 1: deep woods, you get out of them one step at 329 00:17:51,600 --> 00:17:56,280 Speaker 1: a time. So I don't wanna deny that this is 330 00:17:56,440 --> 00:18:01,720 Speaker 1: that there's some encouragement UH in this number, but overreacting 331 00:18:02,680 --> 00:18:07,680 Speaker 1: to that would be a grave mistake. I think your show, before, David, 332 00:18:07,760 --> 00:18:12,320 Speaker 1: I've talked about how prudent people finish their regiment of 333 00:18:12,400 --> 00:18:16,800 Speaker 1: antibiotics even as they're gratified four days in that they 334 00:18:16,880 --> 00:18:20,280 Speaker 1: feel better, and I still think that's the right metaphor 335 00:18:20,720 --> 00:18:25,160 Speaker 1: for thinking about this situation. You and I have talked 336 00:18:25,160 --> 00:18:27,160 Speaker 1: a lot about race. What about the balance sheet? Because 337 00:18:27,160 --> 00:18:29,280 Speaker 1: I muna say, just about every week after we get 338 00:18:29,400 --> 00:18:32,320 Speaker 1: done on this program, somebody emails me and says, what 339 00:18:32,400 --> 00:18:35,080 Speaker 1: about the balance sheet? How effective is the balance sheet 340 00:18:35,119 --> 00:18:36,960 Speaker 1: and helping to slow down the economy get our arms 341 00:18:36,960 --> 00:18:39,040 Speaker 1: around inflation? And are they doing it the right way? 342 00:18:39,080 --> 00:18:41,280 Speaker 1: Should they be coming off the balance sheet even faster 343 00:18:41,400 --> 00:18:44,920 Speaker 1: than they are? I wonder if they should come off 344 00:18:45,960 --> 00:18:50,280 Speaker 1: faster than they are. I think the clearest statement about 345 00:18:50,320 --> 00:18:55,480 Speaker 1: the balance sheet is that they should have stopped buying 346 00:18:56,359 --> 00:18:59,560 Speaker 1: six or nine months earlier than they did. I think 347 00:18:59,640 --> 00:19:04,480 Speaker 1: it's clear that we had something that history will look 348 00:19:04,520 --> 00:19:07,520 Speaker 1: back on as a bit of a housing bubble, and 349 00:19:08,200 --> 00:19:12,840 Speaker 1: I think they contributed to that by buying mortgage backed securities. 350 00:19:13,680 --> 00:19:17,520 Speaker 1: Now I certainly think they're going in the right direction 351 00:19:18,080 --> 00:19:24,320 Speaker 1: with QT rather than QUE. Could they do it faster? 352 00:19:25,080 --> 00:19:29,320 Speaker 1: Perhaps they could. Would it make a major difference, I'm 353 00:19:29,359 --> 00:19:34,160 Speaker 1: not sure that it would. Would it add to financial risk, 354 00:19:34,880 --> 00:19:38,520 Speaker 1: It might in terms of some kind of accident in 355 00:19:39,119 --> 00:19:45,240 Speaker 1: markets in general, David, I think that yields are driven 356 00:19:46,080 --> 00:19:49,960 Speaker 1: more by the fundamentals of what's happening in the economy 357 00:19:50,600 --> 00:19:56,280 Speaker 1: and less by central bank policies like uh QT and 358 00:19:56,480 --> 00:20:00,080 Speaker 1: QE that I think many in the markets thank know. 359 00:20:00,240 --> 00:20:01,800 Speaker 1: I could be right about that, or I could be 360 00:20:02,160 --> 00:20:05,119 Speaker 1: uh or I could be wrong. But I think people 361 00:20:05,480 --> 00:20:11,000 Speaker 1: often ascribe to the direct impact of these policies. What 362 00:20:11,240 --> 00:20:16,119 Speaker 1: is in fact a signaling with respect to future monetary policies. 363 00:20:16,600 --> 00:20:20,960 Speaker 1: And I don't think that now the this is an 364 00:20:21,040 --> 00:20:25,600 Speaker 1: area of stability to FED has set an expectation, that 365 00:20:25,840 --> 00:20:32,719 Speaker 1: expectation is underway. I wouldn't be recommending a major change 366 00:20:32,800 --> 00:20:37,800 Speaker 1: in balance sheet policies at at this point, Okay, Larry Summers, 367 00:20:37,840 --> 00:20:40,080 Speaker 1: I'm delted to say, everybody staying with us, because we're 368 00:20:40,119 --> 00:20:42,680 Speaker 1: gonna be joined by Melissa Carney. She's professor of economics 369 00:20:42,720 --> 00:20:45,159 Speaker 1: in Maryland, and she has convened that Larry and some 370 00:20:45,320 --> 00:20:48,439 Speaker 1: other esteemed economist and askment to address the very important 371 00:20:48,520 --> 00:20:51,240 Speaker 1: question of after we come through whatever downturn we're going through, 372 00:20:51,600 --> 00:20:53,720 Speaker 1: where will the growth come from. That's gonna have next 373 00:20:53,880 --> 00:20:59,640 Speaker 1: on Wall Street Week on Bloomberg. This is Bloomberg Wall 374 00:20:59,720 --> 00:21:09,760 Speaker 1: Street Week with David Weston from Bloomberg Radio. This is 375 00:21:09,800 --> 00:21:12,080 Speaker 1: Wall Street Week. I'm David Weston, our special man Truitton. 376 00:21:12,119 --> 00:21:14,040 Speaker 1: Larry Summers has stayed with us and we are joined now. 377 00:21:14,160 --> 00:21:16,760 Speaker 1: But Melissa Carney, she's professor of economics at the University 378 00:21:16,760 --> 00:21:20,240 Speaker 1: of Maryland, also director of the Aspen Economic Strategy Group, 379 00:21:20,400 --> 00:21:22,399 Speaker 1: which she has convened and asked me this week with 380 00:21:22,560 --> 00:21:25,440 Speaker 1: Larry and other esteemed economists to address a critical question 381 00:21:25,520 --> 00:21:28,320 Speaker 1: really of where the United States could be facing seculation. 382 00:21:28,400 --> 00:21:30,600 Speaker 1: So Melissa, welcome to Wall Street Week. Great to have 383 00:21:30,720 --> 00:21:33,040 Speaker 1: you here. Let's start with the question of where growth 384 00:21:33,119 --> 00:21:35,080 Speaker 1: will come on the other side of whatever it is 385 00:21:35,160 --> 00:21:37,159 Speaker 1: we're going through, because that's ultimately going to be the 386 00:21:37,240 --> 00:21:39,920 Speaker 1: question here. I understand from economists like you it comes 387 00:21:39,960 --> 00:21:42,919 Speaker 1: from one of two sources, either more workers or more productivity. 388 00:21:43,080 --> 00:21:45,479 Speaker 1: Are we going to get more workers? We're looking at 389 00:21:45,560 --> 00:21:48,520 Speaker 1: both fewer workers and lower productivity, as you know, So 390 00:21:48,920 --> 00:21:52,200 Speaker 1: let me focus on the fewer workers aspect for a moment. 391 00:21:52,880 --> 00:21:56,040 Speaker 1: The real issue demographic issue facing the US is we 392 00:21:56,200 --> 00:21:59,879 Speaker 1: have a plummeting birth rate, and so total fertility in 393 00:22:00,000 --> 00:22:03,880 Speaker 1: the US is now below the level required to keep 394 00:22:04,000 --> 00:22:07,560 Speaker 1: population growth constant. And so the issue here is that 395 00:22:07,720 --> 00:22:10,919 Speaker 1: on average now a woman in the US is expected 396 00:22:10,960 --> 00:22:14,639 Speaker 1: to have one point six five children over her lifetime. 397 00:22:14,880 --> 00:22:17,240 Speaker 1: So women used to have three kids, then it fell 398 00:22:17,280 --> 00:22:20,040 Speaker 1: to two. Women were having comfortably above two kids for 399 00:22:20,119 --> 00:22:23,920 Speaker 1: many decades. With a with a fertility rate below too, 400 00:22:24,440 --> 00:22:27,480 Speaker 1: that means our population is going to age and it's 401 00:22:27,520 --> 00:22:29,879 Speaker 1: not going to grow, and so eventually we're going to 402 00:22:30,000 --> 00:22:36,680 Speaker 1: have a shrinking working age population unless Melissa, we have immigration. 403 00:22:37,240 --> 00:22:40,160 Speaker 1: And that's why immigration, I think many of us at 404 00:22:40,200 --> 00:22:44,520 Speaker 1: this conference feel, is so very very important. What's your 405 00:22:44,640 --> 00:22:49,800 Speaker 1: sense of what economists would say the politics apart um 406 00:22:50,400 --> 00:22:55,240 Speaker 1: about the immigration policy. Economists love immigration. We think immigration 407 00:22:55,480 --> 00:22:58,520 Speaker 1: is a is a potential answer to our demographic challenges 408 00:22:58,880 --> 00:23:03,080 Speaker 1: as well as our activity innovation challenges. Since immigrants come in, 409 00:23:03,280 --> 00:23:07,480 Speaker 1: they work, they're more likely than native born Americans to 410 00:23:07,520 --> 00:23:10,640 Speaker 1: be entrepreneurs and innovators. Of course, as you know, Larry, 411 00:23:11,160 --> 00:23:14,080 Speaker 1: immigration rates our way down. So we used to bring 412 00:23:14,200 --> 00:23:17,639 Speaker 1: in as you know, we hit as many as a 413 00:23:17,720 --> 00:23:20,960 Speaker 1: million new people coming into the country every year. That 414 00:23:21,160 --> 00:23:24,159 Speaker 1: number is now below two d and fifty thousand, and 415 00:23:24,280 --> 00:23:28,520 Speaker 1: so the combination of a declining native born population and 416 00:23:28,600 --> 00:23:33,120 Speaker 1: a decline in immigration per tens even worse demographic challenges 417 00:23:33,160 --> 00:23:35,080 Speaker 1: than if we were just facing one versus the other. 418 00:23:35,240 --> 00:23:37,400 Speaker 1: Let me see if I can do a little arithmetic 419 00:23:37,520 --> 00:23:40,280 Speaker 1: based on what you said from one mate in two 420 00:23:41,680 --> 00:23:45,159 Speaker 1: So that's about seven fifty thousand people a year. So 421 00:23:45,320 --> 00:23:50,520 Speaker 1: that's about half a percent of our workforce, maybe a 422 00:23:50,600 --> 00:23:54,160 Speaker 1: little less, so half a percent slower labor force. Uh 423 00:23:54,680 --> 00:24:00,440 Speaker 1: growth over time can accumulate to something uh that is 424 00:24:00,560 --> 00:24:04,040 Speaker 1: very that is very large. And and if we go 425 00:24:04,160 --> 00:24:07,160 Speaker 1: back to the birth rates, we have about five fewer 426 00:24:07,280 --> 00:24:11,680 Speaker 1: babies being born a year than in the not distant past. Melissa, 427 00:24:11,800 --> 00:24:16,480 Speaker 1: if you um, what would you say about about this um. 428 00:24:17,320 --> 00:24:21,120 Speaker 1: Most people are scared that immigrants come and they take 429 00:24:21,200 --> 00:24:25,200 Speaker 1: jobs for Americans and that if they're more immigrants, then 430 00:24:25,760 --> 00:24:28,040 Speaker 1: there aren't gonna be as many jobs for Americans, or 431 00:24:28,119 --> 00:24:32,720 Speaker 1: if there are jobs, because there's more competition, uh, they're 432 00:24:33,160 --> 00:24:36,440 Speaker 1: going to be paid less. And that's true whether the 433 00:24:36,600 --> 00:24:42,080 Speaker 1: job people think is working at McDonald's or is UH 434 00:24:42,480 --> 00:24:46,680 Speaker 1: working doing computer programming at Microsoft. What how do you 435 00:24:46,960 --> 00:24:50,280 Speaker 1: How should people feel? Shouldn't they have shouldn't they have 436 00:24:50,440 --> 00:24:52,600 Speaker 1: this worry that they're gonna be poorer if we take 437 00:24:52,640 --> 00:24:55,240 Speaker 1: all the immigrants, just like they get hurt if we 438 00:24:55,359 --> 00:24:57,960 Speaker 1: take a lot of local a lot of trade from 439 00:24:58,080 --> 00:25:00,680 Speaker 1: other countries where they have much lower wage. So so 440 00:25:01,240 --> 00:25:04,560 Speaker 1: the reason economists are so bullish on immigration is because 441 00:25:04,640 --> 00:25:07,159 Speaker 1: we have so much evidence that immigrants are good for 442 00:25:07,240 --> 00:25:10,080 Speaker 1: the economy. They are good for most workers. But it 443 00:25:10,280 --> 00:25:13,400 Speaker 1: is true that there are some groups in some places 444 00:25:14,000 --> 00:25:16,840 Speaker 1: that will feel wage pressures. And I think the way 445 00:25:16,960 --> 00:25:20,320 Speaker 1: we the way we solve this issue is to make 446 00:25:20,400 --> 00:25:23,679 Speaker 1: sure that we recognize the disparate impacts of certain groups. 447 00:25:23,960 --> 00:25:27,680 Speaker 1: We recognize that low wage workers in certain sectors might 448 00:25:27,840 --> 00:25:32,600 Speaker 1: not experience the benefits the overall benefits that immigrants bring 449 00:25:32,680 --> 00:25:35,560 Speaker 1: to the economy and we take steps to help them. 450 00:25:36,000 --> 00:25:38,240 Speaker 1: I mean, it's not it's not dissimilar to what we 451 00:25:38,320 --> 00:25:41,280 Speaker 1: have to do with trade to you know, more imports 452 00:25:41,359 --> 00:25:43,520 Speaker 1: is good for most people, but some people are harmed 453 00:25:43,560 --> 00:25:45,600 Speaker 1: by it. We're going to see this too with the 454 00:25:45,680 --> 00:25:50,080 Speaker 1: shift to green a greener economy. Some people are going 455 00:25:50,119 --> 00:25:52,399 Speaker 1: to lose their jobs even though it's better for everyone. 456 00:25:52,600 --> 00:25:55,840 Speaker 1: And so I mean, I think acknowledging that some people 457 00:25:56,000 --> 00:25:58,879 Speaker 1: feel and are harmed by this, but that's a small 458 00:25:58,960 --> 00:26:02,679 Speaker 1: concentrated group, and taking steps to address that allows us 459 00:26:02,720 --> 00:26:05,480 Speaker 1: to do things that make the economy grow and be 460 00:26:05,560 --> 00:26:08,639 Speaker 1: more productive. I wanted to come back to fertility. Larry's 461 00:26:08,680 --> 00:26:11,920 Speaker 1: pointed out a way in which economics, whether misperceived or not, 462 00:26:12,280 --> 00:26:15,119 Speaker 1: may affect our willingness to have immigration. What about fertility? 463 00:26:15,359 --> 00:26:19,760 Speaker 1: Are there economic causes for the reduction and fertility? So 464 00:26:19,880 --> 00:26:23,399 Speaker 1: the decline in US fertility and it's really being driven 465 00:26:23,480 --> 00:26:26,160 Speaker 1: by a plummeting of birth rates since two thousand seven. 466 00:26:26,280 --> 00:26:29,960 Speaker 1: Births fell after the Great Recession. They haven't recovered. Um, 467 00:26:30,359 --> 00:26:34,680 Speaker 1: you can't point to any any policy or economic factor 468 00:26:34,760 --> 00:26:37,920 Speaker 1: that's changed since two thousand seven. So sometimes people will 469 00:26:37,920 --> 00:26:40,399 Speaker 1: say things like childcare has become more expensive, and if 470 00:26:40,440 --> 00:26:43,720 Speaker 1: we just made childcare less expensive, people would return to 471 00:26:43,800 --> 00:26:47,159 Speaker 1: having more than two kids. I do not that is 472 00:26:47,200 --> 00:26:50,360 Speaker 1: just not the case, right, There's nothing, uh, there's nothing 473 00:26:50,480 --> 00:26:53,000 Speaker 1: that easy that we could point to. And in fact, 474 00:26:53,359 --> 00:26:57,440 Speaker 1: us women now are just having births in the same 475 00:26:57,520 --> 00:27:00,520 Speaker 1: way that women and other high income try countries have 476 00:27:00,640 --> 00:27:03,919 Speaker 1: reduced their birthrates long before, in the eighties and nineties. 477 00:27:04,160 --> 00:27:05,960 Speaker 1: So I don't think this is going to be easy 478 00:27:06,040 --> 00:27:09,080 Speaker 1: to turn around. Lots of other countries have taken direct 479 00:27:09,160 --> 00:27:13,040 Speaker 1: steps to try and incentivize people to have more kids. 480 00:27:13,280 --> 00:27:15,520 Speaker 1: There's a lot of countries that have experimented with baby 481 00:27:15,600 --> 00:27:19,399 Speaker 1: bonuses a few thousand dollars. Birthrates go up a little 482 00:27:19,400 --> 00:27:23,240 Speaker 1: bit in the following year, but nothing like the increase 483 00:27:23,280 --> 00:27:28,280 Speaker 1: in infertility we would need to get back to replacement level. Also, 484 00:27:28,359 --> 00:27:32,159 Speaker 1: having an expert like you here, I can't resist stepping 485 00:27:32,200 --> 00:27:35,000 Speaker 1: out of our mutual lane as economists to ask a 486 00:27:35,080 --> 00:27:38,440 Speaker 1: question I suspect is on many people's minds. Do you 487 00:27:38,560 --> 00:27:42,159 Speaker 1: think that the recent Supreme Court decision and the steps 488 00:27:42,240 --> 00:27:44,480 Speaker 1: that are going to be taken in a number of states, 489 00:27:45,160 --> 00:27:47,400 Speaker 1: do you think that's going to materially affect the number 490 00:27:47,400 --> 00:27:50,600 Speaker 1: of births in the United States. The we do have 491 00:27:50,760 --> 00:27:53,280 Speaker 1: estimates on this based based on you know, lots of 492 00:27:53,359 --> 00:27:56,840 Speaker 1: data we have about how abortion restrictions, you know, lead 493 00:27:56,880 --> 00:28:00,119 Speaker 1: to more birthrates. I expect there will be about or 494 00:28:00,200 --> 00:28:05,600 Speaker 1: thousand more births a year. UM. So uh, yes, not 495 00:28:06,280 --> 00:28:09,640 Speaker 1: this is this is not going to bring fertility rates 496 00:28:09,720 --> 00:28:12,000 Speaker 1: back to where they were. This is going to mean 497 00:28:12,080 --> 00:28:14,720 Speaker 1: that some women who wouldn't want to have a child 498 00:28:14,840 --> 00:28:18,240 Speaker 1: now are going to UM. Since you raise the issue, 499 00:28:18,800 --> 00:28:22,639 Speaker 1: I will say that this makes the imperative of doing 500 00:28:22,720 --> 00:28:25,560 Speaker 1: more to support kids and low income women in this 501 00:28:25,720 --> 00:28:29,680 Speaker 1: country that much stronger. Which is, you know that that 502 00:28:29,880 --> 00:28:33,040 Speaker 1: was something that Congress was talking about for a brief 503 00:28:33,119 --> 00:28:36,040 Speaker 1: moment in the initial build back Better That stuff got 504 00:28:36,119 --> 00:28:42,520 Speaker 1: jettisoned in the post Dogs decision paradigm. We are going 505 00:28:42,600 --> 00:28:45,840 Speaker 1: to have some more births disproportionately born to low income women, 506 00:28:45,920 --> 00:28:47,400 Speaker 1: and we need to talk about how we're going to 507 00:28:47,480 --> 00:28:50,240 Speaker 1: make sure that those children are well taken care of. So, Larry, 508 00:28:50,360 --> 00:28:54,000 Speaker 1: can we make up the loss of population and workers 509 00:28:54,160 --> 00:28:56,640 Speaker 1: with productivity. We have the Chips and Science Act, now 510 00:28:56,880 --> 00:28:58,640 Speaker 1: we have the Inflation Production Act, both of which I 511 00:28:58,880 --> 00:29:01,840 Speaker 1: understand our meant to increase productivity. Can we make it 512 00:29:01,960 --> 00:29:06,520 Speaker 1: up and increase productivity? You know, Melissa organized a terrific 513 00:29:06,600 --> 00:29:13,240 Speaker 1: session here on R and D and science leadership issues. 514 00:29:14,000 --> 00:29:16,680 Speaker 1: I think there's a lot we can do, but it's 515 00:29:16,840 --> 00:29:21,560 Speaker 1: both about spending money and it's about spending it well. 516 00:29:22,080 --> 00:29:23,560 Speaker 1: Thank you so much. Has been a great discussion. I 517 00:29:23,640 --> 00:29:24,920 Speaker 1: wish I were out there and ask with you. I 518 00:29:24,960 --> 00:29:26,800 Speaker 1: could learn a lot more. But thank you so much 519 00:29:26,840 --> 00:29:29,080 Speaker 1: for our very special trader Larry Summers of Harvard and 520 00:29:29,240 --> 00:29:33,479 Speaker 1: Lissa Carney, Professor of economics at the University of Maryland. Finally, 521 00:29:33,640 --> 00:29:37,000 Speaker 1: one more thought. Heavy is the head that wears the crown, 522 00:29:37,240 --> 00:29:40,040 Speaker 1: at least according to Shakespeare's Henry the Fourth. And it's 523 00:29:40,080 --> 00:29:42,640 Speaker 1: not only heavy, it's hard to pass that crown under 524 00:29:42,680 --> 00:29:45,000 Speaker 1: the next head, at least judging by how often it 525 00:29:45,120 --> 00:29:47,440 Speaker 1: doesn't seem to work. We don't have to go all 526 00:29:47,440 --> 00:29:50,080 Speaker 1: the way back to Lear to find leaders bungling their 527 00:29:50,160 --> 00:29:53,680 Speaker 1: succession plans. And they have dividance in three our kingdom, 528 00:29:54,480 --> 00:29:57,360 Speaker 1: it's a houst intense to shake well cares in business 529 00:29:57,400 --> 00:30:00,719 Speaker 1: from my age concerning them on the youngest we all 530 00:30:00,800 --> 00:30:02,880 Speaker 1: know how that worked out for King Leir. And there 531 00:30:02,920 --> 00:30:05,640 Speaker 1: are plenty of more recent examples, though, particularly in the 532 00:30:05,800 --> 00:30:08,960 Speaker 1: world of business, like Jack Welch annointing Jeff M. L 533 00:30:09,080 --> 00:30:12,080 Speaker 1: to carry on his legend at GE, something that didn't 534 00:30:12,120 --> 00:30:14,280 Speaker 1: work out so well, although Jeff seemed to be the 535 00:30:14,440 --> 00:30:16,920 Speaker 1: last to know when he spoke to our John Nichols 536 00:30:16,960 --> 00:30:19,920 Speaker 1: Wade in two seventeen, not long before he had his 537 00:30:20,040 --> 00:30:24,000 Speaker 1: crown removed. We always have a group of successors, and 538 00:30:24,080 --> 00:30:26,320 Speaker 1: I always think you've got to earn it every day. 539 00:30:26,440 --> 00:30:28,760 Speaker 1: So you've been doing it in a while, I feel great, 540 00:30:28,880 --> 00:30:31,239 Speaker 1: and we'll see where it goes. Or Kevin Johnson, who 541 00:30:31,280 --> 00:30:33,640 Speaker 1: had the bad fortune to be the second CEO to 542 00:30:33,720 --> 00:30:37,239 Speaker 1: replace Starbucks chief Howard Schultz, only to be succeeded by 543 00:30:37,560 --> 00:30:40,320 Speaker 1: you guessed it, Howard Schultz. Though when I spoke with 544 00:30:40,440 --> 00:30:43,520 Speaker 1: Kevin and two nine, he admitted that it was tricky 545 00:30:44,040 --> 00:30:48,120 Speaker 1: in a transition from founder lead to founder inspired. Those 546 00:30:48,160 --> 00:30:51,600 Speaker 1: transitions oftentimes are the most difficult and the most critical 547 00:30:51,640 --> 00:30:54,520 Speaker 1: transition that any company will go through. And this week 548 00:30:54,600 --> 00:30:57,280 Speaker 1: we got yet another example when the founders of the 549 00:30:57,360 --> 00:31:01,480 Speaker 1: Carlisle Group announced that their handpicked air Tucson Lee would 550 00:31:01,520 --> 00:31:05,120 Speaker 1: be leaving abruptly to re replaced at least temporarily by 551 00:31:05,240 --> 00:31:08,560 Speaker 1: Bill Conway, one of those founders who picked him, says, 552 00:31:08,640 --> 00:31:10,960 Speaker 1: definite that we've shaken the investment universe. Let's not be 553 00:31:11,080 --> 00:31:15,080 Speaker 1: coy about it. Ten pm Eastern on a Sunday night. 554 00:31:15,560 --> 00:31:17,600 Speaker 1: And remember, like I said, he's stepping down before the 555 00:31:17,640 --> 00:31:20,240 Speaker 1: contract is even up. But it wasn't only q Lee 556 00:31:20,320 --> 00:31:22,920 Speaker 1: who stepped down this week. We also saw a legend 557 00:31:23,040 --> 00:31:26,480 Speaker 1: prepared to move on when Serena Williams, arguably the greatest 558 00:31:26,520 --> 00:31:29,320 Speaker 1: of all time in women's tennis, announced that she would 559 00:31:29,320 --> 00:31:32,040 Speaker 1: be retiring after the U S opened this year, something 560 00:31:32,160 --> 00:31:35,480 Speaker 1: she had just joked about earlier. Every tennis player thinks 561 00:31:35,480 --> 00:31:38,480 Speaker 1: about the R word as soon as they hit five years. 562 00:31:39,560 --> 00:31:41,280 Speaker 1: And when it comes to Serena, I'm not sure that 563 00:31:41,320 --> 00:31:45,040 Speaker 1: we're going to see any successor anytime soon. So given 564 00:31:45,080 --> 00:31:47,920 Speaker 1: how much drama there is around the subject, it shouldn't 565 00:31:47,960 --> 00:31:50,600 Speaker 1: be surprising that there is a hit TV drama series 566 00:31:50,920 --> 00:31:53,760 Speaker 1: given over to the matter of succession. Because it's one 567 00:31:53,880 --> 00:31:56,440 Speaker 1: thing to know the boss has to go, it's quite 568 00:31:56,480 --> 00:31:58,920 Speaker 1: another to figure out who should be the new boss. 569 00:31:59,480 --> 00:32:03,400 Speaker 1: A special if you're warring with family members, he's erratic, 570 00:32:03,560 --> 00:32:06,080 Speaker 1: he's making bad decisions. If he's not careful, he's going 571 00:32:06,160 --> 00:32:08,200 Speaker 1: to destroy the company. And what you're going to do something? 572 00:32:08,400 --> 00:32:10,320 Speaker 1: I think I'm the best option, all right, because you 573 00:32:10,400 --> 00:32:12,760 Speaker 1: like playing boss. That does it. For this episode of 574 00:32:12,760 --> 00:32:15,600 Speaker 1: Wall Street Week, I'm David Weston. This is Bloomberg. See 575 00:32:15,600 --> 00:32:16,200 Speaker 1: you next week.