Speaker 1: This is Bloomberg Wall Street Week. Market shruggle, higher consumer prices,
Speaker 1: The economy is in the process of rebounding. Will the
Speaker 1: Federal Reserve have its own digital currency? The financial stories
Speaker 1: that cheap hard work. Many people think the eels are
Speaker 1: just going to keep marching up. We have more spending
Speaker 1: coming out of Congress. One of the big questions I
Speaker 1: think on investor's minds inflation through the eyes of the
Speaker 1: most influential voices. Larry Summer is the former Treasury Secretary,
Speaker 1: Bryan Wynhan, a back of America. Will Sarro CEO, Charlie Sharp,
Speaker 1: Bloomberg wool Street Week with David Weston from Bloomberg Radio.
Speaker 1: Which way is up? As the Fed talks taper, COVID
Speaker 1: keeps growing, and the debacle seven thousand miles away consumes Washington.
Speaker 1: This is Bloomberg Wall Street Week. I'm David Weston. It
Speaker 1: was a week marked by uncertainty leading to indecision. Uncertainty
Speaker 1: over the economy as retail sales felt more than expected,
Speaker 1: Uncertainty over how quickly the Fed will taper its bond
Speaker 1: buying after minutes from last month's meeting showed at least
Speaker 1: some members want to get going before the year is out,
Speaker 1: and uncertainty over whether a crisis caused by American withdrawal
Speaker 1: from Afghanistan could make it even more difficult for the
Speaker 1: Democrats to get their spending package through the Congress. And
Speaker 1: the markets this week reflected much of that uncertainty by
Speaker 1: being somewhat indecisive over the week. The SMP was down
Speaker 1: a bit, but that was after it was up on Monday,
Speaker 1: way down on Thursday, and then recovered on Friday. Small
Speaker 1: caps took a hit, but again not in a straight line,
Speaker 1: with losses on Tuesday and Thursday partially offset by gains
Speaker 1: on Wednesday and Friday. Treasury yields remained stubbornly below one
Speaker 1: point three, and commodities were the one asset showing real direction,
Speaker 1: with oil down consistently through the week. To give us
Speaker 1: an investor's perspective on these indecisive and slightly nervous markets,
Speaker 1: we welcome tow Katherine Keating. She is CEO of b
Speaker 1: n Y Melon Wealth MANAGERIC. So give us a sense
Speaker 1: of what you learned. If anything is through this somewhat
Speaker 1: put Tumultuo's week. Yeah, so, I think the word I
Speaker 1: would used to describe this week David is moderating, moderating.
Speaker 1: We came off a quarter of just torrid earnings growth, right,
Speaker 1: earnings growth, and now we're looking at the economic data
Speaker 1: to try to try to figure out what the future holds.
Speaker 1: And as you said, we we saw um you know,
Speaker 1: declines and consumer confidence declines in in retail sales, um
Speaker 1: declines in the mortgage market, right, modest declines in the
Speaker 1: mortgage market, which has been very strong. On the other hand,
Speaker 1: we see corporate America continue to do well, industrial production up,
Speaker 1: so you know, things are moderating, and that's normal at
Speaker 1: this point in the cycle. That's normal at this point
Speaker 1: in the cycle. You can shut down an economy all
Speaker 1: at once, but it opens in an uneven pace, and
Speaker 1: I think that's exactly what we're seeing. And investors are
Speaker 1: looking through that and looking ahead. Well, that's my question.
Speaker 1: What are you hearing from customers? What are they what
Speaker 1: are they saying? Are they nervous about this? Are they
Speaker 1: pretty sanguine? They think it's okay. You know. One of
Speaker 1: the things I think that we have learned through this
Speaker 1: crisis is how quickly things happen. How quickly a virus
Speaker 1: spreads around the world, how quickly you can close down
Speaker 1: the economy, how quickly the market can sit through all
Speaker 1: that information. We had a six week bear market and
Speaker 1: the market completely recovered in six months, so they're learning
Speaker 1: to sift information very quickly. One of the other pieces
Speaker 1: of information we sifted this week was the news about
Speaker 1: the coronavirus and the need for booster shots. Right. The
Speaker 1: market's way that understanding it is looking forward, and again
Speaker 1: the market always looks forward a few quarters um and
Speaker 1: looking forward, we continue to think, uh, the economy is healing.
Speaker 1: We're growing at a six percent rate, that's three times
Speaker 1: what we were growing at before this crisis, and we
Speaker 1: think there's a lot of support for markets. Wall Street,
Speaker 1: we talk about investors. Let's be a little more precise
Speaker 1: about who these investors are. You pointed to a piece
Speaker 1: on the Blueberg actually this week about Fidelity, which reported
Speaker 1: that the number of four or one case went up,
Speaker 1: the number of iras of people with a million dollars
Speaker 1: or more in them. Is there a fundamental shift coming
Speaker 1: in who these investors are that is retail versus institutional
Speaker 1: And that is exactly the right question, David, because the
Speaker 1: structure of the markets has changed during our lifetimes. Today,
Speaker 1: the retail segment of the market that the assets that
Speaker 1: are governed by individuals, is larger than the institutional institutional segment,
Speaker 1: and it's growing faster. And there's a reason for that.
Speaker 1: It's corporate America has fundamentally changed the way we save
Speaker 1: for retirement. Our parents generation, they probably had a defined
Speaker 1: benefit plan, They retired with a pension and annuity for
Speaker 1: the rest of their lives and their personal savings. Today
Speaker 1: we save for our retirements ourselves. If we work for
Speaker 1: a great company, we're lucky to have them contribute as well.
Speaker 1: But it's defined contribution plans. It's for owen cave plans
Speaker 1: and our personal savings that make us ready for retirement.
Speaker 1: So that's why you see this happening. I think one
Speaker 1: of the interesting things about that story is it does
Speaker 1: show the power of investing over the long term. The
Speaker 1: average age of some of those folks with those the
Speaker 1: million dollar accounts was fifty eight, So it shows the
Speaker 1: power of investing over time and markets that do go
Speaker 1: up over time. So, to put it very bluntly, do
Speaker 1: we know what we're doing? It sounds nice to take
Speaker 1: control of our own retire benefits. At the same time
Speaker 1: when it was our pension plan, we sort of thought
Speaker 1: that were professionals doing what they're doing. I'm not sure
Speaker 1: I'm as good as those pension people are. Does it
Speaker 1: change the way with the market performs? Yes, it does
Speaker 1: so um. Yes, that pension plan had professional management, It
Speaker 1: had a chief financial officer, it had a chief investment
Speaker 1: officer doing running in with very clear institutional disciplines. How
Speaker 1: much do we have to earn, what should our asset
Speaker 1: allocation be, how much do we have to pay out
Speaker 1: to our retirees? Very very disciplined, very mathematical. There's nothing
Speaker 1: that requires us to do that ourselves. There's nothing that
Speaker 1: requires us. We have to embed that ourselves in what
Speaker 1: we do. And that's and that's actually quite a mission
Speaker 1: for us in the wealth management industry. Because consumers are
Speaker 1: sevent the economy. We want them to have very solid
Speaker 1: financial futures, very rewarding retirements, and so we're trying to
Speaker 1: embed all of those institutional disciplines right into wealth management.
Speaker 1: I'm not sure how many of us individuals are paying
Speaker 1: attention to FED, but a lot of the institutional people are.
Speaker 1: We will next week. We paying attention and Jackson Hole,
Speaker 1: which is now gonna be virtual. It turns out they're
Speaker 1: not going to actually get together in Jackson Hole. What
Speaker 1: are you looking for to come out of those meetings?
Speaker 1: So I think we're looking for two things next week.
Speaker 1: One is, of course Jackson Hole, and we look forward
Speaker 1: to Chairman Pali's speech on Friday. Will be very interested
Speaker 1: to see whether he talks about tapering. He may, he
Speaker 1: may not. He may wait a week and get the
Speaker 1: jobs report the first week of September. UM, so we
Speaker 1: might not message anything very clear about tapering. UM. We
Speaker 1: also were looking at the the pc inflation dedicator that
Speaker 1: comes out next Friday, right, the FEDS Preferred measure, you
Speaker 1: know c p I. The rate of increase at CPI
Speaker 1: came down, that will probably come down to That's that's
Speaker 1: an important data point, um. And so we're really looking
Speaker 1: at those things next week. That's Katherine Keating, CEO of
Speaker 1: b n y Melon Wealth Management, coming up. Sometimes the
Speaker 1: tortoise beats the hair. We talked with long term value
Speaker 1: investor John Rodgers of Aerial Investments about what their reflation
Speaker 1: trade means for value stocks and why bigger may not
Speaker 1: necessarily be That's next on Wall Street Week on Bloomberg.
Speaker 1: This is Bloomberg Wall Street Week with David Weston from
Speaker 1: Bloomberg Radio. The growth versus value debate is a long
Speaker 1: standing one, with mega cap growth stocks hogging the spotlight
Speaker 1: in recent years with the star power of names like
Speaker 1: Google and Tesla. The five largest components of the SMP
Speaker 1: five hundred are Apple, Microsoft, Amazon, Facebook, and Alphabet. Here's
Speaker 1: David Leibovitz of JP Morgan Asset Management. We're getting to
Speaker 1: a point where the rest of the market needs to participate.
Speaker 1: It can't be all about five or ten names in
Speaker 1: the SMP five hundred. Even though growth stocks have largely
Speaker 1: outperformed value stocks over the past few years, it didn't
Speaker 1: used to be that way, and value still has a
Speaker 1: place in long term investing strategy. These value stocks are
Speaker 1: still generally cheap and under owned relative to growth stocks.
Speaker 1: So um, you know, I think there's there's a number
Speaker 1: of drivers that it can even be more than interest
Speaker 1: rates and starts of voting value over growth right now.
Speaker 1: That's Jill carry Hall of Bank of America. Economic conditions
Speaker 1: may be ripe for value. Bets on economic recovery bring
Speaker 1: the prospects of higher treasury yields yet to come which
Speaker 1: would tend to lift companies sensitive to the economy overall,
Speaker 1: a trend that began at the end of last year
Speaker 1: when the reflation trade lifted value stocks as the global
Speaker 1: economic recovery began to take shape. Here's City Groups, Tobias Lefkovitch.
Speaker 1: This is a heavy growth market and if you flee
Speaker 1: bondles are going to edge higher, then growth stocks are
Speaker 1: going to take a little bit on the chin. And
Speaker 1: that's why you probably want to be in more value.
Speaker 1: Word Terris. When it comes to value investing, no one
Speaker 1: knows it better or is perhaps more identified with it
Speaker 1: than John Rogers, co CEO of Area Investments, with some
Speaker 1: sixteen point eight billion dollars under management last time I counted.
Speaker 1: And we welcome John now to Wall Street Week. John,
Speaker 1: thank you so much for being with us. Let me
Speaker 1: start with the most basic questions here. We talk about
Speaker 1: value with his growth a lot. But when you take
Speaker 1: a look for value stocks, what are the criteria used
Speaker 1: to say yes, that's in the value bucket? What do
Speaker 1: you look at? Well, first of all, we look at
Speaker 1: what we think is the way that we look at value.
Speaker 1: To want to have a low price earnings multiple, a
Speaker 1: low price to EBA dam multiple And at the end
Speaker 1: of the day, we're looking for new companies that are
Speaker 1: selling it at least at discount to their intrinsic value,
Speaker 1: um what we call our our private market value, and
Speaker 1: we think that's critical to get it more than a discount.
Speaker 1: So let me understand that intrinsic value, because I've seen
Speaker 1: some debate now about how you define value. Some people
Speaker 1: would talk about price to book and say that actually
Speaker 1: that number is somewhat outmoded because tech is sort of
Speaker 1: change the assets you keep on your balance shoot, do
Speaker 1: you look at things like price to book or price
Speaker 1: to cash flow? But we do look at price to
Speaker 1: cash flow for sure. But we also are you know,
Speaker 1: doing the traditional discount to present, you know, discounting future
Speaker 1: cash flows into the future to get to what we
Speaker 1: would look at our private market value. So that's you know,
Speaker 1: people learning business school. And though I didn't go to
Speaker 1: business school, but all of our analysts have and and
Speaker 1: and they really do believe that, you know, looking at
Speaker 1: those future cash flows discounting them back, it's how you
Speaker 1: get to a real true value of a company. So
Speaker 1: when you get to your bucket, if okay, these are
Speaker 1: value stacks. How do you discriminate among them and say, yeah,
Speaker 1: those are the ones that I think are really good
Speaker 1: investments for the future. Those maybe value stacks, but I'm
Speaker 1: not so sure about them. Well, one of the things
Speaker 1: we always borrow from our you know, our hero Warren Buffett.
Speaker 1: We want to make sure that the company truly has
Speaker 1: a real moat around it, so that five to ten
Speaker 1: years from now, you can bet that company is still
Speaker 1: going to be a leader in their field and it
Speaker 1: will be hard for competitors that come and knock them off.
Speaker 1: That's really what we are trying so hard to understand
Speaker 1: is making sure that industry is stable and that company's
Speaker 1: leadership role is going to be stable in the long run.
Speaker 1: Of course, we we make mistakes, and so we want
Speaker 1: to make sure we have a margin the safety in
Speaker 1: case for wrong. So we want to make sure the
Speaker 1: companies have a very very strong own sheet that can
Speaker 1: withstand all types of pressures that happen and that are
Speaker 1: inevitable as our economy goes up and down. And then finally,
Speaker 1: we're trying to look to a management team that we
Speaker 1: think a shareholder friendly, that cares deeply about their shareholders
Speaker 1: as well as their customers as well as their employees.
Speaker 1: So getting to know managements is an important part of
Speaker 1: our research. Going out and visiting companies, talking to management
Speaker 1: teams every quarter, understanding understanding their strategy and their plans
Speaker 1: to win is an important part of our analysis. John,
Speaker 1: I think one of the big changes, certainly since maybe
Speaker 1: two thousand eight, maybe four, but I think it's two
Speaker 1: thousand eight, has been the role of government, first on
Speaker 1: the monetary side and the fiscal side, and really being
Speaker 1: involving themselves in the economy. And so people said the
Speaker 1: referee is now joined the game. Has that changed the
Speaker 1: calculus when it comes to value, when you know that
Speaker 1: you can have the massive, massive, sort of fiscal and
Speaker 1: monetary stimulus, well, we think that has certainly made it
Speaker 1: very difficult over the last you know, twelve or thirteen years.
Speaker 1: You're right, since the financial crisis. The FED is in,
Speaker 1: you know, is injected so much liquidity into the market.
Speaker 1: They've kept interest rates historically low for historic length of time,
Speaker 1: and that makes the value of growth stocks, you know,
Speaker 1: look relatively cheap. You know, the SMP at twenty one
Speaker 1: times earnings is not overvalued if if interest rates stay
Speaker 1: this low. But we do think inevitably all the stimulus,
Speaker 1: it's got to have an impact on inflation. And as
Speaker 1: we think about all the new things that are being
Speaker 1: contemplated now by government to throw even more recent sources
Speaker 1: at our economy, that ultimately that's going to cause higher inflation,
Speaker 1: That will cause higher interest rates and be a reason
Speaker 1: why growth stocks will start to underperform because so much
Speaker 1: of their earnings power comes out into the future, and
Speaker 1: if you have higher rates, those future earnings are not
Speaker 1: worth as much today. John, those of us in business
Speaker 1: and financial news like to think that we're providing information
Speaker 1: and making better helping people make better decisions with investments.
Speaker 1: But I wonder sometimes we might skew this system a bit.
Speaker 1: We tend to cover the really big ones. You know,
Speaker 1: when somebody goes over a trillion dollars in market cap, boy,
Speaker 1: they get a lot of attention. Some people have balloons
Speaker 1: coming down at things. But touch us about large versus small,
Speaker 1: because I think you have a somewhat different view about this.
Speaker 1: Well from the very beginning, when when we started Aerial
Speaker 1: thirty eight years ago, we were heavily influenced by the
Speaker 1: place that I used to work. William Blair you know,
Speaker 1: Mr Blair used to always talk about the fact that
Speaker 1: smaller companies should be able to grow faster than larger companies,
Speaker 1: and we still believe that today they can be more nimble,
Speaker 1: they can be able to take advantages of market opportunities
Speaker 1: when you're small and nimble. But secondly, smaller companies are
Speaker 1: less well researched. They were less well researched, uh forty
Speaker 1: years ago, and they're still less well researched. They're not
Speaker 1: as well followed. So you can find some inefficiencies in
Speaker 1: the small cap sector. And even today, the amount of
Speaker 1: research in the small cap sector, as you suggest, have
Speaker 1: gotten less and less and less. People are just not
Speaker 1: following these sort of neglected companies the way they follow
Speaker 1: the large growth companies that have been so popular that
Speaker 1: are the multi trillion dollar companies. So you can do
Speaker 1: your own homework, do thorough research and find these undiscovered gyms.
Speaker 1: We think in that small kept sector today more than ever,
Speaker 1: and that's why we continue to fish in that same
Speaker 1: fishing pod. That's John Rodgers, the chairman and co CEO
Speaker 1: of Aerial Investments. Coming up. Greg Fleming of Rockefeller Capital
Speaker 1: Management on where high net worth individuals are putting their
Speaker 1: money in a low return world. That's next on Wall
Speaker 1: Street Week on Bloomberg. This is Bloomberg Wall Street Week
Speaker 1: with David Weston from Bloomberg Radio. Investors of all sorts
Speaker 1: struggle these days to find yield and places where they
Speaker 1: can get paid for the risks that they're taking. Greg
Speaker 1: Fleming is president of Rockefeller Capital Management, managing assets of
Speaker 1: some billion dollars at least that's the last time I checked.
Speaker 1: And it's his job to find those opportunities that aren't
Speaker 1: quite so obvious, especially for high net worth individuals. Rockefeller
Speaker 1: grew out of the family office of John D. Rockefeller,
Speaker 1: the oil magnet, and we welcome Greg now to Wall
Speaker 1: Street Week. Thank you so much for being with us.
Speaker 1: Greg is a big shoes, You have the filler with
Speaker 1: John D. Rockefeller. But give us the sense as you
Speaker 1: talked to these high that with individuals, what are they
Speaker 1: looking for and where where are you finding it? That's
Speaker 1: good to be here, David, is good to see you,
Speaker 1: m David. Our clients are primarily high net worth individuals
Speaker 1: and family and even into the altar high network category,
Speaker 1: and we work with them through private wealth advisors that
Speaker 1: deal with the client UH and their investment needs in
Speaker 1: the near term all the way through to retirement generational planning.
Speaker 1: So we take a long horizon with our private wealth
Speaker 1: teams UH, and when we look at the world today,
Speaker 1: given as you said, you set it up well with
Speaker 1: a low rate environment. If anything, rates are going to
Speaker 1: go higher from here. You have equity markets that have
Speaker 1: both volatility and they have been on any historical measure,
Speaker 1: pretty fully priced UH in certain parts of the ecuty markets.
Speaker 1: So what we cancel our clients on, even that they
Speaker 1: can handle the irequidity that comes with alterna investments is
Speaker 1: to put a portion of their assets with besting class
Speaker 1: alternative managers across the range of different investment strategies and
Speaker 1: sometimes that even extends to investing rightly in companies that
Speaker 1: are doing capital raising rounds on a direct basis. So
Speaker 1: we think UH, Briana wor all linet work investors, it's
Speaker 1: important to have a the percentage of their assets in
Speaker 1: alternative investments for investing class managers who spent a lot
Speaker 1: of time researching different managers and different strategies, and then
Speaker 1: our private wealth teams bring those investments to our AP clients.
Speaker 1: So Greg just educate me on this. When I hear
Speaker 1: alternative investments, I think I'm giving up some liquidity. Those
Speaker 1: tend to be things where I have to commit some
Speaker 1: money for some period of time, sometimes for a long
Speaker 1: period of time. Is that and if so, what's the
Speaker 1: trade off there? Particularly at uncertain times where there's a
Speaker 1: fair amount of hoolatility, they do tend to be more
Speaker 1: ill liquid in the investment horizon is often longer, certainly
Speaker 1: than a publicly available security, whether it's a stock or
Speaker 1: a bond. So there's no question that that's what uh
Speaker 1: you're you're giving up when you when you move into
Speaker 1: alternate investments. But those investments that are made, whether it's
Speaker 1: a private equity manature or even a hedge fund, they
Speaker 1: tend to be made with a longer term investment horizon
Speaker 1: mind um. And it allows the investor to access these
Speaker 1: managers who are investing through the cycle, if you will, David, So,
Speaker 1: we think it's an important, uh editive part of an
Speaker 1: investment plan or highnet work multi hignetwork investors who don't
Speaker 1: have to access the full range of the portfolio on
Speaker 1: on a real time dear term basis. So so Greg
Speaker 1: at Bloomberg here. We had an interview this week with
Speaker 1: the head of the our Norwegian Sovereign Wealth fund, who
Speaker 1: manages a fair amount of money. I think it's fair
Speaker 1: to say believe it's the largest in the world. And
Speaker 1: what he said was he thought the biggest threat to
Speaker 1: his portfolio, and that's on the fixed income side and
Speaker 1: an equi side, is inflation. At this point, do you
Speaker 1: agree with that and if so, how do you take
Speaker 1: that into account as you make investments. You know, I
Speaker 1: think that inflation and he's probably what he's doing is
Speaker 1: he's saying inflation, which will ultimately lead to higher rates,
Speaker 1: is the threat to his investment portfolio. And this is
Speaker 1: why the FED is working hard to thread this, David.
Speaker 1: They wanted some near term inflation here for multiple reasons, UH,
Speaker 1: including trying to avoid the UH deflationary trappic that Japan
Speaker 1: is legally for so long, and to get some pricing
Speaker 1: power in the hands of the company. So they wanted
Speaker 1: and they hung with this, I think UH for for
Speaker 1: some time to get some inflation in the system. But
Speaker 1: if it goes too far and if it becomes something
Speaker 1: and you know, people forget the inflation is also about
Speaker 1: X patients and earlier in our lives and careers, there
Speaker 1: will more inflation. And when there's a sense of inflation,
Speaker 1: if it starts to get built into the system, then
Speaker 1: it does tend to uh me be harder to move.
Speaker 1: And also, you know, you factor in uh the increase
Speaker 1: in home price uh home prices and home price sales
Speaker 1: for distening home over the last year, you've had real
Speaker 1: inflation in the economy. So he's looking at it and
Speaker 1: he's worried about the fact that if it gets ahead
Speaker 1: of the Fed and the Fed has to start raising rates,
Speaker 1: that's obviously difficult for fixed income investments, but it also
Speaker 1: tends to revising rate environment is a harder thing on
Speaker 1: equity markets as well. So that's why he's saying, wait
Speaker 1: a minute. If inflation starts to move, and if it
Speaker 1: gets ahead of the central bankers and interest rates follow,
Speaker 1: which they will necessarily happen at that point, that could
Speaker 1: be problematic for both sides. UH good portfolio. That's Gregg
Speaker 1: Fleming of Rockefeller Capital Management coming up. We ra up
Speaker 1: the week with special contributor Larry Summers of Harvard. That's
Speaker 1: next on Wall Street Week on Bloomberg. This is Bloomberg
Speaker 1: Wall Street Week with David Weston from Bloomberg Radio. We
Speaker 1: have a lot to go over this week with our
Speaker 1: special contributor Larry Summers at Harvard, So Larry, let's get
Speaker 1: right to it. The biggest story of the week, I
Speaker 1: think on the headlines every single day was Afghanistan. It's
Speaker 1: a political, geopolitical, real crisis. I may say, are there
Speaker 1: any economic ramifications? Do you see? Two comments, David, if
Speaker 1: this affects the broad perception of the administration, that could
Speaker 1: have economic consequences. If you look back to the fall
Speaker 1: of Saigon, no major economic consequences that followed that, and
Speaker 1: rather remarkably, uh month and a half afterwards, the president's
Speaker 1: popularity was up by ten points. Here's what people aren't
Speaker 1: paying at Engine two. The Taliban is going to find
Speaker 1: its victory very challenging. Afghanistan was an economy supported largely
Speaker 1: by foreign aid. That foreign aid, the US spending from
Speaker 1: its troop presence. All of that is going to dry up,
Speaker 1: and that's gonna make governing Afghanistan extremely difficult, and it
Speaker 1: may a few months from now be a source of
Speaker 1: leverage for people on the outside with respect to what
Speaker 1: happens there. They've got big economic challenges ahead much larger
Speaker 1: than people are recognizing. Larry, having been in Washington, take
Speaker 1: your first point. Do you think this puts some of
Speaker 1: President Biden's build back Better plan in jeopardy up on
Speaker 1: the hill? I think the linkages between foreign policy and
Speaker 1: domestic policy tend to be smaller than foreign policy people think.
Speaker 1: And you know, it will all hinge on what happens
Speaker 1: over the next couple of weeks. And we've had a
Speaker 1: tough few days and may well be the next few
Speaker 1: days we're going to be even uh tougher. But if
Speaker 1: we are substantially successful with respect to uh the evacuations,
Speaker 1: and this doesn't dent the president's overall standing, I don't
Speaker 1: think the effect is going to be very large. If
Speaker 1: the president loses ten approval points, all bets are off
Speaker 1: on his ability to move major legislation. But it's really
Speaker 1: an indirect effect through what it means for the president's approval,
Speaker 1: which is the coin of the realm in terms of
Speaker 1: presidential power. Lear. Another story in the news throughout the
Speaker 1: week has been COVID nineteen the delta variant, including now
Speaker 1: the recommendations about booster shots for people who are already
Speaker 1: fully vaccinated you were one of the very first that
Speaker 1: I knew at least the spot this pandemic on the rise.
Speaker 1: Give us your sense about where we are in COVID
Speaker 1: and specifically on booster shots. Something we talked about last
Speaker 1: week on Wall Street Week, which is, if we give
Speaker 1: the shots to booster shots, then what do we do
Speaker 1: for the rest of the world that is not vaccinated
Speaker 1: at all? Look, I think this is as clear a
Speaker 1: case as I've ever seen for where we need to
Speaker 1: shift from a policy of either or to a policy
Speaker 1: of both. And UH. It is not remotely tenable for
Speaker 1: a US president to heed the advice of the who
Speaker 1: that somehow he shouldn't do what he thinks is necessary
Speaker 1: for the health of American children and American seniors in
Speaker 1: order to vaccinate people abroad. That's not how countries operate.
Speaker 1: It's not how the United States will or should operate.
Speaker 1: On the other hand, there is no reason why we
Speaker 1: can't be launching big initiatives in tandem around both UH,
Speaker 1: the booster shots at home and about supporting resilience capacity,
Speaker 1: exporting vaccines and all that goes with UH responding to
Speaker 1: the pandemic. And so I'd like to see the United
Speaker 1: States be much more in the lead on the global
Speaker 1: effort at the same time that we're redoubling our efforts
Speaker 1: at home. I think that's the only way UH forward.
Speaker 1: If we pose this as a choice between American eight
Speaker 1: year olds and UH kids in developing UH countries and
Speaker 1: societies that are falling apart, that kind of hardheartedness and
Speaker 1: hardheadedness will come back to haunt us for a very
Speaker 1: long time. Larry, Investors in the States clear, we're paying
Speaker 1: attention to China this week because China seems to be
Speaker 1: clamping down on yet another industry almost every day. We
Speaker 1: started with tech, and then we went on to things
Speaker 1: like media with reports they're gonna clamp down to that,
Speaker 1: and now we're talking about cosmetics and liquor manufacturers. It's
Speaker 1: raising questions in some people's mind. Golden Sex, a lot
Speaker 1: of said the government. Sex said a lot of their
Speaker 1: customers are asking, is China investi at this point? Just
Speaker 1: because Beijing's seems to be almost capricious. Look, every investor
Speaker 1: will have to make their make their own judgment. Those
Speaker 1: who are serene about China remind me of those who
Speaker 1: are serene about inflation. Bad things keep happening adverse surprises
Speaker 1: keep happening, and they keep explaining them in terms of
Speaker 1: specific factors and resisting the idea that there's some kind
Speaker 1: of emergent general pattern. And I think there is an
Speaker 1: emergent general pattern. Uh. Not that China is going back
Speaker 1: uh to Mao, Uh, not that China is going to
Speaker 1: entirely renounce the market system, but I think the risks
Speaker 1: for foreign investors are going up and have to be
Speaker 1: going up at a time when the greater insertion of
Speaker 1: the Communist Party into every private enterprise is emerging as
Speaker 1: a very important priority for the Chinese government. So it's
Speaker 1: certainly a riskier environment. And I think when you have
Speaker 1: a riskier environment, people demand much higher returns. And then
Speaker 1: there's a question as to whether, given the tensions between
Speaker 1: our nations, the much higher returns that are necessary to
Speaker 1: compensate for much greater risks are going to be politically
Speaker 1: sustainable for a long time in China. So I think uh,
Speaker 1: anxiety is the right thing. And conclusion, let's go through
Speaker 1: a rapid round if Summer says here, and we'll do
Speaker 1: a little bit differently and three different topics. Let's take
Speaker 1: a look at better or worse one week at, one month,
Speaker 1: at six months out. Start with Afghanistan. Do you think
Speaker 1: one week, one month, six months out, it's gonna be
Speaker 1: better or worse, worse, worse, worse, worse better, Okay, six
Speaker 1: months worse, worse, worse, worse better, six months six months out.
Speaker 1: I think that we're going to have more leverage than
Speaker 1: we realize. Then people think we're going to have as
Speaker 1: the challenge of governing Afghanistan. UH is there for the
Speaker 1: Taliban and they become dependent for various kinds of economic
Speaker 1: assistance on the rest of the world. Okay, Afghanistan's number one,
Speaker 1: number two is COVID once again, one week out, one
Speaker 1: month out, six month out, better or worse, um about
Speaker 1: the same, worse better, UH? I think it's UH. I
Speaker 1: think we're clearly in the midst of an upsurge from delta.
Speaker 1: But I think the dynamics around vaccination will change, and
Speaker 1: I think as more and more people tragically are infected,
Speaker 1: more and more people will have a period of immunity.
Speaker 1: So I think we're gonna be further down the road
Speaker 1: towards a new somewhat unfortunate equilibria where UH COVID is
Speaker 1: like a second flu, but it is less paralyzing of
Speaker 1: society six months from now. Okay, one more the economy.
Speaker 1: Give us your read one week out, one month out,
Speaker 1: six months out, better or worse. I think it's going
Speaker 1: to get more difficult UH combination of UH COVID of COVID,
Speaker 1: rising UH price pressures UH financial markets that are priced
Speaker 1: UH for perfection. I don't think it gets much better
Speaker 1: from here anytime soon. We'll see some further reductions and unemployment,
Speaker 1: but I think the mood UH is probably gonna get
Speaker 1: so earlier UH pretty continuously over the next six months. Okay,
Speaker 1: there you happy. That's what Summers says. Thank you so
Speaker 1: much to our special contributor, Larry Summers of Harvard. Finally
Speaker 1: one more thought baseball as a science or not. Steve
Speaker 1: Cohen made his name as an immensely successful hedge fund manager,
Speaker 1: so when he bought the New York Mets, no one
Speaker 1: thought he did it to lose, something he confirmed at
Speaker 1: his first news conference as owner. I want to thank
Speaker 1: my fellow Met fans, the greatest fans in baseball. Your
Speaker 1: support has been incredible. You want us to win the
Speaker 1: World Series, and so do I. New York fans have
Speaker 1: high expectations and I want to exceed them. I want
Speaker 1: an exceptional team. I want a team that's built to
Speaker 1: be great every year. I don't just want to get
Speaker 1: into the playoffs. I want to win a championship. And
Speaker 1: for three months this season, it looked like Steve Cohen
Speaker 1: was going to get his wish, as the Mets led
Speaker 1: the National League East. But then then they had a
Speaker 1: bad road trip and dropped out of first, the second,
Speaker 1: and then the third, falling below five hundred. So Steve
Speaker 1: Cohen does what he does best. He applied the math,
Speaker 1: the medical prowess that made him a billionaire, analyzed his team,
Speaker 1: and took to Twitter saying, quote, it's hard to understand
Speaker 1: how professional hitters can be this unproductive. The best teams
Speaker 1: have a more disciplined approach. The slugging and OPS numbers
Speaker 1: don't lie. Now, for those of us who don't really
Speaker 1: follow baseball stats, OPS is a combination of on base
Speaker 1: and slugging percentage. Mr. Cohen's rigger in analyzing Smiths brings
Speaker 1: back memories of Billy being in Moneyball when he brought
Speaker 1: in a young economist to help remake his Oakland A's
Speaker 1: after concluding that the only way they had to go
Speaker 1: was up, and who knows, maybe Mr Cohen is onto something.
Speaker 1: Hours after he publicly called the Mets out, they came
Speaker 1: from behind to beat the Giants in an extra innings
Speaker 1: twelve innings, three precise. That does it for this episode
Speaker 1: of Wall Street Week. I'm David Weston, This is Bloomberg.
Speaker 1: See you next week.