1 00:00:00,240 --> 00:00:02,440 Speaker 1: This is Bloomberg Wall Street Week. 2 00:00:02,480 --> 00:00:04,400 Speaker 2: I mean, may not have an overall recession. We're having 3 00:00:04,400 --> 00:00:06,760 Speaker 2: a rolling recession. To Kanye Roll looks pretty strongly. It 4 00:00:06,800 --> 00:00:09,000 Speaker 2: is when it comes to jobs, the financial stories that 5 00:00:09,119 --> 00:00:12,640 Speaker 2: shape our work. Three major regional bank failures send shockwaves 6 00:00:12,680 --> 00:00:14,880 Speaker 2: through the banking system. We're all trying to figure out 7 00:00:14,880 --> 00:00:17,000 Speaker 2: what to make of generative AI. 8 00:00:16,920 --> 00:00:19,320 Speaker 1: Through the eyes of the most influential voices. 9 00:00:19,440 --> 00:00:22,400 Speaker 2: Welcome down, Doctor Paul Krugman, Ryan moynihan, Bank of America, 10 00:00:22,560 --> 00:00:25,279 Speaker 2: deebro Lair of the Paulson Institute, well then Hubbard of 11 00:00:25,280 --> 00:00:26,280 Speaker 2: the Columbia Business School. 12 00:00:26,280 --> 00:00:30,120 Speaker 1: Bloomberg Wall Street Week with David Weston from Bloomberg Radio. 13 00:00:30,320 --> 00:00:34,559 Speaker 2: Stubborn Inflation, TikTok and the crosshairs and round two of 14 00:00:34,640 --> 00:00:37,839 Speaker 2: Biden versus Trump. This is Bloomberg Wall Street Week. I'm 15 00:00:37,920 --> 00:00:41,960 Speaker 2: David Weston. This week Harvard economist Ken Rogoff. I mean 16 00:00:42,040 --> 00:00:44,720 Speaker 2: economic policies at issue in November's election. 17 00:00:45,040 --> 00:00:48,120 Speaker 3: They're certainly the two most protection as presidents in a 18 00:00:48,159 --> 00:00:48,720 Speaker 3: long time. 19 00:00:49,040 --> 00:00:52,000 Speaker 2: Cushman and Wakefield CEO Michelle McKay on the state of 20 00:00:52,000 --> 00:00:53,640 Speaker 2: the commercial real estate business. 21 00:00:53,920 --> 00:00:55,880 Speaker 4: You think that the struggle for all of us is 22 00:00:55,920 --> 00:00:57,520 Speaker 4: that it's a gray zone out there. 23 00:00:57,640 --> 00:01:00,520 Speaker 2: And Elizabeth Economy of the Hooper Institution on what the 24 00:01:00,600 --> 00:01:04,520 Speaker 2: fourteenth National People's Congress told us about the Chinese economy. 25 00:01:04,640 --> 00:01:07,720 Speaker 5: It's about control, control over the economy, and I'd say 26 00:01:07,760 --> 00:01:09,319 Speaker 5: control over the information space. 27 00:01:21,920 --> 00:01:25,360 Speaker 2: But we begin with the most populous country in the world, India, 28 00:01:25,400 --> 00:01:28,000 Speaker 2: which has now past China in people and for some 29 00:01:28,360 --> 00:01:31,120 Speaker 2: is an alternative to China for investment. Henry Vey is 30 00:01:31,160 --> 00:01:34,039 Speaker 2: head of Global Macro and Asset Allocation for KKAR and 31 00:01:34,080 --> 00:01:37,200 Speaker 2: it's just returned from the subcondent. So Henry, welcome back. 32 00:01:37,240 --> 00:01:40,160 Speaker 2: Good to have you here. It's a fascinating note you write, 33 00:01:40,160 --> 00:01:42,200 Speaker 2: because you did this twelve years ago. How has it 34 00:01:42,360 --> 00:01:45,320 Speaker 2: changed India since you did the first time in depth. 35 00:01:45,440 --> 00:01:47,280 Speaker 6: Yeah, when we had first when I first joined k 36 00:01:47,360 --> 00:01:49,480 Speaker 6: Aaron twenty eleven twelve, we reade a piece and we 37 00:01:49,520 --> 00:01:51,960 Speaker 6: said this is what India needs to do to hit 38 00:01:52,000 --> 00:01:55,480 Speaker 6: its potential. One of them was invest in infrastructure. The 39 00:01:55,560 --> 00:01:59,360 Speaker 6: second was reduced its deficits. It had twin deficits. And 40 00:01:59,400 --> 00:02:02,320 Speaker 6: the third was stop subsidizing everything and let the real 41 00:02:02,360 --> 00:02:05,360 Speaker 6: economy do its thing. And you know, I was just 42 00:02:05,440 --> 00:02:08,720 Speaker 6: back there recently, and you can see from our piece. 43 00:02:08,840 --> 00:02:10,400 Speaker 6: I mean they have done those. I mean a lot 44 00:02:10,440 --> 00:02:13,800 Speaker 6: of credit to Modi. He's done an excellent job. But 45 00:02:13,840 --> 00:02:17,280 Speaker 6: when you look at it right now, massive investment and infrastructure, 46 00:02:17,320 --> 00:02:20,399 Speaker 6: particularly around roads, which is critical to that that economy. 47 00:02:20,480 --> 00:02:23,600 Speaker 6: Second is around data and making sure that you can 48 00:02:23,639 --> 00:02:26,520 Speaker 6: actually have the you know, technology do what it's supposed 49 00:02:26,520 --> 00:02:28,720 Speaker 6: to do as it relates to the Internet. And then 50 00:02:28,840 --> 00:02:31,760 Speaker 6: and then finally, I think about all the stuff around 51 00:02:31,840 --> 00:02:34,240 Speaker 6: the rule of law and making a better bankruptcy court. 52 00:02:34,320 --> 00:02:37,080 Speaker 6: You know, that's something where people foreign capital now wants 53 00:02:37,080 --> 00:02:39,440 Speaker 6: to be in India, and it's more, it's more active, 54 00:02:39,480 --> 00:02:41,760 Speaker 6: and so it's a pretty good environment right now. As 55 00:02:41,919 --> 00:02:43,680 Speaker 6: as you mentioned, a lot of people are thinking where 56 00:02:43,720 --> 00:02:46,560 Speaker 6: can I get emerging markets growth? And what you see 57 00:02:46,639 --> 00:02:50,120 Speaker 6: is while I'm talking about this, this latest update, India's 58 00:02:50,280 --> 00:02:53,079 Speaker 6: you know, public equity markets have been outperforming by about 59 00:02:53,480 --> 00:02:56,079 Speaker 6: seven hundred basis points for the last ten years. So 60 00:02:56,160 --> 00:02:58,640 Speaker 6: this story, it's a growing one. It's getting better, but 61 00:02:58,680 --> 00:02:59,519 Speaker 6: it's not a new one. 62 00:02:59,680 --> 00:03:02,360 Speaker 2: So the reforms you talk about, how do they manifest 63 00:03:02,360 --> 00:03:04,960 Speaker 2: themselves in economic numbers? For example growth. By the way, 64 00:03:04,960 --> 00:03:07,280 Speaker 2: we've always concerned about inflation in India. 65 00:03:07,000 --> 00:03:08,480 Speaker 6: Yeah, So there are a couple of things. One is 66 00:03:08,520 --> 00:03:12,280 Speaker 6: real GDP has gone up since the past couple of years. 67 00:03:12,320 --> 00:03:15,560 Speaker 6: There's more consumption in the economy. I think you're seeing 68 00:03:15,600 --> 00:03:17,840 Speaker 6: the rise of the middle class, particularly the middle to 69 00:03:18,680 --> 00:03:21,320 Speaker 6: slightly higher class. They're really starting to spend and they're 70 00:03:21,440 --> 00:03:25,639 Speaker 6: enjoying the benefits of that. The second is everybody now 71 00:03:25,639 --> 00:03:28,520 Speaker 6: has a digital bank account and so the government can 72 00:03:28,560 --> 00:03:32,080 Speaker 6: be much more targeted in terms of doing fiscal subsidies, 73 00:03:32,080 --> 00:03:35,120 Speaker 6: making sure that money has been transferred properly. And then 74 00:03:35,160 --> 00:03:38,280 Speaker 6: the final thing is, unlike China or the United States, 75 00:03:38,520 --> 00:03:42,880 Speaker 6: India has really created a technology platform that as agnostic. 76 00:03:43,200 --> 00:03:47,080 Speaker 6: So their version of Amazon or the search engines is 77 00:03:47,080 --> 00:03:49,680 Speaker 6: actually just to have something that's open to everybody, not 78 00:03:49,920 --> 00:03:54,040 Speaker 6: having one private sector company control that. And over time 79 00:03:54,440 --> 00:03:56,880 Speaker 6: that could be a differentiated model. It's still early days, 80 00:03:56,920 --> 00:03:59,160 Speaker 6: but those would be a couple of big changes we're seeing. 81 00:04:00,080 --> 00:04:04,000 Speaker 2: Economic growth is driven by domestic consumption, something China has 82 00:04:04,120 --> 00:04:07,960 Speaker 2: yet to achieve, as Chinese households continue to emphasize saving 83 00:04:08,240 --> 00:04:11,680 Speaker 2: over spending. But each Waad of Cornell says India would 84 00:04:11,720 --> 00:04:16,000 Speaker 2: need to reinforce that domestic consumption with higher paying manufacturing 85 00:04:16,080 --> 00:04:18,839 Speaker 2: jobs in order to continue its move up the global 86 00:04:18,960 --> 00:04:20,200 Speaker 2: economic ladder. 87 00:04:20,240 --> 00:04:23,920 Speaker 7: India has a much higher rate of household consumption out 88 00:04:23,920 --> 00:04:27,960 Speaker 7: of household income. Now. This is true even though India's 89 00:04:27,960 --> 00:04:33,880 Speaker 7: household saving rate is quite decent and the overall national 90 00:04:33,920 --> 00:04:36,520 Speaker 7: saving rate, however, is not quite on part with China 91 00:04:36,560 --> 00:04:40,440 Speaker 7: because corporations and especially the government don't quite save as 92 00:04:40,520 --> 00:04:44,640 Speaker 7: much as those in China do. But in India, household 93 00:04:44,640 --> 00:04:47,600 Speaker 7: consumption has been a very important driver of growth, and 94 00:04:47,640 --> 00:04:51,160 Speaker 7: in particular with the rising middle class, I think India 95 00:04:51,160 --> 00:04:54,560 Speaker 7: has been counting on consumption to dive growth. The one 96 00:04:54,680 --> 00:04:57,280 Speaker 7: problem that held back India's growth story is that the 97 00:04:57,279 --> 00:04:59,840 Speaker 7: manufacturing sector for a long time was not doing very 98 00:04:59,880 --> 00:05:02,799 Speaker 7: well well and it's hard for an economy to graduate 99 00:05:02,839 --> 00:05:06,520 Speaker 7: from being low income or lower middle income to middle 100 00:05:06,600 --> 00:05:10,440 Speaker 7: or upper middle income status without having a vibrant manufacturing 101 00:05:10,440 --> 00:05:13,919 Speaker 7: sector that can generate high paying jobs. India's beginning to 102 00:05:13,960 --> 00:05:16,000 Speaker 7: get there, so it's not only that the middle class 103 00:05:16,040 --> 00:05:20,000 Speaker 7: is expanding, but highway jobs are rising. So overall, I 104 00:05:20,040 --> 00:05:23,080 Speaker 7: think the consumption story is much better in India than 105 00:05:23,080 --> 00:05:23,920 Speaker 7: it is in China. 106 00:05:24,080 --> 00:05:25,760 Speaker 6: The good thing is they don't have to start by 107 00:05:25,760 --> 00:05:29,000 Speaker 6: increasing from exports to consumption. The economy is almost I 108 00:05:29,000 --> 00:05:32,200 Speaker 6: think sixty five to seventy percent consumption to start off with, 109 00:05:32,320 --> 00:05:36,120 Speaker 6: so it's really about increasing GDP per capita. That's why 110 00:05:36,160 --> 00:05:38,480 Speaker 6: it's so important they keep inflation now because you need 111 00:05:38,520 --> 00:05:41,960 Speaker 6: to see real GDP per capita go up, which is 112 00:05:42,080 --> 00:05:45,840 Speaker 6: tough in an economy that often has often has inflation. 113 00:05:46,279 --> 00:05:49,080 Speaker 6: The second thing is they've done things around taxation to 114 00:05:49,120 --> 00:05:51,400 Speaker 6: make sure there's something called the GST tax where it's 115 00:05:51,440 --> 00:05:54,880 Speaker 6: made it more efficient so you actually have the ability 116 00:05:54,880 --> 00:05:59,599 Speaker 6: to transport goods across different regions within India. In the past, 117 00:05:59,640 --> 00:06:02,520 Speaker 6: you've had waste and it's taken time and the toll 118 00:06:02,920 --> 00:06:05,080 Speaker 6: on actually getting the goods from one area to the 119 00:06:05,080 --> 00:06:08,359 Speaker 6: other has been much worse. So that's that's improving. And 120 00:06:08,400 --> 00:06:10,440 Speaker 6: then the final thing we're just seeing is there's more 121 00:06:10,480 --> 00:06:13,480 Speaker 6: confidence in the consumer. We have exposure to different types 122 00:06:13,520 --> 00:06:17,000 Speaker 6: of financial services companies in India and actually the loss 123 00:06:17,080 --> 00:06:19,480 Speaker 6: rates are down, so there's a confidence where people they 124 00:06:19,520 --> 00:06:21,880 Speaker 6: want to invest in their businesses, they're actually paying off 125 00:06:21,960 --> 00:06:25,440 Speaker 6: their debts and the consumer is spending a little bit more. 126 00:06:25,839 --> 00:06:28,839 Speaker 2: Economic reforms put in place by Prime Minister Modi's government 127 00:06:28,920 --> 00:06:32,400 Speaker 2: have created the foundation for India's economic progress, resulting in 128 00:06:32,480 --> 00:06:36,159 Speaker 2: improved consumer confidence. But there's a lot more to be done, 129 00:06:36,320 --> 00:06:40,200 Speaker 2: particularly when it comes to growth in per capita income. Again, 130 00:06:40,400 --> 00:06:42,400 Speaker 2: here's east bars of Cornell. 131 00:06:42,720 --> 00:06:44,960 Speaker 7: That's going to be very difficult. The gulf that has 132 00:06:45,040 --> 00:06:49,240 Speaker 7: opened up between India and even China in terms of 133 00:06:49,960 --> 00:06:53,839 Speaker 7: national GDP overall or per capita income, that's going to 134 00:06:53,880 --> 00:06:56,800 Speaker 7: be very difficult to bridge. You know, a couple of 135 00:06:56,839 --> 00:06:59,760 Speaker 7: decades ago, the two economies were in a very similar 136 00:06:59,760 --> 00:07:03,200 Speaker 7: stay is in terms of the upper cabin incomes and 137 00:07:03,240 --> 00:07:06,240 Speaker 7: even in terms of size, China was some that far ahead. 138 00:07:06,880 --> 00:07:10,680 Speaker 7: But right now I think India's per capita income is 139 00:07:11,520 --> 00:07:13,880 Speaker 7: probably around two thousand and two thousand, five hundred dollars, 140 00:07:13,920 --> 00:07:16,680 Speaker 7: which is well below that of China, about a quarter 141 00:07:16,760 --> 00:07:19,000 Speaker 7: of that of China. So that gap is going to 142 00:07:19,040 --> 00:07:22,240 Speaker 7: be difficult to make up. And India is on track, 143 00:07:22,320 --> 00:07:24,400 Speaker 7: perhaps in the next few years, to become the third 144 00:07:24,480 --> 00:07:26,880 Speaker 7: largest economy in the world, but it's still going to 145 00:07:26,920 --> 00:07:29,600 Speaker 7: be a much smaller economy than either China or the 146 00:07:29,760 --> 00:07:30,720 Speaker 7: US GDP. 147 00:07:30,880 --> 00:07:33,640 Speaker 6: Per capita goes up when you get urbanization. People come 148 00:07:33,680 --> 00:07:36,600 Speaker 6: into the cities, they can use their skill sets India 149 00:07:36,640 --> 00:07:40,400 Speaker 6: has got a tremendous amount of skilled workers. They need 150 00:07:40,440 --> 00:07:42,880 Speaker 6: to learn how to incorporate AI into what they're doing. 151 00:07:42,880 --> 00:07:45,400 Speaker 6: They need to integrate into the global economy, but they 152 00:07:45,400 --> 00:07:48,480 Speaker 6: also need to make sure that their wages are protected 153 00:07:48,760 --> 00:07:53,000 Speaker 6: from the inflationary concerns. I think the administration clearly knows 154 00:07:53,040 --> 00:07:55,760 Speaker 6: that in India, but they need to continually focus on 155 00:07:55,800 --> 00:07:58,280 Speaker 6: that to make sure that you're getting kind of a 156 00:07:58,400 --> 00:07:59,960 Speaker 6: rising tide lifting all both. 157 00:08:00,200 --> 00:08:01,679 Speaker 1: Henry is always great to have you on willsher. 158 00:08:01,880 --> 00:08:05,000 Speaker 2: Thank you for beingv That is Henry mcfae of KKR. 159 00:08:05,760 --> 00:08:09,520 Speaker 2: China has just held its fourteenth National People's Congress, setting 160 00:08:09,520 --> 00:08:12,080 Speaker 2: out plans for its economy. Here to take us through 161 00:08:12,080 --> 00:08:15,760 Speaker 2: what we learned, Elizabeth Economy, Hoover Institution's senior fellow, So 162 00:08:15,840 --> 00:08:18,240 Speaker 2: welcome back. Great to have you, Thanks so much, David. 163 00:08:18,320 --> 00:08:19,000 Speaker 2: What did we learn? 164 00:08:19,800 --> 00:08:22,640 Speaker 5: I mean, I think the big takeaway from this NPC 165 00:08:22,920 --> 00:08:25,920 Speaker 5: was basically that economic reform and opening is off the 166 00:08:25,960 --> 00:08:29,040 Speaker 5: table for the foreseeable future. The message coming out of 167 00:08:29,040 --> 00:08:32,360 Speaker 5: the NPC was basically all about state directed party state 168 00:08:32,440 --> 00:08:36,400 Speaker 5: directed investment, you know, investment in the military, investment in 169 00:08:36,480 --> 00:08:39,640 Speaker 5: R and D, investment in advanced manufacturing. You know, we 170 00:08:39,679 --> 00:08:42,480 Speaker 5: even had a reference to a new leap forward, which 171 00:08:42,520 --> 00:08:44,800 Speaker 5: is a kind of unfortunate reference back to the Great 172 00:08:44,880 --> 00:08:48,000 Speaker 5: Leap Forward which killed tens of millions of Chinese people. 173 00:08:48,040 --> 00:08:50,760 Speaker 5: But I think again, there was very little about the 174 00:08:50,800 --> 00:08:54,240 Speaker 5: private sector, very little you know, sort of about welcoming 175 00:08:54,280 --> 00:08:57,199 Speaker 5: back for an investment, and very little about the consumer. 176 00:08:57,520 --> 00:09:00,959 Speaker 5: So it's about control, control over them. And i'd say 177 00:09:01,000 --> 00:09:02,560 Speaker 5: control over the information space. 178 00:09:02,960 --> 00:09:05,280 Speaker 2: What does that mean for growth? Because President g must 179 00:09:05,320 --> 00:09:08,040 Speaker 2: be a little concerned about growth, he's got demographic issues, 180 00:09:08,040 --> 00:09:10,560 Speaker 2: he's got real estate issues, he's got debt issues. He 181 00:09:10,640 --> 00:09:13,080 Speaker 2: must be consider about growth. Is that state control his 182 00:09:13,160 --> 00:09:15,040 Speaker 2: theory about how he's going to get the thing growing again? 183 00:09:15,559 --> 00:09:19,839 Speaker 5: Absolutely? I think it's again it's about investing in technology, right, 184 00:09:19,880 --> 00:09:23,040 Speaker 5: and advanced manufacturing. And so when Chi Jinping talks about, 185 00:09:23,080 --> 00:09:27,319 Speaker 5: you know, marshaling the new productive forces, right, he's very explicit. 186 00:09:27,400 --> 00:09:31,320 Speaker 5: It's about space commerce, it's about evs, it's about AI. 187 00:09:31,720 --> 00:09:34,120 Speaker 5: You know, there's a whole AI plus initiative. Right, They're 188 00:09:34,120 --> 00:09:36,960 Speaker 5: going to integrate AI through all the sectors of the economy. 189 00:09:37,240 --> 00:09:40,520 Speaker 5: It's moving away from the traditional investment in the property sector, 190 00:09:40,559 --> 00:09:44,320 Speaker 5: which as everybody knows has been quite weak and sort 191 00:09:44,360 --> 00:09:49,480 Speaker 5: of you know, oversubscribed into advanced manufacturing, into innovation. So 192 00:09:49,520 --> 00:09:51,880 Speaker 5: that's how he's going to grow the economy. It's relying 193 00:09:51,920 --> 00:09:54,840 Speaker 5: on those coastal provinces where you do have the innovation, 194 00:09:55,040 --> 00:09:59,280 Speaker 5: you do have an incredible manufacturing ecosystem, and leaving the 195 00:09:59,320 --> 00:10:01,280 Speaker 5: rest of the country really to suffer through. 196 00:10:02,320 --> 00:10:05,920 Speaker 2: One challenge President g faces is demographic, as the Chinese 197 00:10:05,920 --> 00:10:10,239 Speaker 2: population ages and the birth rate remains low, which Arrasat 198 00:10:10,400 --> 00:10:13,000 Speaker 2: of Cornell sees as driving the move to invest in 199 00:10:13,040 --> 00:10:16,080 Speaker 2: technology in order to increase productivity. 200 00:10:16,640 --> 00:10:20,760 Speaker 7: They are looking to investment in the defense sector, partly 201 00:10:21,360 --> 00:10:24,920 Speaker 7: for national security reasons, but partly also as a technology play. 202 00:10:25,320 --> 00:10:29,440 Speaker 7: They are very keen to aggressively increase investment in the 203 00:10:29,520 --> 00:10:34,400 Speaker 7: new technology sectors, especially green energy, electric vehicles, and a 204 00:10:34,480 --> 00:10:37,679 Speaker 7: variety of other technologies that are seen as technologies for 205 00:10:37,760 --> 00:10:40,319 Speaker 7: the future. So that's where the real emphasis is going 206 00:10:40,320 --> 00:10:43,800 Speaker 7: to lie, because ultimately, I think the Chinese government recognizes 207 00:10:43,840 --> 00:10:45,720 Speaker 7: that if it wants the economy to grow in a 208 00:10:45,760 --> 00:10:48,839 Speaker 7: sustainable way, it's going to have to generate much better 209 00:10:48,920 --> 00:10:52,480 Speaker 7: productivity growth because investment growth by itself is not going 210 00:10:52,520 --> 00:10:55,000 Speaker 7: to do it. Especially in the property sector and other 211 00:10:55,040 --> 00:10:59,160 Speaker 7: sectors which traditionally used to drive growth, and with weakening demographics, 212 00:10:59,240 --> 00:11:02,679 Speaker 7: productivity is it's really the one thing that can boost 213 00:11:02,960 --> 00:11:04,200 Speaker 7: or at least hold up growth. 214 00:11:04,880 --> 00:11:07,000 Speaker 5: I was in China back in August and had the 215 00:11:07,040 --> 00:11:10,080 Speaker 5: opportunity to meet with a number of senior economic officials. 216 00:11:10,360 --> 00:11:12,920 Speaker 5: I went with Secretary Romando, and you know, we heard 217 00:11:13,000 --> 00:11:15,360 Speaker 5: consistently all the way down from the Premiere down to 218 00:11:15,400 --> 00:11:18,640 Speaker 5: the Minister of Commerce, they welcome for investment, they want 219 00:11:18,760 --> 00:11:21,720 Speaker 5: us business to be there, and they're all holding meetings 220 00:11:21,720 --> 00:11:24,640 Speaker 5: with you know, international business telling them that we welcome you. 221 00:11:25,160 --> 00:11:28,040 Speaker 5: But there are no steps, there are no concrete steps 222 00:11:28,240 --> 00:11:31,040 Speaker 5: being taken to demonstrate that welcome. And so what you 223 00:11:31,160 --> 00:11:34,400 Speaker 5: have is the security apparatus in China taking all sorts 224 00:11:34,440 --> 00:11:37,480 Speaker 5: of measures that in fact are signaling the opposite. And 225 00:11:37,520 --> 00:11:40,880 Speaker 5: so I think there's really a battle between the economic reformers, 226 00:11:41,360 --> 00:11:44,640 Speaker 5: the few that still remain, and the security apparatus. And 227 00:11:44,679 --> 00:11:48,080 Speaker 5: it's really the security apparatus that Sijinping has empowered. And 228 00:11:48,120 --> 00:11:50,400 Speaker 5: so I think in that battle, it's clear that the 229 00:11:50,440 --> 00:11:52,000 Speaker 5: security side of things is winning. 230 00:11:52,120 --> 00:11:54,000 Speaker 2: What are the shape of the Chinese economy is the 231 00:11:54,040 --> 00:11:57,440 Speaker 2: second largest in the world China. The West cannot avoid 232 00:11:57,520 --> 00:11:59,360 Speaker 2: China dealing in China. So what is the US and 233 00:11:59,400 --> 00:12:02,240 Speaker 2: Western pop economically towards China right now? 234 00:12:02,440 --> 00:12:05,079 Speaker 5: I mean, I think, you know, there are many debates 235 00:12:05,120 --> 00:12:07,760 Speaker 5: within the United States alone, but also among our European 236 00:12:07,800 --> 00:12:10,960 Speaker 5: and Asian allies about how do we strike the right balance? 237 00:12:11,040 --> 00:12:12,680 Speaker 5: And I think you know, the code word, of course 238 00:12:12,760 --> 00:12:15,280 Speaker 5: is de risking, right, and what does that mean? And 239 00:12:15,320 --> 00:12:16,880 Speaker 5: how do we look at that? And I think there 240 00:12:16,880 --> 00:12:18,600 Speaker 5: are a number of ways in which you know, we 241 00:12:18,679 --> 00:12:20,960 Speaker 5: in the United States are de risking. I think first 242 00:12:21,160 --> 00:12:24,040 Speaker 5: there's the issue of de risking around national security, and 243 00:12:24,080 --> 00:12:26,280 Speaker 5: that's the most important thing, right we want to make 244 00:12:26,280 --> 00:12:28,400 Speaker 5: sure that whatever it is that we're selling to China, 245 00:12:28,520 --> 00:12:31,120 Speaker 5: or any investing that we're doing there, or any investments 246 00:12:31,160 --> 00:12:33,520 Speaker 5: that they're making here, we are not doing anything that 247 00:12:33,640 --> 00:12:37,800 Speaker 5: is helping them technologically with you know, products that are 248 00:12:37,840 --> 00:12:40,760 Speaker 5: going to potentially undermine our own national security. 249 00:12:41,120 --> 00:12:42,920 Speaker 1: Okay, listen, it's really great to have you with us 250 00:12:42,920 --> 00:12:43,320 Speaker 1: always on. 251 00:12:43,320 --> 00:12:46,199 Speaker 2: Wall Street week That is Elizabeth Economy of the Hoover 252 00:12:46,360 --> 00:12:50,640 Speaker 2: Institution coming up. We go through the weekend the markets 253 00:12:50,679 --> 00:12:54,280 Speaker 2: with Peter Borsh of Computer Trading that's next on Wall 254 00:12:54,280 --> 00:12:55,679 Speaker 2: Street Week on Bloomberg. 255 00:12:56,840 --> 00:13:01,080 Speaker 1: This is Bloomberg Well Street Week with David Weston from 256 00:13:01,200 --> 00:13:07,240 Speaker 1: Bloomberg Radio. 257 00:13:08,559 --> 00:13:10,720 Speaker 2: This is Wall Street Week. I'm David Weston. The markets 258 00:13:10,760 --> 00:13:13,480 Speaker 2: reacted to those stubborn inflation numbers this week, with the 259 00:13:13,520 --> 00:13:15,720 Speaker 2: SMP five hundred down for the second week in a row, 260 00:13:16,040 --> 00:13:18,200 Speaker 2: this time by just over one tenth of percent to 261 00:13:18,280 --> 00:13:21,199 Speaker 2: end at fifty one seventeen. That is still comfortably above 262 00:13:21,240 --> 00:13:24,120 Speaker 2: the median year end number of five thousand from our 263 00:13:24,120 --> 00:13:26,520 Speaker 2: Bloomberg elves. Then that as that gave up seven tens 264 00:13:26,520 --> 00:13:28,960 Speaker 2: of percent, and the yield on the tenure climbed over 265 00:13:29,080 --> 00:13:31,680 Speaker 2: twenty three basis points to end the week at four 266 00:13:31,679 --> 00:13:33,960 Speaker 2: point three percent. Here to explain it all to us 267 00:13:34,040 --> 00:13:37,200 Speaker 2: is Peter Borsch. He's founder and CEO of Computer Trading Corporation. Peter, 268 00:13:37,280 --> 00:13:38,280 Speaker 2: great to have you back with us. 269 00:13:38,559 --> 00:13:39,640 Speaker 1: So what's going on? 270 00:13:39,720 --> 00:13:41,200 Speaker 2: Is it all about those inflation numbers? 271 00:13:41,640 --> 00:13:43,920 Speaker 8: Well, I think it's a way to the evidence, right. 272 00:13:43,960 --> 00:13:46,200 Speaker 8: If you're a macro analyst, you know, you put a 273 00:13:46,200 --> 00:13:49,280 Speaker 8: balance sheet together and say, Okay, what's positive, what's not 274 00:13:49,400 --> 00:13:52,760 Speaker 8: so positive? And I think Wall Street has a fatal 275 00:13:52,760 --> 00:13:57,120 Speaker 8: attraction issue with FED and interest rate cuts, and the 276 00:13:57,120 --> 00:14:00,760 Speaker 8: weight of the evidence continues to suggest that they're not 277 00:14:00,800 --> 00:14:02,520 Speaker 8: going to cut. I was here three months ago and 278 00:14:02,559 --> 00:14:06,160 Speaker 8: they said, oh yeah, let's forecast a cut in three months. 279 00:14:06,160 --> 00:14:09,439 Speaker 8: Three months later, guess what, they have a meeting next 280 00:14:09,480 --> 00:14:12,200 Speaker 8: week and they're going to suggest cutting in June. I 281 00:14:12,200 --> 00:14:14,160 Speaker 8: don't think that's going to happen. The weight of the 282 00:14:14,160 --> 00:14:14,880 Speaker 8: evidence says that. 283 00:14:15,160 --> 00:14:16,679 Speaker 2: So talk about the way of the evidence. And I 284 00:14:16,760 --> 00:14:19,160 Speaker 2: must say, you point something out this fascinating, and that's 285 00:14:19,160 --> 00:14:21,120 Speaker 2: the story of Coco. I'm not sure I would have 286 00:14:21,120 --> 00:14:23,080 Speaker 2: looked at Coco, but if you look at the chart 287 00:14:23,120 --> 00:14:25,239 Speaker 2: on Coco, it's quite extraordinary. 288 00:14:25,880 --> 00:14:30,360 Speaker 8: It's totally extraordinary. But it's one of the seven seas. 289 00:14:30,200 --> 00:14:31,360 Speaker 2: That I look at. 290 00:14:31,720 --> 00:14:39,520 Speaker 8: Cotton, coffee, cocoa, copper, crude, and corn, and those things 291 00:14:39,560 --> 00:14:42,320 Speaker 8: together are a way to the evidence in terms of inflation. 292 00:14:43,240 --> 00:14:47,200 Speaker 8: Six of those seven markets are in uptrends. Only corn 293 00:14:47,680 --> 00:14:50,040 Speaker 8: has been a little bit weak. So that says that 294 00:14:50,040 --> 00:14:52,640 Speaker 8: there's inflationary pressures out there. 295 00:14:52,920 --> 00:14:55,120 Speaker 2: That's what you have to look at. Well, that's the question. 296 00:14:55,200 --> 00:14:57,280 Speaker 2: We put up a chart actually showing the price of 297 00:14:57,280 --> 00:15:00,280 Speaker 2: Coco versus the price of Nvidia, which would I think 298 00:15:00,280 --> 00:15:03,040 Speaker 2: we'd be particularly correlated in any wishype or form if 299 00:15:03,040 --> 00:15:04,840 Speaker 2: they seem to track. Is that just a coincidence? 300 00:15:05,760 --> 00:15:08,560 Speaker 8: Well, I think when you get sort of into supply 301 00:15:08,720 --> 00:15:14,040 Speaker 8: and demand shortages, particularly in commodities, there's nothing that moves 302 00:15:14,120 --> 00:15:18,120 Speaker 8: more quickly. The point being that everybody thinks Navidia is crazy, 303 00:15:18,640 --> 00:15:21,480 Speaker 8: but Coco is crazy, and it can get more crazy. 304 00:15:21,840 --> 00:15:24,800 Speaker 8: And going back to Navidia, if history is a guide, 305 00:15:25,200 --> 00:15:28,840 Speaker 8: it may take overtake Apple in terms of the most 306 00:15:29,360 --> 00:15:31,480 Speaker 8: second most cap stock. I don't think it's going to 307 00:15:31,480 --> 00:15:35,560 Speaker 8: take over Microsoft. What that tells me is that we're 308 00:15:35,600 --> 00:15:40,640 Speaker 8: in a particularly dangerous period in the stock market because 309 00:15:41,080 --> 00:15:45,040 Speaker 8: you don't have this margin of safety when you buy 310 00:15:45,120 --> 00:15:47,800 Speaker 8: after a long down trend, you have a margin of safety, 311 00:15:47,880 --> 00:15:51,040 Speaker 8: right the risk reward buying Navidia here. It may go 312 00:15:51,240 --> 00:15:54,320 Speaker 8: up twenty thirty percent from here, but what's the margin 313 00:15:54,320 --> 00:15:54,800 Speaker 8: of safety. 314 00:15:54,920 --> 00:15:57,160 Speaker 2: You talked about the FEDS meeting coming up next week, 315 00:15:57,320 --> 00:16:00,600 Speaker 2: and we don't expect there to be any movement next week, 316 00:16:00,640 --> 00:16:03,000 Speaker 2: but they'll probably tell us something or signal what's going on. 317 00:16:03,680 --> 00:16:06,560 Speaker 2: There's a lot of concern, including some board members actually, 318 00:16:06,800 --> 00:16:09,600 Speaker 2: about the fact that we have very restrictive interest rates 319 00:16:09,680 --> 00:16:12,800 Speaker 2: right now that actually it will slow the economy down 320 00:16:12,840 --> 00:16:15,440 Speaker 2: too much. And yet the economy doesn't seem he's slowing down. 321 00:16:15,440 --> 00:16:17,920 Speaker 2: The stock market doesn't seem to be slowing down. So 322 00:16:18,160 --> 00:16:19,800 Speaker 2: isn't as restrictive as we think it is. 323 00:16:20,800 --> 00:16:25,040 Speaker 8: So on the surface, right bitcoins at all time high goals, 324 00:16:25,040 --> 00:16:28,240 Speaker 8: at all time high equities are right off, they're all 325 00:16:28,240 --> 00:16:31,840 Speaker 8: time highs. On employment is that continues to track below 326 00:16:31,960 --> 00:16:36,680 Speaker 8: four percent, that doesn't seem very restrictive to me. Atlanta 327 00:16:36,760 --> 00:16:40,880 Speaker 8: GDP came out yesterday over two percent Michigan, and I 328 00:16:40,920 --> 00:16:42,720 Speaker 8: always have to go back to Michigan, of course, go 329 00:16:44,280 --> 00:16:48,360 Speaker 8: their economic inflation expectations came out today at three percent 330 00:16:49,000 --> 00:16:52,600 Speaker 8: and that's been sticky there. So three percent, two percent 331 00:16:52,640 --> 00:16:57,440 Speaker 8: real GDP, that's over five percent. Nominal interest rates the 332 00:16:57,520 --> 00:16:59,840 Speaker 8: ten years only at four point three. If you add 333 00:16:59,840 --> 00:17:03,720 Speaker 8: one real interest rate, you could start seeing them go 334 00:17:03,840 --> 00:17:08,520 Speaker 8: towards six. The two year today made new highs and yields. 335 00:17:08,320 --> 00:17:11,720 Speaker 2: For the year. So the U curve is getting more steep. 336 00:17:12,000 --> 00:17:16,080 Speaker 8: So there's definitely a little bit of uncertainty out there, 337 00:17:16,119 --> 00:17:19,480 Speaker 8: which it goes back to my point on the equity market. 338 00:17:19,560 --> 00:17:21,600 Speaker 2: So what's an investor to do how do you invest 339 00:17:21,600 --> 00:17:22,920 Speaker 2: in that environment. 340 00:17:22,800 --> 00:17:27,560 Speaker 8: The look for that margin of safety. So, in the 341 00:17:27,600 --> 00:17:32,200 Speaker 8: case of the normal investor, if the stock market today 342 00:17:32,320 --> 00:17:36,240 Speaker 8: is above all r l's objective for the end of 343 00:17:36,280 --> 00:17:42,520 Speaker 8: the year, getting a little bit defensive is okay. 344 00:17:41,640 --> 00:17:44,240 Speaker 2: Take some money off the table. Absolutely, that's a share 345 00:17:44,359 --> 00:17:46,000 Speaker 2: say you would not be fully invested right now. 346 00:17:46,840 --> 00:17:49,240 Speaker 8: I'm never fully invested because you need to be diversified. 347 00:17:49,680 --> 00:17:52,719 Speaker 2: There's always some opportunity out there, you hope, right, that's right, Okay, 348 00:17:52,840 --> 00:17:54,360 Speaker 2: where are you looking for opportunities right now? 349 00:17:55,040 --> 00:17:59,080 Speaker 8: Well, I think unfortunately, the energy market seems to have 350 00:17:59,160 --> 00:18:02,359 Speaker 8: a little bit of some legs behind it. You're going 351 00:18:02,400 --> 00:18:06,240 Speaker 8: into the summer driving season, and gasoline seems to be 352 00:18:06,760 --> 00:18:08,919 Speaker 8: breaking out. If I were going to buy something with 353 00:18:08,960 --> 00:18:11,080 Speaker 8: a bit of a margin of safety in case as there, 354 00:18:11,240 --> 00:18:14,360 Speaker 8: that would be the agriculture markets, which I just said, Corn. 355 00:18:14,440 --> 00:18:15,080 Speaker 9: There you have it. 356 00:18:15,200 --> 00:18:16,680 Speaker 2: Thank you so much, Peter. Always great to have you 357 00:18:16,720 --> 00:18:21,040 Speaker 2: with us. That's Peter Borsh of computer trading. Commercial real estate. 358 00:18:21,359 --> 00:18:24,160 Speaker 2: It's been hit from two sides. First when the pandemic 359 00:18:24,280 --> 00:18:26,920 Speaker 2: drove people from their offices, and then when the FED 360 00:18:27,160 --> 00:18:28,960 Speaker 2: rate hikes took values down. 361 00:18:29,880 --> 00:18:33,760 Speaker 10: Office commercial real estate and urban areas is suffering a 362 00:18:33,840 --> 00:18:35,800 Speaker 10: lot of its Some of it's interest rate, some of 363 00:18:35,840 --> 00:18:39,240 Speaker 10: it's just the transition to remote work and hybrid work 364 00:18:39,640 --> 00:18:42,480 Speaker 10: is reducing demand for office space and creating high vacancy 365 00:18:42,600 --> 00:18:46,600 Speaker 10: rates and stress for the landlords. And then if they 366 00:18:46,640 --> 00:18:49,119 Speaker 10: have to refinance about it. I got to have a 367 00:18:49,200 --> 00:18:52,680 Speaker 10: train is refinancing this year, refinance at higher rates. 368 00:18:53,280 --> 00:18:56,280 Speaker 2: Which puts pressure on the regional banks that had financed 369 00:18:56,280 --> 00:18:57,639 Speaker 2: the deals in the first place. 370 00:18:58,600 --> 00:19:03,600 Speaker 5: I believe it's manageable, although there may be some institutions 371 00:19:04,160 --> 00:19:06,199 Speaker 5: that are quite stressed by this problem. 372 00:19:06,359 --> 00:19:08,800 Speaker 2: It wouldn't stun me if a banker too ended up 373 00:19:08,840 --> 00:19:13,440 Speaker 2: wrong footed, But some like San Francisco FED president Mary Daily, 374 00:19:13,600 --> 00:19:16,119 Speaker 2: say the problem is pretty much limited to office space 375 00:19:16,280 --> 00:19:17,720 Speaker 2: in some urban areas. 376 00:19:18,600 --> 00:19:20,879 Speaker 11: Commercial real estate's a big name for a lot of 377 00:19:20,960 --> 00:19:24,159 Speaker 11: different segments. So if you're an industrial and warehousing space, 378 00:19:24,680 --> 00:19:26,400 Speaker 11: you're feeling very good about. 379 00:19:26,200 --> 00:19:26,800 Speaker 8: Things right now. 380 00:19:27,160 --> 00:19:31,000 Speaker 11: If you're in retail space or even multi family housing 381 00:19:31,119 --> 00:19:34,480 Speaker 11: out in suburban areas, then you're feeling really good. 382 00:19:35,800 --> 00:19:38,560 Speaker 2: And Daily believes that even the troubled parts of commercial 383 00:19:38,600 --> 00:19:40,960 Speaker 2: real estate may be ready for a rebound. 384 00:19:41,440 --> 00:19:46,240 Speaker 11: I see private equity money, venture money, sitting on the sidelines, 385 00:19:46,520 --> 00:19:48,639 Speaker 11: ready to come in when the price is right. So 386 00:19:48,760 --> 00:19:52,480 Speaker 11: there'll be some repricing, there'll be some loss of valuations 387 00:19:52,600 --> 00:19:56,440 Speaker 11: for sure, but it doesn't seem today to be the 388 00:19:56,560 --> 00:19:59,280 Speaker 11: kind of disorderly adjustment that you would worry about. 389 00:20:01,320 --> 00:20:03,159 Speaker 2: And here to take us through the world of commercial 390 00:20:03,160 --> 00:20:05,520 Speaker 2: real estate is a true expert. She is Michelle mackay, 391 00:20:05,680 --> 00:20:08,679 Speaker 2: CEO of Cushman Wakefield. So welcome. Good to have you here, Michelle, 392 00:20:08,720 --> 00:20:10,480 Speaker 2: Thanks for having me. So we've heard an awful lot 393 00:20:10,520 --> 00:20:12,960 Speaker 2: about commercial real estate in recent months, not all of 394 00:20:13,000 --> 00:20:15,880 Speaker 2: it good. Give us your perspective from Cushman Wayfield because 395 00:20:15,880 --> 00:20:17,399 Speaker 2: you have a particular way of looking at it. 396 00:20:17,600 --> 00:20:19,560 Speaker 4: Yeah, I do, and I think that there's been a 397 00:20:19,600 --> 00:20:22,760 Speaker 4: lot of dialogue around the idea that there's a bifurcation 398 00:20:23,119 --> 00:20:26,879 Speaker 4: of assets out there, higher quality and lower quality. I 399 00:20:27,080 --> 00:20:29,480 Speaker 4: like to think of it as a trifurcation of the assets. 400 00:20:29,560 --> 00:20:31,919 Speaker 4: So we have some super high quality assets out there 401 00:20:31,960 --> 00:20:34,880 Speaker 4: in the office, industrial and retail sector in particular, who 402 00:20:34,920 --> 00:20:37,719 Speaker 4: are untouchable. Right you saw them get through COVID. They 403 00:20:37,760 --> 00:20:40,760 Speaker 4: demand higher rents. Everything is great. Then on the other 404 00:20:40,800 --> 00:20:42,800 Speaker 4: book end of this, you have assets that were struggling 405 00:20:42,840 --> 00:20:46,280 Speaker 4: before COVID even started, and those assets continue to struggle 406 00:20:46,320 --> 00:20:48,320 Speaker 4: and may never make it back. The meadia of the 407 00:20:48,359 --> 00:20:51,440 Speaker 4: conversation is around the middle of those markets and the 408 00:20:51,520 --> 00:20:53,720 Speaker 4: assets that reside in the middle of those markets and 409 00:20:53,800 --> 00:20:56,359 Speaker 4: how they're performing. And I think that the struggle for 410 00:20:56,520 --> 00:20:58,760 Speaker 4: all of us is that it's a gray zone out there. 411 00:20:59,280 --> 00:21:01,920 Speaker 4: We want to say it's good, is bad, is bottomed, 412 00:21:02,119 --> 00:21:04,680 Speaker 4: is recovered. We want to make a big statement about it, 413 00:21:04,760 --> 00:21:07,520 Speaker 4: but it's nuanced. We think about some of them having 414 00:21:07,600 --> 00:21:11,200 Speaker 4: financing that's coming due next year at substantially higher rates. 415 00:21:11,280 --> 00:21:12,920 Speaker 4: We think about some of them that are owned purely 416 00:21:13,000 --> 00:21:16,320 Speaker 4: in cash. Some markets could be compelling, like Baltimore that 417 00:21:16,400 --> 00:21:18,720 Speaker 4: you and I don't sit around and think about, or 418 00:21:18,800 --> 00:21:22,400 Speaker 4: San Francisco in contrast to New York. So I think 419 00:21:22,480 --> 00:21:25,040 Speaker 4: that what's going on out there is a discovery process 420 00:21:25,240 --> 00:21:28,199 Speaker 4: whereby people are trying to figure out which assets they 421 00:21:28,240 --> 00:21:30,600 Speaker 4: want to get involved in, what has value, And at 422 00:21:30,640 --> 00:21:32,720 Speaker 4: the end of the day, I do believe in twenty 423 00:21:32,800 --> 00:21:36,359 Speaker 4: twenty four we'll have some distress playing through the system, 424 00:21:36,800 --> 00:21:38,600 Speaker 4: but that will just be helpful to getting us to 425 00:21:38,640 --> 00:21:39,440 Speaker 4: the point of resolution. 426 00:21:39,760 --> 00:21:42,520 Speaker 2: So it's a large and complicated asset class. But we 427 00:21:42,600 --> 00:21:45,080 Speaker 2: in the media like to make things really simple. And 428 00:21:45,200 --> 00:21:47,280 Speaker 2: the question people are asking an addressing right now is 429 00:21:47,520 --> 00:21:49,520 Speaker 2: have we bottomed and we're coming back up? 430 00:21:49,560 --> 00:21:49,720 Speaker 11: Yet? 431 00:21:49,720 --> 00:21:52,000 Speaker 2: We had John Gray from Blackstone just this week say 432 00:21:52,200 --> 00:21:54,159 Speaker 2: he thinks we have bond. We had Mary Daily from 433 00:21:54,240 --> 00:21:56,320 Speaker 2: San Francisco FED saying she thinks there's money about to 434 00:21:56,359 --> 00:21:56,560 Speaker 2: come in. 435 00:21:56,800 --> 00:21:59,520 Speaker 4: What's your perspective, Yeah, I think that if you want 436 00:21:59,560 --> 00:22:03,040 Speaker 4: to say bottomed or not bottomed, you lean to we've bottomed, 437 00:22:03,440 --> 00:22:05,440 Speaker 4: because if you're going to make a macro statement about it, 438 00:22:05,520 --> 00:22:08,000 Speaker 4: I would say somewhere around eighty percent of the assets 439 00:22:08,080 --> 00:22:10,680 Speaker 4: are in really good shape and twenty percent still have 440 00:22:10,760 --> 00:22:13,560 Speaker 4: some issues to work through. We know that the FED 441 00:22:13,720 --> 00:22:15,600 Speaker 4: is most likely going to come out with some kind 442 00:22:15,600 --> 00:22:19,560 Speaker 4: of rate cut. Powell's comments last week were dubvish regardless 443 00:22:19,560 --> 00:22:21,439 Speaker 4: of what's going on with inflation and kind of how 444 00:22:21,480 --> 00:22:24,280 Speaker 4: sticky it's been. That gives everybody a point of view 445 00:22:24,400 --> 00:22:27,640 Speaker 4: to think that there's recovery coming. When there's recovery coming 446 00:22:27,720 --> 00:22:30,080 Speaker 4: and optimism in the real estate sector, people will start 447 00:22:30,119 --> 00:22:30,880 Speaker 4: to make decisions. 448 00:22:31,320 --> 00:22:33,800 Speaker 2: That's what takes you out of the bottom. When it 449 00:22:33,840 --> 00:22:35,840 Speaker 2: comes to offices, talk about the geography. You mentioned some 450 00:22:35,880 --> 00:22:38,080 Speaker 2: of the geographical areas, but we here, for example, San 451 00:22:38,080 --> 00:22:40,560 Speaker 2: Francisco is very different for Chicago, very different from New York. 452 00:22:40,760 --> 00:22:43,840 Speaker 2: And don't get me started about things like Dallas or Austin, 453 00:22:44,359 --> 00:22:46,800 Speaker 2: or of Florida, Miami. What are you seeing? 454 00:22:47,520 --> 00:22:49,840 Speaker 4: I mean, we're seeing certain markets that are doing really well. 455 00:22:49,960 --> 00:22:52,400 Speaker 4: I think that that kind of top line headline is accurate, 456 00:22:52,560 --> 00:22:55,600 Speaker 4: and you're seeing other markets that are really struggling. I 457 00:22:55,680 --> 00:22:57,560 Speaker 4: think that when you take a step out of the 458 00:22:57,680 --> 00:23:00,879 Speaker 4: United States, it's really compelling. I was just in India 459 00:23:01,359 --> 00:23:04,800 Speaker 4: in New Delhi. Those markets are doing really well in Asia, 460 00:23:05,119 --> 00:23:07,239 Speaker 4: a lot of occupancy in the office market, a lot 461 00:23:07,280 --> 00:23:10,240 Speaker 4: of occupancy here in New York City, we're doing pretty 462 00:23:10,280 --> 00:23:10,840 Speaker 4: well here too. 463 00:23:11,800 --> 00:23:15,360 Speaker 2: How is real estate overall changed in the last ten 464 00:23:15,400 --> 00:23:16,240 Speaker 2: to fifteen years. 465 00:23:16,359 --> 00:23:19,480 Speaker 4: Yeah, I love this question. We talk about the flow 466 00:23:19,520 --> 00:23:22,080 Speaker 4: of dollars into the commercial real estate sector over the 467 00:23:22,160 --> 00:23:24,040 Speaker 4: last twenty years. I've been in real estate a little 468 00:23:24,080 --> 00:23:26,959 Speaker 4: over thirty years, and when I started, it was one 469 00:23:27,000 --> 00:23:30,399 Speaker 4: of the only alternatives. You are never considered in the 470 00:23:30,520 --> 00:23:35,000 Speaker 4: vein of equities or bond and debt. I think today 471 00:23:35,080 --> 00:23:37,960 Speaker 4: it's a core part of every money manager out there, 472 00:23:38,040 --> 00:23:41,080 Speaker 4: which means there's just more capital behind it. And so 473 00:23:41,400 --> 00:23:43,800 Speaker 4: in that way it's changed. But let's talk about the 474 00:23:43,880 --> 00:23:46,880 Speaker 4: human equation also post COVID, the way that we talk 475 00:23:46,920 --> 00:23:51,359 Speaker 4: about real estate. Yes, the office conversation has dominated the 476 00:23:51,480 --> 00:23:54,399 Speaker 4: work from home, the return to office, But when you 477 00:23:54,440 --> 00:23:57,040 Speaker 4: think about the ecosystem of real estate and certainly what 478 00:23:57,240 --> 00:24:00,920 Speaker 4: we manage. We're involved in hospitals, we're involved in R 479 00:24:00,960 --> 00:24:05,159 Speaker 4: and D, we're involved in protecting national art collections, we 480 00:24:05,320 --> 00:24:08,040 Speaker 4: clean universities. You know, I mentioned Harvard to you in 481 00:24:08,119 --> 00:24:11,720 Speaker 4: our conversation this morning. Real estate is really about what 482 00:24:11,920 --> 00:24:14,480 Speaker 4: is built and what is out there in the built environment. 483 00:24:15,040 --> 00:24:17,400 Speaker 2: It's also about how it's used. Now, are you seeing 484 00:24:17,560 --> 00:24:20,440 Speaker 2: changes in the way real estate's being configured in the 485 00:24:20,520 --> 00:24:23,160 Speaker 2: wake of the pandemic and all the difficulties you've had. 486 00:24:23,600 --> 00:24:27,480 Speaker 4: Yeah, people are really reconsidering what has value. And it 487 00:24:27,640 --> 00:24:29,960 Speaker 4: used to be that you could walk on to maybe 488 00:24:30,240 --> 00:24:33,280 Speaker 4: any traditional office space in it would almost look like 489 00:24:33,320 --> 00:24:35,880 Speaker 4: a trading floor, right, a pod, a pod, a pod, 490 00:24:35,960 --> 00:24:38,360 Speaker 4: a pod, and people are lined up almost like soldiers 491 00:24:38,400 --> 00:24:40,600 Speaker 4: in that space. Now what you're seeing is more common 492 00:24:40,640 --> 00:24:43,200 Speaker 4: area and what you're seeing in terms of services companies 493 00:24:43,280 --> 00:24:47,679 Speaker 4: like ourselves are groups that specialize in workplace solutioning. How 494 00:24:47,800 --> 00:24:49,600 Speaker 4: you enter your space, how do you feel when you 495 00:24:49,680 --> 00:24:51,960 Speaker 4: come into the space, How are you the most productive 496 00:24:52,000 --> 00:24:54,119 Speaker 4: when you come into it? These are the questions our 497 00:24:54,160 --> 00:24:56,800 Speaker 4: clients are starting to ask us, not just can you 498 00:24:56,920 --> 00:24:58,560 Speaker 4: find me one hundred thousand square feet? 499 00:24:59,000 --> 00:25:00,840 Speaker 2: So we have to have this specialists for that. 500 00:25:01,359 --> 00:25:04,040 Speaker 4: The other way that it's changed is that data is 501 00:25:04,160 --> 00:25:07,320 Speaker 4: really important in decision making today. So if you and 502 00:25:07,400 --> 00:25:09,040 Speaker 4: I were to walk down the street and you said, well, 503 00:25:09,040 --> 00:25:11,119 Speaker 4: I'd like to be in this building, people don't make 504 00:25:11,160 --> 00:25:13,600 Speaker 4: decisions like that anymore. They want to know how does 505 00:25:13,640 --> 00:25:16,000 Speaker 4: the employee get here? How long is the commune? Does 506 00:25:16,040 --> 00:25:17,920 Speaker 4: that employee have the skills that I want? Where do 507 00:25:18,000 --> 00:25:20,879 Speaker 4: they live right? How can I make them come to 508 00:25:21,000 --> 00:25:22,959 Speaker 4: the office or incentivize to get them here? 509 00:25:23,200 --> 00:25:24,680 Speaker 2: Michelle, it's really a treat to have you on. I 510 00:25:24,720 --> 00:25:25,239 Speaker 2: hope you come back. 511 00:25:25,320 --> 00:25:25,560 Speaker 11: Thank you. 512 00:25:25,760 --> 00:25:31,120 Speaker 2: That's Michelle Mackay of Cushman Wakefield coming up. How can 513 00:25:31,160 --> 00:25:33,879 Speaker 2: the stock market be doing so well? What our politics 514 00:25:33,920 --> 00:25:36,960 Speaker 2: seem to be doing so badly? We ask Harvard economist 515 00:25:37,040 --> 00:25:37,920 Speaker 2: Ken Rogoff. 516 00:25:39,160 --> 00:25:42,160 Speaker 3: Neither of them are going to regulate AI and AI 517 00:25:42,320 --> 00:25:44,760 Speaker 3: is behind a lot of the boom in the stock market. 518 00:25:46,520 --> 00:25:48,800 Speaker 2: That's next on Wall Street Week on Bloomberg. 519 00:25:50,080 --> 00:25:54,240 Speaker 1: This is Bloomberg Well Street Week with David Weston from 520 00:25:54,400 --> 00:25:55,320 Speaker 1: Bloomberg Radio. 521 00:26:01,960 --> 00:26:03,920 Speaker 2: This is Wall Street Week. I'm David Weston. With the 522 00:26:03,960 --> 00:26:07,320 Speaker 2: presidential candidates pretty much determined. Now, we've been asking a 523 00:26:07,440 --> 00:26:10,439 Speaker 2: range of economists and other experts what differences the choice 524 00:26:10,480 --> 00:26:13,480 Speaker 2: could make for global Wall Street. For his views, welcome now, 525 00:26:14,040 --> 00:26:16,760 Speaker 2: Ken Rogoff. He's professor of economics at Harvard and former 526 00:26:16,840 --> 00:26:19,600 Speaker 2: IMF Chief of cons So Ken, welcome back. Always great 527 00:26:19,640 --> 00:26:22,760 Speaker 2: to have you on. You've written a piece for Project Syndicate, 528 00:26:23,040 --> 00:26:25,680 Speaker 2: and would you talk about the disconnect between a really 529 00:26:25,840 --> 00:26:29,440 Speaker 2: robust stock market the one hand and some real challenges politically. 530 00:26:29,680 --> 00:26:32,240 Speaker 2: Why is there this disconnect? The stockwork is doing so well, 531 00:26:32,520 --> 00:26:33,720 Speaker 2: politics maybe not so much. 532 00:26:34,040 --> 00:26:37,440 Speaker 3: I have trouble reconciling it. The only thing I can 533 00:26:37,600 --> 00:26:42,000 Speaker 3: just think about in the article is that neither of 534 00:26:42,080 --> 00:26:45,439 Speaker 3: them are going to regulate AI. And AI is behind 535 00:26:45,520 --> 00:26:47,800 Speaker 3: a lot of the boom in the stock market, and 536 00:26:47,920 --> 00:26:50,320 Speaker 3: they figure, well, it's going to be like social media, 537 00:26:50,359 --> 00:26:52,080 Speaker 3: it's going to be like big tech, it's going to 538 00:26:52,080 --> 00:26:54,320 Speaker 3: be like bitcoin. In the end of the day, they're 539 00:26:54,320 --> 00:26:56,800 Speaker 3: going to do nothing, and the stock market rolls along. 540 00:26:57,800 --> 00:26:58,000 Speaker 9: Well. 541 00:26:58,359 --> 00:27:01,200 Speaker 2: Talking about things that they might share and common in 542 00:27:01,400 --> 00:27:04,480 Speaker 2: terms of policy, they also, perhaps, as you suggesting the piece, 543 00:27:04,800 --> 00:27:08,000 Speaker 2: they share sort of sort of a tendency toward protectionism, 544 00:27:08,040 --> 00:27:09,800 Speaker 2: if I can call it that, or a populist approach 545 00:27:09,880 --> 00:27:13,359 Speaker 2: on tariffs, as well as a reluctance to deal with 546 00:27:13,440 --> 00:27:14,320 Speaker 2: the debt and the deficit. 547 00:27:14,720 --> 00:27:20,200 Speaker 3: Well, absolutely so. Obviously Trump put in his tariffs and 548 00:27:20,400 --> 00:27:25,399 Speaker 3: Biden has essentially doubled down on it. Legal immigration is 549 00:27:25,480 --> 00:27:29,720 Speaker 3: still really hard under Biden, you know, became much harder 550 00:27:29,800 --> 00:27:33,280 Speaker 3: under Trump. I won't speak of the open border policies, 551 00:27:33,920 --> 00:27:37,000 Speaker 3: but they both you know, in that respect, we're trying 552 00:27:37,040 --> 00:27:41,040 Speaker 3: to shut out the outside world, and Trump's talking about 553 00:27:41,160 --> 00:27:47,440 Speaker 3: expanding his tariffs and Biden's Inflation Reduction Act of misnamed 554 00:27:47,800 --> 00:27:50,480 Speaker 3: is a very protectionist I mean, the Europeans are livid 555 00:27:50,560 --> 00:27:53,840 Speaker 3: about it that he does things that where you have 556 00:27:53,960 --> 00:27:57,920 Speaker 3: to buy American in many ways. So they're certainly the 557 00:27:58,000 --> 00:28:01,920 Speaker 3: two most protectionist presidents in a long time. How much 558 00:28:02,280 --> 00:28:05,080 Speaker 3: I'm sorry you asked about the debt, and yes, I 559 00:28:05,160 --> 00:28:11,159 Speaker 3: mean Washington in general has a very relaxed attitude towards 560 00:28:11,280 --> 00:28:13,240 Speaker 3: debt that I think they're going to be sorry about. 561 00:28:14,000 --> 00:28:18,600 Speaker 3: Biden speaks suggested blowing up the debt, and of course 562 00:28:18,640 --> 00:28:21,280 Speaker 3: we have really no idea what Donald Trump will do, 563 00:28:21,880 --> 00:28:24,480 Speaker 3: but that's what he did last time he was president. 564 00:28:24,920 --> 00:28:27,080 Speaker 3: The good guess he will do it again. And as 565 00:28:27,119 --> 00:28:29,800 Speaker 3: you know, David, you can't count on real interest rates 566 00:28:29,920 --> 00:28:32,840 Speaker 3: being ultra loan anymore. I think they're probably not going 567 00:28:32,920 --> 00:28:35,520 Speaker 3: to be. And the idea that it's a free lunch, 568 00:28:35,760 --> 00:28:37,960 Speaker 3: I think is past thinking. 569 00:28:38,520 --> 00:28:40,320 Speaker 2: Yeah, I want to come back to the real instance. 570 00:28:40,400 --> 00:28:42,280 Speaker 2: But before that, let's go let's talk about tariffs just 571 00:28:42,360 --> 00:28:44,520 Speaker 2: for a second, because President Trump has said he wants 572 00:28:44,600 --> 00:28:47,440 Speaker 2: ten percent tariffs across the board for all countries worldwide, 573 00:28:47,840 --> 00:28:49,719 Speaker 2: and by the way, he might increase them if anybody 574 00:28:49,880 --> 00:28:52,920 Speaker 2: reciprocated with tariff's coming back and against China, he's talking 575 00:28:52,960 --> 00:28:56,040 Speaker 2: about fifty or even sixty percent tariffs. What likely effect 576 00:28:56,040 --> 00:28:57,560 Speaker 2: could that have any coming I must say we did 577 00:28:57,600 --> 00:28:59,520 Speaker 2: have Paul Krugman and I said ten percent tariffs don't 578 00:28:59,520 --> 00:29:00,440 Speaker 2: make that much of a difference. 579 00:29:01,400 --> 00:29:07,760 Speaker 3: I mean ten percent tariffs would I think push up inflation, 580 00:29:08,040 --> 00:29:12,560 Speaker 3: they push up interest rates. That certainly back when Trump 581 00:29:12,640 --> 00:29:18,200 Speaker 3: put in his tariffs in twenty nineteen, the FED had 582 00:29:18,240 --> 00:29:21,040 Speaker 3: to do an about face on its interest rate policy 583 00:29:21,120 --> 00:29:25,520 Speaker 3: because of the uncertainty and stress that cause. So, you know, 584 00:29:25,880 --> 00:29:29,960 Speaker 3: it's one thing to talk about over a fifty year horizon. 585 00:29:30,200 --> 00:29:32,560 Speaker 3: Does it matter that much if you put in tariffs, 586 00:29:32,760 --> 00:29:34,800 Speaker 3: If you do it out of the blue, it's very 587 00:29:34,920 --> 00:29:38,120 Speaker 3: dislocating to the economy. I think it would be very 588 00:29:38,240 --> 00:29:44,640 Speaker 3: tend to be very recessionary, inflationary, and obviously other countries 589 00:29:44,800 --> 00:29:45,760 Speaker 3: would retaliate. 590 00:29:46,560 --> 00:29:48,600 Speaker 2: So let's come back to that question you raised about 591 00:29:48,640 --> 00:29:51,560 Speaker 2: the long term real interest rates, because there is something 592 00:29:51,600 --> 00:29:53,880 Speaker 2: of a disagreement appears. We have married daily on from 593 00:29:53,880 --> 00:29:56,360 Speaker 2: the San Francisco FED recently who said she still thinks 594 00:29:56,360 --> 00:29:58,360 Speaker 2: that it's around two point five to three percent sort 595 00:29:58,400 --> 00:30:01,200 Speaker 2: of long term neutral rate, which is composed of various 596 00:30:01,200 --> 00:30:04,120 Speaker 2: components as you know so well. And then Larry Summers 597 00:30:04,200 --> 00:30:05,680 Speaker 2: has come on and said it's much higher than that. 598 00:30:06,160 --> 00:30:08,520 Speaker 2: You in the past have said you think it is higher. 599 00:30:09,040 --> 00:30:12,680 Speaker 3: No, well, I've studied the most the ten year rate, 600 00:30:13,320 --> 00:30:17,720 Speaker 3: really long term data on tenure rates, and you know 601 00:30:17,880 --> 00:30:22,920 Speaker 3: it's not It's probably more in the range of one 602 00:30:22,960 --> 00:30:25,440 Speaker 3: and a half to two percent than in the zero 603 00:30:25,640 --> 00:30:28,520 Speaker 3: percent that it was from twenty twelve to twenty twenty one. 604 00:30:29,120 --> 00:30:32,960 Speaker 3: The short term rate, I don't you know, it's possible 605 00:30:33,080 --> 00:30:36,360 Speaker 3: the term premiums change. But you know, look at the economy, 606 00:30:36,720 --> 00:30:40,720 Speaker 3: it doesn't feel like we have really tight monetary policy. 607 00:30:41,200 --> 00:30:45,440 Speaker 3: If we were really three percent above a neutral rate 608 00:30:45,600 --> 00:30:49,040 Speaker 3: right now, you would think that something would have hit 609 00:30:49,240 --> 00:30:52,560 Speaker 3: faster and harder. And I would agree with my colleagu 610 00:30:52,600 --> 00:30:56,960 Speaker 3: Larry Summers that you know, we're probably more like a 611 00:30:57,120 --> 00:31:00,520 Speaker 3: percent or percent and a half above what would currently 612 00:31:00,600 --> 00:31:03,120 Speaker 3: be a neutral rate. So if you're aiming for two 613 00:31:03,200 --> 00:31:06,160 Speaker 3: point five, I think you're going to end up stopping 614 00:31:06,240 --> 00:31:07,640 Speaker 3: a long time before you get there. 615 00:31:08,280 --> 00:31:10,440 Speaker 2: So bring this back to the question of whether it's 616 00:31:10,520 --> 00:31:14,360 Speaker 2: a President Biden or President Trump come next year. Either 617 00:31:14,400 --> 00:31:15,520 Speaker 2: one of them is going to have to deal with 618 00:31:15,560 --> 00:31:17,160 Speaker 2: the consequences that take us through. What some of the 619 00:31:17,280 --> 00:31:20,160 Speaker 2: possible consequences are because the assumptions put into the budget, 620 00:31:20,200 --> 00:31:22,160 Speaker 2: for example, are much more modest when it comes to 621 00:31:22,240 --> 00:31:23,880 Speaker 2: interest So there are. 622 00:31:23,800 --> 00:31:27,680 Speaker 3: Two ways that can go. It could end up in inflation, 623 00:31:27,840 --> 00:31:30,720 Speaker 3: which happened the last time, which would eventually ratchet up 624 00:31:30,840 --> 00:31:33,880 Speaker 3: interest rates. I think One of the reasons inflation's a 625 00:31:33,920 --> 00:31:37,080 Speaker 3: little stuck at a high level is partly because if 626 00:31:37,080 --> 00:31:40,960 Speaker 3: you've just experienced this inflation burst, things don't calm down 627 00:31:41,080 --> 00:31:44,080 Speaker 3: right away. But so one possibly is there's inflation and 628 00:31:44,160 --> 00:31:46,760 Speaker 3: then we ratchet up to higher and higher interest rates. 629 00:31:47,280 --> 00:31:50,320 Speaker 3: But I think if the FAD word to stick to 630 00:31:50,400 --> 00:31:53,040 Speaker 3: its guns and not allowed of that, then you're really 631 00:31:53,160 --> 00:31:56,520 Speaker 3: not seeing interest rates come down. I think we're in 632 00:31:56,600 --> 00:32:01,160 Speaker 3: an environment where there's so many demands on the government, 633 00:32:02,000 --> 00:32:06,600 Speaker 3: even if the neither candidate quite realizes that defense spending 634 00:32:06,720 --> 00:32:08,320 Speaker 3: is going to have to go up. I think it 635 00:32:08,360 --> 00:32:12,400 Speaker 3: went quite a bit down in Biden's budget proposal, and 636 00:32:12,560 --> 00:32:16,400 Speaker 3: Trump presumably retreating out of NATO plans the same. I 637 00:32:16,480 --> 00:32:20,160 Speaker 3: don't think so green transition is going to cost something 638 00:32:20,600 --> 00:32:22,960 Speaker 3: populism and global that's really high. There are a lot 639 00:32:23,000 --> 00:32:25,920 Speaker 3: of upward pressures, and this environment where you can just 640 00:32:26,200 --> 00:32:30,280 Speaker 3: jack up the US debt and assume they'll effect effectively 641 00:32:30,400 --> 00:32:33,400 Speaker 3: be no effect to even see the interest rates trot. 642 00:32:33,880 --> 00:32:36,720 Speaker 3: I think that was a post financial crisis thing, and 643 00:32:37,240 --> 00:32:38,920 Speaker 3: it's not a post pandemic thing. 644 00:32:39,640 --> 00:32:42,320 Speaker 2: What does that mean for fiscal policy going forward? Whatever 645 00:32:42,640 --> 00:32:45,440 Speaker 2: President Trump or President dum wants to do going in 646 00:32:46,000 --> 00:32:48,360 Speaker 2: what constrains me they have on fiscal policy given what 647 00:32:48,440 --> 00:32:49,240 Speaker 2: you just said. 648 00:32:49,960 --> 00:32:52,520 Speaker 3: Well, you take bigger and bigger risks as you blow 649 00:32:52,600 --> 00:32:55,480 Speaker 3: up the debt. I mean, you can just keep borrowing 650 00:32:55,960 --> 00:32:58,680 Speaker 3: all the money you need to pay the interest and 651 00:32:58,840 --> 00:33:03,360 Speaker 3: keep expanding the debt. The CBO estimates bounce all over 652 00:33:03,440 --> 00:33:07,080 Speaker 3: the place, but most recently they projected the debt GDP 653 00:33:07,320 --> 00:33:11,280 Speaker 3: ratio getting to one hundred and seventy percent in the 654 00:33:11,360 --> 00:33:15,920 Speaker 3: year twenty fifty three. But you know that really leaves 655 00:33:15,960 --> 00:33:18,840 Speaker 3: a lot of room for accidents. So yeah, I mean, 656 00:33:18,920 --> 00:33:20,960 Speaker 3: we don't know what an upper limit is. There is 657 00:33:21,120 --> 00:33:24,200 Speaker 3: no upper limit. But as you get higher and hired, 658 00:33:24,200 --> 00:33:27,800 Speaker 3: it puts political pressures on the Fed, It puts volatility 659 00:33:27,960 --> 00:33:31,880 Speaker 3: to inflation and interest rates. We will feel events that 660 00:33:32,120 --> 00:33:35,000 Speaker 3: create pressures that It's just not the free lunch. 661 00:33:35,560 --> 00:33:37,920 Speaker 2: Ken, how do you assess the prospect? We don't know, 662 00:33:38,080 --> 00:33:40,840 Speaker 2: but the prospect at least the productivity and growth will 663 00:33:40,920 --> 00:33:42,640 Speaker 2: save us. I mean we have seen something of a 664 00:33:42,720 --> 00:33:46,360 Speaker 2: productivity upsurged, and just in recent months here we don't 665 00:33:46,400 --> 00:33:49,880 Speaker 2: know exactly what it is. Perhaps more immigration actually whether 666 00:33:49,960 --> 00:33:54,360 Speaker 2: it's lawful or otherwise. And also some other source of productivity. 667 00:33:54,480 --> 00:33:56,000 Speaker 2: Could we grow ourselves out of this problem? 668 00:33:56,600 --> 00:33:59,640 Speaker 3: I mean, first of all, in the immigration immigration is good. 669 00:34:00,160 --> 00:34:04,560 Speaker 3: Put a rational immigration problem. A rational immigration policy would 670 00:34:04,600 --> 00:34:07,400 Speaker 3: be better. I mean, if you tell me, let's spend 671 00:34:07,520 --> 00:34:10,399 Speaker 3: ten trillion dollars, you can probably get some growth out 672 00:34:10,440 --> 00:34:15,200 Speaker 3: of that. The US has room to have immigration. You 673 00:34:15,280 --> 00:34:19,520 Speaker 3: will get some at least, you know, temporary boost perhaps 674 00:34:19,640 --> 00:34:22,360 Speaker 3: out of that, but it's much less than it could be. 675 00:34:22,440 --> 00:34:25,800 Speaker 3: You're giving up an asset by not having a rational 676 00:34:25,840 --> 00:34:31,640 Speaker 3: immigration policy. AI. I'm a big believer in AI. But 677 00:34:31,840 --> 00:34:34,960 Speaker 3: the question is, you know, is what we're seeing in 678 00:34:35,000 --> 00:34:38,480 Speaker 3: the stock market a belief that firms are going to 679 00:34:38,520 --> 00:34:41,239 Speaker 3: get a bigger share because they're going to be laying 680 00:34:41,360 --> 00:34:45,959 Speaker 3: people off and it'll be you know, globalization squared. There's 681 00:34:45,960 --> 00:34:49,080 Speaker 3: certainly a lot of studies and reports showing that is 682 00:34:49,160 --> 00:34:52,120 Speaker 3: it really going to be just much higher growth in 683 00:34:52,239 --> 00:34:54,840 Speaker 3: the economy and it's sort of hard. So our firms 684 00:34:54,880 --> 00:34:57,239 Speaker 3: getting a bigger piece of the pie where it's the 685 00:34:57,320 --> 00:34:58,799 Speaker 3: pie growing faster. 686 00:34:59,320 --> 00:35:00,520 Speaker 2: And it's such an treat to have you on. 687 00:35:00,560 --> 00:35:01,280 Speaker 1: It's really helpful. 688 00:35:01,320 --> 00:35:01,560 Speaker 10: That is. 689 00:35:01,640 --> 00:35:05,160 Speaker 2: Ken Rogoff of Harvard T. H. White wrote in The 690 00:35:05,239 --> 00:35:08,120 Speaker 2: Once and Future King that the destiny of man is 691 00:35:08,200 --> 00:35:11,520 Speaker 2: to unite, not to divide. If you keep on dividing, 692 00:35:11,560 --> 00:35:13,919 Speaker 2: you end up as a collection of monkeys throwing nuts 693 00:35:13,960 --> 00:35:17,240 Speaker 2: at each other out of separate trees. Sometimes it seems 694 00:35:17,239 --> 00:35:19,560 Speaker 2: as though we're closer to those monkeys throwing nuts at 695 00:35:19,560 --> 00:35:22,480 Speaker 2: one another than we are to a destiny of being united. 696 00:35:22,960 --> 00:35:25,200 Speaker 2: Certainly it seems that way in politics, as we saw 697 00:35:25,239 --> 00:35:27,359 Speaker 2: in the State of the Union address last week, when 698 00:35:27,440 --> 00:35:31,080 Speaker 2: half the Congress cheered President Biden on we will not 699 00:35:31,320 --> 00:35:46,719 Speaker 2: bow down, and the other half heckled him. Even the 700 00:35:46,920 --> 00:35:49,600 Speaker 2: historic unity between the United States and Israel is under 701 00:35:49,719 --> 00:35:54,160 Speaker 2: increasing strain, as President Biden presses for restraint and in. 702 00:35:54,360 --> 00:36:00,399 Speaker 8: Israel must do us park, Israel must allow we're hating 703 00:36:00,440 --> 00:36:04,000 Speaker 8: the gods who ensure humanitarian workers aren't carought in the crossfire. 704 00:36:04,480 --> 00:36:07,200 Speaker 2: And Prime Minister net and Yahoo will have none of it. 705 00:36:07,800 --> 00:36:11,960 Speaker 9: You cannot say you support Israel's right to exist and 706 00:36:12,080 --> 00:36:15,360 Speaker 9: to defend itself and then oppose his roe when it 707 00:36:15,520 --> 00:36:19,399 Speaker 9: exercises that right. You cannot say you support Israel's goal 708 00:36:19,480 --> 00:36:23,319 Speaker 9: of destroying Khamas and then oppose Israel when it takes 709 00:36:23,360 --> 00:36:25,759 Speaker 9: the actions necessary to achieve that goal. 710 00:36:26,200 --> 00:36:28,719 Speaker 2: An activist investor Nelson Peltz is throwing his share of 711 00:36:28,840 --> 00:36:31,920 Speaker 2: nuts at Disney CEO Bob Iger as Pelts tries to 712 00:36:32,000 --> 00:36:34,640 Speaker 2: break up the unity that Bob is long enjoyed with 713 00:36:34,800 --> 00:36:35,640 Speaker 2: his shareholders. 714 00:36:36,040 --> 00:36:38,120 Speaker 5: Now some Pelts is out with a manifesto for change 715 00:36:38,239 --> 00:36:39,160 Speaker 5: over at Disney. 716 00:36:39,480 --> 00:36:39,920 Speaker 12: Here it is. 717 00:36:40,040 --> 00:36:42,239 Speaker 5: It's a one hundred and thirty three page white paper 718 00:36:42,480 --> 00:36:45,040 Speaker 5: entitled Restore the Magic at the Walt Disney Company. 719 00:36:45,520 --> 00:36:48,000 Speaker 2: So, in the midst of so much dissension that we 720 00:36:48,120 --> 00:36:50,120 Speaker 2: see every day in the news, it's nice to know 721 00:36:50,239 --> 00:36:53,400 Speaker 2: that there are some things we can all agree on, like, 722 00:36:53,480 --> 00:36:56,080 Speaker 2: for example, how much the United States regards the Chinese 723 00:36:56,160 --> 00:36:59,920 Speaker 2: government with a distrust that sometimes borders on outright hostility. 724 00:37:00,440 --> 00:37:02,920 Speaker 2: There's a tremendous loss of confidence investment. 725 00:37:03,120 --> 00:37:06,840 Speaker 10: Foreign investment has collapsed, domestic confidence has collapsed. 726 00:37:07,120 --> 00:37:08,439 Speaker 4: It feels pretty bad. 727 00:37:09,040 --> 00:37:12,000 Speaker 2: And in particular, how Republicans and Democrats seem to be 728 00:37:12,040 --> 00:37:14,960 Speaker 2: able to get together on trying to do something to TikTok, 729 00:37:15,400 --> 00:37:17,720 Speaker 2: like make it get a non Chinese owner. 730 00:37:18,080 --> 00:37:21,200 Speaker 12: The main thing, though, is we want TikTok to exist. 731 00:37:21,280 --> 00:37:23,600 Speaker 12: We're not there to ban it. I've said, we want 732 00:37:23,640 --> 00:37:25,800 Speaker 12: to make it TikTok toe we want to make it 733 00:37:27,120 --> 00:37:30,960 Speaker 12: something that is not a fearful social media platform, but 734 00:37:31,120 --> 00:37:34,040 Speaker 12: one that is very positive, and in order to do 735 00:37:34,200 --> 00:37:37,520 Speaker 12: that we have to see the divesting of it from 736 00:37:37,880 --> 00:37:38,920 Speaker 12: the Chinese government. 737 00:37:39,640 --> 00:37:42,920 Speaker 2: Last week we saw yet another example of people coming together, 738 00:37:43,239 --> 00:37:45,239 Speaker 2: but this time it was people all dressed up and 739 00:37:45,320 --> 00:37:48,600 Speaker 2: gathered in Hollywood to celebrate a range of motion pictures, 740 00:37:48,960 --> 00:37:50,359 Speaker 2: everything from one about a doll. 741 00:37:50,840 --> 00:37:51,920 Speaker 7: This is the best day ever. 742 00:37:52,120 --> 00:37:53,239 Speaker 3: It is the best day ever. 743 00:37:53,480 --> 00:37:55,719 Speaker 4: So is yesterday, and so is tomorrow and every day 744 00:37:55,760 --> 00:37:56,600 Speaker 4: for Nursia forever. 745 00:37:56,800 --> 00:38:00,400 Speaker 2: Yes to a young woman in Victorian England back to 746 00:38:00,520 --> 00:38:04,840 Speaker 2: life by a brain transplant. She's an extpediment. Good evening, 747 00:38:05,280 --> 00:38:06,520 Speaker 2: a brain and humbody. 748 00:38:06,560 --> 00:38:12,200 Speaker 3: I'm not quite synchronized, but she's progressing at an accilliary 749 00:38:12,280 --> 00:38:12,719 Speaker 3: to peace. 750 00:38:13,840 --> 00:38:16,160 Speaker 2: And in the end they united in agreeing that the 751 00:38:16,280 --> 00:38:18,400 Speaker 2: best fill of the year was one that portrayed the 752 00:38:18,480 --> 00:38:21,359 Speaker 2: invention of the Adam bomb, which led to the end 753 00:38:21,400 --> 00:38:22,080 Speaker 2: of World War II. 754 00:38:22,680 --> 00:38:23,719 Speaker 3: Why why? 755 00:38:24,600 --> 00:38:24,919 Speaker 1: How about? 756 00:38:24,960 --> 00:38:27,040 Speaker 2: Because this is the most important thing to ever happen 757 00:38:27,080 --> 00:38:27,880 Speaker 2: in the history. 758 00:38:27,719 --> 00:38:28,120 Speaker 3: Of the world. 759 00:38:28,840 --> 00:38:31,360 Speaker 2: Let's hope it doesn't take the threat of nuclear destruction 760 00:38:31,520 --> 00:38:35,680 Speaker 2: to help us find unity on other controversial subjects that 761 00:38:35,880 --> 00:38:37,799 Speaker 2: does it. For this episode of Wall Street Week, I'm 762 00:38:37,880 --> 00:38:40,439 Speaker 2: David Weston. This is Bloomberg. See you next week.