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Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene. Daily

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Speaker 1: we bring you insight from the best in economics, finance, investment,

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

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

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Speaker 1: our conversation with the World Bank President David Malpass. David

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Speaker 1: I was talking with our Eric Martin, and he is

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Speaker 1: quite certain that a key topic here is debt relief

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Speaker 1: for beleaguer nations. To begin, give us an update on

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Speaker 1: the urgency of debt relief for many troubled nations. Hi, Tom,

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Speaker 1: and and and a good morning. Um Well, the deepest

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Speaker 1: urgency is for growth and reduction in poverty and in

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Speaker 1: to get their countries need investment, new new cash flows,

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Speaker 1: new investment, and one obstacle to that is the is

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Speaker 1: the debt burden. If you if you're a new investor

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Speaker 1: and you know that your money is going to go

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Speaker 1: to help pay off old debt, that creates an obstacle

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Speaker 1: to the new investment. So we're trying to find relief

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Speaker 1: from both the debt service, meaning that the payments that

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Speaker 1: the countries have to make. These are the poorest countries

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Speaker 1: in the world. They don't have the resources to fight COVID,

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Speaker 1: so to reduce their current cash flow payments, but also

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Speaker 1: looking at reducing the stock of their debt, which would

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Speaker 1: give light at the end of the tunnel the debut

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Speaker 1: are expert on this from your tour of duty as

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Speaker 1: global economists for Bear Stearns, and you and I know

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Speaker 1: Stam Fisher in the Wonderful Summary read book he wrote,

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Speaker 1: we know the work of Bill Rhodes when he was

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Speaker 1: at City Group on debt workout, etcetera. Is it the

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Speaker 1: same pole season procedures? Is from another time and place.

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Speaker 1: There's a world bank working at debt workout with a

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Speaker 1: new different formula, a new different process. Uh, it's different.

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Speaker 1: I talked, happened to talk with Bill Rhodes last week.

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Speaker 1: He's doing well. By the way, was involved in many

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Speaker 1: of the previous debt restructurings. Those in the nineteen eighties.

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Speaker 1: I was at Treasury with the with the during the

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Speaker 1: Latin debt crisis. Those were syndicated bank loans and so

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Speaker 1: they had a different restructuring process. Uh. And also very

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Speaker 1: importantly a different dynamic between creditors and debtors because that

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Speaker 1: the banks needed the repayments in order to maintain their

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Speaker 1: equity capital. This time around, basically beginning in two thousand

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Speaker 1: four or so, there has been a huge build up

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Speaker 1: of debt in the poorest countries coming from China and

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Speaker 1: also from private sector. Credit is through bonds, your Euro

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Speaker 1: bonds for example, and those are those are more difficult

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Speaker 1: to instructor and the dynamic between the creditor and the

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Speaker 1: debtor has shifted in favor of the creditor. So the

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Speaker 1: problem this causes for growth for new investment is the

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Speaker 1: creditor is sitting there wanting on the doctor uh, and

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Speaker 1: that creates a big challenge in terms of creating light

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Speaker 1: at the end of the tunnel for the poorest countries.

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Speaker 1: You have on your website, Mr mal Pass a phenomenal

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Speaker 1: box chart of these troubled nations and their relationship with China.

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Speaker 1: This is a delicate question, David, and I hope you

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Speaker 1: come back to Bloomberg Surveillance after my rudeness. But how

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Speaker 1: intrusive is a Trump White House in their negotiations with

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Speaker 1: China for you at the World Bank to have a

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Speaker 1: constructive workout of troubled nation debt with China. How much

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Speaker 1: does the Trump administration get in the way. I would

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Speaker 1: frame it that way, Tom. The issues are the US

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Speaker 1: may have issues with China, for example on trade UH,

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Speaker 1: but then the world separately recognizes that we're all trying

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Speaker 1: to work together to get growth in developing countries. So

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Speaker 1: the challenge is that over the last ten years or so,

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Speaker 1: China has UH made many loans into developing countries with

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Speaker 1: terms that aren't transparent UH and also with terms that

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Speaker 1: are that are higher in interest rate than than than

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Speaker 1: the countries can afford UH. And so the challenges is

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Speaker 1: somewhat a technical one for the whole world working together

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Speaker 1: looking for a way to find a way through this

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Speaker 1: and China, China needs to participate the G They in

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Speaker 1: the G twenty in April they said they were fully

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Speaker 1: engaged in this. But then getting each of the Chinese lenders,

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Speaker 1: there's there's many official lenders from China, getting each of

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Speaker 1: them on board is a challenge. So what we're pushing

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Speaker 1: and I'm glad you raised the website, so we are

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Speaker 1: we are thinking that transparency will help UH. And so

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Speaker 1: if we can disclose for example, when central banks make

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Speaker 1: swaps between each other, that's actually a debt or some

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Speaker 1: of the types of those swaps our debts and could

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Speaker 1: be disclosed as debts and should be um When Ecuador

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Speaker 1: does a restructuring as they did last week, there are

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Speaker 1: other creditors who were not included in the main restructuring,

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Speaker 1: and the terms of those other restructuring should be disclosed.

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Speaker 1: This way people can look at it and get a

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Speaker 1: better outcome. Okay, David, good morning to you. So that

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Speaker 1: transparency should help maybe facilitate those conversations with China. But

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Speaker 1: in the current climate, do you get any sense than

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Speaker 1: David that the Chinese are going to join with your

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Speaker 1: effort with the d S s I to to alleviate

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Speaker 1: this debt servicing burden for the for the for the

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Speaker 1: poor nations. Yes, certainly so many of the Chinese creditor agencies,

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Speaker 1: so China x In Bank, they have they have a

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Speaker 1: number of lenders in China. Uh they're participating in the

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Speaker 1: d S s I with the restructuring terms that are

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Speaker 1: that other countries are using, some of them are not,

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Speaker 1: and so that that creates the challenge that we're that

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Speaker 1: we're working on through by disclosing that. In other words,

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Speaker 1: if there can be more information I think we'll get

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Speaker 1: a better outcome. Other things I should say that we're

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Speaker 1: working on is in the longer run, some of the countries,

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Speaker 1: the h the most debt constrained, really need a reduction

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Speaker 1: in the stock of debt. What we've been talking about

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Speaker 1: so far is is the China's participation and everyone, all

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Speaker 1: the creditors participating in a moratorium on the on the

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Speaker 1: re aiments from the countries. But so far they they're

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Speaker 1: the countries are just adding that amount on to the

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Speaker 1: end of the loan, so there's not really debt stock

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Speaker 1: relief um and with the interest rate environment as low

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Speaker 1: as it is right now, net present value isn't a

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Speaker 1: good metric of trying to figure that out. So we're

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Speaker 1: looking at ways to do a reduction in the actual

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Speaker 1: amount owed so that then more investors will come into

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Speaker 1: the countries. If we look ahead to the meetings that

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Speaker 1: always take place in the in the fall, in the autumn,

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Speaker 1: the I m F and the World Bank meetings, should

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Speaker 1: we look ahead with that kind of time horizon in

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Speaker 1: mind to see an extension of the d S S

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Speaker 1: I so further relief on debt servicing costs and should

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Speaker 1: we go further than that should we hope in October

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Speaker 1: to see something on the underlying stock of debt, then um,

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Speaker 1: yes and yes. So I spoke with the G seven

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Speaker 1: finance ministers on Monday and they're they're they're favorable, and

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Speaker 1: I think to G twenty will be favorable on an

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Speaker 1: extension of the debt service moratorium. And then the next

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Speaker 1: step is is harder to have agreement to to actually

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Speaker 1: do haircuts or write downs. That has happened in the past,

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Speaker 1: for example, in the nineteen eighties and the Latin deck crisis,

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Speaker 1: it got to the point of of haircuts, but it

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Speaker 1: took so long that the countries were in deep, deep

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Speaker 1: trouble by the time that happened UH. And so one

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Speaker 1: of the things we're trying to do is UH is

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Speaker 1: accelerate that so you can get to a good outcome sooner.

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Speaker 1: You know, this is important, and I'd like to mention

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Speaker 1: other things. We're working on a whole range of areas,

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Speaker 1: and one is the inequality of the current global UH crisis.

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Speaker 1: It's hitting the forest countries and people the hardest. And

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Speaker 1: another so we're working hard on that with big new

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Speaker 1: UH surge in World Bank Group lending to these countries

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Speaker 1: And the other thing I wanted to mention is vaccines,

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Speaker 1: which are so important, and so the fund the financing

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Speaker 1: that the World Bank has available for things like healthcare,

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Speaker 1: and we we've done over a hundred programs just in

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Speaker 1: April and May. Those can be used for vaccines, for therapeutics,

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Speaker 1: and so I think the world concentrating on that, putting

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Speaker 1: more money into those efforts is used. David, you know what,

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Speaker 1: I mean to make a joke about it, because this

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Speaker 1: is tragic stuff. But if you look at Jay John

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Speaker 1: Burns Murdoch's wonderful work at the FT with Johns Hopkins University,

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Speaker 1: there's Bolivia, there's Panama, there's Latin America, and then there's

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Speaker 1: this World Bank country, the United States of America up

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Speaker 1: there with pandemic. What would David mal Pass in the

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Speaker 1: World Bank do to help the United States not have

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Speaker 1: as ugly death statistics like these other truly impoverished nations. Uh.

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Speaker 1: I mean, one thing we should recognize is we're in

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Speaker 1: new territory. The pandemic is new, the severity of it

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Speaker 1: is new, and it's coming at a time when many

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Speaker 1: of the developing countries had too much debt um So

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Speaker 1: as as we think about the the US. I think

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Speaker 1: you move through methodically with ways to uh, ways to

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Speaker 1: allow the businesses that can reopen, to reopen, the schools

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Speaker 1: to reopen where they can. That becomes a very important

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Speaker 1: part of people's productivity. You want to raise the productivity. UH.

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Speaker 1: And then in the long run you need to get

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Speaker 1: good well well UH well targeted investments UM UH in

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Speaker 1: the US and everywhere. UH. I think that comes from

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Speaker 1: transparency if you know what the investment is. For example,

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Speaker 1: in the US time you know, I've advocated the disclosure

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Speaker 1: of the outlay projections of public pension funds. A huge

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Speaker 1: amount of money goes into these funds and you don't

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Speaker 1: know what the what, what the outlay, what the outlays

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Speaker 1: are used for, what the projections are for the future

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Speaker 1: on those outlays, So they become a burden on the

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Speaker 1: allocation of investment. So developing countries, of of of finished

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Speaker 1: bit and in developing countries, we need a way that

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Speaker 1: they can move investment from the old sectors, the pre

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Speaker 1: pandemic sectors, into the new sectors. That's a core ofing

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Speaker 1: on We're gonna leave it there. David Malpus, thank you

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Speaker 1: for the update with the World Bank as well. Jill

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Speaker 1: carry Hall joins us right now with Bank of America. Joe.

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Speaker 1: We just sparked to Canadas smoke to Candice Browning here

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Speaker 1: in the last hour about your new focus on small

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Speaker 1: cap you're a specialist there as well. Is it about

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Speaker 1: a rotation from tech to small cap or is it

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Speaker 1: about tech still doing well and small cap finally picking

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Speaker 1: it up. Well, I think to your point on on

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Speaker 1: yields earlier, we've been a market where what's been what's

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Speaker 1: been gears has been rewarded, so yield has been scarce,

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Speaker 1: growth has been scarce, and you've seen a lot of

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Speaker 1: these themes working for a number of years now. Small

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Speaker 1: caps have obviously been been challenged by you know, trade tensions,

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Speaker 1: They've been challenged by the fundamental backdrop their lack of quality.

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Speaker 1: But I think you know, one of will we've been

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Speaker 1: cautious relatively on small caps in your term, one of

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Speaker 1: the longer term bullish themes for small caps is that

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Speaker 1: if we do see this this shift from from globalization

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Speaker 1: to localization and the reshoring of US manufacturing which Candice

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Speaker 1: was talking about, um, we think that could be a

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Speaker 1: bullish longer term theme for for small cap companies in

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Speaker 1: the coming years. What is the star the sectors specificity

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Speaker 1: of small caps? I mean, do I just go out

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Speaker 1: and buy small camps? Are you looking at different sectors

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Speaker 1: for example tech small cap right Well, I think one

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Speaker 1: of the important things right now is that you are

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Speaker 1: seeing a lot of divergence within the market in terms

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Speaker 1: of valuations, in terms of performance read so it's been

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Speaker 1: a good backdrop for stock pickers UM for from a

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Speaker 1: sector basis, we are within small caps starting to see

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Speaker 1: some of the more value oriented cyclical sectors start to

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Speaker 1: wait better in our works as some of the commodity

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Speaker 1: oriented cyclical sectors that previously looked like value traps are

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Speaker 1: now starting to look like better value UM. So, overall,

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Speaker 1: value is a theme that we like within the market.

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Speaker 1: We do expect we will see that rotation out of

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Speaker 1: growth into value as the profits recovery and economic recovery

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Speaker 1: broadens out. And then on the on the restoring theme,

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Speaker 1: we think that you know, there's there's a number of

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Speaker 1: subsectors that are slated to benefits. So certainly some some

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Speaker 1: tech companies, but also a number of industrials that are

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Speaker 1: focused on on automation or engineering. UM even in in

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Speaker 1: other cyclical sectors. A number of regional banks that might

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Speaker 1: be exposed to manufacturing hubs reefs, which is a big

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Speaker 1: part of small caps, that that's a sector where industrial rates, warehouses,

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Speaker 1: the could benefit as well. Jil A, good morning to you.

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Speaker 1: I've heard a lot about reshoring this week, and a

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Speaker 1: lot more in conversations with American strategists and American business

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Speaker 1: then than than I have with with people here in Europe.

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Speaker 1: Is it going to remain quite a US phenomenon and

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Speaker 1: is that because businesses think it plays well in Washington

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Speaker 1: or because they really intend to follow through on this well.

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Speaker 1: I think while while you as you see firms move

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Speaker 1: out of areas like China, there are certainly some other

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Speaker 1: regions of Asia, for example, that will benefit. But a

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Speaker 1: lot of companies are talking about bringing and bringing companies

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Speaker 1: back to North America and to the US. So I think,

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Speaker 1: you know, in areas like the Midwest and the sun Belt,

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Speaker 1: that's where some of these banks, reas, etcetera that that

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Speaker 1: I mentioned could could benefit. Um you know, if we

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Speaker 1: see higher regions from manufacturing, this could benefit lower income

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Speaker 1: consumers and areas like you know, retail value retailers like

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Speaker 1: Burlington and Coles. So I think there's a lot of

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Speaker 1: areas within the U s CAN that can benefit. And

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Speaker 1: we are starting to see early signs of this, even

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Speaker 1: though it is a long term theme actually taking hold.

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Speaker 1: We're seeing, you know, when we checked earnings calls, We're

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Speaker 1: seeing more and more companies start to talk about this

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Speaker 1: on earnings calls. We're seeing you know, supply chain professionals

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Speaker 1: talk about this. So companies, you know, even though Capex

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Speaker 1: has been in a down cycle, they are starting to

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Speaker 1: talk about making tangible shifts with respect to this theme.

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Speaker 1: And is there something that's going to create jobs in

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Speaker 1: America or is it something that's going to going to

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Speaker 1: drive the bottom line of businesses that create automated automation technology.

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Speaker 1: There are plenty of those in Europe. Yes, we think so.

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Speaker 1: And I think Candas mentioned earlier that you know, for

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Speaker 1: every manufacturing job that's created, you could see somewhere around

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Speaker 1: six or seven jobs created in other industries. So um,

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Speaker 1: you know, we think that that's why the overall pick

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Speaker 1: up in unemployment and and in potentially wages could could

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Speaker 1: benefit some of these areas like select retailers UM, and

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Speaker 1: they'll just be more demand for for banking financial services,

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Speaker 1: So there's a lot of um knock on effects from

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Speaker 1: the scheme, uh that that we could see across the

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Speaker 1: U S. And then certainly for for automation, UM you know,

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Speaker 1: companies in industrials like Rockwell or companies that focus on

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Speaker 1: industrial leadsers or things like that. Um, you know, there's

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Speaker 1: that angle as well. That that automation and the Internet

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Speaker 1: of things and a lot of these big themes that

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Speaker 1: we've been talking about as a research department we see

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Speaker 1: as as big multi year themes related to this as well.

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Speaker 1: How here with Savita Supermannians work. I mean, when we

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Speaker 1: look at the E s G as you know, top

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Speaker 1: fifty stocks maybe top two D stacks, can small cap

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Speaker 1: go E s G? Are they just not there yet? Well?

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Speaker 1: I think you know what, it's a challenge in smaller

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Speaker 1: caps because a lot of these companies may not have

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Speaker 1: the resources that it came to it, or the or

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Speaker 1: the disclosures. So it's tough for to evaluate. But when

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Speaker 1: we've done some work looking on on sub themes of

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Speaker 1: e SG for example, um, you know, diversity, women on

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Speaker 1: the board, etcetera, we found that that E s G

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Speaker 1: still still works within small caps, so that companies that

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Speaker 1: you know, for we'll have more diverse or as better governance,

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Speaker 1: are treating at higher multiples. Consistently you're seeing better returns

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Speaker 1: on equity. So this is something that I think as

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Speaker 1: the as we continue to see money flow into E

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Speaker 1: s G strategies and as companies continue to focus on

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Speaker 1: this um we found that E s G was particularly

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Speaker 1: important during the downturn that even though we saw outflows

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Speaker 1: out of E t F s broadly, we were continuing

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Speaker 1: to see inflows into E s G types of strategies. So,

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Speaker 1: you know, I think it's a very important theme that

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Speaker 1: that we as the Department of reading a lot about

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Speaker 1: and small caps. Obviously there's there's less disclosure there, but

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Speaker 1: I think that will continue to increase. Okay, we don't

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Speaker 1: do enough of this. Jill carry All, thank you so

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Speaker 1: much on small caps. Really really appreciate that. To get

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Speaker 1: you through August and into the autumn is James Bianco.

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Speaker 1: Jim Bianco writes a wonderfully eclectic note for Bianco Research

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Speaker 1: out of Chicago. He is appearing with us only because

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Speaker 1: of Chicago Cubs are in first place. Jim Bianco, I

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Speaker 1: loved what you said there about about this enigma of

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Speaker 1: where tips are give us insight on how unusual these

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Speaker 1: inflation adjustice statistics are. The problem is is the Federal

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Speaker 1: Reserve is the biggest player in that market. Since March,

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Speaker 1: they've bought a quarter trillion dollars worth of tips. And

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Speaker 1: if you're looking at the tips market and you're trying

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Speaker 1: to discern a signal out of it about the outlook

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Speaker 1: for inflation or the outlook for the economy, you have

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Speaker 1: to be be careful that it's a bit distorted because

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Speaker 1: the biggest buyer is the central Bank. Now it doesn't

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Speaker 1: mean that it's it should be ignored or are not

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Speaker 1: looked at, but it is become more complicated to try

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Speaker 1: and understand it. What other signals have value to consider inflation?

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Speaker 1: You know, that's a good question, because you'd have to

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Speaker 1: go away from the signals that are not with the

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Speaker 1: central bank. The surveys of inflation like the University of

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Speaker 1: Michigan survey or the Consumer Confidence survey, or the commodity

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Speaker 1: markets themselves, that central banks are playing in those markets

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Speaker 1: and those numbers are turning higher and they are expecting

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Speaker 1: more inflation as we move forward from here. So there's

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Speaker 1: definitely signals on the horizon that inflation is coming. You

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Speaker 1: could argue the tips market is saying the same thing,

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Speaker 1: but I'd be a little bit careful in over reading

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Speaker 1: the tips market. I want to try and rely on

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Speaker 1: some of those non market indicators. And good morning to

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Speaker 1: Jim talking about other indicators. How confident are you that

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Speaker 1: inflation readings We just got some out of the UK

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Speaker 1: this morning, inflation a little bit stronger than had been anticipated,

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Speaker 1: but that might be short lived. How confident are you

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Speaker 1: that inflation readings are giving us accurate information? Given the

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Speaker 1: way our spending patterns have shifted so much, the basket

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Speaker 1: that the statisticians rely on might not be the basket

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Speaker 1: that you and I actually consume. That it's absolutely right

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Speaker 1: that you know, in the pandemic, especially to move to online,

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Speaker 1: that what we are consuming now is what we weren't

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Speaker 1: consuming four or five months ago, so that there could

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Speaker 1: be a bit of a distortion. But at the end

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Speaker 1: of the day, let's remember what's going on, which is

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Speaker 1: the fundamental for pushing inflation higher. We have a higher

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Speaker 1: unemployment rate, we have we're producing less stuff because the

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Speaker 1: economy is at a lower level than it was a

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Speaker 1: few months ago, and we're stimulating the economy by giving

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Speaker 1: people either stimulus checks or extra unemployment. I know it

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Speaker 1: rolled off in August first, but that might come back,

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Speaker 1: and so we've got less supply, we've got demand being stimulated,

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Speaker 1: and that, I balance, should lead to higher prices, otherwise

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Speaker 1: known as inflation. And I think that that's what a

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Speaker 1: lot of the surveys are telling us might be coming.

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Speaker 1: But but knowing what we know about the way the

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Speaker 1: central banks want to keep costs or keep the costs

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Speaker 1: of funding debt low, at this point, do we really

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Speaker 1: think that do we really see inflation coming meaningfully? Jim,

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Speaker 1: I suppose a lot of people talk about inflation and

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Speaker 1: they just mean, you know, we've bounced up, expectations have

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Speaker 1: bounced up from the lows of Mars, But that doesn't

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Speaker 1: necessarily mean we're off to the races and inflation goes

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Speaker 1: much much higher from here. Yeah, you know, that's a

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Speaker 1: good point, and I do think that we are going

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Speaker 1: to see meaningful inflation, probably in the second half of

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Speaker 1: twenty one or in the twenty two as the economy

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Speaker 1: strength is an all the stimulus starts to add in

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Speaker 1: as well to the central bank, especially the Federal Reserve

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Speaker 1: is going to go to something called an average inflation target.

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Speaker 1: They're gonna say two percent is not their target, it's

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Speaker 1: their average, so they can run it above two percent.

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Speaker 1: Bear in mind, they're not gonna change policy one inch.

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Speaker 1: They're just going to announce that the target is changed

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Speaker 1: as well. Good my, Jim Bianco. This is as rare

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Speaker 1: as it can be. This is like when the White

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Speaker 1: Sox are better than the Cubs, and that only happens

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Speaker 1: once a century. Is there any evidence out there whatsoever

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Speaker 1: that governments can reflate an economy, that governments can you know,

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Speaker 1: somehow magically make two or two point five or three

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Speaker 1: percent inflation appear. No, there's no evidence at all. In fact,

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Speaker 1: two and a half three percent inflation at the core level,

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Speaker 1: we haven't seen that in thirty years. It was the

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Speaker 1: early last and and you know, I get you go

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Speaker 1: to the other side of the equation too, if you

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Speaker 1: ever got to three percent or maybe a little bit

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Speaker 1: more in inflation, there's very little evidence that the governments

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Speaker 1: or the central banks could stop it. Okay, they wanted

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Speaker 1: to stop it. I mean, I don't want to go

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Speaker 1: all Nelly Fox on you here, but let's stay with

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Speaker 1: the white sox here right now, just to bust your chops.

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Speaker 1: But Jim Bianco, what is so so important here? Is

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Speaker 1: the FED in their timeline? Do you just assume their

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Speaker 1: timeline is way out past what the zeitgeist is that

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Speaker 1: it's twenty three or dare I even say two thousand

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Speaker 1: and twenty four. Yeah, I'm gonna go white sex with

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Speaker 1: you two. They want to Richie this come run that's

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Speaker 1: gonna go into the upper deck and hope they keep

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Speaker 1: it rates that zero down to twenty three or twenty four.

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Speaker 1: But they're only going to kind of do it one

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Speaker 1: meeting at a time. They're gonna give you forward guidance

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Speaker 1: there's gonna be no inflation, and then when it's arts

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Speaker 1: to percolate and percolate too much, they'll change it and

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Speaker 1: Diagnow that's not going to happen right away, but I

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Speaker 1: suspect that when all is said and done, they'll be

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Speaker 1: moving on inflation a lot sooner than they think, probably

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Speaker 1: in a year to eighteen months as opposed to three years. Jim,

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Speaker 1: you know, you do a lot of different things a

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Speaker 1: bond market. I loved your tips work as well. I

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Speaker 1: want you to address for our listeners and viewers. This

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Speaker 1: stock market, it seems to be uniquely and differently unloved.

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Speaker 1: How do you participate? You know, that's um the stock market.

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Speaker 1: I'm in a pushback, and I understand people have said

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Speaker 1: that it is the most hated bullmarket ever. We were

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Speaker 1: saying that pre pandemic, we're saying that post pandemic. But

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Speaker 1: there are plenty of instances. There's eight signals that the

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Speaker 1: public is in in in a big way. The Robin

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Speaker 1: Hood type of retail accounts which now count for of

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Speaker 1: all the volume, which was practically nothing a couple of

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Speaker 1: years ago. They're in in a in a big way too.

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Speaker 1: They're in a big way in the concentration you see

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Speaker 1: in the in the fame stocks. Those are almost a

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Speaker 1: quarter of the SMP. You gotta go back fifty years

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Speaker 1: to find five stocks that had that big awaiting in

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Speaker 1: the market. So they were in that market. And I

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Speaker 1: think as far as to your question, the reason that

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Speaker 1: they hated is those bottom three companies. I think they're

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Speaker 1: still struggling with the economy to return to normal. But

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Speaker 1: those top companies, especially those top twenty or top, their

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Speaker 1: stay at home companies and they're doing very well and

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Speaker 1: they're pushing the whole index higher. Jim Bianco, thank you

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Speaker 1: so much. Just brilliant and love the Cubs. Jim Bianco.

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Speaker 1: They're from Chicago, combining academics in African American history with

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Speaker 1: also the operation of it all. Mr Bunch, of course,

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Speaker 1: Secretary of the Smithsonian Institution. This is a fascinating and

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Speaker 1: deeply important interview for the nation. On two accounts. It

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Speaker 1: is peer to peer with David Rubinstein, but far more

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Speaker 1: than that, it is a philanthropy of Mr Rubinstein to

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Speaker 1: the nation. David, I want you to explain when you

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00:25:02,800 --> 00:25:07,959
Speaker 1: walked in that museum and you saw your emancipation Proclamation

434
00:25:08,400 --> 00:25:13,320
Speaker 1: and your thirteenth Amendment of Abraham Lincoln sitting in that museum,

435
00:25:13,600 --> 00:25:17,000
Speaker 1: what was that like? While I was very proud that

436
00:25:17,200 --> 00:25:20,480
Speaker 1: I was able to uh provide those through the museum

437
00:25:20,520 --> 00:25:23,680
Speaker 1: and to help them get the African American History and

438
00:25:23,680 --> 00:25:26,359
Speaker 1: Culture Museum off the ground. As you probably know, that

439
00:25:26,480 --> 00:25:30,200
Speaker 1: museum cost about five forty million dollars, half of which

440
00:25:30,240 --> 00:25:32,000
Speaker 1: came from the federal government, half of which came from

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00:25:32,000 --> 00:25:34,960
Speaker 1: private contributions. And I was very pleased to be part

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00:25:34,960 --> 00:25:38,280
Speaker 1: of it. It's an extraordinary museum, and the Lonny Bunch

443
00:25:38,320 --> 00:25:40,840
Speaker 1: of the person who started it from scratch, and now

444
00:25:40,880 --> 00:25:43,320
Speaker 1: he's the not only was ahead of that museum, but

445
00:25:43,359 --> 00:25:46,480
Speaker 1: now he's the head of the Empire. Smithsonian. The Secretary,

446
00:25:46,600 --> 00:25:49,080
Speaker 1: as he's called. The inside story is the reason the

447
00:25:49,119 --> 00:25:52,919
Speaker 1: Washington Redskins exists. David is so there's something more controversial

448
00:25:53,280 --> 00:25:57,360
Speaker 1: in the Smithsonian institution in Washington. It's been a pinata

449
00:25:57,440 --> 00:26:01,200
Speaker 1: for decades. How will Mr Bunch, in your conversation with him,

450
00:26:01,480 --> 00:26:06,000
Speaker 1: how will he drive forward the Smithsonian to stability and

451
00:26:06,080 --> 00:26:10,840
Speaker 1: to a more modern institution. Well about or so of

452
00:26:10,920 --> 00:26:13,359
Speaker 1: the money comes from the federal government, so making sure

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00:26:13,480 --> 00:26:16,080
Speaker 1: Congress is happy is always important. But then we get

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00:26:16,080 --> 00:26:19,600
Speaker 1: a lot of philanthropic contributions from around the country. We

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00:26:19,800 --> 00:26:22,320
Speaker 1: make sure that continues. And then because the museums have

456
00:26:22,400 --> 00:26:25,760
Speaker 1: been closed, we've lost some revenue sources from restaurants and

457
00:26:25,800 --> 00:26:28,480
Speaker 1: other kinds of uh shops that we have in the museums.

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00:26:28,480 --> 00:26:31,280
Speaker 1: There are nineteen museums at the at the Smithsonian and

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00:26:31,480 --> 00:26:36,159
Speaker 1: but almost a ten research centers, and those museums have

460
00:26:36,280 --> 00:26:38,800
Speaker 1: been largely closed, though two are now open. The National

461
00:26:38,880 --> 00:26:41,320
Speaker 1: Zoo is open, and there's reports that there may be

462
00:26:41,359 --> 00:26:44,040
Speaker 1: a new baby panda being born very soon which will

463
00:26:44,080 --> 00:26:46,480
Speaker 1: get a lot of interest. And then the UH the

464
00:26:46,520 --> 00:26:50,280
Speaker 1: Space Museum out of Dullars uh Ubar Hazy is open

465
00:26:50,560 --> 00:26:53,680
Speaker 1: and they's expected that other museums will gradually open, assuming

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00:26:53,720 --> 00:26:56,720
Speaker 1: we do this with appropriate social distancing. I say we

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00:26:57,280 --> 00:26:59,119
Speaker 1: um Lonnie is a friend of mine. I was the

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00:26:59,200 --> 00:27:02,040
Speaker 1: chairman of the board of the Smithsonian when Monty was

469
00:27:02,080 --> 00:27:04,520
Speaker 1: selected to be the new secretary, and I've been on

470
00:27:04,520 --> 00:27:06,119
Speaker 1: the board for about a dozen years. I was a

471
00:27:06,200 --> 00:27:10,399
Speaker 1: chair for about three years. David, A good morning from London.

472
00:27:10,400 --> 00:27:12,760
Speaker 1: A good afternoon from here. What is the Smithsonian? What

473
00:27:12,760 --> 00:27:14,679
Speaker 1: did Lonnie tell you about what they are doing, what

474
00:27:14,720 --> 00:27:18,760
Speaker 1: they're thinking of doing around around racism and around adding

475
00:27:18,800 --> 00:27:21,600
Speaker 1: to the stock of education on that subject here in

476
00:27:21,920 --> 00:27:24,160
Speaker 1: the UK, there's been a lot of soul searching around

477
00:27:24,200 --> 00:27:26,359
Speaker 1: the people we chose to put on platforms over recent

478
00:27:26,480 --> 00:27:28,960
Speaker 1: years and statues that are up in in all kinds

479
00:27:29,000 --> 00:27:33,840
Speaker 1: of civic spaces. It's important perhaps that those people, if

480
00:27:33,840 --> 00:27:36,399
Speaker 1: they're toppled, that that maybe they find a place in

481
00:27:36,400 --> 00:27:38,920
Speaker 1: a museum and people can learn the lessons of history.

482
00:27:38,960 --> 00:27:42,400
Speaker 1: What is the museum thinking about doing there it's appropriate

483
00:27:42,440 --> 00:27:46,640
Speaker 1: that somebody from London's is on this club because Mr

484
00:27:46,720 --> 00:27:50,560
Speaker 1: Smith's himself was British, as you may know. Upon his death,

485
00:27:50,720 --> 00:27:54,000
Speaker 1: he ultimately provided about five hundred thousand dollars to create

486
00:27:54,040 --> 00:27:57,280
Speaker 1: the Smithsonian in the mid eighteen hundreds, and that's how

487
00:27:57,280 --> 00:28:00,159
Speaker 1: he got the Smithsonian's named after him. Of course, to

488
00:28:00,200 --> 00:28:03,680
Speaker 1: answer your question, the Bank of America has recently given

489
00:28:03,720 --> 00:28:07,040
Speaker 1: the Smithsonian million dollars and the Smithsonian is trying to

490
00:28:07,160 --> 00:28:10,480
Speaker 1: raise another five million dollars for fifty million dollars to

491
00:28:10,680 --> 00:28:14,800
Speaker 1: have a conversation and dialogue about race that will go

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00:28:14,920 --> 00:28:17,920
Speaker 1: throughout all the museums of the Smithsonian, the nine Team museums,

493
00:28:18,000 --> 00:28:20,880
Speaker 1: but also try to have a very frank conversation about

494
00:28:20,960 --> 00:28:24,639
Speaker 1: race at the Smithsonian, just as Smithsonian racial matters, but

495
00:28:24,720 --> 00:28:27,840
Speaker 1: about the entire country. Now. No conversation is going to

496
00:28:27,920 --> 00:28:30,640
Speaker 1: solve all racial problems, of course, and there's no doubt

497
00:28:30,720 --> 00:28:33,720
Speaker 1: that there are going to be racial discrimination, uh for

498
00:28:33,760 --> 00:28:36,240
Speaker 1: some time in this country. But it's a beginning, and

499
00:28:36,280 --> 00:28:38,640
Speaker 1: I think it's an important beginning. It's an important beginning.

500
00:28:38,640 --> 00:28:41,880
Speaker 1: Important parts of the conversation, how how are they managing

501
00:28:41,960 --> 00:28:44,880
Speaker 1: to return to anything like normal operations? David, because I

502
00:28:44,920 --> 00:28:46,680
Speaker 1: know that one of the things you talked about was

503
00:28:46,960 --> 00:28:49,280
Speaker 1: the way that teamwork really shown through. And this is

504
00:28:49,320 --> 00:28:52,040
Speaker 1: something I've heard from a number of leaders in business

505
00:28:52,120 --> 00:28:56,040
Speaker 1: also that although the pandemic has thrown up incredible challenges

506
00:28:56,080 --> 00:28:58,760
Speaker 1: for business leaders, it has also shown a light on

507
00:28:58,840 --> 00:29:01,200
Speaker 1: resilience and and seen work in a way that perhaps

508
00:29:01,200 --> 00:29:03,200
Speaker 1: normal times don't. Is that something you took away from

509
00:29:03,240 --> 00:29:06,480
Speaker 1: your conversation. Well, sure, Remember most people in the United

510
00:29:06,520 --> 00:29:09,280
Speaker 1: States love the Smithsonian. Is I like to say nobody

511
00:29:09,320 --> 00:29:12,360
Speaker 1: doesn't like the Smithsonian. Everybody likes the Smithsonian because people

512
00:29:12,400 --> 00:29:15,040
Speaker 1: have fond memories of it, and part because its attendance

513
00:29:15,200 --> 00:29:17,920
Speaker 1: is free. There are no admission prices, and that's because

514
00:29:17,960 --> 00:29:20,720
Speaker 1: Congress is putting up the money for it. Its taxpayer money.

515
00:29:20,920 --> 00:29:22,840
Speaker 1: So people have fond memories. I do when I was

516
00:29:22,880 --> 00:29:24,800
Speaker 1: a child of going there for free, and and many

517
00:29:24,800 --> 00:29:27,880
Speaker 1: other people I have those similar memories. Today. What we

518
00:29:27,920 --> 00:29:30,320
Speaker 1: want to do is get the museums open again, and

519
00:29:30,360 --> 00:29:31,840
Speaker 1: that's what Lonny Bunch is trying to do. But we

520
00:29:31,880 --> 00:29:34,480
Speaker 1: have to do it an appropriate social distancing way and

521
00:29:34,560 --> 00:29:37,160
Speaker 1: way that isn't gonna lead to viruses and the employees

522
00:29:37,320 --> 00:29:41,000
Speaker 1: getting getting sick or the people attending, So every employee

523
00:29:41,000 --> 00:29:43,440
Speaker 1: will have to wear a mask. Those coming into the

524
00:29:43,520 --> 00:29:45,560
Speaker 1: museums will wear masks, and we have to make sure

525
00:29:45,600 --> 00:29:47,600
Speaker 1: we don't have too many people, and we'll open them

526
00:29:47,640 --> 00:29:49,719
Speaker 1: up gradually over a period of time and see how

527
00:29:49,760 --> 00:29:51,920
Speaker 1: it goes, and if we make mistakes, then we'll have

528
00:29:51,920 --> 00:29:54,000
Speaker 1: to correct them. But it's gonna take a while. And

529
00:29:54,040 --> 00:29:56,840
Speaker 1: I think, just as other organizations around the United States

530
00:29:56,840 --> 00:29:59,120
Speaker 1: that are figuring out other museums how to open up,

531
00:29:59,240 --> 00:30:02,800
Speaker 1: the Smithsonian is is really the museum everybody's watching because

532
00:30:02,800 --> 00:30:05,280
Speaker 1: we are the biggest museum complex in the world. David

533
00:30:05,320 --> 00:30:07,960
Speaker 1: rudin Stein, thank you so much. It is peer to peer.

534
00:30:08,040 --> 00:30:13,280
Speaker 1: These are wonderful conversations with business, finance, and indeed Washington leaders.

535
00:30:13,360 --> 00:30:16,360
Speaker 1: Lonny Bunch of the Smithsonian Museum. That's tonight at nine

536
00:30:16,440 --> 00:30:21,160
Speaker 1: pm is well. Thanks for listening to the Bloomberg Surveillance podcast.

537
00:30:21,520 --> 00:30:26,480
Speaker 1: Subscribe and listen to interviews on Apple Podcasts, SoundCloud, or

538
00:30:26,600 --> 00:30:30,920
Speaker 1: whichever podcast platform you prefer. I'm on Twitter at Tom

539
00:30:31,040 --> 00:30:34,920
Speaker 1: Keane before the podcast, you can always catch us worldwide.

540
00:30:35,360 --> 00:30:36,440
Speaker 1: I'm Bloomberg Radio