Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene. Daily
Speaker 1: we bring you insight from the best in economics, finance, investment,
Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,
Speaker 1: Bloomberg dot Com and of course on the Bloomberg. Right now,
Speaker 1: our conversation with the World Bank President David Malpass. David
Speaker 1: I was talking with our Eric Martin, and he is
Speaker 1: quite certain that a key topic here is debt relief
Speaker 1: for beleaguer nations. To begin, give us an update on
Speaker 1: the urgency of debt relief for many troubled nations. Hi, Tom,
Speaker 1: and and and a good morning. Um Well, the deepest
Speaker 1: urgency is for growth and reduction in poverty and in
Speaker 1: to get their countries need investment, new new cash flows,
Speaker 1: new investment, and one obstacle to that is the is
Speaker 1: the debt burden. If you if you're a new investor
Speaker 1: and you know that your money is going to go
Speaker 1: to help pay off old debt, that creates an obstacle
Speaker 1: to the new investment. So we're trying to find relief
Speaker 1: from both the debt service, meaning that the payments that
Speaker 1: the countries have to make. These are the poorest countries
Speaker 1: in the world. They don't have the resources to fight COVID,
Speaker 1: so to reduce their current cash flow payments, but also
Speaker 1: looking at reducing the stock of their debt, which would
Speaker 1: give light at the end of the tunnel the debut
Speaker 1: are expert on this from your tour of duty as
Speaker 1: global economists for Bear Stearns, and you and I know
Speaker 1: Stam Fisher in the Wonderful Summary read book he wrote,
Speaker 1: we know the work of Bill Rhodes when he was
Speaker 1: at City Group on debt workout, etcetera. Is it the
Speaker 1: same pole season procedures? Is from another time and place.
Speaker 1: There's a world bank working at debt workout with a
Speaker 1: new different formula, a new different process. Uh, it's different.
Speaker 1: I talked, happened to talk with Bill Rhodes last week.
Speaker 1: He's doing well. By the way, was involved in many
Speaker 1: of the previous debt restructurings. Those in the nineteen eighties.
Speaker 1: I was at Treasury with the with the during the
Speaker 1: Latin debt crisis. Those were syndicated bank loans and so
Speaker 1: they had a different restructuring process. Uh. And also very
Speaker 1: importantly a different dynamic between creditors and debtors because that
Speaker 1: the banks needed the repayments in order to maintain their
Speaker 1: equity capital. This time around, basically beginning in two thousand
Speaker 1: four or so, there has been a huge build up
Speaker 1: of debt in the poorest countries coming from China and
Speaker 1: also from private sector. Credit is through bonds, your Euro
Speaker 1: bonds for example, and those are those are more difficult
Speaker 1: to instructor and the dynamic between the creditor and the
Speaker 1: debtor has shifted in favor of the creditor. So the
Speaker 1: problem this causes for growth for new investment is the
Speaker 1: creditor is sitting there wanting on the doctor uh, and
Speaker 1: that creates a big challenge in terms of creating light
Speaker 1: at the end of the tunnel for the poorest countries.
Speaker 1: You have on your website, Mr mal Pass a phenomenal
Speaker 1: box chart of these troubled nations and their relationship with China.
Speaker 1: This is a delicate question, David, and I hope you
Speaker 1: come back to Bloomberg Surveillance after my rudeness. But how
Speaker 1: intrusive is a Trump White House in their negotiations with
Speaker 1: China for you at the World Bank to have a
Speaker 1: constructive workout of troubled nation debt with China. How much
Speaker 1: does the Trump administration get in the way. I would
Speaker 1: frame it that way, Tom. The issues are the US
Speaker 1: may have issues with China, for example on trade UH,
Speaker 1: but then the world separately recognizes that we're all trying
Speaker 1: to work together to get growth in developing countries. So
Speaker 1: the challenge is that over the last ten years or so,
Speaker 1: China has UH made many loans into developing countries with
Speaker 1: terms that aren't transparent UH and also with terms that
Speaker 1: are that are higher in interest rate than than than
Speaker 1: the countries can afford UH. And so the challenges is
Speaker 1: somewhat a technical one for the whole world working together
Speaker 1: looking for a way to find a way through this
Speaker 1: and China, China needs to participate the G They in
Speaker 1: the G twenty in April they said they were fully
Speaker 1: engaged in this. But then getting each of the Chinese lenders,
Speaker 1: there's there's many official lenders from China, getting each of
Speaker 1: them on board is a challenge. So what we're pushing
Speaker 1: and I'm glad you raised the website, so we are
Speaker 1: we are thinking that transparency will help UH. And so
Speaker 1: if we can disclose for example, when central banks make
Speaker 1: swaps between each other, that's actually a debt or some
Speaker 1: of the types of those swaps our debts and could
Speaker 1: be disclosed as debts and should be um When Ecuador
Speaker 1: does a restructuring as they did last week, there are
Speaker 1: other creditors who were not included in the main restructuring,
Speaker 1: and the terms of those other restructuring should be disclosed.
Speaker 1: This way people can look at it and get a
Speaker 1: better outcome. Okay, David, good morning to you. So that
Speaker 1: transparency should help maybe facilitate those conversations with China. But
Speaker 1: in the current climate, do you get any sense than
Speaker 1: David that the Chinese are going to join with your
Speaker 1: effort with the d S s I to to alleviate
Speaker 1: this debt servicing burden for the for the for the
Speaker 1: poor nations. Yes, certainly so many of the Chinese creditor agencies,
Speaker 1: so China x In Bank, they have they have a
Speaker 1: number of lenders in China. Uh they're participating in the
Speaker 1: d S s I with the restructuring terms that are
Speaker 1: that other countries are using, some of them are not,
Speaker 1: and so that that creates the challenge that we're that
Speaker 1: we're working on through by disclosing that. In other words,
Speaker 1: if there can be more information I think we'll get
Speaker 1: a better outcome. Other things I should say that we're
Speaker 1: working on is in the longer run, some of the countries,
Speaker 1: the h the most debt constrained, really need a reduction
Speaker 1: in the stock of debt. What we've been talking about
Speaker 1: so far is is the China's participation and everyone, all
Speaker 1: the creditors participating in a moratorium on the on the
Speaker 1: re aiments from the countries. But so far they they're
Speaker 1: the countries are just adding that amount on to the
Speaker 1: end of the loan, so there's not really debt stock
Speaker 1: relief um and with the interest rate environment as low
Speaker 1: as it is right now, net present value isn't a
Speaker 1: good metric of trying to figure that out. So we're
Speaker 1: looking at ways to do a reduction in the actual
Speaker 1: amount owed so that then more investors will come into
Speaker 1: the countries. If we look ahead to the meetings that
Speaker 1: always take place in the in the fall, in the autumn,
Speaker 1: the I m F and the World Bank meetings, should
Speaker 1: we look ahead with that kind of time horizon in
Speaker 1: mind to see an extension of the d S S
Speaker 1: I so further relief on debt servicing costs and should
Speaker 1: we go further than that should we hope in October
Speaker 1: to see something on the underlying stock of debt, then um,
Speaker 1: yes and yes. So I spoke with the G seven
Speaker 1: finance ministers on Monday and they're they're they're favorable, and
Speaker 1: I think to G twenty will be favorable on an
Speaker 1: extension of the debt service moratorium. And then the next
Speaker 1: step is is harder to have agreement to to actually
Speaker 1: do haircuts or write downs. That has happened in the past,
Speaker 1: for example, in the nineteen eighties and the Latin deck crisis,
Speaker 1: it got to the point of of haircuts, but it
Speaker 1: took so long that the countries were in deep, deep
Speaker 1: trouble by the time that happened UH. And so one
Speaker 1: of the things we're trying to do is UH is
Speaker 1: accelerate that so you can get to a good outcome sooner.
Speaker 1: You know, this is important, and I'd like to mention
Speaker 1: other things. We're working on a whole range of areas,
Speaker 1: and one is the inequality of the current global UH crisis.
Speaker 1: It's hitting the forest countries and people the hardest. And
Speaker 1: another so we're working hard on that with big new
Speaker 1: UH surge in World Bank Group lending to these countries
Speaker 1: And the other thing I wanted to mention is vaccines,
Speaker 1: which are so important, and so the fund the financing
Speaker 1: that the World Bank has available for things like healthcare,
Speaker 1: and we we've done over a hundred programs just in
Speaker 1: April and May. Those can be used for vaccines, for therapeutics,
Speaker 1: and so I think the world concentrating on that, putting
Speaker 1: more money into those efforts is used. David, you know what,
Speaker 1: I mean to make a joke about it, because this
Speaker 1: is tragic stuff. But if you look at Jay John
Speaker 1: Burns Murdoch's wonderful work at the FT with Johns Hopkins University,
Speaker 1: there's Bolivia, there's Panama, there's Latin America, and then there's
Speaker 1: this World Bank country, the United States of America up
Speaker 1: there with pandemic. What would David mal Pass in the
Speaker 1: World Bank do to help the United States not have
Speaker 1: as ugly death statistics like these other truly impoverished nations. Uh.
Speaker 1: I mean, one thing we should recognize is we're in
Speaker 1: new territory. The pandemic is new, the severity of it
Speaker 1: is new, and it's coming at a time when many
Speaker 1: of the developing countries had too much debt um So
Speaker 1: as as we think about the the US. I think
Speaker 1: you move through methodically with ways to uh, ways to
Speaker 1: allow the businesses that can reopen, to reopen, the schools
Speaker 1: to reopen where they can. That becomes a very important
Speaker 1: part of people's productivity. You want to raise the productivity. UH.
Speaker 1: And then in the long run you need to get
Speaker 1: good well well UH well targeted investments UM UH in
Speaker 1: the US and everywhere. UH. I think that comes from
Speaker 1: transparency if you know what the investment is. For example,
Speaker 1: in the US time you know, I've advocated the disclosure
Speaker 1: of the outlay projections of public pension funds. A huge
Speaker 1: amount of money goes into these funds and you don't
Speaker 1: know what the what, what the outlay, what the outlays
Speaker 1: are used for, what the projections are for the future
Speaker 1: on those outlays, So they become a burden on the
Speaker 1: allocation of investment. So developing countries, of of of finished
Speaker 1: bit and in developing countries, we need a way that
Speaker 1: they can move investment from the old sectors, the pre
Speaker 1: pandemic sectors, into the new sectors. That's a core ofing
Speaker 1: on We're gonna leave it there. David Malpus, thank you
Speaker 1: for the update with the World Bank as well. Jill
Speaker 1: carry Hall joins us right now with Bank of America. Joe.
Speaker 1: We just sparked to Canadas smoke to Candice Browning here
Speaker 1: in the last hour about your new focus on small
Speaker 1: cap you're a specialist there as well. Is it about
Speaker 1: a rotation from tech to small cap or is it
Speaker 1: about tech still doing well and small cap finally picking
Speaker 1: it up. Well, I think to your point on on
Speaker 1: yields earlier, we've been a market where what's been what's
Speaker 1: been gears has been rewarded, so yield has been scarce,
Speaker 1: growth has been scarce, and you've seen a lot of
Speaker 1: these themes working for a number of years now. Small
Speaker 1: caps have obviously been been challenged by you know, trade tensions,
Speaker 1: They've been challenged by the fundamental backdrop their lack of quality.
Speaker 1: But I think you know, one of will we've been
Speaker 1: cautious relatively on small caps in your term, one of
Speaker 1: the longer term bullish themes for small caps is that
Speaker 1: if we do see this this shift from from globalization
Speaker 1: to localization and the reshoring of US manufacturing which Candice
Speaker 1: was talking about, um, we think that could be a
Speaker 1: bullish longer term theme for for small cap companies in
Speaker 1: the coming years. What is the star the sectors specificity
Speaker 1: of small caps? I mean, do I just go out
Speaker 1: and buy small camps? Are you looking at different sectors
Speaker 1: for example tech small cap right Well, I think one
Speaker 1: of the important things right now is that you are
Speaker 1: seeing a lot of divergence within the market in terms
Speaker 1: of valuations, in terms of performance read so it's been
Speaker 1: a good backdrop for stock pickers UM for from a
Speaker 1: sector basis, we are within small caps starting to see
Speaker 1: some of the more value oriented cyclical sectors start to
Speaker 1: wait better in our works as some of the commodity
Speaker 1: oriented cyclical sectors that previously looked like value traps are
Speaker 1: now starting to look like better value UM. So, overall,
Speaker 1: value is a theme that we like within the market.
Speaker 1: We do expect we will see that rotation out of
Speaker 1: growth into value as the profits recovery and economic recovery
Speaker 1: broadens out. And then on the on the restoring theme,
Speaker 1: we think that you know, there's there's a number of
Speaker 1: subsectors that are slated to benefits. So certainly some some
Speaker 1: tech companies, but also a number of industrials that are
Speaker 1: focused on on automation or engineering. UM even in in
Speaker 1: other cyclical sectors. A number of regional banks that might
Speaker 1: be exposed to manufacturing hubs reefs, which is a big
Speaker 1: part of small caps, that that's a sector where industrial rates, warehouses,
Speaker 1: the could benefit as well. Jil A, good morning to you.
Speaker 1: I've heard a lot about reshoring this week, and a
Speaker 1: lot more in conversations with American strategists and American business
Speaker 1: then than than I have with with people here in Europe.
Speaker 1: Is it going to remain quite a US phenomenon and
Speaker 1: is that because businesses think it plays well in Washington
Speaker 1: or because they really intend to follow through on this well.
Speaker 1: I think while while you as you see firms move
Speaker 1: out of areas like China, there are certainly some other
Speaker 1: regions of Asia, for example, that will benefit. But a
Speaker 1: lot of companies are talking about bringing and bringing companies
Speaker 1: back to North America and to the US. So I think,
Speaker 1: you know, in areas like the Midwest and the sun Belt,
Speaker 1: that's where some of these banks, reas, etcetera that that
Speaker 1: I mentioned could could benefit. Um you know, if we
Speaker 1: see higher regions from manufacturing, this could benefit lower income
Speaker 1: consumers and areas like you know, retail value retailers like
Speaker 1: Burlington and Coles. So I think there's a lot of
Speaker 1: areas within the U s CAN that can benefit. And
Speaker 1: we are starting to see early signs of this, even
Speaker 1: though it is a long term theme actually taking hold.
Speaker 1: We're seeing, you know, when we checked earnings calls, We're
Speaker 1: seeing more and more companies start to talk about this
Speaker 1: on earnings calls. We're seeing you know, supply chain professionals
Speaker 1: talk about this. So companies, you know, even though Capex
Speaker 1: has been in a down cycle, they are starting to
Speaker 1: talk about making tangible shifts with respect to this theme.
Speaker 1: And is there something that's going to create jobs in
Speaker 1: America or is it something that's going to going to
Speaker 1: drive the bottom line of businesses that create automated automation technology.
Speaker 1: There are plenty of those in Europe. Yes, we think so.
Speaker 1: And I think Candas mentioned earlier that you know, for
Speaker 1: every manufacturing job that's created, you could see somewhere around
Speaker 1: six or seven jobs created in other industries. So um,
Speaker 1: you know, we think that that's why the overall pick
Speaker 1: up in unemployment and and in potentially wages could could
Speaker 1: benefit some of these areas like select retailers UM, and
Speaker 1: they'll just be more demand for for banking financial services,
Speaker 1: So there's a lot of um knock on effects from
Speaker 1: the scheme, uh that that we could see across the
Speaker 1: U S. And then certainly for for automation, UM you know,
Speaker 1: companies in industrials like Rockwell or companies that focus on
Speaker 1: industrial leadsers or things like that. Um, you know, there's
Speaker 1: that angle as well. That that automation and the Internet
Speaker 1: of things and a lot of these big themes that
Speaker 1: we've been talking about as a research department we see
Speaker 1: as as big multi year themes related to this as well.
Speaker 1: How here with Savita Supermannians work. I mean, when we
Speaker 1: look at the E s G as you know, top
Speaker 1: fifty stocks maybe top two D stacks, can small cap
Speaker 1: go E s G? Are they just not there yet? Well?
Speaker 1: I think you know what, it's a challenge in smaller
Speaker 1: caps because a lot of these companies may not have
Speaker 1: the resources that it came to it, or the or
Speaker 1: the disclosures. So it's tough for to evaluate. But when
Speaker 1: we've done some work looking on on sub themes of
Speaker 1: e SG for example, um, you know, diversity, women on
Speaker 1: the board, etcetera, we found that that E s G
Speaker 1: still still works within small caps, so that companies that
Speaker 1: you know, for we'll have more diverse or as better governance,
Speaker 1: are treating at higher multiples. Consistently you're seeing better returns
Speaker 1: on equity. So this is something that I think as
Speaker 1: the as we continue to see money flow into E
Speaker 1: s G strategies and as companies continue to focus on
Speaker 1: this um we found that E s G was particularly
Speaker 1: important during the downturn that even though we saw outflows
Speaker 1: out of E t F s broadly, we were continuing
Speaker 1: to see inflows into E s G types of strategies. So,
Speaker 1: you know, I think it's a very important theme that
Speaker 1: that we as the Department of reading a lot about
Speaker 1: and small caps. Obviously there's there's less disclosure there, but
Speaker 1: I think that will continue to increase. Okay, we don't
Speaker 1: do enough of this. Jill carry All, thank you so
Speaker 1: much on small caps. Really really appreciate that. To get
Speaker 1: you through August and into the autumn is James Bianco.
Speaker 1: Jim Bianco writes a wonderfully eclectic note for Bianco Research
Speaker 1: out of Chicago. He is appearing with us only because
Speaker 1: of Chicago Cubs are in first place. Jim Bianco, I
Speaker 1: loved what you said there about about this enigma of
Speaker 1: where tips are give us insight on how unusual these
Speaker 1: inflation adjustice statistics are. The problem is is the Federal
Speaker 1: Reserve is the biggest player in that market. Since March,
Speaker 1: they've bought a quarter trillion dollars worth of tips. And
Speaker 1: if you're looking at the tips market and you're trying
Speaker 1: to discern a signal out of it about the outlook
Speaker 1: for inflation or the outlook for the economy, you have
Speaker 1: to be be careful that it's a bit distorted because
Speaker 1: the biggest buyer is the central Bank. Now it doesn't
Speaker 1: mean that it's it should be ignored or are not
Speaker 1: looked at, but it is become more complicated to try
Speaker 1: and understand it. What other signals have value to consider inflation?
Speaker 1: You know, that's a good question, because you'd have to
Speaker 1: go away from the signals that are not with the
Speaker 1: central bank. The surveys of inflation like the University of
Speaker 1: Michigan survey or the Consumer Confidence survey, or the commodity
Speaker 1: markets themselves, that central banks are playing in those markets
Speaker 1: and those numbers are turning higher and they are expecting
Speaker 1: more inflation as we move forward from here. So there's
Speaker 1: definitely signals on the horizon that inflation is coming. You
Speaker 1: could argue the tips market is saying the same thing,
Speaker 1: but I'd be a little bit careful in over reading
Speaker 1: the tips market. I want to try and rely on
Speaker 1: some of those non market indicators. And good morning to
Speaker 1: Jim talking about other indicators. How confident are you that
Speaker 1: inflation readings We just got some out of the UK
Speaker 1: this morning, inflation a little bit stronger than had been anticipated,
Speaker 1: but that might be short lived. How confident are you
Speaker 1: that inflation readings are giving us accurate information? Given the
Speaker 1: way our spending patterns have shifted so much, the basket
Speaker 1: that the statisticians rely on might not be the basket
Speaker 1: that you and I actually consume. That it's absolutely right
Speaker 1: that you know, in the pandemic, especially to move to online,
Speaker 1: that what we are consuming now is what we weren't
Speaker 1: consuming four or five months ago, so that there could
Speaker 1: be a bit of a distortion. But at the end
Speaker 1: of the day, let's remember what's going on, which is
Speaker 1: the fundamental for pushing inflation higher. We have a higher
Speaker 1: unemployment rate, we have we're producing less stuff because the
Speaker 1: economy is at a lower level than it was a
Speaker 1: few months ago, and we're stimulating the economy by giving
Speaker 1: people either stimulus checks or extra unemployment. I know it
Speaker 1: rolled off in August first, but that might come back,
Speaker 1: and so we've got less supply, we've got demand being stimulated,
Speaker 1: and that, I balance, should lead to higher prices, otherwise
Speaker 1: known as inflation. And I think that that's what a
Speaker 1: lot of the surveys are telling us might be coming.
Speaker 1: But but knowing what we know about the way the
Speaker 1: central banks want to keep costs or keep the costs
Speaker 1: of funding debt low, at this point, do we really
Speaker 1: think that do we really see inflation coming meaningfully? Jim,
Speaker 1: I suppose a lot of people talk about inflation and
Speaker 1: they just mean, you know, we've bounced up, expectations have
Speaker 1: bounced up from the lows of Mars, But that doesn't
Speaker 1: necessarily mean we're off to the races and inflation goes
Speaker 1: much much higher from here. Yeah, you know, that's a
Speaker 1: good point, and I do think that we are going
Speaker 1: to see meaningful inflation, probably in the second half of
Speaker 1: twenty one or in the twenty two as the economy
Speaker 1: strength is an all the stimulus starts to add in
Speaker 1: as well to the central bank, especially the Federal Reserve
Speaker 1: is going to go to something called an average inflation target.
Speaker 1: They're gonna say two percent is not their target, it's
Speaker 1: their average, so they can run it above two percent.
Speaker 1: Bear in mind, they're not gonna change policy one inch.
Speaker 1: They're just going to announce that the target is changed
Speaker 1: as well. Good my, Jim Bianco. This is as rare
Speaker 1: as it can be. This is like when the White
Speaker 1: Sox are better than the Cubs, and that only happens
Speaker 1: once a century. Is there any evidence out there whatsoever
Speaker 1: that governments can reflate an economy, that governments can you know,
Speaker 1: somehow magically make two or two point five or three
Speaker 1: percent inflation appear. No, there's no evidence at all. In fact,
Speaker 1: two and a half three percent inflation at the core level,
Speaker 1: we haven't seen that in thirty years. It was the
Speaker 1: early last and and you know, I get you go
Speaker 1: to the other side of the equation too, if you
Speaker 1: ever got to three percent or maybe a little bit
Speaker 1: more in inflation, there's very little evidence that the governments
Speaker 1: or the central banks could stop it. Okay, they wanted
Speaker 1: to stop it. I mean, I don't want to go
Speaker 1: all Nelly Fox on you here, but let's stay with
Speaker 1: the white sox here right now, just to bust your chops.
Speaker 1: But Jim Bianco, what is so so important here? Is
Speaker 1: the FED in their timeline? Do you just assume their
Speaker 1: timeline is way out past what the zeitgeist is that
Speaker 1: it's twenty three or dare I even say two thousand
Speaker 1: and twenty four. Yeah, I'm gonna go white sex with
Speaker 1: you two. They want to Richie this come run that's
Speaker 1: gonna go into the upper deck and hope they keep
Speaker 1: it rates that zero down to twenty three or twenty four.
Speaker 1: But they're only going to kind of do it one
Speaker 1: meeting at a time. They're gonna give you forward guidance
Speaker 1: there's gonna be no inflation, and then when it's arts
Speaker 1: to percolate and percolate too much, they'll change it and
Speaker 1: Diagnow that's not going to happen right away, but I
Speaker 1: suspect that when all is said and done, they'll be
Speaker 1: moving on inflation a lot sooner than they think, probably
Speaker 1: in a year to eighteen months as opposed to three years. Jim,
Speaker 1: you know, you do a lot of different things a
Speaker 1: bond market. I loved your tips work as well. I
Speaker 1: want you to address for our listeners and viewers. This
Speaker 1: stock market, it seems to be uniquely and differently unloved.
Speaker 1: How do you participate? You know, that's um the stock market.
Speaker 1: I'm in a pushback, and I understand people have said
Speaker 1: that it is the most hated bullmarket ever. We were
Speaker 1: saying that pre pandemic, we're saying that post pandemic. But
Speaker 1: there are plenty of instances. There's eight signals that the
Speaker 1: public is in in in a big way. The Robin
Speaker 1: Hood type of retail accounts which now count for of
Speaker 1: all the volume, which was practically nothing a couple of
Speaker 1: years ago. They're in in a in a big way too.
Speaker 1: They're in a big way in the concentration you see
Speaker 1: in the in the fame stocks. Those are almost a
Speaker 1: quarter of the SMP. You gotta go back fifty years
Speaker 1: to find five stocks that had that big awaiting in
Speaker 1: the market. So they were in that market. And I
Speaker 1: think as far as to your question, the reason that
Speaker 1: they hated is those bottom three companies. I think they're
Speaker 1: still struggling with the economy to return to normal. But
Speaker 1: those top companies, especially those top twenty or top, their
Speaker 1: stay at home companies and they're doing very well and
Speaker 1: they're pushing the whole index higher. Jim Bianco, thank you
Speaker 1: so much. Just brilliant and love the Cubs. Jim Bianco.
Speaker 1: They're from Chicago, combining academics in African American history with
Speaker 1: also the operation of it all. Mr Bunch, of course,
Speaker 1: Secretary of the Smithsonian Institution. This is a fascinating and
Speaker 1: deeply important interview for the nation. On two accounts. It
Speaker 1: is peer to peer with David Rubinstein, but far more
Speaker 1: than that, it is a philanthropy of Mr Rubinstein to
Speaker 1: the nation. David, I want you to explain when you
Speaker 1: walked in that museum and you saw your emancipation Proclamation
Speaker 1: and your thirteenth Amendment of Abraham Lincoln sitting in that museum,
Speaker 1: what was that like? While I was very proud that
Speaker 1: I was able to uh provide those through the museum
Speaker 1: and to help them get the African American History and
Speaker 1: Culture Museum off the ground. As you probably know, that
Speaker 1: museum cost about five forty million dollars, half of which
Speaker 1: came from the federal government, half of which came from
Speaker 1: private contributions. And I was very pleased to be part
Speaker 1: of it. It's an extraordinary museum, and the Lonny Bunch
Speaker 1: of the person who started it from scratch, and now
Speaker 1: he's the not only was ahead of that museum, but
Speaker 1: now he's the head of the Empire. Smithsonian. The Secretary,
Speaker 1: as he's called. The inside story is the reason the
Speaker 1: Washington Redskins exists. David is so there's something more controversial
Speaker 1: in the Smithsonian institution in Washington. It's been a pinata
Speaker 1: for decades. How will Mr Bunch, in your conversation with him,
Speaker 1: how will he drive forward the Smithsonian to stability and
Speaker 1: to a more modern institution. Well about or so of
Speaker 1: the money comes from the federal government, so making sure
Speaker 1: Congress is happy is always important. But then we get
Speaker 1: a lot of philanthropic contributions from around the country. We
Speaker 1: make sure that continues. And then because the museums have
Speaker 1: been closed, we've lost some revenue sources from restaurants and
Speaker 1: other kinds of uh shops that we have in the museums.
Speaker 1: There are nineteen museums at the at the Smithsonian and
Speaker 1: but almost a ten research centers, and those museums have
Speaker 1: been largely closed, though two are now open. The National
Speaker 1: Zoo is open, and there's reports that there may be
Speaker 1: a new baby panda being born very soon which will
Speaker 1: get a lot of interest. And then the UH the
Speaker 1: Space Museum out of Dullars uh Ubar Hazy is open
Speaker 1: and they's expected that other museums will gradually open, assuming
Speaker 1: we do this with appropriate social distancing. I say we
Speaker 1: um Lonnie is a friend of mine. I was the
Speaker 1: chairman of the board of the Smithsonian when Monty was
Speaker 1: selected to be the new secretary, and I've been on
Speaker 1: the board for about a dozen years. I was a
Speaker 1: chair for about three years. David, A good morning from London.
Speaker 1: A good afternoon from here. What is the Smithsonian? What
Speaker 1: did Lonnie tell you about what they are doing, what
Speaker 1: they're thinking of doing around around racism and around adding
Speaker 1: to the stock of education on that subject here in
Speaker 1: the UK, there's been a lot of soul searching around
Speaker 1: the people we chose to put on platforms over recent
Speaker 1: years and statues that are up in in all kinds
Speaker 1: of civic spaces. It's important perhaps that those people, if
Speaker 1: they're toppled, that that maybe they find a place in
Speaker 1: a museum and people can learn the lessons of history.
Speaker 1: What is the museum thinking about doing there it's appropriate
Speaker 1: that somebody from London's is on this club because Mr
Speaker 1: Smith's himself was British, as you may know. Upon his death,
Speaker 1: he ultimately provided about five hundred thousand dollars to create
Speaker 1: the Smithsonian in the mid eighteen hundreds, and that's how
Speaker 1: he got the Smithsonian's named after him. Of course, to
Speaker 1: answer your question, the Bank of America has recently given
Speaker 1: the Smithsonian million dollars and the Smithsonian is trying to
Speaker 1: raise another five million dollars for fifty million dollars to
Speaker 1: have a conversation and dialogue about race that will go
Speaker 1: throughout all the museums of the Smithsonian, the nine Team museums,
Speaker 1: but also try to have a very frank conversation about
Speaker 1: race at the Smithsonian, just as Smithsonian racial matters, but
Speaker 1: about the entire country. Now. No conversation is going to
Speaker 1: solve all racial problems, of course, and there's no doubt
Speaker 1: that there are going to be racial discrimination, uh for
Speaker 1: some time in this country. But it's a beginning, and
Speaker 1: I think it's an important beginning. It's an important beginning.
Speaker 1: Important parts of the conversation, how how are they managing
Speaker 1: to return to anything like normal operations? David, because I
Speaker 1: know that one of the things you talked about was
Speaker 1: the way that teamwork really shown through. And this is
Speaker 1: something I've heard from a number of leaders in business
Speaker 1: also that although the pandemic has thrown up incredible challenges
Speaker 1: for business leaders, it has also shown a light on
Speaker 1: resilience and and seen work in a way that perhaps
Speaker 1: normal times don't. Is that something you took away from
Speaker 1: your conversation. Well, sure, Remember most people in the United
Speaker 1: States love the Smithsonian. Is I like to say nobody
Speaker 1: doesn't like the Smithsonian. Everybody likes the Smithsonian because people
Speaker 1: have fond memories of it, and part because its attendance
Speaker 1: is free. There are no admission prices, and that's because
Speaker 1: Congress is putting up the money for it. Its taxpayer money.
Speaker 1: So people have fond memories. I do when I was
Speaker 1: a child of going there for free, and and many
Speaker 1: other people I have those similar memories. Today. What we
Speaker 1: want to do is get the museums open again, and
Speaker 1: that's what Lonny Bunch is trying to do. But we
Speaker 1: have to do it an appropriate social distancing way and
Speaker 1: way that isn't gonna lead to viruses and the employees
Speaker 1: getting getting sick or the people attending, So every employee
Speaker 1: will have to wear a mask. Those coming into the
Speaker 1: museums will wear masks, and we have to make sure
Speaker 1: we don't have too many people, and we'll open them
Speaker 1: up gradually over a period of time and see how
Speaker 1: it goes, and if we make mistakes, then we'll have
Speaker 1: to correct them. But it's gonna take a while. And
Speaker 1: I think, just as other organizations around the United States
Speaker 1: that are figuring out other museums how to open up,
Speaker 1: the Smithsonian is is really the museum everybody's watching because
Speaker 1: we are the biggest museum complex in the world. David
Speaker 1: rudin Stein, thank you so much. It is peer to peer.
Speaker 1: These are wonderful conversations with business, finance, and indeed Washington leaders.
Speaker 1: Lonny Bunch of the Smithsonian Museum. That's tonight at nine
Speaker 1: pm is well. Thanks for listening to the Bloomberg Surveillance podcast.
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Speaker 1: I'm Bloomberg Radio