1 00:00:00,240 --> 00:00:04,960 Speaker 1: This is Bloomberg Wall Street Week. Market shruggle, higher consumer prizes. 2 00:00:05,040 --> 00:00:07,400 Speaker 1: The economy is in the process of rebounding. Will the 3 00:00:07,480 --> 00:00:10,479 Speaker 1: utter reserve of its own digital currency? The financial stories 4 00:00:10,520 --> 00:00:12,879 Speaker 1: that sheep our word. Many people think the yells are 5 00:00:12,880 --> 00:00:15,080 Speaker 1: just going to keep marching up. We have more spending 6 00:00:15,120 --> 00:00:17,160 Speaker 1: coming out of Congress. One of the big questions I 7 00:00:17,200 --> 00:00:19,880 Speaker 1: think on investor's mind inflations through the eyes of the 8 00:00:19,920 --> 00:00:23,560 Speaker 1: most influential voices. Larry Summer is the former Treasury Secretary 9 00:00:23,640 --> 00:00:27,960 Speaker 1: Bryan wynhan Beck of America, Will CEO Charlie Sharp Bloomberg 10 00:00:28,000 --> 00:00:32,519 Speaker 1: Wall Street Week with David Weston from Bloomberg Radio. This 11 00:00:32,560 --> 00:00:35,080 Speaker 1: is Bloomberg Wall Street Week. I'm Romain Bostick in for 12 00:00:35,200 --> 00:00:38,960 Speaker 1: David Weston. This week. Professor Stephanie Kelton, author of The 13 00:00:39,000 --> 00:00:43,920 Speaker 1: Deficit myth on economic experimentation. We are in an experimental economy. 14 00:00:44,120 --> 00:00:47,680 Speaker 1: After this crisis, we really saw fiscal policy engage in 15 00:00:47,720 --> 00:00:50,879 Speaker 1: a way that it didn't after the financial crisis. And 16 00:00:50,920 --> 00:00:54,920 Speaker 1: special contributor Larry Summers on the continuation of trade tensions 17 00:00:54,920 --> 00:00:59,240 Speaker 1: between the US and China. I hope there's some kind 18 00:00:59,360 --> 00:01:05,399 Speaker 1: of ongoing channel so as to manage potential crises five 19 00:01:05,440 --> 00:01:08,880 Speaker 1: point four. That's the statistic for the week. It was 20 00:01:08,880 --> 00:01:11,240 Speaker 1: the headline consumer price index number for June, and it 21 00:01:11,280 --> 00:01:14,200 Speaker 1: was the strongest jump in inflation in more than a decade. 22 00:01:14,440 --> 00:01:16,679 Speaker 1: You exclude food and gas, it ends up being the 23 00:01:16,680 --> 00:01:19,119 Speaker 1: biggest jump in three decades. Even if you back out 24 00:01:19,160 --> 00:01:21,160 Speaker 1: the cost to shelter and the cost of use cars, 25 00:01:21,560 --> 00:01:24,600 Speaker 1: the remaining goods and services in the index rose by 26 00:01:24,600 --> 00:01:27,679 Speaker 1: the most in two decades. That CPI report for the 27 00:01:27,720 --> 00:01:30,600 Speaker 1: month of June left no doubt that the US is 28 00:01:30,640 --> 00:01:33,720 Speaker 1: battling a problem of rising prices. What is in doubt 29 00:01:34,040 --> 00:01:38,280 Speaker 1: whether those inflationary pressures will be long lasting or temporary. 30 00:01:38,800 --> 00:01:41,600 Speaker 1: Critics argue inflation is being fanned by the FED, a 31 00:01:41,680 --> 00:01:44,399 Speaker 1: FED that insists on holding interest rates near zero and 32 00:01:44,480 --> 00:01:47,160 Speaker 1: is yet to detail when it will fully scale back 33 00:01:47,200 --> 00:01:51,360 Speaker 1: its multibillion dollar monthly purchases of treasuries and mortgage backed securities. 34 00:01:51,800 --> 00:01:54,680 Speaker 1: Lawmaker's grilled FED chair J. Powell, who defended the current 35 00:01:54,720 --> 00:01:58,880 Speaker 1: standstill on monetary policy. Inflation has increased notably and will 36 00:01:58,880 --> 00:02:02,360 Speaker 1: likely remain elevated coming months before moderating, and even as 37 00:02:02,400 --> 00:02:04,520 Speaker 1: the economy seems to be roaring back, the FIT is 38 00:02:04,520 --> 00:02:08,000 Speaker 1: still concerned that the pre pandemic normal is not here yet. 39 00:02:08,280 --> 00:02:11,280 Speaker 1: While reaching the standard of substantial further progress is still 40 00:02:11,360 --> 00:02:15,280 Speaker 1: a ways off, participants expect that progress will continue. The 41 00:02:15,320 --> 00:02:17,520 Speaker 1: spread of the COVID delta variant is proof of the 42 00:02:17,520 --> 00:02:20,640 Speaker 1: slow slog. It's now the dominant strain in Spain and 43 00:02:20,760 --> 00:02:24,000 Speaker 1: in the UK, and it accounts for almost sixty percent 44 00:02:24,560 --> 00:02:27,200 Speaker 1: of the cases right here in the US, widening the 45 00:02:27,200 --> 00:02:31,360 Speaker 1: gulf between the unvaccinated and vaccinated communities. And while the 46 00:02:31,360 --> 00:02:34,760 Speaker 1: government's central bank waits and sees the big Wall Street banks, 47 00:02:34,800 --> 00:02:38,520 Speaker 1: they show just how complicated things are in this economic recovery. 48 00:02:38,720 --> 00:02:42,840 Speaker 1: Investment banking divisions they're doing well helping corporate clients adjust 49 00:02:42,880 --> 00:02:46,160 Speaker 1: their finances, but revenue growth on most trading desk that's 50 00:02:46,200 --> 00:02:49,079 Speaker 1: been cooling as the market swings subside. And then while 51 00:02:49,120 --> 00:02:52,240 Speaker 1: consumers are spending more and swiping their credit cards more frequently, 52 00:02:52,560 --> 00:02:55,400 Speaker 1: they're also borrowing less money to do so. Joining us 53 00:02:55,520 --> 00:02:58,520 Speaker 1: right now our roundtable, invest Co chief Global market strategist 54 00:02:58,560 --> 00:03:02,919 Speaker 1: Christina Hooper and bloom Intelligence senior analyst Allison Williams joining 55 00:03:03,040 --> 00:03:06,520 Speaker 1: us here today to talk down about what happened really 56 00:03:06,560 --> 00:03:09,000 Speaker 1: this week, and Christina, we really have to start with 57 00:03:09,080 --> 00:03:12,400 Speaker 1: that CPI data, followed by the PPI data, which seemed 58 00:03:12,440 --> 00:03:14,760 Speaker 1: to ratify the guests the fears of a lot of 59 00:03:14,800 --> 00:03:18,000 Speaker 1: people that inflation is certainly real. The big question here 60 00:03:18,280 --> 00:03:20,480 Speaker 1: is whether it's transitory. And I'm wondering whether you at 61 00:03:20,480 --> 00:03:22,160 Speaker 1: all got a little bit rattled by some of the 62 00:03:22,240 --> 00:03:25,839 Speaker 1: data that we saw this week. I actually didn't get 63 00:03:25,919 --> 00:03:28,920 Speaker 1: very rattled at all, Romane, and I'll tell you why. Um, 64 00:03:28,960 --> 00:03:32,959 Speaker 1: we have gone through an extraordinary period in economic history. 65 00:03:33,320 --> 00:03:36,960 Speaker 1: We essentially shut down the economy, UH, and then after 66 00:03:37,080 --> 00:03:40,760 Speaker 1: a very significant period, we reopened it. So we have 67 00:03:40,880 --> 00:03:44,680 Speaker 1: an incredible amount of pent up demand. We have elevated 68 00:03:44,720 --> 00:03:48,920 Speaker 1: household savings. UH. We have lots of liquidity in general 69 00:03:48,960 --> 00:03:52,960 Speaker 1: because we've had very significant fiscal and monetary stimulus, and 70 00:03:53,080 --> 00:03:56,760 Speaker 1: so um, there is a lot of money chasing too 71 00:03:56,840 --> 00:04:01,320 Speaker 1: few goods and services. Now, this int might be higher 72 00:04:01,360 --> 00:04:04,800 Speaker 1: than what FED officials expected, but they have said over 73 00:04:04,840 --> 00:04:08,240 Speaker 1: and over again that they did expect inflation to spike, 74 00:04:08,680 --> 00:04:12,320 Speaker 1: and I think that's key. This is not this should 75 00:04:12,320 --> 00:04:14,840 Speaker 1: not come as a huge surprise. Yes, maybe it's a 76 00:04:14,840 --> 00:04:18,400 Speaker 1: little higher than most expect um, but there's nothing that 77 00:04:18,480 --> 00:04:21,920 Speaker 1: I've seen that changes my mind that this is likely 78 00:04:22,400 --> 00:04:26,280 Speaker 1: mostly transitory inflation, so that so far investors did that 79 00:04:26,320 --> 00:04:31,720 Speaker 1: mean that they should remain pro risk, pro duration absolutely. 80 00:04:32,400 --> 00:04:34,320 Speaker 1: I think what we need to do is take a 81 00:04:34,320 --> 00:04:36,320 Speaker 1: step back and look at where we are in the 82 00:04:36,360 --> 00:04:39,960 Speaker 1: economic cycle, and the US really has just entered the 83 00:04:40,040 --> 00:04:43,960 Speaker 1: expansion phase of the economic cycle. What we know from 84 00:04:44,040 --> 00:04:46,880 Speaker 1: history is that typically that's a period in which risk 85 00:04:46,920 --> 00:04:52,440 Speaker 1: at risk assets outperform UH and UM. Usually it's stocks 86 00:04:52,480 --> 00:04:57,720 Speaker 1: that outperform risky bonds. So it's an environment that I 87 00:04:57,760 --> 00:05:02,360 Speaker 1: think is a positive for the stock market, and I 88 00:05:02,440 --> 00:05:06,520 Speaker 1: expect that monetary policy remains very supportive even if we 89 00:05:06,560 --> 00:05:09,080 Speaker 1: see the start of normalization. So to me, this is 90 00:05:09,080 --> 00:05:11,880 Speaker 1: a time to be risk on. So Allison Williams, a 91 00:05:11,880 --> 00:05:13,640 Speaker 1: lot of people are really sort of trying to get 92 00:05:13,640 --> 00:05:16,400 Speaker 1: a read here on where we stand in the economic cycle. 93 00:05:16,480 --> 00:05:18,680 Speaker 1: This week, of course, we got earnings from all of 94 00:05:18,680 --> 00:05:21,800 Speaker 1: the major US banks here, and usually they kind of 95 00:05:21,839 --> 00:05:24,080 Speaker 1: serve as a barometer, I guess for economic sentiment. What 96 00:05:24,120 --> 00:05:25,920 Speaker 1: do we learn from them this week? I think we 97 00:05:26,080 --> 00:05:29,839 Speaker 1: learned that the economy is very healthy, and to some extent, 98 00:05:29,920 --> 00:05:32,360 Speaker 1: we saw most of the trends that we saw were 99 00:05:32,360 --> 00:05:34,479 Speaker 1: in line with our expected. A couple were a little 100 00:05:34,480 --> 00:05:38,360 Speaker 1: bit outsized, so net interest income continuing to drift lower. 101 00:05:38,640 --> 00:05:41,960 Speaker 1: Credit super strong, UM, great numbers from the bank, not 102 00:05:42,080 --> 00:05:44,520 Speaker 1: just the reserve releases that we read so much about, 103 00:05:44,520 --> 00:05:48,479 Speaker 1: but the underlying credit strong and then UM. When you 104 00:05:48,480 --> 00:05:50,719 Speaker 1: talk about the reserve releases, this is effectively the money 105 00:05:50,760 --> 00:05:53,440 Speaker 1: they were setting aside for bad loans, right, correct, So 106 00:05:53,480 --> 00:05:56,599 Speaker 1: if we think about the reserves UM a year ago, 107 00:05:57,120 --> 00:05:59,800 Speaker 1: banks had no idea, none of us had any idea 108 00:05:59,839 --> 00:06:02,240 Speaker 1: how bad things would get, so they were very conservative 109 00:06:02,240 --> 00:06:05,280 Speaker 1: in terms of setting money aside. As things are getting better, 110 00:06:05,520 --> 00:06:09,560 Speaker 1: they're releasing those reserves and that feeds into the income statement. 111 00:06:09,880 --> 00:06:11,720 Speaker 1: And so there is a lot of volatility when you 112 00:06:11,760 --> 00:06:14,360 Speaker 1: look at the overall EPs numbers, but I think from 113 00:06:14,360 --> 00:06:18,880 Speaker 1: a core trends also generally healthy, although as I said 114 00:06:18,880 --> 00:06:20,440 Speaker 1: that it's it's a little bit of a mix. So 115 00:06:20,520 --> 00:06:23,440 Speaker 1: those banks that rely more on that interest income, like 116 00:06:23,480 --> 00:06:25,760 Speaker 1: a Bank of America or well as far ago, some 117 00:06:25,839 --> 00:06:28,000 Speaker 1: of the regional banks that are covered by Herman chan 118 00:06:28,560 --> 00:06:31,320 Speaker 1: Um really have seen some softness and a lot of 119 00:06:31,320 --> 00:06:33,839 Speaker 1: that is really just due to the lack of borrowing 120 00:06:34,440 --> 00:06:37,760 Speaker 1: our Thanks to Christina Hooper of Investco and Allison Williams 121 00:06:37,800 --> 00:06:42,000 Speaker 1: of Bloomberg Intelligence. Coming up Netflix, it's adding a new 122 00:06:42,000 --> 00:06:44,320 Speaker 1: wrinkle to the streaming wars with its plans to offer 123 00:06:44,440 --> 00:06:47,680 Speaker 1: video games alongside Britain. We talked to the former CNN 124 00:06:47,720 --> 00:06:50,400 Speaker 1: president John Klein about the fight to stand out in 125 00:06:50,440 --> 00:06:54,000 Speaker 1: the streaming world. That's next on Wall Street Week on Bloomberg. 126 00:07:01,320 --> 00:07:05,279 Speaker 1: This is Bloomberg Wall Street Week with David Weston from 127 00:07:05,400 --> 00:07:08,560 Speaker 1: Bloomberg Radio. This is Bloomberg Wall Street Week. I'm Romain 128 00:07:08,640 --> 00:07:13,280 Speaker 1: Bostick in for David weston the lockdowns of boosted Netflix. 129 00:07:13,280 --> 00:07:15,600 Speaker 1: But next week investors will get a chance to see 130 00:07:15,640 --> 00:07:18,480 Speaker 1: whether the streaming giants growth will hold in the post 131 00:07:18,560 --> 00:07:22,240 Speaker 1: pandemic world. We saw dramatic pull in UH for their 132 00:07:22,280 --> 00:07:25,920 Speaker 1: subscriber growth. The bump was enormous. You can't sustain that. Obviously, 133 00:07:25,920 --> 00:07:28,360 Speaker 1: the question was when would that slow down and how 134 00:07:28,440 --> 00:07:31,200 Speaker 1: dramatically would slow down. Well, now we have the answer. 135 00:07:31,520 --> 00:07:34,240 Speaker 1: The key number to watch will be subscriber growth. A 136 00:07:34,280 --> 00:07:38,320 Speaker 1: Bloomberg Intelligence analysis of Censor tower data suggests global demand 137 00:07:38,320 --> 00:07:41,000 Speaker 1: for Netflix is moderating, with the number of downloads in 138 00:07:41,080 --> 00:07:43,480 Speaker 1: May and June were bounding a little from March and 139 00:07:43,520 --> 00:07:46,680 Speaker 1: April when reopenings took a toll on adding new subscribers. 140 00:07:46,880 --> 00:07:49,559 Speaker 1: Netflix has done better than I think many people thought 141 00:07:49,600 --> 00:07:52,160 Speaker 1: in terms of the doctrines. A few banks one the 142 00:07:52,240 --> 00:07:55,680 Speaker 1: competition from Disney and in a T and T and 143 00:07:55,760 --> 00:08:00,080 Speaker 1: others uh two uh international expansions or something of the 144 00:08:01,440 --> 00:08:05,080 Speaker 1: Disney Plus is Netflix's most formidable rival, but the streaming 145 00:08:05,120 --> 00:08:06,800 Speaker 1: service still has a lot of catching up to do. 146 00:08:06,960 --> 00:08:10,000 Speaker 1: Disney Plus had a hundred and three million global subscribers 147 00:08:10,160 --> 00:08:12,920 Speaker 1: that compares the Netflix is two hundred and eight million. 148 00:08:13,400 --> 00:08:16,440 Speaker 1: Disney Plus has a strong presence in Europe and in India, 149 00:08:16,480 --> 00:08:20,559 Speaker 1: where Carrie streaming service hot Star. There's a new Marvel series, Loki, 150 00:08:20,760 --> 00:08:23,600 Speaker 1: which debuted on Disney Plus last month, and that may 151 00:08:23,640 --> 00:08:26,320 Speaker 1: have given the streaming service a last minute subscriber pans 152 00:08:26,600 --> 00:08:29,400 Speaker 1: for the quarter are signed up to. Growth continues both 153 00:08:29,440 --> 00:08:32,560 Speaker 1: domestically and internationally, and I have to say that we've 154 00:08:32,600 --> 00:08:35,040 Speaker 1: now launched a number of markets, I think fifty nine 155 00:08:35,040 --> 00:08:38,680 Speaker 1: markets across the world, and we've not been disappointed yet. 156 00:08:38,720 --> 00:08:41,200 Speaker 1: The streaming world is expected to get even bigger. A 157 00:08:41,200 --> 00:08:44,800 Speaker 1: new PwC report predicts streaming is going to generate ninety 158 00:08:44,880 --> 00:08:48,319 Speaker 1: four billion dollars in revenue by the end of that's 159 00:08:48,400 --> 00:08:52,880 Speaker 1: up from the pandemic. Brought new entrance into the streaming 160 00:08:52,880 --> 00:08:57,160 Speaker 1: wars with the launch of NBC Universal's Peacock and Discovery Plus. 161 00:08:57,400 --> 00:09:00,280 Speaker 1: I think there's only a handful of truly global, you know, 162 00:09:00,400 --> 00:09:04,000 Speaker 1: greater than a hundred million subscriber based type of services 163 00:09:04,040 --> 00:09:09,520 Speaker 1: that can that can exist alright, Netflix setting a high 164 00:09:09,520 --> 00:09:11,880 Speaker 1: bar for its competitors, of course, with that TV and 165 00:09:11,920 --> 00:09:14,960 Speaker 1: film content. Now the streaming giant said to be expanding 166 00:09:14,960 --> 00:09:17,560 Speaker 1: into video games, joining us right now. John Klein, you 167 00:09:17,600 --> 00:09:19,720 Speaker 1: know him, of course as a former president of CNN. 168 00:09:19,840 --> 00:09:22,280 Speaker 1: He's now the co founder of Hanged Media. He knows 169 00:09:22,320 --> 00:09:25,400 Speaker 1: a lot about keeping eyeballs glued to the screen. John. 170 00:09:25,440 --> 00:09:29,360 Speaker 1: Even before this announcement here about the foray into video games, 171 00:09:29,360 --> 00:09:33,480 Speaker 1: we had seen Netflix experiment with live events and merchandizing 172 00:09:33,520 --> 00:09:35,920 Speaker 1: a lot of things that are more than just the 173 00:09:36,000 --> 00:09:38,560 Speaker 1: content of watching a television show or a movie. Here 174 00:09:38,840 --> 00:09:41,480 Speaker 1: is this the future of streaming. This is what it's 175 00:09:41,480 --> 00:09:45,440 Speaker 1: going to be. It's the present of streaming. Because streaming 176 00:09:45,480 --> 00:09:51,320 Speaker 1: has become the central entertainment activity for everybody. H COVID 177 00:09:51,320 --> 00:09:54,520 Speaker 1: helped accelerate that, and that trend is not going away. 178 00:09:54,720 --> 00:09:57,720 Speaker 1: Wait until they start getting into a R and VR, 179 00:09:57,800 --> 00:09:59,600 Speaker 1: and you know, there's been a lot of experiments with 180 00:09:59,640 --> 00:10:02,400 Speaker 1: that all ready, but that's all going to be filtered 181 00:10:02,480 --> 00:10:04,600 Speaker 1: through your streaming service as well, So there's a lot 182 00:10:04,640 --> 00:10:06,960 Speaker 1: more to come. So what does that mean though for 183 00:10:07,000 --> 00:10:10,280 Speaker 1: some of these smaller streaming services. I saw a statistic 184 00:10:10,360 --> 00:10:12,559 Speaker 1: saying that, you know, as of last month, there were 185 00:10:12,559 --> 00:10:15,960 Speaker 1: almost two hundred streaming services available here in the US, 186 00:10:16,000 --> 00:10:18,160 Speaker 1: some of them obviously very niche. And then of course 187 00:10:18,160 --> 00:10:22,079 Speaker 1: you have the big players like Amazon, Apple, Netflix, Disney Plus. 188 00:10:22,120 --> 00:10:24,839 Speaker 1: Here is there room for a niche service that it 189 00:10:24,960 --> 00:10:28,680 Speaker 1: just may be doing one small thing. It's really tricky 190 00:10:28,679 --> 00:10:31,520 Speaker 1: because one thing that we've all seen in the past 191 00:10:31,600 --> 00:10:35,560 Speaker 1: year is that streaming is an incredibly expensive business to 192 00:10:35,679 --> 00:10:38,640 Speaker 1: be in. Disney just announced that they're going to be 193 00:10:38,679 --> 00:10:44,000 Speaker 1: spending thirty billion dollars a year on content for Disney Plus, 194 00:10:44,559 --> 00:10:46,839 Speaker 1: and they thought they were going to be spending about 195 00:10:46,840 --> 00:10:49,679 Speaker 1: half that, and they've realized that they have two seriously 196 00:10:49,720 --> 00:10:53,440 Speaker 1: up the anti. Because you think about your own streaming habits, 197 00:10:53,520 --> 00:10:55,760 Speaker 1: you can binge an entire season of a show and 198 00:10:55,880 --> 00:10:59,000 Speaker 1: one night if you're really into it, and these services 199 00:10:59,000 --> 00:11:00,800 Speaker 1: are all having a scram about to catch up to 200 00:11:00,840 --> 00:11:04,319 Speaker 1: make sure that they're shoveling enough content onto their services. 201 00:11:04,440 --> 00:11:09,319 Speaker 1: That's why you've seen Netflix add so many foreign produced shows. 202 00:11:09,679 --> 00:11:11,760 Speaker 1: I mean, I'll bet you've watched at least one Netflix 203 00:11:11,800 --> 00:11:14,959 Speaker 1: show that had subtitles last year, right, And that's because 204 00:11:15,000 --> 00:11:18,720 Speaker 1: they just kind of ran out of US created content, 205 00:11:18,840 --> 00:11:21,920 Speaker 1: partly due to COVID and partly because consumer habits are 206 00:11:22,040 --> 00:11:26,559 Speaker 1: just out just out of control, and it's going to 207 00:11:26,640 --> 00:11:28,600 Speaker 1: take a lot of resources to catch up to that, 208 00:11:28,640 --> 00:11:31,400 Speaker 1: which means that smaller niche players are going to have 209 00:11:31,480 --> 00:11:36,680 Speaker 1: to add double down on the ultra niche and over 210 00:11:36,760 --> 00:11:40,559 Speaker 1: deliver on their customer acquisition tactics so that the cost 211 00:11:40,600 --> 00:11:45,360 Speaker 1: of acquiring a subscriber drops to make up for the 212 00:11:45,360 --> 00:11:48,200 Speaker 1: the increasing cost of content. But it's gonna be tough. 213 00:11:48,360 --> 00:11:51,920 Speaker 1: Think of it this way. The tech companies have so 214 00:11:51,960 --> 00:11:56,439 Speaker 1: many more resources to deploy against content costs than traditional 215 00:11:56,480 --> 00:12:00,240 Speaker 1: media companies do. Apple alone has a higher market cap 216 00:12:00,679 --> 00:12:06,760 Speaker 1: than a combination of Disney, Netflix, Comcast, Horizon, you know, 217 00:12:07,120 --> 00:12:11,280 Speaker 1: And it's so they can enter this business whole hog, 218 00:12:11,440 --> 00:12:14,520 Speaker 1: and they've barely begun to fight. So it's going to 219 00:12:14,600 --> 00:12:17,360 Speaker 1: be it's going to be a very expensive proposition to 220 00:12:17,480 --> 00:12:20,600 Speaker 1: be in the streaming business. Given the expense of that proposition, 221 00:12:20,640 --> 00:12:24,559 Speaker 1: do you anticipate any sort of meaningful consolidation. I think 222 00:12:24,600 --> 00:12:27,720 Speaker 1: there's going to have to be among the streaming also 223 00:12:27,880 --> 00:12:30,360 Speaker 1: rans or the smaller players. I mean, it just isn't 224 00:12:30,400 --> 00:12:33,080 Speaker 1: going to make sense to some of these companies to 225 00:12:33,200 --> 00:12:36,200 Speaker 1: spend the kind of money that's necessary. For example, if 226 00:12:36,200 --> 00:12:39,320 Speaker 1: your NBC Universal and you're planning to spend seventeen billion 227 00:12:39,400 --> 00:12:43,720 Speaker 1: dollars this year on Peacock, you might pause and say, well, 228 00:12:43,840 --> 00:12:45,800 Speaker 1: first of all, where is that going to come from. 229 00:12:45,800 --> 00:12:48,960 Speaker 1: We're gonna have to cannabalize some of our other core 230 00:12:49,040 --> 00:12:51,720 Speaker 1: businesses and they're gonna have to be willing to do that. 231 00:12:51,840 --> 00:12:54,200 Speaker 1: And will they be you know, will they pull money 232 00:12:54,200 --> 00:12:57,480 Speaker 1: away from the TV networks, from the local TV stations 233 00:12:57,559 --> 00:13:00,120 Speaker 1: that they've got in order to fundness, or might they 234 00:13:00,160 --> 00:13:02,439 Speaker 1: you know what, maybe we ought to pair up with 235 00:13:02,520 --> 00:13:06,520 Speaker 1: somebody like a CBS or or warners. Should we should 236 00:13:06,600 --> 00:13:10,080 Speaker 1: Comcast jump in to the bidding for Warner Media and 237 00:13:10,080 --> 00:13:12,280 Speaker 1: and and grab that away. Well, that raises an interesting 238 00:13:12,320 --> 00:13:15,000 Speaker 1: question here about the future of live television. John. Obviously, 239 00:13:15,040 --> 00:13:17,800 Speaker 1: you ran CNN for our several years out here in 240 00:13:17,840 --> 00:13:19,880 Speaker 1: the US here, and I'm curious, is there still a 241 00:13:19,880 --> 00:13:22,880 Speaker 1: place for live news, live sports in a streaming world 242 00:13:22,960 --> 00:13:26,079 Speaker 1: where we want to see everything on demand. Well, news 243 00:13:26,120 --> 00:13:28,600 Speaker 1: is one of the few areas that that's actually growing 244 00:13:28,720 --> 00:13:30,840 Speaker 1: during the streaming boom, and I think it will continue 245 00:13:30,840 --> 00:13:34,240 Speaker 1: to because it's just a very tough proposition to watch 246 00:13:34,280 --> 00:13:37,720 Speaker 1: news later, you know, on demand, you do want to 247 00:13:37,760 --> 00:13:42,720 Speaker 1: see it as it's unfolding. Sports is gonna evolve because 248 00:13:43,360 --> 00:13:45,800 Speaker 1: it used to be and has been up until now, 249 00:13:45,840 --> 00:13:51,320 Speaker 1: a mainstay of traditional television delivery. But Amazon just paid 250 00:13:51,520 --> 00:13:55,200 Speaker 1: a billion dollars for the rights to Thursday Night Football starting. 251 00:13:56,640 --> 00:13:59,439 Speaker 1: That's the first for a streaming service to pay that 252 00:13:59,559 --> 00:14:02,360 Speaker 1: kind of money, So, uh, you know that that's gonna 253 00:14:02,600 --> 00:14:05,720 Speaker 1: that's that is a bell weather for a big change, 254 00:14:05,720 --> 00:14:07,560 Speaker 1: and I think you're gonna begin to see sports go 255 00:14:07,679 --> 00:14:10,240 Speaker 1: to pay as well. And our thanks to Tap Media 256 00:14:10,320 --> 00:14:14,080 Speaker 1: chairman and former CNN president John Klein coming up here. 257 00:14:14,440 --> 00:14:17,000 Speaker 1: Fed share Pal says central banks can still help get 258 00:14:17,040 --> 00:14:20,640 Speaker 1: the economy back on track, but modern monetary theory experts 259 00:14:20,680 --> 00:14:23,560 Speaker 1: like Stephanie Kelton say holding down rates may not be 260 00:14:23,600 --> 00:14:26,760 Speaker 1: the best way to manage inflation. That's next on Wall 261 00:14:26,760 --> 00:14:40,840 Speaker 1: Street Week on Bloomberg. This is Bloomberg Wall Street Week 262 00:14:41,040 --> 00:14:44,960 Speaker 1: with David Weston from Bloomberg Radio. M Romaine Bostick in 263 00:14:45,040 --> 00:14:47,480 Speaker 1: for David Weston. The FED jumped into action at the 264 00:14:47,520 --> 00:14:49,320 Speaker 1: height of the pandemic, and it helped fill in the 265 00:14:49,360 --> 00:14:53,080 Speaker 1: gap while lawmakers came up with fiscal stimulus plans, but 266 00:14:53,160 --> 00:14:56,120 Speaker 1: FED share j Pal says it's still too soon to 267 00:14:56,200 --> 00:15:00,000 Speaker 1: think about pulling back that aid now. Inflation is jumping 268 00:15:00,040 --> 00:15:02,040 Speaker 1: and the FIT doesn't seem to be in any rush 269 00:15:02,080 --> 00:15:06,040 Speaker 1: to raise rates. Modern monetary theory experts say that is 270 00:15:06,080 --> 00:15:10,160 Speaker 1: not just the FITS responsibility. Fiscal policy should also play 271 00:15:10,160 --> 00:15:13,880 Speaker 1: a role in controlling inflation. Stephanie Kelton, a professor of 272 00:15:13,880 --> 00:15:17,720 Speaker 1: economics at stony Brook University, is a leading expert on MMT. 273 00:15:18,120 --> 00:15:20,920 Speaker 1: She joins us right now, Stephanie, as we speak today, 274 00:15:20,920 --> 00:15:23,320 Speaker 1: all of the debate out there right now is about inflation. 275 00:15:23,400 --> 00:15:24,960 Speaker 1: Is it going to be long lasting or is it 276 00:15:25,000 --> 00:15:27,440 Speaker 1: going to be transitory? When you look at the latest 277 00:15:27,480 --> 00:15:30,360 Speaker 1: data that we got, what type of inflationary pressures are 278 00:15:30,400 --> 00:15:32,880 Speaker 1: you actually seeing yourself? And do you see those as 279 00:15:32,960 --> 00:15:37,520 Speaker 1: being permanent? When I look at the data, what I 280 00:15:37,560 --> 00:15:41,280 Speaker 1: think mostly this looks like are the growing pains of 281 00:15:41,320 --> 00:15:45,960 Speaker 1: an economy that's emerging from a pandemic and reopening. And 282 00:15:46,320 --> 00:15:50,160 Speaker 1: we see a lot of videosyncratic UH pressures and supply 283 00:15:50,280 --> 00:15:54,320 Speaker 1: chain issues and UM backlogs and that sort of stuff. 284 00:15:54,360 --> 00:15:56,760 Speaker 1: So I think, by and large, what it looks like 285 00:15:56,840 --> 00:15:59,640 Speaker 1: to me is the kind of thing that frankly, we 286 00:15:59,720 --> 00:16:03,440 Speaker 1: had ticipated right coming out of the pandemic. And so 287 00:16:03,600 --> 00:16:06,800 Speaker 1: it's pretty hard for me to see the kinds of 288 00:16:06,840 --> 00:16:08,960 Speaker 1: things that I think you would need to be in 289 00:16:09,040 --> 00:16:11,960 Speaker 1: place in order to get this sort of entrenched inflation 290 00:16:12,000 --> 00:16:14,960 Speaker 1: that begins to feed on it. So so I I 291 00:16:15,000 --> 00:16:18,840 Speaker 1: guess I situate myself pretty squarely in the in the 292 00:16:18,840 --> 00:16:22,400 Speaker 1: transitory camp. Yeah, and there's certainly an element of the 293 00:16:22,440 --> 00:16:26,240 Speaker 1: inflationary pressures we have that we're certainly predictable, given just 294 00:16:26,320 --> 00:16:29,280 Speaker 1: how volatile the economic crisis was, the COVID crisis, and 295 00:16:29,400 --> 00:16:31,680 Speaker 1: how volatile things have been coming out of it. Here. 296 00:16:32,080 --> 00:16:33,760 Speaker 1: But as we sort of get to the other side 297 00:16:34,440 --> 00:16:37,320 Speaker 1: of this economic cycle, there's a lot of debate right 298 00:16:37,320 --> 00:16:41,400 Speaker 1: now about additional fiscal spending, additional fiscal stimulus, whatever you 299 00:16:41,400 --> 00:16:43,720 Speaker 1: wanna call it, is it just throwing another log on 300 00:16:43,760 --> 00:16:46,480 Speaker 1: the fire of an economy that's already hot, or is 301 00:16:46,520 --> 00:16:49,800 Speaker 1: this something that maybe has a place here in our 302 00:16:49,800 --> 00:16:53,200 Speaker 1: policy and in the way we spend government money. Well, 303 00:16:53,240 --> 00:16:55,520 Speaker 1: I think it's the ladder. I think that most of 304 00:16:55,560 --> 00:16:58,680 Speaker 1: what we're hearing about right now. Right we're hearing about 305 00:16:58,840 --> 00:17:03,880 Speaker 1: maybe three and a trillion dollar um human infrastructure bill 306 00:17:04,080 --> 00:17:08,879 Speaker 1: coming maybe alongside the more traditional so called heart infrastructure. 307 00:17:09,240 --> 00:17:11,960 Speaker 1: And I don't think the administration is thinking of this 308 00:17:12,119 --> 00:17:15,800 Speaker 1: as as stimulus. I'm certainly not thinking of this as stimulus. 309 00:17:15,840 --> 00:17:18,480 Speaker 1: I'm thinking of this more the way I think they are, 310 00:17:18,600 --> 00:17:22,960 Speaker 1: which is, you know, doing things that will strengthen some 311 00:17:23,160 --> 00:17:27,240 Speaker 1: of the fragility that's been baked into our system by 312 00:17:27,280 --> 00:17:32,040 Speaker 1: you know, longstanding policy decisions were trying to redress, uh 313 00:17:32,280 --> 00:17:35,719 Speaker 1: some things, fix some of the deficits in the real economy, 314 00:17:35,880 --> 00:17:41,280 Speaker 1: and lay a foundation for a really sustainable and inclusive recovery. 315 00:17:41,320 --> 00:17:43,840 Speaker 1: So I think they're looking at this as an opportunity 316 00:17:44,240 --> 00:17:47,680 Speaker 1: to strengthen the social safety net, make investments skin things 317 00:17:47,680 --> 00:17:51,800 Speaker 1: like education and healthcare, just places where we have underinvested 318 00:17:51,840 --> 00:17:55,119 Speaker 1: for decades. And we've heard that message, of course from 319 00:17:55,160 --> 00:17:58,520 Speaker 1: the Biden administration and some of his allies in Congress. 320 00:17:59,080 --> 00:18:02,000 Speaker 1: We've also heard this idea here that sort of inequalities 321 00:18:02,040 --> 00:18:05,520 Speaker 1: need to be addressed, particularly inequalities that we're sort of 322 00:18:05,600 --> 00:18:08,480 Speaker 1: laid bare based on the policies coming out of the 323 00:18:08,560 --> 00:18:11,360 Speaker 1: last big financial crisis in two thousand and eight two 324 00:18:11,359 --> 00:18:14,800 Speaker 1: thousand ten. Here, what type of steps do you think 325 00:18:14,800 --> 00:18:17,760 Speaker 1: that the Biden administration and hopefully Congress can sort of 326 00:18:17,800 --> 00:18:21,720 Speaker 1: take so that we don't repeat some of those same mistakes. Well, 327 00:18:21,800 --> 00:18:25,000 Speaker 1: I think that what we're hearing articulated from the administration 328 00:18:25,160 --> 00:18:28,959 Speaker 1: right is that the goal is to make investments at 329 00:18:29,040 --> 00:18:32,480 Speaker 1: the bottom that grow from the middle out. So instead 330 00:18:32,520 --> 00:18:35,320 Speaker 1: of you know, this sort of top down, trickle down 331 00:18:35,520 --> 00:18:39,400 Speaker 1: sort of uh, you know, policy prescription that we've tried 332 00:18:39,480 --> 00:18:42,880 Speaker 1: again and again uh and and watched fail, that this 333 00:18:42,920 --> 00:18:45,480 Speaker 1: time is different, that this time we want to see 334 00:18:45,520 --> 00:18:49,080 Speaker 1: the government making investments and things like early childhood education 335 00:18:49,240 --> 00:18:53,840 Speaker 1: and the caring economy, um, you know, broadening the scope 336 00:18:53,840 --> 00:18:58,560 Speaker 1: for infrastructure investment, college education, elder care, and and the 337 00:18:58,560 --> 00:19:00,520 Speaker 1: rest of it. So I think, you know, we're looking 338 00:19:00,560 --> 00:19:04,680 Speaker 1: at the potential for millions and millions of good paying jobs, 339 00:19:05,160 --> 00:19:07,440 Speaker 1: many of them for people, in fact, most of them 340 00:19:07,440 --> 00:19:11,119 Speaker 1: for people with um little if any college education. So 341 00:19:11,200 --> 00:19:15,879 Speaker 1: this really is an opportunity to, you know, provide a good, 342 00:19:16,240 --> 00:19:20,200 Speaker 1: solid foundation for a recovery that aims squarely at those 343 00:19:20,240 --> 00:19:24,520 Speaker 1: at the bottom in the middle of the economic income distribution. So, 344 00:19:24,560 --> 00:19:27,080 Speaker 1: professor you mentioned the sort of top down nature of 345 00:19:27,119 --> 00:19:30,359 Speaker 1: economic policy that has been basically the dogma now for 346 00:19:30,400 --> 00:19:32,560 Speaker 1: several decades. A lot of people have bought into it 347 00:19:33,200 --> 00:19:35,960 Speaker 1: on both sides of the political spectrum. There's an argument 348 00:19:36,040 --> 00:19:38,119 Speaker 1: to be made that there has been a spate of 349 00:19:38,119 --> 00:19:41,240 Speaker 1: prosperity in this country that I guess can be attributed 350 00:19:41,440 --> 00:19:45,160 Speaker 1: to that top down policy. Is there a sense here 351 00:19:45,200 --> 00:19:48,000 Speaker 1: that the boom bus cycles we've been through over those 352 00:19:48,119 --> 00:19:51,280 Speaker 1: last few decades since that top down policy became the 353 00:19:51,320 --> 00:19:53,879 Speaker 1: sort of dogma, that that is a contributor to it, 354 00:19:54,000 --> 00:19:56,080 Speaker 1: or is there something else here that maybe we should 355 00:19:56,119 --> 00:19:59,679 Speaker 1: be looking at. Well, I think there's something else. I 356 00:19:59,680 --> 00:20:03,080 Speaker 1: think know. The reality is that we've got a lot 357 00:20:03,160 --> 00:20:05,800 Speaker 1: of studies now, and some pretty big ones that have 358 00:20:05,880 --> 00:20:09,960 Speaker 1: been done looking at the longer term effects of the 359 00:20:10,119 --> 00:20:13,360 Speaker 1: supply side policies, and they really have been a failure. 360 00:20:13,600 --> 00:20:16,399 Speaker 1: These have not been successful policies, and they've been tried 361 00:20:16,520 --> 00:20:19,840 Speaker 1: decades upon decades, and what we've ended up with is 362 00:20:20,000 --> 00:20:23,520 Speaker 1: widening gaps between those at the very top and everybody else. 363 00:20:23,600 --> 00:20:27,280 Speaker 1: Income in wealth, inequalities have widened. We haven't gotten the 364 00:20:27,359 --> 00:20:32,120 Speaker 1: kinds of wage growth and inclusive and sustainable growth for 365 00:20:32,280 --> 00:20:35,600 Speaker 1: the middle class. We've seen middle class jobs and workers 366 00:20:35,600 --> 00:20:38,680 Speaker 1: fall behind for decades. So I think it is time 367 00:20:38,760 --> 00:20:41,840 Speaker 1: to shift gears. Thanks to Stephanie Flanders of Stony Brook 368 00:20:41,960 --> 00:20:45,359 Speaker 1: University and the author of the Deficit Myth. Coming up, 369 00:20:45,440 --> 00:20:47,879 Speaker 1: we wrap up the week with our special contributor Larry 370 00:20:47,920 --> 00:20:51,280 Speaker 1: Summers of Harvard. That's next on Wall Street Week on Bloomberg. 371 00:20:57,720 --> 00:21:01,680 Speaker 1: This is Bloomberg Wall Street Week with David Weston from 372 00:21:01,800 --> 00:21:05,200 Speaker 1: Bloomberg Radio. This is Bloomberg Wall Street Week, arm Romain 373 00:21:05,280 --> 00:21:07,840 Speaker 1: Bostick in for David Weston and now Here to discuss 374 00:21:07,920 --> 00:21:10,200 Speaker 1: some of the economic developments of the week. We're joined 375 00:21:10,200 --> 00:21:13,840 Speaker 1: by our special contributor, economists Larry Summers. Larry, I want 376 00:21:13,840 --> 00:21:16,159 Speaker 1: to start with some developments that occurred towards the end 377 00:21:16,160 --> 00:21:18,760 Speaker 1: of the week. On Friday, we got an advisory out 378 00:21:18,760 --> 00:21:21,680 Speaker 1: of the Biden administration, the Treasury, the State Department, the 379 00:21:21,720 --> 00:21:24,959 Speaker 1: Homeland Security Department, and the Commerce Department, all putting out 380 00:21:25,000 --> 00:21:28,760 Speaker 1: an advisory warning US companies about the risks of doing 381 00:21:28,800 --> 00:21:32,080 Speaker 1: business in Hong Kong, saying the business environment over there 382 00:21:32,080 --> 00:21:36,360 Speaker 1: has deteriorated given China's recent pushup to I guess control 383 00:21:36,840 --> 00:21:40,760 Speaker 1: what goes on in that territory there. The relationship between 384 00:21:40,760 --> 00:21:43,639 Speaker 1: the U S and China, the economic dialogue between the 385 00:21:43,720 --> 00:21:47,080 Speaker 1: U S and China, seems to be getting worse, not better. 386 00:21:47,280 --> 00:21:50,040 Speaker 1: I think that's right. I think there are plenty of 387 00:21:50,080 --> 00:21:53,240 Speaker 1: issues on both sides. You look at many of the 388 00:21:53,400 --> 00:21:56,960 Speaker 1: things that China has done. It's not just Usibly, the 389 00:21:57,080 --> 00:22:01,440 Speaker 1: United States Investment degree meant that China and the EU 390 00:22:01,640 --> 00:22:07,440 Speaker 1: had reached our on the rails China's encountering UH friction 391 00:22:08,560 --> 00:22:13,640 Speaker 1: all over the world. I am concerned about the canceling 392 00:22:13,760 --> 00:22:17,919 Speaker 1: of dialogue. It seems to me that in many ways, 393 00:22:18,000 --> 00:22:21,959 Speaker 1: the more fundamental your disagreements, the more important it is 394 00:22:22,040 --> 00:22:26,399 Speaker 1: that there be some form of UH communications. So I 395 00:22:26,400 --> 00:22:28,800 Speaker 1: don't think we're in any position to have a partnership 396 00:22:28,840 --> 00:22:33,320 Speaker 1: with UH China. We're competing with them in very full 397 00:22:33,400 --> 00:22:39,600 Speaker 1: spectrum ways. But the strategy of not having UH dialogue 398 00:22:39,680 --> 00:22:43,640 Speaker 1: and not being interested in communication, it seems to me, 399 00:22:43,840 --> 00:22:48,359 Speaker 1: is one that UH concerns me and whether it's called 400 00:22:48,400 --> 00:22:54,280 Speaker 1: a strategic economic dialogue, whatever it is UH called, I 401 00:22:54,320 --> 00:23:00,159 Speaker 1: hope there's some kind of ongoing channel so as to 402 00:23:00,280 --> 00:23:03,800 Speaker 1: manage potential crises and so that we're in a position 403 00:23:04,240 --> 00:23:11,399 Speaker 1: to address difficult issues when an if they arise. I 404 00:23:11,440 --> 00:23:14,200 Speaker 1: think we need to recognize that we're in a kind 405 00:23:14,240 --> 00:23:22,200 Speaker 1: of unprecedented situation. When we were UM in a significantly 406 00:23:22,240 --> 00:23:27,280 Speaker 1: adversarial relationship with the Soviet Union, there was vastly less 407 00:23:27,400 --> 00:23:34,440 Speaker 1: interdependence than there is today. And so with this degree 408 00:23:34,480 --> 00:23:39,760 Speaker 1: of disagreement, this degree of interdependence, UH is a new 409 00:23:39,840 --> 00:23:43,640 Speaker 1: kind of relationship, and we're all feeling our way, and 410 00:23:44,040 --> 00:23:51,480 Speaker 1: I'm not counseling us to not aggressively pursue our interests. 411 00:23:51,560 --> 00:23:56,160 Speaker 1: I think we do need a kind of UH firmness 412 00:23:56,200 --> 00:24:00,960 Speaker 1: and directness that we always haven't had, But I I 413 00:24:01,080 --> 00:24:06,080 Speaker 1: do wish we were providing for some continuing conversation. That 414 00:24:06,200 --> 00:24:10,119 Speaker 1: interdependence is certainly a critical difference here between how the 415 00:24:10,240 --> 00:24:13,600 Speaker 1: us UH is dealing with China and how the situation 416 00:24:13,640 --> 00:24:16,600 Speaker 1: it had with the Soviets. I am curious though there 417 00:24:16,600 --> 00:24:19,160 Speaker 1: has been a push here to try to make some 418 00:24:19,320 --> 00:24:22,880 Speaker 1: U S industries a little bit more economically independent from 419 00:24:23,200 --> 00:24:25,719 Speaker 1: the Chinese supply chain here. And obviously we know that 420 00:24:25,840 --> 00:24:29,040 Speaker 1: is a tough thing to do here, given just how 421 00:24:29,320 --> 00:24:31,440 Speaker 1: supply chains are set up here. But do you think 422 00:24:31,480 --> 00:24:33,320 Speaker 1: that there is a case to be made that the 423 00:24:33,440 --> 00:24:36,600 Speaker 1: US can be a more of a manufacturer of its 424 00:24:36,640 --> 00:24:39,080 Speaker 1: own goods, more of an assembler of its own goods, 425 00:24:39,119 --> 00:24:42,720 Speaker 1: and less reliant on China and other foreign nations remain. 426 00:24:42,760 --> 00:24:51,520 Speaker 1: I think one needs to distinguish between security and UH independent. Yes, 427 00:24:51,680 --> 00:24:55,879 Speaker 1: I think we need to be conscious and careful about 428 00:24:56,000 --> 00:25:00,080 Speaker 1: being vulnerable. I think it was a very concern in 429 00:25:00,240 --> 00:25:05,760 Speaker 1: situation that the US couldn't get acces two masks early 430 00:25:06,800 --> 00:25:11,760 Speaker 1: in UH the pandemic, and so yes, I do think 431 00:25:11,840 --> 00:25:15,240 Speaker 1: we need to pay attention to Some people have put 432 00:25:15,280 --> 00:25:19,440 Speaker 1: it just in time as well as UH just in case, 433 00:25:19,920 --> 00:25:23,399 Speaker 1: as much as we pay attention to just in time. 434 00:25:23,960 --> 00:25:26,960 Speaker 1: But does that mean the production needs to be located 435 00:25:26,960 --> 00:25:31,480 Speaker 1: in the United States rather than in countries were allied with, 436 00:25:31,680 --> 00:25:36,000 Speaker 1: like those in Canada and Europe. I think that's a mistake. 437 00:25:36,600 --> 00:25:40,560 Speaker 1: Does that mean that those strategies should be motivated not 438 00:25:40,760 --> 00:25:46,680 Speaker 1: by secure supplies but instead by aspirations to return jobs 439 00:25:47,000 --> 00:25:49,640 Speaker 1: to the United States. I'm not sure that when they're 440 00:25:49,680 --> 00:25:54,439 Speaker 1: framed that way they are particularly sound. I think the 441 00:25:54,480 --> 00:25:58,639 Speaker 1: Trump administration made a serious error to which the Biden 442 00:25:59,040 --> 00:26:04,960 Speaker 1: administration and as I think not uh corrected uh fully 443 00:26:05,000 --> 00:26:09,560 Speaker 1: of forgetting that when you raise the price of inputs, 444 00:26:10,200 --> 00:26:14,440 Speaker 1: you reduced the competitiveness of US producers. And so when 445 00:26:14,560 --> 00:26:18,240 Speaker 1: imported goods are an import to our manufacturing and we 446 00:26:18,359 --> 00:26:24,800 Speaker 1: restrict those imports, we make our manufacturing less uh competitive. 447 00:26:25,320 --> 00:26:29,720 Speaker 1: And so all of that is I think issues that 448 00:26:29,800 --> 00:26:33,440 Speaker 1: we need to recognize. So yes, I would take on 449 00:26:33,600 --> 00:26:39,560 Speaker 1: board the idea of resilience and containing supply chains, but no, 450 00:26:40,359 --> 00:26:45,359 Speaker 1: I surely would not uh frame this in terms of 451 00:26:45,680 --> 00:26:51,919 Speaker 1: maximizing manufacturing jobs. That's a kind of old fashioned Latin 452 00:26:51,960 --> 00:26:55,600 Speaker 1: American notion that didn't work very well in Latin America, 453 00:26:55,720 --> 00:26:58,280 Speaker 1: and I think ultimately over the long term, won't work 454 00:26:58,320 --> 00:27:00,960 Speaker 1: so well here. All right. So the other big development 455 00:27:00,960 --> 00:27:03,280 Speaker 1: this week, of course, was the latest inflation data, the 456 00:27:03,280 --> 00:27:06,600 Speaker 1: CPI numbers and the pp I numbers both running hot, 457 00:27:06,680 --> 00:27:10,520 Speaker 1: both adding to the evidence here that inflation is certainly real. 458 00:27:11,119 --> 00:27:13,359 Speaker 1: J Pal the fetch here was on Capitol Hill for 459 00:27:13,359 --> 00:27:16,679 Speaker 1: his semi annual testimony. He acknowledges. His exact quote was, 460 00:27:16,840 --> 00:27:20,639 Speaker 1: inflation is not moderately above two percent, it's well above 461 00:27:20,680 --> 00:27:23,439 Speaker 1: two percent. But then he did ask and ask his 462 00:27:23,480 --> 00:27:26,800 Speaker 1: own question here, basically is where are we six months 463 00:27:26,800 --> 00:27:30,480 Speaker 1: from now? Basically raising this question about whether the pressures 464 00:27:30,560 --> 00:27:33,200 Speaker 1: or we're seeing out there are transitory, whether they will 465 00:27:33,240 --> 00:27:36,359 Speaker 1: dissipate once some of the supply chain bottlenecks are finally 466 00:27:36,359 --> 00:27:39,120 Speaker 1: worked out here. What's your general view here right now 467 00:27:39,240 --> 00:27:42,120 Speaker 1: on where we stand with these inflation pressures. I think 468 00:27:42,200 --> 00:27:45,240 Speaker 1: most of the observers are framing the question the wrong 469 00:27:45,280 --> 00:27:49,720 Speaker 1: way Room made. They're framing it as is inflation transitory? 470 00:27:50,000 --> 00:27:53,720 Speaker 1: Look the at an annualized rate, the inflation rate was 471 00:27:53,760 --> 00:27:59,560 Speaker 1: eleven this month. Yes, that is transitory. There's no question 472 00:27:59,640 --> 00:28:02,640 Speaker 1: at all that that is transitory. There is no question 473 00:28:02,720 --> 00:28:06,240 Speaker 1: that the figures were pushed up by transitory factors and 474 00:28:06,440 --> 00:28:10,200 Speaker 1: used cars and other things. But that's not the important question. 475 00:28:10,480 --> 00:28:15,240 Speaker 1: The important question is whether of the eleven percent, nine 476 00:28:15,280 --> 00:28:19,080 Speaker 1: percent was transitory, eight percent was transitory, or six or 477 00:28:19,119 --> 00:28:23,320 Speaker 1: seven percent were transitory, six or seven percent was transitory. 478 00:28:23,400 --> 00:28:26,199 Speaker 1: Then we've got inflation running at four or five percent, 479 00:28:26,760 --> 00:28:30,959 Speaker 1: and we've got a real problem. Uh, in the country. 480 00:28:31,000 --> 00:28:35,679 Speaker 1: So one's not addressing the issue usefully simply by remarking 481 00:28:35,720 --> 00:28:40,200 Speaker 1: that there's a lot of transitory inflation. I look at 482 00:28:40,240 --> 00:28:43,920 Speaker 1: what's happening in the labor market, where we've got job 483 00:28:44,040 --> 00:28:47,240 Speaker 1: shortages to UH in terms of the ability to fill 484 00:28:47,360 --> 00:28:52,480 Speaker 1: jobs to an unprecedented degree, where workers are quitting at 485 00:28:52,520 --> 00:28:57,719 Speaker 1: a very large UH rate, and I see real cause 486 00:28:57,840 --> 00:29:04,920 Speaker 1: for concern that waging lation is starting to UH accelerate. 487 00:29:05,440 --> 00:29:08,320 Speaker 1: I look at what's happening in the housing market, where 488 00:29:08,760 --> 00:29:12,200 Speaker 1: everybody I know who's trying to rent a house. Every 489 00:29:12,240 --> 00:29:16,920 Speaker 1: statistic I see, whether it's from San Francisco or from Cincinnati, 490 00:29:17,000 --> 00:29:20,640 Speaker 1: whether it's from New York, or whether it's from rural 491 00:29:20,680 --> 00:29:24,240 Speaker 1: Iowa is saying that the housing market is on fire, 492 00:29:24,720 --> 00:29:28,240 Speaker 1: both for renters and owners. I see none of that 493 00:29:28,440 --> 00:29:32,240 Speaker 1: in the statistics. And it looks to me the statistics 494 00:29:32,240 --> 00:29:34,760 Speaker 1: are the official price INDUSESE and it looks to me 495 00:29:34,920 --> 00:29:38,520 Speaker 1: like either those statistics are wrong or more likely that 496 00:29:38,600 --> 00:29:43,840 Speaker 1: inflation is going to UH come. And so I think 497 00:29:43,920 --> 00:29:47,480 Speaker 1: that inflation is with us thanks to our special contributor, 498 00:29:47,560 --> 00:29:51,080 Speaker 1: Larry Summers of Harvard. Now, finally, one more thought. Next 499 00:29:51,080 --> 00:29:54,000 Speaker 1: week marks the fifty second anniversary of the Apollo eleven 500 00:29:54,000 --> 00:29:56,640 Speaker 1: mission to the Moon, a human setting foot on soil 501 00:29:56,920 --> 00:29:59,760 Speaker 1: other than the Earth's. It was a dramatic culmination of 502 00:29:59,800 --> 00:30:02,640 Speaker 1: your is long space race between the Soviets and the US, 503 00:30:02,680 --> 00:30:06,000 Speaker 1: and while rooted in national security and national pride, it 504 00:30:06,080 --> 00:30:09,160 Speaker 1: ended up being a springboard for technological advancement like we 505 00:30:09,240 --> 00:30:12,719 Speaker 1: had never seen before, a third Industrial Revolution that hastened 506 00:30:12,720 --> 00:30:16,040 Speaker 1: the development of automation and computing, and it laid the 507 00:30:16,040 --> 00:30:17,960 Speaker 1: groundwork for many of the things we take for granted 508 00:30:18,000 --> 00:30:26,000 Speaker 1: today mobile phones, food preservatives, air purifiers, cordless tools, wireless headsets, memory, foam, mattresses. 509 00:30:26,040 --> 00:30:30,240 Speaker 1: So many little things owe directly to one big thing, 510 00:30:30,720 --> 00:30:35,040 Speaker 1: the push to explore space. That push then was led 511 00:30:35,040 --> 00:30:38,120 Speaker 1: by the government, but now a new era of space 512 00:30:38,200 --> 00:30:40,480 Speaker 1: exploration is a foot, and it's being led by private 513 00:30:40,480 --> 00:30:46,720 Speaker 1: industry and private individuals. Bezos, Branson, Musk, billionaire entrepreneurs whose 514 00:30:46,760 --> 00:30:49,880 Speaker 1: ambitions there I say, maybe a little bit less noble 515 00:30:50,440 --> 00:30:52,600 Speaker 1: and much more profit oriented, to be sure, than what 516 00:30:52,680 --> 00:30:55,640 Speaker 1: spawned the nineteen sixties space race. But once you dig 517 00:30:55,680 --> 00:30:59,880 Speaker 1: beneath the billionaire bravado, something important is actually taking place here. 518 00:31:00,240 --> 00:31:04,960 Speaker 1: Real science, real research, real human progress, It's likely no 519 00:31:05,040 --> 00:31:08,480 Speaker 1: coincidence that Bezos chose to stage the first crude mission 520 00:31:08,520 --> 00:31:12,520 Speaker 1: of his Blue Origin space graph for July, the anniversary 521 00:31:12,520 --> 00:31:16,080 Speaker 1: of Neil Armstrong's milestone. Bezos has already compared the spectacle 522 00:31:16,120 --> 00:31:18,640 Speaker 1: of space tourism to the airplane barn stormers of a 523 00:31:18,680 --> 00:31:22,000 Speaker 1: hundred years ago, whose flying acrobatics seemed trivial at the time, 524 00:31:22,240 --> 00:31:25,680 Speaker 1: but they helped fuel public fascination and an acceptance of 525 00:31:25,720 --> 00:31:28,680 Speaker 1: a new and of course now common mode of transportation, 526 00:31:28,800 --> 00:31:32,200 Speaker 1: the airplane. Elon Musk and SpaceX, they've shown you can 527 00:31:32,200 --> 00:31:34,680 Speaker 1: shave millions of dollars off the cost of launches with 528 00:31:34,800 --> 00:31:37,600 Speaker 1: reusable rocket boosters, an idea that was nothing more than 529 00:31:37,640 --> 00:31:41,080 Speaker 1: science fiction just a few decades ago. The experimentation by 530 00:31:41,120 --> 00:31:44,560 Speaker 1: these individuals, along with the continued involvement of the government 531 00:31:44,680 --> 00:31:49,200 Speaker 1: NASA in the US and space agencies in China, Europe, India, Russia, 532 00:31:49,280 --> 00:31:56,440 Speaker 1: the UAE, they're actively leading to scientific advancement in jet propulsion, mining, farming, 533 00:31:56,880 --> 00:32:02,280 Speaker 1: water extraction, laser communication, and radio shielding, all providing valuable 534 00:32:02,320 --> 00:32:07,760 Speaker 1: insight into how humankind could adapt to much harsher environments. Now, 535 00:32:07,800 --> 00:32:10,360 Speaker 1: it's unclear what the endgame is for this renewed push 536 00:32:10,520 --> 00:32:14,080 Speaker 1: to explore the ultimate frontier. But if the nineteen sixty 537 00:32:14,160 --> 00:32:17,680 Speaker 1: Space race was any guide, then the sky is not 538 00:32:17,800 --> 00:32:20,440 Speaker 1: the limit that does it. For this episode of Wall 539 00:32:20,480 --> 00:32:23,440 Speaker 1: Street Week, arm Romaine Bostick, this is Bloomberg.