WEBVTT - Fed Starts to Confront the Next Big Question 0:00:01.360 --> 0:00:05.720 This is Bloomberg Business Wait inside from the reporters and 0:00:05.880 --> 0:00:09.479 editors who bring you America's most trusted business magazine, plus 0:00:09.520 --> 0:00:13.440 gloom O Business Finance and tech news. The Bloomberg Business 0:00:13.440 --> 0:00:19.000 Week podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio. 0:00:20.520 --> 0:00:23.840 Got a great segment coming up to continue the macro talk. 0:00:24.800 --> 0:00:28.000 We've got our colleague, Rich Miller, who's on my team 0:00:28.040 --> 0:00:29.880 you know when I'm doing the rest of my job, 0:00:29.920 --> 0:00:33.199 which is covering the economy. So Rich, good colleague of 0:00:33.280 --> 0:00:35.760 mind based out of DC. He's with us on zoom 0:00:35.800 --> 0:00:38.479 and Ira Jersey, our chief US interest rate strategies with 0:00:38.560 --> 0:00:41.360 us here in the Bloomberg Interactive Burger studio. How do 0:00:41.360 --> 0:00:41.880 you guys doing. 0:00:42.120 --> 0:00:44.680 I'm doing great, Molly, thanks very much for having us 0:00:44.680 --> 0:00:45.800 and having me in the studio. 0:00:45.920 --> 0:00:48.360 And it looks like the investors I think we're saying 0:00:48.560 --> 0:00:51.680 in something of a holding pattern. Hand of the inflation 0:00:51.760 --> 0:00:55.240 data tomorrow and of course the FED decision on Wednesday, 0:00:55.400 --> 0:00:58.000 so let's get a preview of all that. Ira, who's 0:00:58.040 --> 0:00:59.640 in studio. By the way, do you know the difference 0:00:59.680 --> 0:01:02.880 between suspenders and braces? Because Ira can tell you. 0:01:02.960 --> 0:01:03.920 Please tell me Ira. 0:01:04.200 --> 0:01:05.679 One has buttons, one has clips. 0:01:07.000 --> 0:01:09.959 Keep that in mind. So the guy with the braces, 0:01:10.040 --> 0:01:12.880 he's the most important one. I suspect he's also in studio. 0:01:13.200 --> 0:01:16.440 So Ira, what is the market expecting at this point 0:01:16.520 --> 0:01:20.280 and what do you suppose the Fed's going to do? 0:01:20.600 --> 0:01:23.199 And why is there such a disconnector if there is one? 0:01:23.360 --> 0:01:25.720 Well, I think the rate market is thinking the Fed's 0:01:25.760 --> 0:01:27.760 not going to do anything this week, right, But the 0:01:28.800 --> 0:01:30.880 question is will they start to get more dubvish? 0:01:31.000 --> 0:01:31.160 Right? 0:01:31.200 --> 0:01:34.880 And certainly the market has completely shifted tone the last 0:01:34.920 --> 0:01:38.240 six weeks, where at the beginning of October we were 0:01:38.280 --> 0:01:40.600 basically pricing for the Fed to do almost nothing in 0:01:40.640 --> 0:01:42.960 twenty twenty four, maybe a cut at the end of 0:01:43.000 --> 0:01:45.720 the year. Now we're pricing for one hundred bases points 0:01:45.720 --> 0:01:49.080 of interest rate cuts starting in March, right, So we're 0:01:49.120 --> 0:01:52.880 going to be definitely listening for any tone shift from 0:01:52.920 --> 0:01:53.320 the Fed. 0:01:53.400 --> 0:01:54.200 That's a big one. 0:01:54.720 --> 0:01:57.360 And if they were a little bit more hawkish than 0:01:57.440 --> 0:01:59.680 they were, say last month or what you heard in 0:01:59.680 --> 0:02:02.680 the minute, then you can probably start to price out 0:02:02.720 --> 0:02:05.680 that March. That March cut that's already priced about. 0:02:05.480 --> 0:02:08.040 That is really dramatic to move up from basically no 0:02:08.240 --> 0:02:11.160 cuts to now starting as early as March. Rich, let's 0:02:11.160 --> 0:02:12.880 bring you in here because you had a great story 0:02:12.880 --> 0:02:15.240 over the weekend. As to the question isn't so much 0:02:15.520 --> 0:02:18.840 about the when, but the why. So tell us about 0:02:18.880 --> 0:02:21.600 the reasons why the Fed could cut and why that matters. 0:02:23.280 --> 0:02:27.680 Well, two basic reasons. One, you know, the economy's falling apart, 0:02:27.760 --> 0:02:29.520 and then they've got to come to the rescue. So 0:02:30.480 --> 0:02:33.880 in that case, probably the cuts will be rapid or big. 0:02:34.639 --> 0:02:39.480 But the other one, which Chris Waller Governor Chris Waller floated, 0:02:39.520 --> 0:02:44.920 would be if inflation keeps falling, they bring down rates 0:02:45.080 --> 0:02:49.320 in tandem with their fall in inflation, so they effectively 0:02:49.480 --> 0:02:56.200 keep the real rate interest rate after adjusting for inflation, steady, 0:02:56.240 --> 0:02:59.480 And so that would be sort of good news, probably 0:02:59.600 --> 0:03:01.600 certainly good news for the economy, because it would be 0:03:01.600 --> 0:03:04.080 suggesting that the economy is cruising along or in this 0:03:04.200 --> 0:03:09.600 soft landing. You know, inflation is coming down, a maculous disinflation, 0:03:09.680 --> 0:03:10.160 et cetera. 0:03:10.960 --> 0:03:15.160 Hey, I, when things turn, they usually turn pretty quickly 0:03:15.240 --> 0:03:19.720 and pretty severely. How dramatic of a turn have we 0:03:19.919 --> 0:03:22.440 seen when it comes to parsing the data? 0:03:23.200 --> 0:03:26.720 Well, not that dramatic, right, We've seen a mix of 0:03:26.800 --> 0:03:28.920 data right, where some data is certainly weaker and the 0:03:28.960 --> 0:03:32.080 data is certainly you know, not falling off a cliff yet. 0:03:32.120 --> 0:03:34.600 But to your point, John and I, you know, it's 0:03:34.680 --> 0:03:37.760 possible that you get this, you know, a massive downshift 0:03:37.760 --> 0:03:39.600 in the economy, and that would be one of the 0:03:39.640 --> 0:03:42.040 reasons why the Federal Reserve, as to what Rich was 0:03:42.080 --> 0:03:43.960 just saying, that would be one of the reasons why 0:03:44.000 --> 0:03:45.240 the Fed would start to cut early. 0:03:45.280 --> 0:03:47.840 Now that's a minority view to put that out. 0:03:47.720 --> 0:03:51.000 There, though, probably, But at the same time, if that 0:03:51.160 --> 0:03:53.920 does occur, then certainly the Fed might cut much faster. 0:03:54.000 --> 0:03:54.120 Right. 0:03:54.160 --> 0:03:56.839 Typically I call it escalator up elevator down. 0:03:56.960 --> 0:03:59.680 Right, when the Federal Reserve hikes interest rates, it increases 0:03:59.720 --> 0:04:03.600 them relatively, you know, slowly, although you know in. 0:04:03.520 --> 0:04:08.119 This site four seventy five faces point hypes incessions. 0:04:07.200 --> 0:04:07.840 A little bit different. 0:04:07.920 --> 0:04:08.119 Right. 0:04:08.320 --> 0:04:10.560 But when they cut, they cut, you know, one hundred 0:04:10.560 --> 0:04:13.200 basis points at a time, maybe for three times, right, 0:04:13.320 --> 0:04:17.000 so you can wind up with with very significant declines 0:04:17.400 --> 0:04:19.080 in it. Now, that's not my call, and I actually 0:04:19.080 --> 0:04:21.520 think that the market's probably getting ahead of itself because 0:04:22.000 --> 0:04:24.880 I do think that you know that Governor Waller and 0:04:24.920 --> 0:04:26.400 some of the other members of the FED. They would 0:04:26.440 --> 0:04:29.560 love to be able to kind of calibrate the federal 0:04:29.560 --> 0:04:32.960 funds rate with inflation and with the growth level, but 0:04:33.160 --> 0:04:36.080 it's very hard to do, right. So I agree with 0:04:36.080 --> 0:04:38.240 with the idea that we need to know why they're 0:04:38.240 --> 0:04:40.680 going to be cutting early, and I'm not convinced that 0:04:40.680 --> 0:04:42.880 they're that they need to or they're going to. 0:04:43.160 --> 0:04:44.880 Yeah, and Richie, you know, let's get into a little 0:04:44.880 --> 0:04:47.120 bit more in the story. Because when I pointed out 0:04:47.160 --> 0:04:49.880 that that reset why they'd be cutting because of a 0:04:49.880 --> 0:04:52.720 recession and being a minority view, it looked like in 0:04:52.760 --> 0:04:56.400 the survey that Bloomberg did earlier this month was what 0:04:56.480 --> 0:04:58.400 was it about twenty eight percent of people who thought 0:04:58.400 --> 0:05:00.799 that would be the reason why the Fed would be cutting, 0:05:00.800 --> 0:05:03.840 but closer to three quarters thinking it'd be more along 0:05:03.880 --> 0:05:06.440 the soft landing narrative that inflation is cooling and that 0:05:06.480 --> 0:05:09.400 would warrant a lower policy rate. So tell us for 0:05:09.520 --> 0:05:12.000 those people who are in more of the recession camp, 0:05:12.520 --> 0:05:14.960 I mean, not many of them left, Why do they 0:05:15.120 --> 0:05:16.200 think that's still the case? 0:05:16.960 --> 0:05:19.520 Well, I mean some of them include our own Anawong 0:05:19.560 --> 0:05:26.160 who's the chief of cons So it basically I think 0:05:26.400 --> 0:05:30.080 the people are arguing that there's still a recession likely, 0:05:30.400 --> 0:05:32.240 I guess have a couple of reasons. One, you know, 0:05:33.720 --> 0:05:36.159 if you go back in history, people always talking about 0:05:36.160 --> 0:05:38.240 soft landing just before recession. 0:05:38.360 --> 0:05:41.240 So that's one. 0:05:41.360 --> 0:05:46.960 But two, I think it's more about that the interest 0:05:47.040 --> 0:05:54.320 rates will slowly start to weigh on consumers companies, and 0:05:54.360 --> 0:05:58.680 that you know, consumers have more or less exhausted all 0:05:58.680 --> 0:06:01.760 their surplus savings and now they're having a bar credit 0:06:01.839 --> 0:06:06.200 you know, people point to buy now pay later has 0:06:06.240 --> 0:06:13.039 like ballooned, and the companies, many of the companies, the 0:06:13.120 --> 0:06:16.359 rates they locked in will be coming doe and they'll 0:06:16.360 --> 0:06:20.400 have to refinance. So that's the argument of, as you say, 0:06:20.760 --> 0:06:24.640 sort of dwindling minority at the moment of people who 0:06:24.720 --> 0:06:26.919 think of recession. I mean, what was kind of interesting 0:06:26.960 --> 0:06:30.279 in the survey was that, just looking ahead to the meeting, 0:06:30.440 --> 0:06:35.440 is that the median economists we surveyed, you know, says 0:06:35.440 --> 0:06:38.080 the Fed itself is only going to have two interest 0:06:38.160 --> 0:06:42.760 rate cuts penciled into their dot plot. And that's like 0:06:43.000 --> 0:06:45.520 just half, as Ira was saying, that's just half of 0:06:45.560 --> 0:06:48.840 what the market is expecting the Fed will end up 0:06:48.839 --> 0:06:49.359 having to do. 0:06:50.120 --> 0:06:54.000 Is it instructive? Ira to look at history the interval 0:06:54.080 --> 0:06:59.520 between pauses, hikes, pauses and cuts. Does that tell you anything? 0:07:00.080 --> 0:07:02.680 I mean, it's not a time thing that the FED 0:07:02.760 --> 0:07:04.960 really worries about, right, it's where are we in the economy. 0:07:05.000 --> 0:07:07.120 But there is a cyclicality to the business. 0:07:06.839 --> 0:07:10.280 Cycle, for sure, right where you do have troughs and 0:07:10.400 --> 0:07:15.200 valleys and economic momentum. But sometimes it was manifest themselves 0:07:15.200 --> 0:07:17.640 in mid cycle slowdowns. I mean, I'll take twenty fifteen 0:07:17.680 --> 0:07:20.720 as a perfect example where you had some massive sectors 0:07:20.760 --> 0:07:22.600 of the economy that were in recession. 0:07:22.720 --> 0:07:22.880 Right. 0:07:22.920 --> 0:07:25.080 You had the oil patch was in recession for sure, 0:07:25.560 --> 0:07:28.840 but we didn't really fall into the category of making 0:07:28.880 --> 0:07:31.280 it a recession because it wasn't incredibly broad based. 0:07:31.640 --> 0:07:33.040 And it's possible that we could. 0:07:32.840 --> 0:07:34.520 Be in a situation like that right where we have 0:07:34.680 --> 0:07:39.040 a meaningful slow down right now that winds up accelerating 0:07:40.440 --> 0:07:42.679 sometime in the not too distant future and we don't 0:07:42.680 --> 0:07:45.600 technically get a recession, but it doesn't matter. The economy 0:07:45.640 --> 0:07:48.280 is slowing, right. There's you know, I think very few 0:07:48.280 --> 0:07:51.680 people and objective observers would deny that. The question is 0:07:52.040 --> 0:07:54.360 will the pace be slow enough that and broad enough 0:07:54.400 --> 0:07:58.800 that it worries the federal reserve, and does is it 0:07:58.840 --> 0:08:00.880 slow enough that inflation I'm sound enough for the. 0:08:00.800 --> 0:08:03.200 Federal reserve to be And then what's the history of 0:08:03.320 --> 0:08:07.080 soft landings? Do we have a good track record of that? 0:08:07.120 --> 0:08:09.120 You could you could argue we had one in nineteen 0:08:09.160 --> 0:08:11.880 ninety four. You can argue that, you know, we had 0:08:11.920 --> 0:08:14.640 one or two. But yeah, they don't normally happen. 0:08:14.400 --> 0:08:17.680 Right, It's it's the Fed cuts usually because there's an emergency, 0:08:17.680 --> 0:08:18.680 and it cuts a lot. 0:08:19.120 --> 0:08:20.880 Yeah, I mean what kind of emergency do you think 0:08:20.880 --> 0:08:22.880 that would be at this point, rich, Like, you know, 0:08:22.920 --> 0:08:25.880 that Job's report on Friday certainly doesn't look like any 0:08:25.880 --> 0:08:27.520 emergency in the labor market right now. 0:08:28.600 --> 0:08:31.440 Yeah, I mean, and all survey sort of said that 0:08:32.760 --> 0:08:35.360 one other option would because some sort of financial shock. 0:08:35.400 --> 0:08:39.840 And for the moment, none of the economists we survey 0:08:39.840 --> 0:08:41.839 are looking for a financial shock, which gets you a 0:08:41.880 --> 0:08:51.440 little worried. But you know that would be something you know, 0:08:51.040 --> 0:08:54.680 as I said, the people who see a recession sort 0:08:54.720 --> 0:08:57.880 of you know say, okay, you know things are always 0:08:58.160 --> 0:09:00.640 bright before it turns dark or some thing like that, 0:09:01.040 --> 0:09:03.679 and that you know that that that that that this 0:09:03.880 --> 0:09:07.440 interest rates have have an impact. High interest rates have 0:09:07.480 --> 0:09:10.240 an impact, and they will. They will basically wear the 0:09:10.280 --> 0:09:12.959 economy down to recession. I'll be a most people think 0:09:13.000 --> 0:09:18.040 it's going to be very mild, but still that's I mean. 0:09:18.640 --> 0:09:20.720 I think will be interesting next week, Will you know 0:09:20.920 --> 0:09:23.840 be the Fed has kind of in its statement has 0:09:24.600 --> 0:09:29.960 a bit of a tightening bias. Will they reword that 0:09:31.240 --> 0:09:35.000 some people, some economists like Michael Gapin of Bank of 0:09:35.040 --> 0:09:40.040 America suggesting they may even drop that. And then the 0:09:40.120 --> 0:09:42.320 other things I mentioned earlier will be you know, the 0:09:42.360 --> 0:09:45.040 dot plot, and you know how much, how many, how many, 0:09:45.559 --> 0:09:48.800 how many, how many rate cuts they've got priced in. 0:09:49.320 --> 0:09:55.000 At the last press conference after the last meeting, Powell 0:09:55.040 --> 0:09:58.079 said they weren't even thinking about rate cuts, not talking 0:09:58.120 --> 0:09:59.040 about rate cuts. 0:09:59.040 --> 0:10:00.600 It's going to be hot for him. 0:10:00.679 --> 0:10:02.400 I think to say that this time. 0:10:02.400 --> 0:10:05.400 Rich joys a pleasure thanks a lot rich on Zoom 0:10:05.520 --> 0:10:08.640 from Washington, D C. Rich Miller, our economics reporter and 0:10:08.800 --> 0:10:12.239 in studio with us Ira Jersey, the chief US industrate 0:10:12.520 --> 0:10:18.040 strategists with Bloomberg Intelligence. Of course, the FED meeting Wednesday 0:10:18.520 --> 0:10:22.520 and the foul Powell press conference will be specifically looking 0:10:22.600 --> 0:10:27.480 for the summary of economic projections. You're listening to Bloomberg. 0:10:28.520 --> 0:10:32.080 You're listening to the Bloomberg Business Week podcast. Catch us 0:10:32.120 --> 0:10:35.480 live weekday afternoons from three to six Eastern Listen on 0:10:35.520 --> 0:10:39.559 Bloomberg dot com, the iHeartRadio app, and the Bloomberg Business App, 0:10:39.840 --> 0:10:41.560 or watch us live on YouTube. 0:10:42.520 --> 0:10:47.199 You know New York Molly has been winning listings from London, 0:10:47.520 --> 0:10:50.440 the Chipman early listings. That is, well stock listings. 0:10:50.600 --> 0:10:52.600 Yeah, the kind that our listeners care about. 0:10:52.760 --> 0:10:54.040 What'd you think I was talking about? 0:10:54.120 --> 0:10:55.600 I don't know. I mean, you know, my mind's been 0:10:55.600 --> 0:10:56.920 in the real estate space lately. 0:10:57.200 --> 0:11:00.680 Oh that's right. Just closed, closed. 0:11:01.120 --> 0:11:04.920 We just signed a contract. Big except we're closing. 0:11:05.240 --> 0:11:07.240 You become a big girl now, Oh. 0:11:07.080 --> 0:11:08.440 My goodness, you better believe it. 0:11:08.600 --> 0:11:11.920 Mortgage and everything well, chip Maker arm when you talk 0:11:11.960 --> 0:11:14.600 about listings, that's the one that immediately comes to mind. 0:11:14.640 --> 0:11:18.440 Based in Cambridge, listing in New York. With that as 0:11:18.440 --> 0:11:22.439 a backdrop, let's explore the ties between our two great cities, 0:11:22.760 --> 0:11:26.040 New York and London. And we're honored to say hi 0:11:26.120 --> 0:11:29.640 to Chris Hayworth, the Policy Chairman for the City of London. 0:11:30.000 --> 0:11:33.280 So New York and London are we friends, enemies, frenemies 0:11:33.600 --> 0:11:35.079 competitors something else. 0:11:35.040 --> 0:11:37.559 Well, I would say we are first and foremost friends 0:11:37.880 --> 0:11:40.360 and also just a little bit of competition between our 0:11:40.400 --> 0:11:43.600 two great cities as well. But as far as the 0:11:43.640 --> 0:11:46.120 listings go, I mean, I think both our exchanges have 0:11:46.480 --> 0:11:49.400 had challenging years, ours more than yours. We know our 0:11:49.440 --> 0:11:51.880 listings are down in London, and really that's down to 0:11:52.320 --> 0:11:56.480 availability of capital and capital flows, and particularly we've seen 0:11:56.520 --> 0:11:59.800 it with fintech and fintech sector companies who we would 0:11:59.800 --> 0:12:01.920 have had would have listed on the London Stock Exchange 0:12:02.120 --> 0:12:04.360 have come across the pond because then get bigger valuations 0:12:04.400 --> 0:12:08.880 here there's more capital availability. But our regulators have adjusted 0:12:08.880 --> 0:12:12.000 some of the restrictions on listing in on the London 0:12:12.040 --> 0:12:15.160 Stock Exchange, and so we're hoping to continue to win 0:12:15.240 --> 0:12:17.720 business in a friendly and competitive way with you in 0:12:17.720 --> 0:12:18.120 New York. 0:12:18.240 --> 0:12:20.240 Is it too much regulation in your city? 0:12:20.760 --> 0:12:23.839 We don't think so. We think that high quality regulation. 0:12:24.280 --> 0:12:28.200 Financial regulation is actually very important. It's important to attract 0:12:28.280 --> 0:12:31.600 foreign direct investments into our country. But at the same 0:12:31.600 --> 0:12:33.840 time it mustn't be restrictive. It has to be innovative 0:12:33.880 --> 0:12:35.800 as well. And the one thing you do much better 0:12:35.840 --> 0:12:38.200 in New York than we do is you actually take 0:12:38.520 --> 0:12:43.760 risk in business, and unfortunately regulation has become something that's 0:12:44.000 --> 0:12:50.000 seen not innovative, not promoting global competitiveness. We're very keen 0:12:50.040 --> 0:12:52.760 to see them do that, but not to downgrade the 0:12:52.840 --> 0:12:54.000 quality of our regulation. 0:12:54.480 --> 0:12:56.400 Got it, well, Chris, tell us a little bit more 0:12:56.440 --> 0:12:59.760 about your title. We were trying to understand as a 0:12:59.800 --> 0:13:03.040 lot little bit before. You know your distinction is policy chairman. 0:13:03.160 --> 0:13:06.160 What role that really entails? And I'm also a little 0:13:06.200 --> 0:13:07.360 bit while you're here this week. 0:13:07.760 --> 0:13:10.200 So okay, So the Policy Chairman of the City of 0:13:10.200 --> 0:13:13.960 London is the political leader of the corporation. Serves for 0:13:14.080 --> 0:13:15.880 five years. We have one hundred and twenty so. 0:13:15.960 --> 0:13:20.679 That deserves explanation on itself. There's there's London and the Corporation, 0:13:21.400 --> 0:13:25.520 which is in the Guema Square city So where does 0:13:25.559 --> 0:13:27.640 the where does that get its roots? The corporation? 0:13:27.840 --> 0:13:30.600 The Corporation goes back over one thousand years. It is 0:13:30.640 --> 0:13:33.680 the oldest part the heart of the of London in general. 0:13:33.720 --> 0:13:36.440 London in general is made up of thirty two different 0:13:36.480 --> 0:13:40.280 London boroughs and the City of London Corporation. But our 0:13:40.360 --> 0:13:44.719 job specifically is to promote UK financial and professional services 0:13:45.080 --> 0:13:47.440 both and to represent them, both to the UK government 0:13:47.520 --> 0:13:50.559 and internationally. So my job sees me doing sixty five 0:13:50.640 --> 0:13:54.280 days travel around the world promoting London as a global 0:13:54.360 --> 0:13:55.920 financial capital. 0:13:55.760 --> 0:13:58.240 And to that and you're opening an office. 0:13:58.720 --> 0:14:00.640 We are we are know this. This is something I've 0:14:00.679 --> 0:14:03.360 wanted to do for a number of years now. We 0:14:03.480 --> 0:14:06.280 have a global representation in other countries, we haven't had 0:14:06.320 --> 0:14:09.560 it here in the US, and so I've hired a 0:14:09.600 --> 0:14:13.600 managing director and we're going to work between DC, where 0:14:13.640 --> 0:14:17.080 we obviously have the regulators, the Hill and the think tanks, 0:14:17.200 --> 0:14:19.960 and New York, where you obviously have the commercial and 0:14:20.040 --> 0:14:24.240 financial center. The idea is really to talk together about 0:14:24.320 --> 0:14:29.400 regulation and alignment of regulation and policy areas as well, 0:14:29.680 --> 0:14:32.800 and of course to promote flows off trade and investment 0:14:33.080 --> 0:14:34.880 between our two great nations. 0:14:35.280 --> 0:14:38.520 So tell us, Chris, because admittedly, so like I said, 0:14:38.560 --> 0:14:40.880 I'm a huge fan of your city. I studied abroad 0:14:40.880 --> 0:14:43.120 there when I was in college, have been dying to 0:14:43.160 --> 0:14:46.600 get back when My memory though of the financial center 0:14:46.600 --> 0:14:49.760 of London is that it's largely Canary Wharf, right or 0:14:49.840 --> 0:14:52.240 is there a whole lot else going on beyond that area? 0:14:52.840 --> 0:14:55.320 Absolutely? I mean what you will find in Canary Wharf 0:14:55.400 --> 0:14:57.160 are some of the big banks, some of the big 0:14:57.160 --> 0:15:00.760 investment banks, but you will find huge amounts to financial 0:15:00.800 --> 0:15:05.120 services companies and some banks in the square mile itself. 0:15:05.160 --> 0:15:07.960 What happened is, you know, we only have one square mile. 0:15:08.000 --> 0:15:10.880 That's a tiny area to actually be able to cope 0:15:11.080 --> 0:15:13.480 with the explosion of growth in the past twenty years 0:15:13.720 --> 0:15:16.920 in the financial services sector. And so fifteen so years ago, 0:15:16.960 --> 0:15:18.640 a number of the moved to Canary Wharfs. Some are 0:15:18.640 --> 0:15:22.320 now moving back into the city, but we still maintain 0:15:22.440 --> 0:15:26.120 that the reputation when you're talking globally, what people remember 0:15:26.240 --> 0:15:28.720 is not Canary Wharf. They remember the city of London. 0:15:29.000 --> 0:15:32.520 It's not a one way street. There's US investment going 0:15:33.040 --> 0:15:36.320 to London. Tell us about that, particularly with venture capital. 0:15:36.440 --> 0:15:39.640 With venture capital particularly there is and that's hugely important 0:15:39.680 --> 0:15:42.200 for us. And what I've been doing today and I 0:15:42.240 --> 0:15:44.200 will be doing in the next few days here and 0:15:44.280 --> 0:15:47.280 in DC is. I spoke today with the New York 0:15:47.280 --> 0:15:51.000 Stock Exchange and we agreed to mutual collaboration. Although there 0:15:51.040 --> 0:15:53.920 is com competition, there's no reason why we can't equally 0:15:54.440 --> 0:15:57.600 support each other's aspirations. And there's lots of ways we 0:15:57.680 --> 0:16:00.120 can align and one of the encouraging things is we 0:16:00.200 --> 0:16:02.480 do get two way flows, it's not just one way. 0:16:02.720 --> 0:16:05.680 We do have US investment into the United Kingdom and 0:16:05.680 --> 0:16:08.000 that's been growing, and the VC market in particular. 0:16:08.280 --> 0:16:11.200 And tell us about investment then from other countries. As 0:16:11.280 --> 0:16:13.440 much as we sometimes like to think, the US is 0:16:13.480 --> 0:16:15.120 not the center of the world, So tell us what's 0:16:15.160 --> 0:16:16.040 happening elsewhere. 0:16:16.120 --> 0:16:19.000 Well, look, we've been through a very difficult challenge over 0:16:19.040 --> 0:16:22.560 the past seven years with the Brexit debate and leaving 0:16:22.600 --> 0:16:25.800 Europe and leaving the EU, leaving the Single Market. So 0:16:25.920 --> 0:16:28.320 that's forced us now to look globally, and we've been 0:16:28.320 --> 0:16:32.720 doing free trade agreements around the world and unfortunately I 0:16:32.720 --> 0:16:34.320 don't think we're going to get a free trade agreement 0:16:34.360 --> 0:16:36.720 with the US, but that I don't think will stop 0:16:36.920 --> 0:16:40.840 US trading as we do very effectively between US and 0:16:40.920 --> 0:16:44.800 the UK. I don't think either of your political parties 0:16:44.840 --> 0:16:49.000 here have our appetite for free trade agreement with US. 0:16:49.000 --> 0:16:53.160 But nevertheless, there is a tremendous flow of business and 0:16:53.240 --> 0:16:57.680 trade and investment going both ways across the Atlantic. And 0:16:57.760 --> 0:17:01.440 we know this transatlantic alliance, this friendship has been around 0:17:01.480 --> 0:17:04.640 for decades and centuries in fact, and what we want 0:17:04.640 --> 0:17:06.520 to do is take it to its next level. That's 0:17:06.560 --> 0:17:07.800 why we're opening an office here. 0:17:07.960 --> 0:17:11.680 What excites you the most about this relationship and where 0:17:11.680 --> 0:17:12.440 it's headed. 0:17:12.800 --> 0:17:15.440 Well, I think we have lots of things in common 0:17:15.480 --> 0:17:18.640 between the United States and the United Kingdom. We both 0:17:18.680 --> 0:17:22.959 speak the same language. We both have slightly different accent 0:17:23.000 --> 0:17:25.720 to it, maybe, but we do both speak the same language. 0:17:25.840 --> 0:17:29.200 We're both financial capitals. Look New York. We have huge 0:17:29.240 --> 0:17:31.720 respect for New York and the New York Stock Exchange, 0:17:32.200 --> 0:17:34.639 and I think the city of London is reciprocated. You know, 0:17:34.680 --> 0:17:38.159 we see ourselves as a global financial center. So what 0:17:38.240 --> 0:17:40.359 excites me is how do we bring the tour us 0:17:40.359 --> 0:17:43.840 together to strengthen the alliance in the Western world between 0:17:43.880 --> 0:17:46.280 these two great financial capitals. 0:17:46.600 --> 0:17:50.560 Yeah, you know, in financial houses in New York and 0:17:50.840 --> 0:17:54.479 even places like Bloomberg, you sort of cut your teeth 0:17:54.680 --> 0:17:57.880 in London. At some point in your career, you're sent 0:17:57.920 --> 0:17:59.320 over there, and that's like a have. 0:17:59.320 --> 0:18:02.760 You been with Bloomberg or otherwise you had to ask, 0:18:02.800 --> 0:18:07.600 didn't for the work, Okay, just for fun? Well have 0:18:07.720 --> 0:18:09.600 you been to our office over there? Chris, I hear. 0:18:09.640 --> 0:18:10.520 It's quite the marvel. 0:18:10.600 --> 0:18:14.159 It is the most remarkable building, the most sustainable office 0:18:14.160 --> 0:18:17.000 building in the whole of Europe. It's a fabulous building. 0:18:17.040 --> 0:18:20.119 I go on the radio Bloomberg in London regularly. I 0:18:20.160 --> 0:18:23.920 do Bloomberg TV regularly, and I have met your great 0:18:23.960 --> 0:18:27.080 mister Bloomberg last week at the cop actually out in Dubai, 0:18:27.200 --> 0:18:29.200 so I went to the Bloomberg dinner. 0:18:29.240 --> 0:18:32.040 So I was very lucky, fantastic. Well, we love to hear. Then, 0:18:32.040 --> 0:18:32.359 thank you. 0:18:32.800 --> 0:18:35.040 I haven't been invited to the new building yet. 0:18:35.240 --> 0:18:37.600 I haven't either. Maybe that'll be our next week. 0:18:37.640 --> 0:18:39.959 You need to get an invitation, you really do, and 0:18:40.000 --> 0:18:41.920 come and see us in the Guildhall in the City 0:18:41.920 --> 0:18:42.320 of London. 0:18:43.320 --> 0:18:44.520 Office opening in New York. 0:18:44.920 --> 0:18:46.040 Well, we're at the moment. 0:18:46.080 --> 0:18:49.760 We're working between New York and DC to identify locations 0:18:49.760 --> 0:18:52.359 in both and we'll we're bottom that ats. We've appointed 0:18:52.359 --> 0:18:54.560 the MD we'll bottom that out in the next few months. 0:18:54.960 --> 0:18:55.760 Keep us updated. 0:18:55.960 --> 0:19:00.240 Fantastic, appreciate it and Chris Hayward, the policy Chairman for 0:19:00.320 --> 0:19:03.600 the City of London, deepening the relationship the ties between 0:19:03.880 --> 0:19:05.440 New York and London. 0:19:06.440 --> 0:19:10.000 You're listening to the Bloomberg Business Week podcast. Catch us 0:19:10.040 --> 0:19:14.000 live weekday afternoons. From three to six Easter on Bloomberg Radio, 0:19:14.240 --> 0:19:17.520 the Bloomberg Business app, and YouTube. You can also listen 0:19:17.640 --> 0:19:20.760 live on Amazon Alexa from our flagship New York station, 0:19:21.200 --> 0:19:23.960 Just Say Alexa, play Bloomberg eleven thirty. 0:19:25.960 --> 0:19:29.240 Have you booked a hotel in a big appolitely. 0:19:29.440 --> 0:19:30.560 In a city where I live? 0:19:33.440 --> 0:19:36.359 I don't know. Oh, come on, it's almost a rhetorical 0:19:36.440 --> 0:19:40.040 question for the listeners and viewers. Right, So I did 0:19:40.240 --> 0:19:42.280 because I had to do a quick turnover, and I 0:19:42.280 --> 0:19:45.280 don't live here. I live in another state. But my 0:19:45.560 --> 0:19:47.720 eyeballs almost pomped out of their sack. 0:19:47.800 --> 0:19:48.560 Scary stuff. 0:19:48.920 --> 0:19:52.000 Oh goodness, gracious, I didn't pay for it. I mean 0:19:52.040 --> 0:19:55.560 I put them on the MX. But anyway, Our next 0:19:55.600 --> 0:20:00.280 guest follows the hotel and hospitality industry pretty closely. Kevin 0:20:00.359 --> 0:20:05.680 Davis is CEO of America's Hotels and Hospitality at JLL. 0:20:06.840 --> 0:20:10.000 So how does the Big Apple stack up? Right now? 0:20:11.280 --> 0:20:14.919 The New York City hotel market is performing exceptionally well. 0:20:15.080 --> 0:20:18.880 In fact, we are having a record year from an 0:20:18.920 --> 0:20:23.680 average daily rate perspective. We're up almost thirteen percent compared 0:20:23.680 --> 0:20:27.480 to twenty nineteen and over twenty two percent compared to 0:20:27.520 --> 0:20:32.359 twenty twenty two, So incredibly strong dynamics in New York City. 0:20:32.560 --> 0:20:34.879 So how much of this, Kevin, is like pent up 0:20:34.920 --> 0:20:37.399 COVID demand versus I'm sure you get this question a 0:20:37.400 --> 0:20:39.600