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Speaker 1: This is Bloomberg Wall Street Week.

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Speaker 2: And we may not have an overall recession, We're having

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Speaker 2: a rolling recession. To kind of roll looks pretty strongly

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Speaker 2: it is when it comes to jobs.

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Speaker 1: The financial stories that shape our world.

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Speaker 2: Three major regional bank failures send shockwaves through the banking system.

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Speaker 2: We're all trying to figure out what to make of

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Speaker 2: generative AI.

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Speaker 1: Through the eyes of the most influential voices.

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Speaker 2: Welcome down, Doctor Paul Krugman, Ryan moynihan, a Bank of America,

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Speaker 2: deebro Lair of the Paulson Institute, Len Hubbard of the

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Speaker 2: Columbia Business School.

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Speaker 1: Bloomberg Wall Street Week with David Weston from Bloomberg Radio.

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Speaker 2: Finding a way forward through the Red Sea at Davos,

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Speaker 2: in the presidential campaigns, and once again in Congress.

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Speaker 3: This is Bloomberg Wall Street Week. I'm David Weston.

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Speaker 2: This week's special contributor Larry Summers of Harvard and the

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Speaker 2: fiscal path ahead for the US government.

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Speaker 4: Our fiscal problems are much more serious than they were

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Speaker 4: in nineteen ninety one or nineteen ninety three.

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Speaker 2: I'm Funny a Bacheloss of Rock Creek. I'm plotting a

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Speaker 2: new course for ESG investing.

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Speaker 5: The economics of solar and wind have changed today.

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Speaker 2: They are very economic, and Blair Ephron of Centerview partners

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Speaker 2: on getting mergers and acquisitions.

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Speaker 3: Back on track.

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Speaker 6: M and A feels like we're much more important than

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Speaker 6: them in twenty four than it was in twenty twenty three.

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Speaker 2: Global Wall Street spent the week looking at some hard

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Speaker 2: problems and searching for some solutions. As a tax from

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Speaker 2: Huthi rebels on commercial shipping in the Red Sea worsened

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Speaker 2: despite US and British military action. I don't think it

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Speaker 2: was possible to go on allowing these attacks to continue

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Speaker 2: in the Red Sea. In Davos, the Great and the

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Speaker 2: Good gathered for their annual meetings, which this year focused

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Speaker 2: on the newest bright and shiny objects generative AI.

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Speaker 6: It's not yet like replacing jobs in the way to

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Speaker 6: the degree that people thought it was going to.

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Speaker 7: What we're doing is we're addressing some of the most

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Speaker 7: profound social challenges with AI in ways they're transformative.

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Speaker 2: Even as Secretary of State, Blincoln had trouble getting out

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Speaker 2: of town because his plane broke down, only adding to

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Speaker 2: Boeing's problems in the frozen tundra of Iowa. Former President

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Speaker 2: Trump found his way forward with the resounding victory and

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Speaker 2: the caucusses there.

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Speaker 8: The important thing is for us to just take the

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Speaker 8: victory tonight and send a message to the nation the

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Speaker 8: world that the Republican Party is going to be supporting

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Speaker 8: once again with Donald J. Trump for the presidency.

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Speaker 2: And back in Washington, Congress continued to struggle to come

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Speaker 2: up with some set of compromises to avoid a government shutdown.

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Speaker 9: Congress has been able to keep the government open only

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Speaker 9: by kind of kicking the can down the road.

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Speaker 2: Whatever the struggles the rest of US may have had

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Speaker 2: this week, the markets certainly had no trouble finding their way,

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Speaker 2: as the S and P five hundred closed at a

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Speaker 2: record high for the first time in two years, up

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Speaker 2: almost one point two percent on the shortened trading wheel

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Speaker 2: that put it at forty eight thirty nine, which is

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Speaker 2: only about one hundred points below the median number the

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Speaker 2: Bloomberg Ls have for the SMP to close at the

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Speaker 2: end of the entire year. The Nasdaq was up as well,

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Speaker 2: by two point twenty six percent, while the yield on

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Speaker 2: the ten year march back up above four percent, adding

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Speaker 2: almost twenty basis points to end the week at four

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Speaker 2: point one three here to take us through the record

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Speaker 2: breaking week. We welcome back Peter Boris. She's chairman and

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Speaker 2: CEO of Computer Trading Corporation. Peter, thank you so much

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Speaker 2: for being here with pleasure pick the right week, record

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Speaker 2: week in the S ANDP. What do you make of

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Speaker 2: what we saw this week in the equity market?

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Speaker 10: Well, the week itself was a bit fascinating, just if

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Speaker 10: you listen to your preview there. So everybody loves higher

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Speaker 10: markets and this was incredible week, right, shortened week, holiday week.

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Speaker 10: At the same time, you had global uncertainty which was

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Speaker 10: just mentioned. Maybe there was optimism because of the fiscal deal,

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Speaker 10: as your person just said, to kick the can down

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Speaker 10: the road. But the fact that interest rates are higher

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Speaker 10: faster than people expected is something that you need to watch.

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Speaker 10: I've never seen so many people prepare for interest rate

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Speaker 10: cuts and then keep pushing out the forecasts. So I

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Speaker 10: guess if you're going to forecast, forecast often.

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Speaker 2: So one of the things that you are so student

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Speaker 2: is really understanding with the markets work, is that the

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Speaker 2: thing that's driving right now is that anticipation of cuts

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Speaker 2: from the fur Reserve, and are the markets getting a

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Speaker 2: little ahead of themselves, even though they came off a

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Speaker 2: little bit this week.

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Speaker 10: Yes, there's this expectation that the FED itself is trying

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Speaker 10: to camper in the sense that all the public statements

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Speaker 10: this week are, hey, we're not gonna cut as soon

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Speaker 10: as you think the march futures markets have really cut

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Speaker 10: the probability of a cut then in half. It's highly

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Speaker 10: unlikely in an election year to see the Fed cut

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Speaker 10: so many Historically that has just not happened.

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Speaker 2: Well, I was wondering about that historical Because you have

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Speaker 2: that historical perspective, does a FED have to be a

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Speaker 2: little concerned, particularly as we get into the year, that

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Speaker 2: if they start cutting a lot, it looks like they've

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Speaker 2: got their thumb on the scale of the election.

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Speaker 10: That's going to be a problem because every point that

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Speaker 10: takes place then becomes a question of are you favoring

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Speaker 10: one candidate over the other. So if they cut, Trump's

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Speaker 10: going to say, oh, boy, you're just doing it to

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Speaker 10: support Biden. If they don't do anything, then the Biden

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Speaker 10: camp may say, well, you're doing this just to support Trump.

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Speaker 10: It's a very no win situation. But you have to

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Speaker 10: look at the economic data. Someone tell me why the

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Speaker 10: FED needs to cut. Equity prices are record highs. That's

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Speaker 10: a good thing. Crude oil, given all the uncertainty in

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Speaker 10: the Middle East, is still in the middle of its range.

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Speaker 10: Unemployment is We just had a number yesterday on initial

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Speaker 10: unemployment claims that was the lowest in decades. If I'm

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Speaker 10: sitting at the FED, that's a pretty good thing. Why

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Speaker 10: do I have to do something?

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Speaker 3: Peter's always great to have you with.

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Speaker 2: That's Peter Borsh of computer trading.

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Speaker 11: Well, I don't think the US has lost on migrancy.

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Speaker 11: We're going to regain it in the second half of

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Speaker 11: this decade. The second half of this decade, one of

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Speaker 11: the overriding issues facing the economy and the political decision

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Speaker 11: makers will be the infrastructure of the United States. To

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Speaker 11: rehabilitate our educational facilities, to rehabilitate our roads, our communications,

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Speaker 11: our environment.

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Speaker 7: I think the solution to the budget deficit problem is

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Speaker 7: really twofold. Number one, create strong sustainable economic growth by,

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Speaker 7: as you said, getting out of the way of the

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Speaker 7: private sector, support entrepreneurship, investment incentives, and so forth. Number Two,

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Speaker 7: we've got to restrain federal spending. And I think on

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Speaker 7: this point there's a lot more work to be done.

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Speaker 2: That was Henry Kaufman on Wall Street We're Back in

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Speaker 2: nineteen ninety one, and Larry Kudlow appearing with Lewis Rakiser

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Speaker 2: in nineteen ninety three, taking decidedly different views on spending

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Speaker 2: in the role of government for his thoughts on where

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Speaker 2: we should be heading in twenty twenty four, welcome now

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Speaker 2: our very special contributor, Larry Summers of Harvard.

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Speaker 3: So, Larry, welcome back. Great to have you here.

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Speaker 2: We've talked about some aspects of this before. I mean,

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Speaker 2: I could say it's guns, butter and deficit, the question

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Speaker 2: of defense spending, the question of investing in future productivity,

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Speaker 2: question of deficit. If you were the architect once again

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Speaker 2: of US fiscal policy over the longer term, where should

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Speaker 2: we be heading?

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Speaker 4: Let's start with the recognition that our fiscal problems are

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Speaker 4: much more serious than they were in nineteen ninety one

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Speaker 4: or nineteen ninety three. Then we had budget budget debts

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Speaker 4: relative to GDP and the thirty percent range, with outyear

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Speaker 4: deficits perhaps in the five percent range on honest forecasts.

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Speaker 12: Today we have.

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Speaker 4: A debt to GDP ratio above one hundred percent, with

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Speaker 4: out your debts in the ten percent of GDP range,

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Speaker 4: So we've got a much more serious problem Number one.

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Speaker 3: Number two.

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Speaker 4: Then we were reaping a Cold War dividend from the

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Speaker 4: end of the Cold War, and we could reasonably expect

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Speaker 4: defense spending as a share of GDP to be falling today.

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Speaker 4: Though it's not reflected in the CBO forecast, almost certainly

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Speaker 4: we are going to have to substantially increase defense spending

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Speaker 4: and spending on a broader range of what in a

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Speaker 4: sense or international security activities, issues like global health, issues

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Speaker 4: like resilience, most importantly climate change. So we've got a

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Speaker 4: very different kind of problem. There are places where we're

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Speaker 4: going to need to cut government spending. We need to

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Speaker 4: control cost growth in healthcare, but we've already controlled it

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Speaker 4: substantially over the next decade, and I suspect the challenge

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Speaker 4: is going to be to maintain our momentum, not lose

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Speaker 4: that momentum. And it's going to be very difficult to

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Speaker 4: get even more momentum out of healthcare costs.

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Speaker 2: So one of the questions people ask is did you

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Speaker 2: increase taxes? Are you going to reduce productivity?

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Speaker 13: No, First of all, the last time we did it

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Speaker 13: in nineteen ninety three, productivity sword afterwards, when we had

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Speaker 13: much higher tax rates in the United States in the fifties,

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Speaker 13: the sixties, and the early seventies, productivity growth was more

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Speaker 13: rapid than it has been in recent years. The vast

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Speaker 13: majority of the funds that flow into venture capital come

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Speaker 13: from institutions like state pension funds, university endowments that are

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Speaker 13: tax free investments. It defies belief that the young Bill Gates,

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Speaker 13: the young Mark Zuckerberg, the young Steve Jobs would have

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Speaker 13: not done their projects if they thought they would have

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Speaker 13: had to pay a bit higher capital gains taxes and

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Speaker 13: we would have been without those companies.

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Speaker 2: Okay, Larry, thank you so much for being back with

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Speaker 2: us again this week. That is Larry Summer's our very

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Speaker 2: special contributor here on Wall Street Week.

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Speaker 3: Coming up, we go to Davos.

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Speaker 2: We're up Sunny Bechelists of Rock Creek will bring us

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Speaker 2: up to speed on two central topics, China and the

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Speaker 2: future of ESG investing.

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Speaker 5: Most people, including myself, you know, and people have been

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Speaker 5: in the world of impact investing, do not necessarily like

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Speaker 5: the word ESG.

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Speaker 3: That's next on Wall Street Week.

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Speaker 1: On Bloomberg this is Bloomberg Wall Street Week with David

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Speaker 1: Weston from Bloomberg Radio.

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Speaker 3: This is Wall Street Week. I'm David Weston.

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Speaker 2: A good part of global Wall Street gathered for the

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Speaker 2: World Economic Forum meetings in Davos this week, and a

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Speaker 2: good part of the discussion returned to topics we discussed

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Speaker 2: here before, China and climate of Sonny Bachelized, a founder

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Speaker 2: and CEO of Rock Creek, joined us now fresh back

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Speaker 2: from the Swiss Alps. So Sonny, welcome, It's good to

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Speaker 2: have you back in this country. Tell us what came

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Speaker 2: out of Davas and start with China from them, because

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Speaker 2: we did have the Prime Minister go over, Prime Minister

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Speaker 2: legal over. He was very proud of five percent GDP.

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Speaker 2: Some people are questioning some of those numbers. What was

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Speaker 2: the discussion at Davos about China and where it stands?

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Speaker 14: David, number is five point two.

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Speaker 5: Obviously it looked a little better than what the estenates

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Speaker 5: had been, but as you said, the numbers are less.

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Speaker 14: Credible these days.

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Speaker 5: I think the general sense that is coming up from

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Speaker 5: China is very simple. Obviously you had the biggest delegation.

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Speaker 5: I think maybe ever from China is certainly bigger than

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Speaker 5: the US delegation this year.

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Speaker 14: But while the language was about.

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Speaker 5: We're open for business, in practice, as we know, markets

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Speaker 5: were down twenty three percent outflows huge uploads last year.

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Speaker 5: Markets are down ten percent already in China this year.

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Speaker 5: And if you look at both the economic and the

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Speaker 5: social problems that China is facing, things are only unfortunately

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Speaker 5: getting worse. Because if we look for those of us

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Speaker 5: who've been long term investors in China, if you look

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Speaker 5: over twenty years, the first ten years of that twenty

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Speaker 5: year period, China did fairly well. The last ten years

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Speaker 5: in China, if you were just a regular investor in

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Speaker 5: their equity markets, you were you maybe made a percent

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Speaker 5: or two percent. So when you look at that and

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Speaker 5: you look at the numbers of youth unemployment, those numbers also,

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Speaker 5: by the way, came out they used to show twenty

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Speaker 5: some percent youth unemployment number. They stop putting that number

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Speaker 5: out and they started a new index which shows fourteen

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Speaker 5: point one.

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Speaker 14: But excludes college students.

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Speaker 5: Those numbers are showing that student aspirations and young people's

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Speaker 5: aspirations right now in China, those between like sixteen to

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Speaker 5: twenty four have diminished. China was a country where in

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Speaker 5: the last twenty years, there was a lot of hope,

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Speaker 5: so people thought they would do better than their parents.

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Speaker 14: They thought by getting.

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Speaker 5: A better education, etc. More job opportunities, they would do better.

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Speaker 5: Those aspirations, unfortunately, are getting squashed for the younger population

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Speaker 5: and then for the urban sort established mature population.

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Speaker 14: The value of the real estate has come down.

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Speaker 5: So if we look at the next ten years, while

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Speaker 5: the delegations, whether it's this we or a lot of

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Speaker 5: Chinese delegations are going all over the world right now

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Speaker 5: trying to wile investors as we speak, it's hard to

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Speaker 5: be a convincing. Of course, valuations are low, but what

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Speaker 5: is the trigger to get them up?

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Speaker 3: Well, what about something you just referred to?

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Speaker 2: Because Pronsterly and others within the administration in China have

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Speaker 2: been saying we're going to be pro business.

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Speaker 3: We're going to be pro business.

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Speaker 2: Do we have any sense of actually delivering on that promise, because,

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Speaker 2: as you suggest, aside, they've got a big problem with

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Speaker 2: foreign direct investment, which has gone negative.

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Speaker 5: For goodness sake, I think they are saying they're pro investments.

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Speaker 5: At the same time, the actions over the last year

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Speaker 5: especially were maybe less friendly just to investors in general,

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Speaker 5: a lot of the money that went even into their

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Speaker 5: own local markets was going to the soees versus their

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Speaker 5: own private markets. The power of the central bank was

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Speaker 5: getting diminished. So while they're making those statements, in practice,

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Speaker 5: unfortunately they are being less business friendly because there's less

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Speaker 5: money is going into their own private sector and the

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Speaker 5: fact that central bank is getting more and more directives

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Speaker 5: from the central government.

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Speaker 2: Jamie Jamon, the head of JP Morgan while Davos, says

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Speaker 2: that basically the risk reward has changed dramatically for China.

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Speaker 3: Do you agree with that completely?

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Speaker 5: But also I just want to say, even though the

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Speaker 5: risk reward was good the last ten years, China did

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Speaker 5: really well. I'm not sure if investors made as much money.

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Speaker 5: Venture investors made a ton of money early on, but

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Speaker 5: you know, for the companies that are not sold, it's

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Speaker 5: not clear that they would be able to get out

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Speaker 5: of those positions right now. So I think Jamie is

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Speaker 5: very correct in saying the next few years a lot

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Speaker 5: would have to change in China in terms of economic

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Speaker 5: policies to make it more interesting to investors, both private

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Speaker 5: and public investors.

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Speaker 2: That's economic policy, which is something that the administration in

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Speaker 2: China can do something about what about demographics, because we

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Speaker 2: also got numbers off for demographics, which we're not encouraging exactly.

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Speaker 5: And I think think the population keeps on getting smaller.

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Speaker 5: And if you have a population that is diminishing in

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Speaker 5: terms of because of the previous policies in terms of

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Speaker 5: children that they had, even though that policy has changed.

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Speaker 5: The issue is that, together with the aspiration of young

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Speaker 5: people and the fact that there is this youth unemployment

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Speaker 5: really does not bote very well.

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Speaker 14: And the fact that a lot.

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Speaker 5: Of Chinese investments of households was in real estate and

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Speaker 5: we know that that sector is hugely down and even

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Speaker 5: policies are not going to fix that. And last, but

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Speaker 5: at least, a lot of the young people have been

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Speaker 5: getting trained to go into services jobs, jobs that are

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Speaker 5: diminishing also. So all of that, the demographics but also

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Speaker 5: the composition of the job market that is changing again

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Speaker 5: is not very positive.

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Speaker 2: What was the discussion at Davos about what used to

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Speaker 2: be called ESG. Esg's sort of got a bad name now,

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Speaker 2: Larry Fink says, you don't want to say that anymore,

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Speaker 2: but whatever you call about climate related investment, what was

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Speaker 2: the discussion.

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Speaker 14: I think radly speaking.

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Speaker 5: You know, thin World Economic Forum has been doing a

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Speaker 5: number of studies also over the.

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Speaker 14: Last year on the ESG topic, and.

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Speaker 5: Most people, including myself, you know, and people have been

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Speaker 5: in the world of impact investing, do not necessarily like

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Speaker 5: the word ESG. There is a political issue going on

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Speaker 5: with ESG and d I putting that aside for a second. Basically,

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Speaker 5: I don't think there's a lot of disagreement that there

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Speaker 5: are issues and risks with climate related issues. Plus, the

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Speaker 5: economics of solar and wind have changed hugely and today

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Speaker 5: they are very economic in many parts of the world,

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Speaker 5: whether it's US, whether it's Africa, whether it's Norway, whether

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Speaker 5: it is the rest of Europe. What we're seeing is

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Speaker 5: that there is China itself, you know, where you're seeing that,

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Speaker 5: whether it is ev cars or it's solar panels, they're

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Speaker 5: going to be a cheaper alternative than relying on oil

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Speaker 5: and gas.

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Speaker 14: So the decisions are economic.

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Speaker 5: I think the Chinese obviously are looking at their own

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Speaker 5: climate related issues, the quality of air, the quality of water,

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Speaker 5: the quality of food that is coming out and is

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Speaker 5: sometimes hazardous, and they are investing a lot.

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Speaker 14: In those areas.

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Speaker 5: Plus, that is the one bright spot, I would say

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Speaker 5: in China.

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Speaker 2: Well, and I'm sunny, as you know so well in

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Speaker 2: life and in business, what you call something really matters

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Speaker 2: and go away from ESG or even climate, talk about infrastructure.

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Speaker 2: Last week we had this big deal announced with Blackrock

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Speaker 2: and gp Bioevaglacia, you know, well, so as Lori Frank

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Speaker 2: and talking to about the opportunity they see there and infrastructure.

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Speaker 2: An awful lot of it seems to go back to

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Speaker 2: climate and the investment we need to make to get

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Speaker 2: to net zero exactly.

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Speaker 5: And I think while you will see that Larry may

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Speaker 5: not be using those terms and politically very very careful

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Speaker 5: on the terminology he's using, you can see what he's

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Speaker 5: investing in, and I think that is a really positive

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Speaker 5: sign in the sense that structure is getting built. G

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Speaker 5: IP obviously is one of the biggest investors in this area.

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Speaker 5: I think, you know as one of my colleagues, one

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Speaker 5: of the ex World Bank presidents also is been there

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Speaker 5: as well. And what you see is that a lot

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Speaker 5: of their portfolio is increasingly investing in energy transition, in

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Speaker 5: bringing power allianes and great expansion of power grids. It's

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Speaker 5: looking at ports and looking at infrastructure with and with

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Speaker 5: ESG lends. And it's not just GIPS, not just Black Rock.

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Speaker 5: If you look at Prologist, if you look at really

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Speaker 5: any large company investing in infrastructure or logistics looking at

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Speaker 5: two areas. One is clean energy and energy transition in

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Speaker 5: order to reduce costs and increase reliability and reduce risks.

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Speaker 5: And also AI obviously, and those are getting more and

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Speaker 5: more inter twined, and inter relationship between AI and clean

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Speaker 5: energy I think will be an interesting area to watch.

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Speaker 2: Sney, thank you so much. Always great to have you

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Speaker 2: on Wall Street Week. But as a Sonny Bachelist of

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Speaker 2: Rock Creek. Coming up, what corporate leaders should be thinking

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Speaker 2: about as we move toward the November elections in the

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Speaker 2: United States. We'll ask Blair Ephron of Centerview Partners.

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Speaker 6: That think's important to either candidate that we rein in

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Speaker 6: our deficit.

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Speaker 3: That's next on Wall Street Week on Bloomberg.

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Speaker 1: This is Bloomberg Wall Street Week with David Weston from

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Speaker 1: Bloomberg Radio.

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Speaker 2: Corporate transactions have hit a dry spell after a blockbuster

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Speaker 2: year in twenty twenty one. Mergers and acquisition stalled in

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Speaker 2: twenty twenty three, though by the summer bankers like evercoorse

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Speaker 2: Ralph Schlostein were hoping for more action in the second

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Speaker 2: half of the year.

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Speaker 15: Announced and for the first six months of the year

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Speaker 15: was down. The dollar volume was down forty percent. I

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Speaker 15: don't expect it will be quite as bad in the

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Speaker 15: second half of the year, but certainly the amount of

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Speaker 15: dialogue among our clients is up quite dramatically, and our

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Speaker 15: backlogs are up.

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Speaker 2: And there were some areas where things did pick up,

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Speaker 2: like on international deals.

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Speaker 16: This year was very busy for US on cross border

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Speaker 16: m and A. So we could we're seeing one companies

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Speaker 16: listed outside the US just migrate to another new list

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Speaker 16: thing here and turning it into their primary list thing,

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Speaker 16: getting a multiple bump plump. But we could also just

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Speaker 16: see a lot of US companies spending their cash overseas.

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Speaker 2: And as we get into twenty twenty four, there's reason

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Speaker 2: to believe there's the appetite out there, whether it's from

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Speaker 2: private credit.

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Speaker 17: If you look at the likely demand for private credit,

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Speaker 17: if you take the two point four trillion dollars of

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Speaker 17: dry powder and private equity funds and you assume five

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Speaker 17: plus billion dollars of deals, is an enormous demand for private.

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Speaker 2: Credit or in tech where valuations may be making deals

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Speaker 2: more compelling.

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Speaker 9: I do think investors have more confidence in the levels

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Speaker 9: that we're at from a valuation standpoint, more broadly in technology,

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Speaker 9: and are starting to see the competing tension in the

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Speaker 9: public market of M and A from strategic you know,

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Speaker 9: take privates for example, or or from take privates or

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Speaker 9: from strategic activity leading into the end of this year.

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Speaker 2: But when you talk with the bank leading the league

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Speaker 2: tables in M and A Golden Sachs, there remains a

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Speaker 2: big difference between the interest and appetite and the deals

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Speaker 2: making it over the finish line.

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Speaker 16: When you think about what really drives a future M

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Speaker 16: and A, we think there's a lot of pent up demand.

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Speaker 3: The pipeline of.

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Speaker 12: Dialogue is as robust as we have seen.

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Speaker 10: What the challenge has been is just getting the fingers

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Speaker 10: to meet on transactions.

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Speaker 2: And to take us through where we are emergence exhibitions

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Speaker 2: right now. Blair fron cofound of Center of Your Partners,

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Speaker 2: So Blair, this is really what you do for a living.

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Speaker 2: We've talked a lot about the fact that the mergeranc

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Speaker 2: existies were way up, came way down, and then we've

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Speaker 2: talked about a pipeline You've talked about in this program,

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Speaker 2: pipeline coming. It's been coming for a while. Now, when

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Speaker 2: is it actually going to get here?

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Speaker 12: So a great question.

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Speaker 6: Obviously, if you're an investment banker, you're preternaturally optimistic.

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Speaker 12: So we always think that things will better.

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Speaker 6: I would tell you this, but we do see the

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Speaker 6: shoots and actually it's already happening. In January, for example,

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Speaker 6: you think about larger transactions, We've already had four transactions

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Speaker 6: in the first two weeks over ten billion dollars. You

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Speaker 6: compare that to last year's entire first quarter, there was

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Speaker 6: five transactions over ten billion.

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Speaker 12: So it is happening. One. Two.

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Speaker 6: The fact is there's an optimism in the C suite

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Speaker 6: that we have avoided sniffing the downturn and in fact

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Speaker 6: that we'll have a tailwind and some growth. And that's

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Speaker 6: always a good environment in which to do M and

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Speaker 6: A and we're getting a sense of that strongly. Three

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Speaker 6: does a pent up demand. We haven't had an important

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Speaker 6: M and A in eighteen months. Last year's a three

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Speaker 6: trillion dollar market. That compares to an average the five

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Speaker 6: years before that four to four and a half trillion.

444
00:24:09,920 --> 00:24:12,640
Speaker 6: So there is this demand David. And remember, companies are

445
00:24:12,680 --> 00:24:16,159
Speaker 6: actually really good at thinking about inorganic activity, M and

446
00:24:16,240 --> 00:24:19,399
Speaker 6: A activity in a way that twenty years ago wouldn't

447
00:24:19,400 --> 00:24:20,800
Speaker 6: have been the case. So it's such a core part

448
00:24:20,800 --> 00:24:23,360
Speaker 6: of what they do that there's a little bit of makeup.

449
00:24:23,640 --> 00:24:26,400
Speaker 6: And then you think about the financing markets. There's more liquidity,

450
00:24:28,080 --> 00:24:32,560
Speaker 6: not perfect, but more. And what we see on financing,

451
00:24:32,560 --> 00:24:35,600
Speaker 6: for example, on leverage deals at this point you can

452
00:24:35,640 --> 00:24:37,679
Speaker 6: get five to five and a half times leverage. If

453
00:24:37,720 --> 00:24:39,479
Speaker 6: you go back six months ago, it would have been

454
00:24:39,480 --> 00:24:41,560
Speaker 6: in the force. So there's a lot of reason to

455
00:24:41,720 --> 00:24:45,359
Speaker 6: think it is a good time. And the last thing

456
00:24:45,400 --> 00:24:48,840
Speaker 6: I'd say is we're in an election year and the

457
00:24:48,880 --> 00:24:50,840
Speaker 6: dirty little secret is twenty out of the past twenty

458
00:24:50,880 --> 00:24:53,919
Speaker 6: four presidential elections, markets have done well and gone.

459
00:24:53,840 --> 00:24:57,320
Speaker 12: Up in the last year's.

460
00:24:56,000 --> 00:24:58,479
Speaker 2: Talk about the financing for a second. There are some people,

461
00:24:58,680 --> 00:25:01,520
Speaker 2: particularly private equity, You're saying if in fact the Fed

462
00:25:01,640 --> 00:25:05,040
Speaker 2: cuts cuts earlier rather than later, that will really really

463
00:25:05,080 --> 00:25:07,440
Speaker 2: stimulate which an exquisition is that your experience? I mean,

464
00:25:07,640 --> 00:25:09,679
Speaker 2: is it important whether they cut in March or they

465
00:25:09,680 --> 00:25:11,679
Speaker 2: cut in July, and it is important how much they

466
00:25:11,760 --> 00:25:12,880
Speaker 2: cut this year Hey.

467
00:25:12,760 --> 00:25:13,560
Speaker 12: I'm not in that camp.

468
00:25:13,680 --> 00:25:16,320
Speaker 6: I'm in the camp that wherever we end up at

469
00:25:16,320 --> 00:25:18,800
Speaker 6: the end of the year in terms of the rates

470
00:25:18,800 --> 00:25:20,600
Speaker 6: has been priced in. Whether it happens in March or

471
00:25:20,600 --> 00:25:24,720
Speaker 6: happens in May, we'll have limited impact on my world.

472
00:25:25,560 --> 00:25:27,400
Speaker 6: The trend will have a positive impact.

473
00:25:27,560 --> 00:25:29,000
Speaker 12: The fact is when.

474
00:25:30,640 --> 00:25:33,399
Speaker 6: Rates get cut from the first rate cut to the

475
00:25:33,440 --> 00:25:35,200
Speaker 6: final rate cut, if you look at the past five

476
00:25:35,240 --> 00:25:37,399
Speaker 6: times as this happened, markets have done very well.

477
00:25:37,560 --> 00:25:39,720
Speaker 12: Okay, so, and that's what we'll be priced in.

478
00:25:39,800 --> 00:25:41,679
Speaker 6: I think the bigger question is going to be evaluation

479
00:25:41,960 --> 00:25:50,119
Speaker 6: number one. And after you've had such a run in

480
00:25:50,160 --> 00:25:53,520
Speaker 6: the market, you have the obvious question am I buying

481
00:25:53,520 --> 00:25:56,560
Speaker 6: it at the XYZ company at the right time or not?

482
00:25:56,760 --> 00:25:58,280
Speaker 6: And the way you think through the and how long

483
00:25:58,280 --> 00:26:00,480
Speaker 6: will the process take from assigning to a close that

484
00:26:00,520 --> 00:26:03,760
Speaker 6: actually continues to be a big factor, as it should.

485
00:26:04,160 --> 00:26:09,320
Speaker 6: So I think that as we find a level in

486
00:26:09,320 --> 00:26:12,960
Speaker 6: the markets and things continue to settle out, it encourages

487
00:26:13,240 --> 00:26:16,000
Speaker 6: both the buyer and the seller to say, Okay, there's

488
00:26:16,000 --> 00:26:18,520
Speaker 6: something that can be done here. But in general, I

489
00:26:18,680 --> 00:26:20,960
Speaker 6: just back up and say, the conversations that I'm having

490
00:26:21,000 --> 00:26:23,840
Speaker 6: in my firms, having with senior leaders across different industries

491
00:26:24,200 --> 00:26:27,840
Speaker 6: suggests that M and A feels like it'd be much more

492
00:26:27,880 --> 00:26:28,800
Speaker 6: important for them in.

493
00:26:28,800 --> 00:26:30,480
Speaker 12: Twenty four than it was in twenty twenty three.

494
00:26:30,560 --> 00:26:33,080
Speaker 2: So in financial media, which doesn't necessarily make it sold,

495
00:26:33,119 --> 00:26:34,760
Speaker 2: but in financial media's a lot to talk about private

496
00:26:34,800 --> 00:26:37,000
Speaker 2: equity and having a lot of portfolio companies that need

497
00:26:37,000 --> 00:26:38,919
Speaker 2: for private equity to actually get some money into the

498
00:26:38,920 --> 00:26:40,520
Speaker 2: hands of some of the people who have given their money.

499
00:26:40,800 --> 00:26:43,440
Speaker 2: Is that an imphatus right now to have more transactions done.

500
00:26:43,600 --> 00:26:45,920
Speaker 6: I think private equity will be a very strong driver

501
00:26:46,000 --> 00:26:49,320
Speaker 6: in twenty twenty four. If you think about the years

502
00:26:49,320 --> 00:26:51,480
Speaker 6: of preceding twenty twenty three, with basically forty percent of

503
00:26:51,480 --> 00:26:59,040
Speaker 6: the market, there is such a large group of companies

504
00:26:59,040 --> 00:27:02,280
Speaker 6: that are looking for the quid and coming from private

505
00:27:02,280 --> 00:27:05,240
Speaker 6: equity that I do think it'll be a very active time.

506
00:27:05,520 --> 00:27:07,800
Speaker 6: And again that goes directly to the financing markets as well.

507
00:27:07,960 --> 00:27:12,760
Speaker 6: The financing arena will be more liquid than it was

508
00:27:12,880 --> 00:27:16,760
Speaker 6: last year, and we're seeing most of the private equity

509
00:27:17,840 --> 00:27:22,119
Speaker 6: world think about being more active, and frankly, to their credit,

510
00:27:23,440 --> 00:27:25,359
Speaker 6: they slowed down activity at a moment when they should.

511
00:27:25,920 --> 00:27:27,600
Speaker 12: You know, it's so.

512
00:27:30,359 --> 00:27:34,000
Speaker 6: Last year it was much easier for corporate to look

513
00:27:34,040 --> 00:27:36,040
Speaker 6: at something and not think they had private ere competition.

514
00:27:36,240 --> 00:27:40,560
Speaker 6: This year, when we see companies we're selling, the interest

515
00:27:40,680 --> 00:27:44,160
Speaker 6: is both corporate We're already saying it corporate and private equity.

516
00:27:44,480 --> 00:27:47,040
Speaker 2: How much of your business emergion exisition is driven by

517
00:27:47,280 --> 00:27:50,760
Speaker 2: essentially the need to reform parts of a sector. I mean,

518
00:27:50,800 --> 00:27:52,520
Speaker 2: I'm thinking of one that I come out of media

519
00:27:52,640 --> 00:27:54,240
Speaker 2: right now. There's a lot of pressure right now for

520
00:27:54,280 --> 00:27:56,440
Speaker 2: some of the big media companies to really think about

521
00:27:56,440 --> 00:27:58,360
Speaker 2: the cards they've gotten, how they deal with them, and

522
00:27:58,359 --> 00:28:00,000
Speaker 2: how they get rid of them, how they pick them up.

523
00:28:00,280 --> 00:28:02,200
Speaker 2: How much of em andy is really driven by these

524
00:28:02,200 --> 00:28:04,720
Speaker 2: big companies saying, you know, we got a really restructure today.

525
00:28:04,880 --> 00:28:06,359
Speaker 12: I think it's most of it.

526
00:28:07,040 --> 00:28:12,720
Speaker 6: Progress transformation is happening so quickly and it's so disruptive

527
00:28:12,840 --> 00:28:16,359
Speaker 6: that every company is saying, here's my portfolio today, but

528
00:28:16,560 --> 00:28:17,960
Speaker 6: where's it going to be tomorrow? So you know, you

529
00:28:17,960 --> 00:28:20,600
Speaker 6: talk about your world media. It used to be traditional

530
00:28:20,680 --> 00:28:27,200
Speaker 6: media with three networks. Now it's traditional and not traditional players. Apple, Google,

531
00:28:27,280 --> 00:28:32,159
Speaker 6: Amazon are as active as Disney, Comcast, Paramount Gaming. What

532
00:28:32,320 --> 00:28:34,919
Speaker 6: is technology? It's all becomes one industry. If I go

533
00:28:34,960 --> 00:28:39,560
Speaker 6: across any industry. That is what we say. I look

534
00:28:39,600 --> 00:28:42,960
Speaker 6: at the pharma world. The fact is life sciences is

535
00:28:42,960 --> 00:28:44,680
Speaker 6: one of the biggest areas out there. Why because we

536
00:28:44,720 --> 00:28:48,280
Speaker 6: have such innovation going on in this country. So many

537
00:28:48,280 --> 00:28:50,000
Speaker 6: companies you never heard of five years ago on editor

538
00:28:50,080 --> 00:28:53,000
Speaker 6: heard of that have become really important just five years later.

539
00:28:53,840 --> 00:28:55,960
Speaker 6: That this becomes a window. When you get about R

540
00:28:56,000 --> 00:28:58,480
Speaker 6: and D for a big farmer company, it's wornting in

541
00:28:58,480 --> 00:28:58,960
Speaker 6: many ways to.

542
00:28:58,960 --> 00:28:59,840
Speaker 12: Buy then build.

543
00:29:01,000 --> 00:29:05,920
Speaker 6: So I would say that every business is being challenged

544
00:29:06,440 --> 00:29:09,840
Speaker 6: in ways it never was before, and it's causing CEOs.

545
00:29:09,840 --> 00:29:13,120
Speaker 6: It is causing boards, causing season leaders to constantly rethink

546
00:29:13,240 --> 00:29:15,920
Speaker 6: their ideal portfolio, recognizing there is never an end state

547
00:29:15,960 --> 00:29:16,880
Speaker 6: portfolio anymore.

548
00:29:17,000 --> 00:29:20,200
Speaker 12: It is always going to be evolving. And the good

549
00:29:20,240 --> 00:29:20,760
Speaker 12: news is.

550
00:29:20,840 --> 00:29:25,520
Speaker 6: We have a as talented and experienced a group of

551
00:29:25,600 --> 00:29:26,480
Speaker 6: leaders as ever.

552
00:29:27,280 --> 00:29:29,320
Speaker 12: So when a CEO undertakes M and A.

553
00:29:29,360 --> 00:29:34,360
Speaker 6: Today, chances are strong that he or she is going

554
00:29:34,360 --> 00:29:36,280
Speaker 6: to end up doing a good job in the right

555
00:29:36,320 --> 00:29:39,040
Speaker 6: thing for the company, both strategically and financially.

556
00:29:38,720 --> 00:29:40,080
Speaker 3: All of which supports your view.

557
00:29:40,120 --> 00:29:41,880
Speaker 2: The twenty twenty four looks like it'll be a lot

558
00:29:41,920 --> 00:29:44,160
Speaker 2: strong at twenty thirty three Emergent Acquisitions. What does this

559
00:29:44,280 --> 00:29:46,400
Speaker 2: say for a cent of your partners are you hiring

560
00:29:46,760 --> 00:29:48,480
Speaker 2: and if they are, you are hiring what sorts of

561
00:29:48,480 --> 00:29:50,280
Speaker 2: people you're hiring? Because it looks very different than it,

562
00:29:50,440 --> 00:29:52,800
Speaker 2: certainly ten years ago, maybe five years ago, because of

563
00:29:52,840 --> 00:29:56,920
Speaker 2: something innovation. I'm not to speaking for example generat Ai. Boy,

564
00:29:56,920 --> 00:29:58,720
Speaker 2: that's a great question. First all, we are hiring, so

565
00:29:58,720 --> 00:30:00,600
Speaker 2: anybody has a resume, let us know. We're always hiring.

566
00:30:01,800 --> 00:30:03,600
Speaker 3: The skill set we look for is.

567
00:30:07,000 --> 00:30:08,360
Speaker 12: Probably different than you would think.

568
00:30:08,640 --> 00:30:13,000
Speaker 6: We want people who can think critically, who can analyze situations,

569
00:30:13,000 --> 00:30:17,400
Speaker 6: who have judgment, have an ability to make difficult problems

570
00:30:17,400 --> 00:30:20,720
Speaker 6: distilled into more simple problems, and it's less about whether

571
00:30:20,800 --> 00:30:22,760
Speaker 6: you can make a great model.

572
00:30:23,240 --> 00:30:25,080
Speaker 3: That was Blair Efron of Center View Partners.

573
00:30:26,880 --> 00:30:28,720
Speaker 2: Coming up, we'll wrap up the week in Davis with

574
00:30:28,760 --> 00:30:32,360
Speaker 2: Bloomberg Senior executive editor for Economics and Government, Stephanie Flanders.

575
00:30:32,720 --> 00:30:34,920
Speaker 3: That's next on Wall Street Week on Bloomberg