WEBVTT - Bloomberg Wall Street Week - January 19th, 2024 0:00:00.240 --> 0:00:02.440 This is Bloomberg Wall Street Week. 0:00:02.480 --> 0:00:04.400 And we may not have an overall recession, We're having 0:00:04.400 --> 0:00:06.720 a rolling recession. To kind of roll looks pretty strongly 0:00:06.720 --> 0:00:07.680 it is when it comes to jobs. 0:00:07.720 --> 0:00:09.840 The financial stories that shape our world. 0:00:09.960 --> 0:00:13.640 Three major regional bank failures send shockwaves through the banking system. 0:00:13.680 --> 0:00:15.480 We're all trying to figure out what to make of 0:00:15.600 --> 0:00:17.000 generative AI. 0:00:16.920 --> 0:00:19.320 Through the eyes of the most influential voices. 0:00:19.440 --> 0:00:22.400 Welcome down, Doctor Paul Krugman, Ryan moynihan, a Bank of America, 0:00:22.560 --> 0:00:25.360 deebro Lair of the Paulson Institute, Len Hubbard of the 0:00:25.360 --> 0:00:26.280 Columbia Business School. 0:00:26.280 --> 0:00:30.120 Bloomberg Wall Street Week with David Weston from Bloomberg Radio. 0:00:30.240 --> 0:00:33.960 Finding a way forward through the Red Sea at Davos, 0:00:34.000 --> 0:00:37.320 in the presidential campaigns, and once again in Congress. 0:00:37.640 --> 0:00:39.839 This is Bloomberg Wall Street Week. I'm David Weston. 0:00:41.040 --> 0:00:43.479 This week's special contributor Larry Summers of Harvard and the 0:00:43.479 --> 0:00:46.000 fiscal path ahead for the US government. 0:00:46.400 --> 0:00:50.040 Our fiscal problems are much more serious than they were 0:00:50.040 --> 0:00:53.040 in nineteen ninety one or nineteen ninety three. 0:00:53.120 --> 0:00:55.240 I'm Funny a Bacheloss of Rock Creek. I'm plotting a 0:00:55.240 --> 0:00:57.680 new course for ESG investing. 0:00:57.480 --> 0:01:02.000 The economics of solar and wind have changed today. 0:01:02.560 --> 0:01:06.360 They are very economic, and Blair Ephron of Centerview partners 0:01:06.400 --> 0:01:08.720 on getting mergers and acquisitions. 0:01:08.120 --> 0:01:09.320 Back on track. 0:01:10.040 --> 0:01:12.640 M and A feels like we're much more important than 0:01:12.640 --> 0:01:26.920 them in twenty four than it was in twenty twenty three. 0:01:27.760 --> 0:01:30.319 Global Wall Street spent the week looking at some hard 0:01:30.440 --> 0:01:33.560 problems and searching for some solutions. As a tax from 0:01:33.600 --> 0:01:36.520 Huthi rebels on commercial shipping in the Red Sea worsened 0:01:36.640 --> 0:01:40.360 despite US and British military action. I don't think it 0:01:40.400 --> 0:01:43.320 was possible to go on allowing these attacks to continue 0:01:43.640 --> 0:01:46.319 in the Red Sea. In Davos, the Great and the 0:01:46.360 --> 0:01:49.360 Good gathered for their annual meetings, which this year focused 0:01:49.400 --> 0:01:52.760 on the newest bright and shiny objects generative AI. 0:01:53.680 --> 0:01:57.040 It's not yet like replacing jobs in the way to 0:01:57.160 --> 0:01:58.720 the degree that people thought it was going to. 0:01:58.840 --> 0:02:01.880 What we're doing is we're addressing some of the most 0:02:01.920 --> 0:02:06.840 profound social challenges with AI in ways they're transformative. 0:02:07.240 --> 0:02:10.120 Even as Secretary of State, Blincoln had trouble getting out 0:02:10.120 --> 0:02:13.240 of town because his plane broke down, only adding to 0:02:13.320 --> 0:02:17.560 Boeing's problems in the frozen tundra of Iowa. Former President 0:02:17.560 --> 0:02:20.680 Trump found his way forward with the resounding victory and 0:02:20.720 --> 0:02:21.680 the caucusses there. 0:02:22.360 --> 0:02:25.320 The important thing is for us to just take the 0:02:25.400 --> 0:02:27.680 victory tonight and send a message to the nation the 0:02:27.680 --> 0:02:31.359 world that the Republican Party is going to be supporting 0:02:31.360 --> 0:02:33.760 once again with Donald J. Trump for the presidency. 0:02:34.000 --> 0:02:37.119 And back in Washington, Congress continued to struggle to come 0:02:37.240 --> 0:02:40.960 up with some set of compromises to avoid a government shutdown. 0:02:41.639 --> 0:02:43.720 Congress has been able to keep the government open only 0:02:43.760 --> 0:02:45.360 by kind of kicking the can down the road. 0:02:47.720 --> 0:02:49.799 Whatever the struggles the rest of US may have had 0:02:49.800 --> 0:02:53.079 this week, the markets certainly had no trouble finding their way, 0:02:53.320 --> 0:02:54.960 as the S and P five hundred closed at a 0:02:55.000 --> 0:02:57.000 record high for the first time in two years, up 0:02:57.040 --> 0:02:59.960 almost one point two percent on the shortened trading wheel 0:03:00.240 --> 0:03:02.080 that put it at forty eight thirty nine, which is 0:03:02.120 --> 0:03:04.359 only about one hundred points below the median number the 0:03:04.400 --> 0:03:07.160 Bloomberg Ls have for the SMP to close at the 0:03:07.280 --> 0:03:10.359 end of the entire year. The Nasdaq was up as well, 0:03:10.400 --> 0:03:12.639 by two point twenty six percent, while the yield on 0:03:12.720 --> 0:03:15.480 the ten year march back up above four percent, adding 0:03:15.480 --> 0:03:17.919 almost twenty basis points to end the week at four 0:03:17.919 --> 0:03:20.160 point one three here to take us through the record 0:03:20.160 --> 0:03:22.760 breaking week. We welcome back Peter Boris. She's chairman and 0:03:22.840 --> 0:03:25.120 CEO of Computer Trading Corporation. Peter, thank you so much 0:03:25.160 --> 0:03:28.160 for being here with pleasure pick the right week, record 0:03:28.160 --> 0:03:29.800 week in the S ANDP. What do you make of 0:03:29.840 --> 0:03:32.160 what we saw this week in the equity market? 0:03:32.639 --> 0:03:35.960 Well, the week itself was a bit fascinating, just if 0:03:36.000 --> 0:03:41.200 you listen to your preview there. So everybody loves higher 0:03:41.240 --> 0:03:46.920 markets and this was incredible week, right, shortened week, holiday week. 0:03:47.840 --> 0:03:51.560 At the same time, you had global uncertainty which was 0:03:51.800 --> 0:03:56.600 just mentioned. Maybe there was optimism because of the fiscal deal, 0:03:57.120 --> 0:04:00.320 as your person just said, to kick the can down 0:04:00.400 --> 0:04:04.280 the road. But the fact that interest rates are higher 0:04:04.920 --> 0:04:09.920 faster than people expected is something that you need to watch. 0:04:09.920 --> 0:04:14.760 I've never seen so many people prepare for interest rate 0:04:14.840 --> 0:04:19.000 cuts and then keep pushing out the forecasts. So I 0:04:19.000 --> 0:04:21.039 guess if you're going to forecast, forecast often. 0:04:21.600 --> 0:04:23.760 So one of the things that you are so student 0:04:24.080 --> 0:04:26.159 is really understanding with the markets work, is that the 0:04:26.160 --> 0:04:29.560 thing that's driving right now is that anticipation of cuts 0:04:29.560 --> 0:04:31.920 from the fur Reserve, and are the markets getting a 0:04:31.920 --> 0:04:33.560 little ahead of themselves, even though they came off a 0:04:33.600 --> 0:04:34.400 little bit this week. 0:04:34.760 --> 0:04:39.200 Yes, there's this expectation that the FED itself is trying 0:04:39.240 --> 0:04:43.000 to camper in the sense that all the public statements 0:04:43.000 --> 0:04:46.200 this week are, hey, we're not gonna cut as soon 0:04:46.240 --> 0:04:51.000 as you think the march futures markets have really cut 0:04:51.040 --> 0:04:56.320 the probability of a cut then in half. It's highly 0:04:56.400 --> 0:04:59.039 unlikely in an election year to see the Fed cut 0:04:59.440 --> 0:05:03.200 so many Historically that has just not happened. 0:05:03.920 --> 0:05:06.000 Well, I was wondering about that historical Because you have 0:05:06.040 --> 0:05:08.440 that historical perspective, does a FED have to be a 0:05:08.480 --> 0:05:10.760 little concerned, particularly as we get into the year, that 0:05:10.839 --> 0:05:12.520 if they start cutting a lot, it looks like they've 0:05:12.560 --> 0:05:13.960 got their thumb on the scale of the election. 0:05:14.560 --> 0:05:18.640 That's going to be a problem because every point that 0:05:18.720 --> 0:05:23.480 takes place then becomes a question of are you favoring 0:05:23.520 --> 0:05:27.880 one candidate over the other. So if they cut, Trump's 0:05:27.880 --> 0:05:29.960 going to say, oh, boy, you're just doing it to 0:05:30.040 --> 0:05:34.960 support Biden. If they don't do anything, then the Biden 0:05:35.320 --> 0:05:38.480 camp may say, well, you're doing this just to support Trump. 0:05:38.600 --> 0:05:41.159 It's a very no win situation. But you have to 0:05:41.160 --> 0:05:44.839 look at the economic data. Someone tell me why the 0:05:44.880 --> 0:05:49.440 FED needs to cut. Equity prices are record highs. That's 0:05:49.440 --> 0:05:53.680 a good thing. Crude oil, given all the uncertainty in 0:05:53.720 --> 0:05:58.040 the Middle East, is still in the middle of its range. 0:05:58.680 --> 0:06:03.120 Unemployment is We just had a number yesterday on initial 0:06:03.240 --> 0:06:08.640 unemployment claims that was the lowest in decades. If I'm 0:06:08.640 --> 0:06:10.800 sitting at the FED, that's a pretty good thing. Why 0:06:10.800 --> 0:06:11.960 do I have to do something? 0:06:12.400 --> 0:06:13.640 Peter's always great to have you with. 0:06:13.800 --> 0:06:15.840 That's Peter Borsh of computer trading. 0:06:16.720 --> 0:06:19.080 Well, I don't think the US has lost on migrancy. 0:06:19.600 --> 0:06:21.599 We're going to regain it in the second half of 0:06:21.640 --> 0:06:25.160 this decade. The second half of this decade, one of 0:06:25.200 --> 0:06:29.080 the overriding issues facing the economy and the political decision 0:06:29.160 --> 0:06:33.240 makers will be the infrastructure of the United States. To 0:06:33.360 --> 0:06:39.760 rehabilitate our educational facilities, to rehabilitate our roads, our communications, 0:06:39.760 --> 0:06:40.560 our environment. 0:06:40.920 --> 0:06:44.279 I think the solution to the budget deficit problem is 0:06:44.360 --> 0:06:50.680 really twofold. Number one, create strong sustainable economic growth by, 0:06:50.800 --> 0:06:52.640 as you said, getting out of the way of the 0:06:52.680 --> 0:06:57.800 private sector, support entrepreneurship, investment incentives, and so forth. Number Two, 0:06:58.200 --> 0:07:00.800 we've got to restrain federal spending. And I think on 0:07:00.839 --> 0:07:03.080 this point there's a lot more work to be done. 0:07:03.920 --> 0:07:05.800 That was Henry Kaufman on Wall Street We're Back in 0:07:05.880 --> 0:07:09.200 nineteen ninety one, and Larry Kudlow appearing with Lewis Rakiser 0:07:09.240 --> 0:07:13.160 in nineteen ninety three, taking decidedly different views on spending 0:07:13.200 --> 0:07:15.360 in the role of government for his thoughts on where 0:07:15.360 --> 0:07:18.320 we should be heading in twenty twenty four, welcome now 0:07:18.360 --> 0:07:20.400 our very special contributor, Larry Summers of Harvard. 0:07:20.440 --> 0:07:22.360 So, Larry, welcome back. Great to have you here. 0:07:22.480 --> 0:07:24.760 We've talked about some aspects of this before. I mean, 0:07:24.800 --> 0:07:27.600 I could say it's guns, butter and deficit, the question 0:07:27.680 --> 0:07:30.680 of defense spending, the question of investing in future productivity, 0:07:30.760 --> 0:07:33.440 question of deficit. If you were the architect once again 0:07:33.560 --> 0:07:35.960 of US fiscal policy over the longer term, where should 0:07:36.000 --> 0:07:36.480 we be heading? 0:07:36.920 --> 0:07:40.320 Let's start with the recognition that our fiscal problems are 0:07:40.400 --> 0:07:43.760 much more serious than they were in nineteen ninety one 0:07:44.000 --> 0:07:48.680 or nineteen ninety three. Then we had budget budget debts 0:07:49.320 --> 0:07:54.000 relative to GDP and the thirty percent range, with outyear 0:07:54.120 --> 0:07:59.520 deficits perhaps in the five percent range on honest forecasts. 0:07:59.760 --> 0:08:01.200 Today we have. 0:08:01.440 --> 0:08:05.120 A debt to GDP ratio above one hundred percent, with 0:08:05.760 --> 0:08:12.040 out your debts in the ten percent of GDP range, 0:08:12.400 --> 0:08:15.840 So we've got a much more serious problem Number one. 0:08:16.600 --> 0:08:17.160 Number two. 0:08:17.840 --> 0:08:22.520 Then we were reaping a Cold War dividend from the 0:08:22.640 --> 0:08:27.280 end of the Cold War, and we could reasonably expect 0:08:27.680 --> 0:08:32.520 defense spending as a share of GDP to be falling today. 0:08:33.000 --> 0:08:37.559 Though it's not reflected in the CBO forecast, almost certainly 0:08:37.960 --> 0:08:41.880 we are going to have to substantially increase defense spending 0:08:42.440 --> 0:08:45.480 and spending on a broader range of what in a 0:08:45.600 --> 0:08:52.080 sense or international security activities, issues like global health, issues 0:08:52.240 --> 0:08:58.319 like resilience, most importantly climate change. So we've got a 0:08:58.480 --> 0:09:04.880 very different kind of problem. There are places where we're 0:09:04.880 --> 0:09:07.360 going to need to cut government spending. We need to 0:09:07.440 --> 0:09:11.960 control cost growth in healthcare, but we've already controlled it 0:09:12.000 --> 0:09:15.920 substantially over the next decade, and I suspect the challenge 0:09:15.960 --> 0:09:19.240 is going to be to maintain our momentum, not lose 0:09:19.280 --> 0:09:21.960 that momentum. And it's going to be very difficult to 0:09:22.000 --> 0:09:27.560 get even more momentum out of healthcare costs. 0:09:27.760 --> 0:09:29.520 So one of the questions people ask is did you 0:09:29.559 --> 0:09:31.560 increase taxes? Are you going to reduce productivity? 0:09:32.480 --> 0:09:35.880 No, First of all, the last time we did it 0:09:36.400 --> 0:09:42.840 in nineteen ninety three, productivity sword afterwards, when we had 0:09:43.000 --> 0:09:46.800 much higher tax rates in the United States in the fifties, 0:09:47.200 --> 0:09:51.360 the sixties, and the early seventies, productivity growth was more 0:09:51.480 --> 0:09:56.560 rapid than it has been in recent years. The vast 0:09:56.600 --> 0:10:01.800 majority of the funds that flow into venture capital come 0:10:01.960 --> 0:10:08.240 from institutions like state pension funds, university endowments that are 0:10:08.520 --> 0:10:15.800 tax free investments. It defies belief that the young Bill Gates, 0:10:15.920 --> 0:10:20.480 the young Mark Zuckerberg, the young Steve Jobs would have 0:10:21.000 --> 0:10:25.960 not done their projects if they thought they would have 0:10:26.120 --> 0:10:31.120 had to pay a bit higher capital gains taxes and 0:10:31.640 --> 0:10:36.479 we would have been without those companies. 0:10:36.840 --> 0:10:38.600 Okay, Larry, thank you so much for being back with 0:10:38.640 --> 0:10:40.400 us again this week. That is Larry Summer's our very 0:10:40.400 --> 0:10:42.640 special contributor here on Wall Street Week. 0:10:44.679 --> 0:10:46.080 Coming up, we go to Davos. 0:10:46.120 --> 0:10:48.240 We're up Sunny Bechelists of Rock Creek will bring us 0:10:48.320 --> 0:10:51.320 up to speed on two central topics, China and the 0:10:51.320 --> 0:10:52.800 future of ESG investing. 0:10:53.760 --> 0:10:56.839 Most people, including myself, you know, and people have been 0:10:57.800 --> 0:11:00.960 in the world of impact investing, do not necessarily like 0:11:01.000 --> 0:11:01.840 the word ESG. 0:11:03.400 --> 0:11:04.720 That's next on Wall Street Week. 0:11:04.840 --> 0:11:09.920 On Bloomberg this is Bloomberg Wall Street Week with David 0:11:09.960 --> 0:11:12.000 Weston from Bloomberg Radio. 0:11:18.800 --> 0:11:20.520 This is Wall Street Week. I'm David Weston. 0:11:20.559 --> 0:11:22.560 A good part of global Wall Street gathered for the 0:11:22.600 --> 0:11:25.360 World Economic Forum meetings in Davos this week, and a 0:11:25.400 --> 0:11:27.679 good part of the discussion returned to topics we discussed 0:11:27.720 --> 0:11:31.560 here before, China and climate of Sonny Bachelized, a founder 0:11:31.559 --> 0:11:34.480 and CEO of Rock Creek, joined us now fresh back 0:11:34.679 --> 0:11:37.120 from the Swiss Alps. So Sonny, welcome, It's good to 0:11:37.120 --> 0:11:40.400 have you back in this country. Tell us what came 0:11:40.480 --> 0:11:42.800 out of Davas and start with China from them, because 0:11:42.800 --> 0:11:44.920 we did have the Prime Minister go over, Prime Minister 0:11:45.040 --> 0:11:47.680 legal over. He was very proud of five percent GDP. 0:11:47.800 --> 0:11:50.920 Some people are questioning some of those numbers. What was 0:11:50.960 --> 0:11:53.640 the discussion at Davos about China and where it stands? 0:11:53.840 --> 0:11:55.640 David, number is five point two. 0:11:55.679 --> 0:11:59.480 Obviously it looked a little better than what the estenates 0:11:59.480 --> 0:12:03.040 had been, but as you said, the numbers are less. 0:12:02.840 --> 0:12:04.040 Credible these days. 0:12:04.240 --> 0:12:06.560 I think the general sense that is coming up from 0:12:06.640 --> 0:12:10.040 China is very simple. Obviously you had the biggest delegation. 0:12:10.360 --> 0:12:13.040 I think maybe ever from China is certainly bigger than 0:12:13.080 --> 0:12:14.560 the US delegation this year. 0:12:15.440 --> 0:12:19.679 But while the language was about. 0:12:19.400 --> 0:12:23.120 We're open for business, in practice, as we know, markets 0:12:23.120 --> 0:12:26.680 were down twenty three percent outflows huge uploads last year. 0:12:27.080 --> 0:12:30.280 Markets are down ten percent already in China this year. 0:12:30.760 --> 0:12:33.840 And if you look at both the economic and the 0:12:33.920 --> 0:12:37.679 social problems that China is facing, things are only unfortunately 0:12:37.720 --> 0:12:40.960 getting worse. Because if we look for those of us 0:12:41.000 --> 0:12:43.679 who've been long term investors in China, if you look 0:12:43.720 --> 0:12:46.480 over twenty years, the first ten years of that twenty 0:12:46.559 --> 0:12:50.440 year period, China did fairly well. The last ten years 0:12:50.480 --> 0:12:52.920 in China, if you were just a regular investor in 0:12:52.960 --> 0:12:56.840 their equity markets, you were you maybe made a percent 0:12:56.960 --> 0:13:00.320 or two percent. So when you look at that and 0:13:00.360 --> 0:13:04.319 you look at the numbers of youth unemployment, those numbers also, 0:13:04.360 --> 0:13:07.720 by the way, came out they used to show twenty 0:13:07.760 --> 0:13:12.240 some percent youth unemployment number. They stop putting that number 0:13:12.320 --> 0:13:15.920 out and they started a new index which shows fourteen 0:13:15.960 --> 0:13:16.640 point one. 0:13:16.440 --> 0:13:18.320 But excludes college students. 0:13:19.400 --> 0:13:23.880 Those numbers are showing that student aspirations and young people's 0:13:23.960 --> 0:13:27.920 aspirations right now in China, those between like sixteen to 0:13:28.000 --> 0:13:31.840 twenty four have diminished. China was a country where in 0:13:31.880 --> 0:13:34.200 the last twenty years, there was a lot of hope, 0:13:34.240 --> 0:13:37.880 so people thought they would do better than their parents. 0:13:37.920 --> 0:13:39.280 They thought by getting. 0:13:39.000 --> 0:13:42.520 A better education, etc. More job opportunities, they would do better. 0:13:42.840 --> 0:13:48.840 Those aspirations, unfortunately, are getting squashed for the younger population 0:13:49.000 --> 0:13:52.640 and then for the urban sort established mature population. 0:13:52.840 --> 0:13:54.600 The value of the real estate has come down. 0:13:54.960 --> 0:13:57.920 So if we look at the next ten years, while 0:13:58.280 --> 0:14:00.720 the delegations, whether it's this we or a lot of 0:14:00.800 --> 0:14:03.719 Chinese delegations are going all over the world right now 0:14:03.760 --> 0:14:08.280 trying to wile investors as we speak, it's hard to 0:14:08.320 --> 0:14:12.240 be a convincing. Of course, valuations are low, but what 0:14:12.440 --> 0:14:14.120 is the trigger to get them up? 0:14:14.600 --> 0:14:16.400 Well, what about something you just referred to? 0:14:16.520 --> 0:14:20.440 Because Pronsterly and others within the administration in China have 0:14:20.520 --> 0:14:22.080 been saying we're going to be pro business. 0:14:22.120 --> 0:14:23.200 We're going to be pro business. 0:14:23.640 --> 0:14:26.480 Do we have any sense of actually delivering on that promise, because, 0:14:26.520 --> 0:14:28.520 as you suggest, aside, they've got a big problem with 0:14:28.520 --> 0:14:30.280 foreign direct investment, which has gone negative. 0:14:30.280 --> 0:14:33.800 For goodness sake, I think they are saying they're pro investments. 0:14:33.880 --> 0:14:36.560 At the same time, the actions over the last year 0:14:36.640 --> 0:14:41.360 especially were maybe less friendly just to investors in general, 0:14:41.480 --> 0:14:44.080 a lot of the money that went even into their 0:14:44.080 --> 0:14:47.280 own local markets was going to the soees versus their 0:14:47.320 --> 0:14:50.280 own private markets. The power of the central bank was 0:14:50.320 --> 0:14:55.520 getting diminished. So while they're making those statements, in practice, 0:14:55.600 --> 0:15:00.640 unfortunately they are being less business friendly because there's less 0:15:00.680 --> 0:15:03.600 money is going into their own private sector and the 0:15:03.640 --> 0:15:06.400 fact that central bank is getting more and more directives 0:15:06.440 --> 0:15:07.720 from the central government. 0:15:08.400 --> 0:15:11.120 Jamie Jamon, the head of JP Morgan while Davos, says 0:15:11.200 --> 0:15:14.440 that basically the risk reward has changed dramatically for China. 0:15:14.520 --> 0:15:16.920 Do you agree with that completely? 0:15:17.840 --> 0:15:19.840 But also I just want to say, even though the 0:15:19.920 --> 0:15:23.240 risk reward was good the last ten years, China did 0:15:23.320 --> 0:15:26.840 really well. I'm not sure if investors made as much money. 0:15:27.200 --> 0:15:30.200 Venture investors made a ton of money early on, but 0:15:30.680 --> 0:15:32.960 you know, for the companies that are not sold, it's 0:15:32.960 --> 0:15:34.880 not clear that they would be able to get out 0:15:34.920 --> 0:15:39.000 of those positions right now. So I think Jamie is 0:15:39.160 --> 0:15:44.040 very correct in saying the next few years a lot 0:15:44.080 --> 0:15:46.480 would have to change in China in terms of economic 0:15:46.520 --> 0:15:49.800 policies to make it more interesting to investors, both private 0:15:49.960 --> 0:15:51.120 and public investors. 0:15:51.240 --> 0:15:53.400 That's economic policy, which is something that the administration in 0:15:53.480 --> 0:15:55.440 China can do something about what about demographics, because we 0:15:55.440 --> 0:15:59.600 also got numbers off for demographics, which we're not encouraging exactly. 0:15:59.640 --> 0:16:03.120 And I think think the population keeps on getting smaller. 0:16:03.520 --> 0:16:06.280 And if you have a population that is diminishing in 0:16:06.360 --> 0:16:08.840 terms of because of the previous policies in terms of 0:16:08.920 --> 0:16:12.240 children that they had, even though that policy has changed. 0:16:12.440 --> 0:16:15.680 The issue is that, together with the aspiration of young 0:16:15.720 --> 0:16:18.160 people and the fact that there is this youth unemployment 0:16:18.720 --> 0:16:20.600 really does not bote very well. 0:16:20.760 --> 0:16:21.840 And the fact that a lot. 0:16:21.720 --> 0:16:25.880 Of Chinese investments of households was in real estate and 0:16:25.920 --> 0:16:31.160 we know that that sector is hugely down and even 0:16:31.240 --> 0:16:34.080 policies are not going to fix that. And last, but 0:16:34.200 --> 0:16:36.080 at least, a lot of the young people have been 0:16:36.160 --> 0:16:39.480 getting trained to go into services jobs, jobs that are 0:16:39.520 --> 0:16:43.120 diminishing also. So all of that, the demographics but also 0:16:43.200 --> 0:16:46.880 the composition of the job market that is changing again 0:16:47.160 --> 0:16:48.320 is not very positive. 0:16:49.480 --> 0:16:52.320 What was the discussion at Davos about what used to 0:16:52.320 --> 0:16:54.800 be called ESG. Esg's sort of got a bad name now, 0:16:54.880 --> 0:16:56.560 Larry Fink says, you don't want to say that anymore, 0:16:56.680 --> 0:16:59.160 but whatever you call about climate related investment, what was 0:16:59.200 --> 0:17:00.160 the discussion. 0:16:59.800 --> 0:17:01.040 I think radly speaking. 0:17:02.320 --> 0:17:04.760 You know, thin World Economic Forum has been doing a 0:17:04.800 --> 0:17:06.320 number of studies also over the. 0:17:06.280 --> 0:17:10.040 Last year on the ESG topic, and. 0:17:11.520 --> 0:17:14.640 Most people, including myself, you know, and people have been 0:17:15.600 --> 0:17:18.760 in the world of impact investing, do not necessarily like 0:17:18.800 --> 0:17:22.320 the word ESG. There is a political issue going on 0:17:22.480 --> 0:17:26.560 with ESG and d I putting that aside for a second. Basically, 0:17:26.600 --> 0:17:29.040 I don't think there's a lot of disagreement that there 0:17:29.080 --> 0:17:33.760 are issues and risks with climate related issues. Plus, the 0:17:33.880 --> 0:17:39.960 economics of solar and wind have changed hugely and today 0:17:40.520 --> 0:17:43.200 they are very economic in many parts of the world, 0:17:43.280 --> 0:17:45.840 whether it's US, whether it's Africa, whether it's Norway, whether 0:17:45.880 --> 0:17:48.479 it is the rest of Europe. What we're seeing is 0:17:48.520 --> 0:17:51.920 that there is China itself, you know, where you're seeing that, 0:17:53.080 --> 0:17:55.840 whether it is ev cars or it's solar panels, they're 0:17:55.880 --> 0:17:59.359 going to be a cheaper alternative than relying on oil 0:17:59.400 --> 0:17:59.840 and gas. 0:18:00.119 --> 0:18:01.600 So the decisions are economic. 0:18:01.680 --> 0:18:05.000 I think the Chinese obviously are looking at their own 0:18:05.760 --> 0:18:10.119 climate related issues, the quality of air, the quality of water, 0:18:10.400 --> 0:18:13.439 the quality of food that is coming out and is 0:18:13.520 --> 0:18:16.520 sometimes hazardous, and they are investing a lot. 0:18:16.400 --> 0:18:17.080 In those areas. 0:18:17.160 --> 0:18:20.160 Plus, that is the one bright spot, I would say 0:18:20.160 --> 0:18:20.840 in China. 0:18:20.640 --> 0:18:22.000 Well, and I'm sunny, as you know so well in 0:18:22.040 --> 0:18:24.880 life and in business, what you call something really matters 0:18:25.200 --> 0:18:28.560 and go away from ESG or even climate, talk about infrastructure. 0:18:28.680 --> 0:18:31.679 Last week we had this big deal announced with Blackrock 0:18:31.960 --> 0:18:35.480 and gp Bioevaglacia, you know, well, so as Lori Frank 0:18:35.760 --> 0:18:38.760 and talking to about the opportunity they see there and infrastructure. 0:18:38.800 --> 0:18:40.560 An awful lot of it seems to go back to 0:18:40.640 --> 0:18:42.760 climate and the investment we need to make to get 0:18:42.800 --> 0:18:44.240 to net zero exactly. 0:18:44.320 --> 0:18:47.160 And I think while you will see that Larry may 0:18:47.160 --> 0:18:51.280 not be using those terms and politically very very careful 0:18:51.320 --> 0:18:53.600 on the terminology he's using, you can see what he's 0:18:53.640 --> 0:18:57.920 investing in, and I think that is a really positive 0:18:57.960 --> 0:19:01.159 sign in the sense that structure is getting built. G 0:19:01.240 --> 0:19:05.399 IP obviously is one of the biggest investors in this area. 0:19:05.520 --> 0:19:08.879 I think, you know as one of my colleagues, one 0:19:08.880 --> 0:19:14.080 of the ex World Bank presidents also is been there 0:19:14.200 --> 0:19:17.440 as well. And what you see is that a lot 0:19:17.440 --> 0:19:23.840 of their portfolio is increasingly investing in energy transition, in 0:19:24.320 --> 0:19:28.400 bringing power allianes and great expansion of power grids. It's 0:19:28.640 --> 0:19:33.879 looking at ports and looking at infrastructure with and with 0:19:35.280 --> 0:19:39.080 ESG lends. And it's not just GIPS, not just Black Rock. 0:19:39.160 --> 0:19:42.000 If you look at Prologist, if you look at really 0:19:42.040 --> 0:19:47.040 any large company investing in infrastructure or logistics looking at 0:19:47.080 --> 0:19:51.639 two areas. One is clean energy and energy transition in 0:19:51.760 --> 0:19:56.560 order to reduce costs and increase reliability and reduce risks. 0:19:56.640 --> 0:19:59.800 And also AI obviously, and those are getting more and 0:19:59.800 --> 0:20:03.280 more inter twined, and inter relationship between AI and clean 0:20:03.400 --> 0:20:05.919 energy I think will be an interesting area to watch. 0:20:06.440 --> 0:20:08.080 Sney, thank you so much. Always great to have you 0:20:08.119 --> 0:20:10.080 on Wall Street Week. But as a Sonny Bachelist of 0:20:10.280 --> 0:20:14.960 Rock Creek. Coming up, what corporate leaders should be thinking 0:20:15.000 --> 0:20:17.440 about as we move toward the November elections in the 0:20:17.560 --> 0:20:21.480 United States. We'll ask Blair Ephron of Centerview Partners. 0:20:21.760 --> 0:20:27.120 That think's important to either candidate that we rein in 0:20:27.160 --> 0:20:27.760 our deficit. 0:20:29.280 --> 0:20:31.400 That's next on Wall Street Week on Bloomberg. 0:20:32.520 --> 0:20:36.760 This is Bloomberg Wall Street Week with David Weston from 0:20:36.880 --> 0:20:39.720 Bloomberg Radio. 0:20:44.960 --> 0:20:48.040 Corporate transactions have hit a dry spell after a blockbuster 0:20:48.119 --> 0:20:51.199 year in twenty twenty one. Mergers and acquisition stalled in 0:20:51.240 --> 0:20:54.400 twenty twenty three, though by the summer bankers like evercoorse 0:20:54.520 --> 0:20:57.639 Ralph Schlostein were hoping for more action in the second 0:20:57.680 --> 0:20:58.640 half of the year. 0:20:58.880 --> 0:21:02.000 Announced and for the first six months of the year 0:21:02.200 --> 0:21:06.399 was down. The dollar volume was down forty percent. I 0:21:06.440 --> 0:21:09.480 don't expect it will be quite as bad in the 0:21:09.520 --> 0:21:12.919 second half of the year, but certainly the amount of 0:21:13.080 --> 0:21:17.840 dialogue among our clients is up quite dramatically, and our 0:21:17.880 --> 0:21:18.840 backlogs are up. 0:21:19.480 --> 0:21:21.960 And there were some areas where things did pick up, 0:21:22.440 --> 0:21:23.920 like on international deals. 0:21:24.240 --> 0:21:26.280 This year was very busy for US on cross border 0:21:26.440 --> 0:21:29.520 m and A. So we could we're seeing one companies 0:21:29.560 --> 0:21:32.880 listed outside the US just migrate to another new list 0:21:32.880 --> 0:21:34.800 thing here and turning it into their primary list thing, 0:21:34.840 --> 0:21:37.359 getting a multiple bump plump. But we could also just 0:21:37.400 --> 0:21:40.600 see a lot of US companies spending their cash overseas. 0:21:41.119 --> 0:21:43.440 And as we get into twenty twenty four, there's reason 0:21:43.480 --> 0:21:46.120 to believe there's the appetite out there, whether it's from 0:21:46.160 --> 0:21:46.879 private credit. 0:21:47.240 --> 0:21:50.840 If you look at the likely demand for private credit, 0:21:51.480 --> 0:21:54.600 if you take the two point four trillion dollars of 0:21:54.680 --> 0:21:57.640 dry powder and private equity funds and you assume five 0:21:57.720 --> 0:22:02.960 plus billion dollars of deals, is an enormous demand for private. 0:22:02.640 --> 0:22:06.719 Credit or in tech where valuations may be making deals 0:22:06.760 --> 0:22:07.560 more compelling. 0:22:07.920 --> 0:22:11.320