1 00:00:05,120 --> 00:00:09,200 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along 2 00:00:09,200 --> 00:00:13,200 Speaker 1: with Jonathan Farrell and Lisa Bramowitz. Daily we bring you 3 00:00:13,280 --> 00:00:18,600 Speaker 1: insight from the best and economics, finance, investment, and international relations. 4 00:00:18,960 --> 00:00:23,840 Speaker 1: Find Bloomberg Surveillance on Apple Podcast, Suncloud, Bloomberg dot com, 5 00:00:23,920 --> 00:00:30,640 Speaker 1: and of course on the Bloomberg Terminal. Someone who has 6 00:00:30,720 --> 00:00:34,760 Speaker 1: written about the torrential reign of the world landscape is 7 00:00:34,840 --> 00:00:38,080 Speaker 1: Daniel Jurgen. He is vice chairman at SMP Global and 8 00:00:38,159 --> 00:00:40,640 Speaker 1: yes the prize and oil and yes Brent Crudz a 9 00:00:40,720 --> 00:00:44,159 Speaker 1: hundred and fift. But in this more somber Dabos, we 10 00:00:44,280 --> 00:00:48,040 Speaker 1: must speak to Daniel Jurgen about the Commanding Heights that 11 00:00:48,080 --> 00:00:52,839 Speaker 1: he codified a good thirty years ago. Daniel Jurgen, in 12 00:00:53,000 --> 00:00:57,720 Speaker 1: Commanding Heights, you spoke of the journey of Communism, What 13 00:00:57,920 --> 00:01:01,080 Speaker 1: is the journey of Putin? I think what we are 14 00:01:01,280 --> 00:01:03,920 Speaker 1: really at an end of an era, and it's bracketed 15 00:01:04,000 --> 00:01:06,160 Speaker 1: by Davos, because it was in Davos where you saw 16 00:01:06,200 --> 00:01:08,840 Speaker 1: the opening up the reconnection of what had been the 17 00:01:08,840 --> 00:01:12,600 Speaker 1: Soviet Union and the Soviet satellites with the world economy 18 00:01:12,680 --> 00:01:16,280 Speaker 1: in one global economy that's now fragmenting. Of course, no 19 00:01:16,400 --> 00:01:19,679 Speaker 1: Russians here, no Chinese here, and it's back to a 20 00:01:19,760 --> 00:01:23,320 Speaker 1: more fragmented, less globalized world. How much finger pointing has 21 00:01:23,360 --> 00:01:25,759 Speaker 1: there been, both in conversations on and off the record, 22 00:01:25,800 --> 00:01:28,720 Speaker 1: that you've had a Germany and the reluctance to move 23 00:01:28,760 --> 00:01:31,800 Speaker 1: away from Russia in terms of their dependence on oil, Well, 24 00:01:31,800 --> 00:01:34,240 Speaker 1: I haven't heard. The German economics ministers said it was 25 00:01:34,280 --> 00:01:36,600 Speaker 1: a strategic mistake to what they've done for the last 26 00:01:36,640 --> 00:01:38,920 Speaker 1: year and a half, a decade and a half rather 27 00:01:39,319 --> 00:01:41,039 Speaker 1: and that he said in a matter of weeks we've 28 00:01:41,040 --> 00:01:44,000 Speaker 1: got to change that. So it really is a big change. 29 00:01:44,319 --> 00:01:46,840 Speaker 1: And meanwhile, going forward, do you get the sense that 30 00:01:46,880 --> 00:01:50,280 Speaker 1: there is a cohesive plan to really move away and 31 00:01:50,360 --> 00:01:53,520 Speaker 1: substitute that those supplies or do you think that that 32 00:01:53,560 --> 00:01:56,680 Speaker 1: plan is still lacking? I would say it's an uncohesive plan. 33 00:01:56,840 --> 00:02:00,360 Speaker 1: I mean Europe wants to the EU wants to bargo 34 00:02:00,480 --> 00:02:03,480 Speaker 1: Russian crude oil. They can't get Hungry on board, so 35 00:02:03,520 --> 00:02:06,400 Speaker 1: they keep postponing it. But I think individual countries are 36 00:02:06,440 --> 00:02:09,120 Speaker 1: going to cut cut back. And what Putin has done 37 00:02:09,160 --> 00:02:12,360 Speaker 1: is he's basically over the law next two years has 38 00:02:12,840 --> 00:02:16,079 Speaker 1: undercut his what is his baseload market, and that's why 39 00:02:16,120 --> 00:02:18,800 Speaker 1: Russia is not going to be an energy superpower anymore. 40 00:02:19,000 --> 00:02:23,600 Speaker 1: Dr you're in. George Will September twelfth, two thousand one, 41 00:02:23,840 --> 00:02:27,880 Speaker 1: wrote of our holiday from history is over. Robert Gates, 42 00:02:28,040 --> 00:02:31,600 Speaker 1: esteemed by all in politics in Washington, has spoken of 43 00:02:31,680 --> 00:02:36,119 Speaker 1: our holiday from history is over, and acclaimed Infantry Officer 44 00:02:36,280 --> 00:02:39,800 Speaker 1: General Mark Kimmitt says, our holiday from history is over. 45 00:02:40,360 --> 00:02:42,840 Speaker 1: You more than anyone in the modern you're have written 46 00:02:42,880 --> 00:02:46,920 Speaker 1: about this. If our holiday from history is over, what 47 00:02:47,000 --> 00:02:49,240 Speaker 1: are we going to? Well? I think we've moved from 48 00:02:49,240 --> 00:02:51,680 Speaker 1: what I have called the w t O consensus, which 49 00:02:51,720 --> 00:02:54,960 Speaker 1: is globalization to great power competition. Which do you agree 50 00:02:54,960 --> 00:02:59,360 Speaker 1: in deglobalization. I think fragmented globalization is what we have 51 00:02:59,800 --> 00:03:03,160 Speaker 1: and it's the problem for companies, of course, multinationals. They're 52 00:03:03,160 --> 00:03:07,040 Speaker 1: played by the playbook of globalization, but that playbook doesn't 53 00:03:07,040 --> 00:03:10,560 Speaker 1: work anymore in the world's fragmenting. In Commanding Heights, you 54 00:03:10,600 --> 00:03:13,520 Speaker 1: do a beautiful job of bouncing between the elites and 55 00:03:13,560 --> 00:03:16,800 Speaker 1: the people. I remember in the chapter on Brazil was 56 00:03:16,840 --> 00:03:20,480 Speaker 1: just brilliant in this regard. A great theme here is 57 00:03:20,480 --> 00:03:25,240 Speaker 1: the elites are disassociated from the broader middle class, higher inflation, 58 00:03:25,280 --> 00:03:27,960 Speaker 1: which crushes the middle class. You know the story and 59 00:03:28,000 --> 00:03:32,120 Speaker 1: the drill. What's your prescription for institutions and elites to 60 00:03:32,240 --> 00:03:34,720 Speaker 1: reconnect with their middle class. I don't think it's a 61 00:03:34,800 --> 00:03:39,320 Speaker 1: it's a simple thing. Obviously, the inflation is so undercutting 62 00:03:39,320 --> 00:03:42,240 Speaker 1: of society and build so much anger. So I think 63 00:03:42,240 --> 00:03:45,120 Speaker 1: they're dealing with inflation. But you're dealing at a time 64 00:03:45,160 --> 00:03:48,080 Speaker 1: when world energy is going to is disrupted food and 65 00:03:48,080 --> 00:03:51,160 Speaker 1: of course of the cost of food is actually energy 66 00:03:51,440 --> 00:03:54,000 Speaker 1: processing and everything. So I think these are still going 67 00:03:54,040 --> 00:03:56,520 Speaker 1: to be very much. I think it's a troubled period 68 00:03:56,560 --> 00:03:59,240 Speaker 1: I had, and you're gonna see a social instability as 69 00:03:59,240 --> 00:04:01,360 Speaker 1: a result of this in countries. Is it appropriate that 70 00:04:01,440 --> 00:04:04,280 Speaker 1: China isn't here, given the fact that that economy has 71 00:04:04,280 --> 00:04:07,760 Speaker 1: such a massive influence and whether we get a global recession. Yeah, absolutely, 72 00:04:07,760 --> 00:04:09,920 Speaker 1: But they're not here because of COVID and because you'd 73 00:04:09,960 --> 00:04:13,200 Speaker 1: have to go back and uh and and uh quarantine. 74 00:04:13,520 --> 00:04:16,400 Speaker 1: But you know, Russia, you understand. But but the lack 75 00:04:16,440 --> 00:04:20,320 Speaker 1: of China here is actually more significant and probably more 76 00:04:20,480 --> 00:04:22,960 Speaker 1: of the reason why there is so much uncertainty. I 77 00:04:23,000 --> 00:04:25,039 Speaker 1: was looking at a number of reports that came out. 78 00:04:25,120 --> 00:04:27,880 Speaker 1: If we keep getting these waves of COVID, China remains 79 00:04:27,880 --> 00:04:30,039 Speaker 1: in lockdown for longer. All of a sudden, you have 80 00:04:30,080 --> 00:04:33,440 Speaker 1: a very different parameter of risks in terms of the 81 00:04:33,480 --> 00:04:36,719 Speaker 1: downside to growth. What's your view on this in terms 82 00:04:36,760 --> 00:04:38,720 Speaker 1: of how much of a swing factor that will be? Well, 83 00:04:38,720 --> 00:04:40,640 Speaker 1: I think you see it, because once again means you 84 00:04:40,680 --> 00:04:44,040 Speaker 1: get the supply chain problems. Again that adds to the disruption, 85 00:04:44,120 --> 00:04:46,800 Speaker 1: that adds to the inflation. So waves of COVID, if 86 00:04:47,080 --> 00:04:49,680 Speaker 1: and that is what continues to unfold, is in itself 87 00:04:50,279 --> 00:04:54,120 Speaker 1: deglobalizing factor in the world. Learning Aaron Dubos of the 88 00:04:54,160 --> 00:04:57,280 Speaker 1: I'm going to call its certification by the Philippine Congress 89 00:04:57,800 --> 00:05:00,760 Speaker 1: of Mr Marcos Jr. You may of the name from 90 00:05:00,760 --> 00:05:04,800 Speaker 1: many years ago. Dan Jurgen certainly does huge debate within 91 00:05:04,880 --> 00:05:08,839 Speaker 1: Philippine society of his resounding win over Ms Robetto and 92 00:05:08,839 --> 00:05:12,240 Speaker 1: other candidates as well. And some would say not me, 93 00:05:12,360 --> 00:05:15,800 Speaker 1: but some would say this has an autocratic tendency or 94 00:05:15,880 --> 00:05:19,280 Speaker 1: return to autocracy, as maybe we see in Hungry. I'll 95 00:05:19,360 --> 00:05:24,160 Speaker 1: let you suggest other nations. How does a liberal society 96 00:05:24,160 --> 00:05:27,200 Speaker 1: fight against a trend of autocracy? Well, I think it 97 00:05:27,600 --> 00:05:28,960 Speaker 1: is you can see it in a in a lot 98 00:05:29,000 --> 00:05:31,400 Speaker 1: of countries. I mean, the most important thing is actually 99 00:05:31,400 --> 00:05:34,160 Speaker 1: elections that people. Once people are in power for eight 100 00:05:34,240 --> 00:05:36,839 Speaker 1: or ten years, you're in a different game. And we've 101 00:05:36,880 --> 00:05:38,919 Speaker 1: seen that. Look what happened with Russia. Well look what 102 00:05:39,000 --> 00:05:41,480 Speaker 1: up with Russia. But we're all hinged on the Chinese 103 00:05:41,520 --> 00:05:45,280 Speaker 1: Party Congress, where it's I believe you for life. I mean, 104 00:05:45,360 --> 00:05:47,800 Speaker 1: is that an important meeting coming up? That's a late 105 00:05:47,839 --> 00:05:49,919 Speaker 1: autumn central meeting, because it will set the course for 106 00:05:50,040 --> 00:05:54,080 Speaker 1: China for some time to come, and obviously they're struggling 107 00:05:54,120 --> 00:05:59,120 Speaker 1: with party control at the same time maintaining a vibrant economy. 108 00:05:59,279 --> 00:06:01,679 Speaker 1: Do you get the sense that the conversation around moving 109 00:06:01,760 --> 00:06:05,200 Speaker 1: away from fossil fuels and oil in particular is taking 110 00:06:05,200 --> 00:06:08,479 Speaker 1: on a new geopolitical significance at this Davos rather than 111 00:06:08,560 --> 00:06:11,159 Speaker 1: just good wishes of people who want to do the 112 00:06:11,240 --> 00:06:13,440 Speaker 1: right thing. Yeah, I think it's it's cutting both ways 113 00:06:13,480 --> 00:06:15,720 Speaker 1: because it also means that there's much more concerned about 114 00:06:15,760 --> 00:06:18,600 Speaker 1: access to fossil fuels investment and the kind of pre 115 00:06:18,640 --> 00:06:21,640 Speaker 1: emptive under investment that there's been. So a lot of 116 00:06:21,640 --> 00:06:24,919 Speaker 1: the discussions I've heard is actually you need you're gonna 117 00:06:24,920 --> 00:06:28,000 Speaker 1: need more investment resources and you can't just count on 118 00:06:28,000 --> 00:06:30,520 Speaker 1: a smooth path ahead. But I think it's the bigger 119 00:06:30,560 --> 00:06:33,960 Speaker 1: problem now. It's it's a more discordant discussion now than 120 00:06:34,000 --> 00:06:36,160 Speaker 1: it's been in the past. Here Global Wall Street doesn't 121 00:06:36,200 --> 00:06:39,000 Speaker 1: give a damn about international relations. None of them were 122 00:06:39,000 --> 00:06:43,160 Speaker 1: at the commanding heights. JP Morgan's London desk models out 123 00:06:43,160 --> 00:06:46,680 Speaker 1: a hundred hundred and fifty dollar brand. Is that feasible? 124 00:06:46,960 --> 00:06:49,279 Speaker 1: I think you could have that happened. Where see this 125 00:06:49,360 --> 00:06:53,440 Speaker 1: market tightening right now, and if Chinese comes out of 126 00:06:53,480 --> 00:06:55,599 Speaker 1: COVID and demand goes up, the pressure will be there, 127 00:06:55,839 --> 00:06:58,120 Speaker 1: and the responses to that are gonna be there's gonna 128 00:06:58,120 --> 00:07:00,279 Speaker 1: be a political response, and there's going to be obviously 129 00:07:00,320 --> 00:07:03,080 Speaker 1: big economic crisip. Where does even gasoline prices go? Then 130 00:07:03,080 --> 00:07:05,839 Speaker 1: with the refined goods listen to your gloom, Well, no, 131 00:07:06,000 --> 00:07:10,320 Speaker 1: I like Brent, we're having. We're having not only a 132 00:07:10,360 --> 00:07:12,960 Speaker 1: problem with crude oil is the problem. We're refining. That's 133 00:07:12,960 --> 00:07:15,600 Speaker 1: where the real problem is. And that's where diesel gasoline 134 00:07:15,720 --> 00:07:18,280 Speaker 1: all those prices. And you know we had a global 135 00:07:18,320 --> 00:07:21,520 Speaker 1: refining system and that's been disrupted too by as a 136 00:07:21,600 --> 00:07:24,600 Speaker 1: result of putent. We're out of time with a new map. 137 00:07:24,680 --> 00:07:31,680 Speaker 1: Danielgan with us of course of SMP Global. Right now, 138 00:07:31,840 --> 00:07:35,160 Speaker 1: this is a joy within the sphere of international relations. 139 00:07:35,160 --> 00:07:37,120 Speaker 1: There can be vogues, It could be moments, and one 140 00:07:37,120 --> 00:07:40,040 Speaker 1: of those moments was I'm going to guess twenty years 141 00:07:40,080 --> 00:07:45,000 Speaker 1: ago for read Zacaria with the post American world. He says, 142 00:07:45,040 --> 00:07:49,040 Speaker 1: there is a revolutionary moment now and a required read 143 00:07:49,160 --> 00:07:53,200 Speaker 1: is Ian Bremer's The Power of Crisis. Dr Bremer joins 144 00:07:53,280 --> 00:07:55,360 Speaker 1: us this morning, of course, you raise your group, of 145 00:07:55,360 --> 00:07:58,360 Speaker 1: which we do an annual beginning of the year visit. 146 00:07:58,400 --> 00:08:02,080 Speaker 1: I thought free Zakaria was dead on about the moment 147 00:08:02,240 --> 00:08:07,400 Speaker 1: we're in in the power of crisis, except it's not crisis. 148 00:08:07,440 --> 00:08:09,120 Speaker 1: I don't know what the plural is a crisis. You're 149 00:08:09,160 --> 00:08:13,240 Speaker 1: the fav sees the crisis descend upondas. Don't think. Why 150 00:08:13,240 --> 00:08:15,280 Speaker 1: are you shaking your head? That is the plural of christ. 151 00:08:15,440 --> 00:08:17,440 Speaker 1: I know. It's just that really has to deal with 152 00:08:17,480 --> 00:08:21,160 Speaker 1: me on a daily things. The many crisis we have now, 153 00:08:21,200 --> 00:08:24,200 Speaker 1: which matters, uh well, Russia Ukraine is the one that 154 00:08:24,240 --> 00:08:26,800 Speaker 1: matters to everyone here. It's also the one that's least 155 00:08:26,840 --> 00:08:30,360 Speaker 1: well understood because for the last three months, the focus 156 00:08:30,360 --> 00:08:33,800 Speaker 1: has been Ukraine, but of course the confrontation is also 157 00:08:33,880 --> 00:08:37,640 Speaker 1: between Russia and NATO. The potential for negotiations to bear 158 00:08:37,720 --> 00:08:41,200 Speaker 1: fruit virtually zero. It's the first time in history that 159 00:08:41,320 --> 00:08:45,680 Speaker 1: we have forcibly decoupled a G twenty economy from the 160 00:08:45,679 --> 00:08:48,319 Speaker 1: world's advanced industrial economies. That is a very big deal, 161 00:08:48,400 --> 00:08:51,920 Speaker 1: especially for a forum that traffics in globalization. It is 162 00:08:52,000 --> 00:08:55,280 Speaker 1: purely because of the acts that Russia has taken, and 163 00:08:55,280 --> 00:08:57,480 Speaker 1: and this is the fact of the matter. Is not 164 00:08:57,559 --> 00:09:00,280 Speaker 1: just a cold war between Russia and NATO, but there 165 00:09:00,280 --> 00:09:03,079 Speaker 1: are elements of a hot war. So of course people 166 00:09:03,080 --> 00:09:05,720 Speaker 1: are rather disconcerted by that. People are focused on that, 167 00:09:05,760 --> 00:09:07,320 Speaker 1: but are they focused on the right thing. We were 168 00:09:07,360 --> 00:09:11,000 Speaker 1: just speaking with Daniel Jurgen just moments ago, and he said, frankly, 169 00:09:11,440 --> 00:09:14,320 Speaker 1: the bigger news is that China is not here because 170 00:09:14,320 --> 00:09:16,720 Speaker 1: of COVID, and that that has a much more substantive 171 00:09:16,800 --> 00:09:19,920 Speaker 1: impact on the global economy. Should we be more focused 172 00:09:19,920 --> 00:09:23,440 Speaker 1: on a decoupling there, Uh no, because we are not 173 00:09:23,679 --> 00:09:27,720 Speaker 1: doing a significant decoupling there. I mean, look, yesterday everyone 174 00:09:27,800 --> 00:09:30,760 Speaker 1: was asking about the Biden Taiwan statement, which was much 175 00:09:30,800 --> 00:09:33,000 Speaker 1: ado about the exact same thing that he said a 176 00:09:33,000 --> 00:09:35,800 Speaker 1: couple of times already, and that the White House backtrack. China, 177 00:09:35,880 --> 00:09:38,640 Speaker 1: of course, is the most important rising power in the world, 178 00:09:38,640 --> 00:09:40,720 Speaker 1: second large economy. We're not taking anyway from that, but 179 00:09:40,760 --> 00:09:43,320 Speaker 1: the fact is that U S. China relations are very 180 00:09:43,400 --> 00:09:46,880 Speaker 1: interdependent and they are more stable where Russia has just 181 00:09:47,080 --> 00:09:52,040 Speaker 1: completely subverted a thirty year piece dividend that Europe has enjoyed. 182 00:09:52,080 --> 00:09:54,280 Speaker 1: And I mean, I understand that I'm a New Yorker, 183 00:09:55,240 --> 00:09:57,920 Speaker 1: but also we are in Europe, and so this is 184 00:09:58,000 --> 00:10:00,840 Speaker 1: this is truly a generation will change. That is what 185 00:10:00,840 --> 00:10:02,680 Speaker 1: we should be focused on. So how much is this 186 00:10:02,760 --> 00:10:06,200 Speaker 1: an issue of supply chains of food and issues with 187 00:10:06,320 --> 00:10:08,760 Speaker 1: just what we're seeing in terms of a widening divide 188 00:10:08,800 --> 00:10:11,520 Speaker 1: if nothing else, in the quality of life between wealthy 189 00:10:11,559 --> 00:10:15,200 Speaker 1: and the number of times that I have heard from 190 00:10:15,240 --> 00:10:17,320 Speaker 1: people in the last three months that well, you're focused 191 00:10:17,360 --> 00:10:20,040 Speaker 1: on Ukraine because it's white people, because it's Europeans. You 192 00:10:20,080 --> 00:10:22,920 Speaker 1: don't care about Syria, you don't care about Afghanistan. There 193 00:10:23,040 --> 00:10:25,439 Speaker 1: is a point to that argument, But the fact is 194 00:10:25,480 --> 00:10:27,120 Speaker 1: that the poorest people in the world are going to 195 00:10:27,160 --> 00:10:30,079 Speaker 1: be vastly more impacted by the Ukraine crisis than any 196 00:10:30,160 --> 00:10:32,320 Speaker 1: of those other crisis that have for precisely the reason 197 00:10:32,360 --> 00:10:34,560 Speaker 1: you just mentioned. How much is this also an existential 198 00:10:34,640 --> 00:10:37,319 Speaker 1: threat of the geopolitical order of Europe? And that's why 199 00:10:37,520 --> 00:10:39,800 Speaker 1: you made the point. We're in Europe and people are 200 00:10:39,800 --> 00:10:42,440 Speaker 1: focused on that. How much are people concerned about this 201 00:10:42,520 --> 00:10:47,079 Speaker 1: trickling out into some sort of bigger challenge that is unanticipated? Well, 202 00:10:47,160 --> 00:10:49,640 Speaker 1: I mean, how much are they concerned that gas from 203 00:10:49,720 --> 00:10:53,920 Speaker 1: Russia through Ukraine to Europe could be cut off at 204 00:10:53,960 --> 00:10:56,719 Speaker 1: any moment by the Russians, by the Europeans, or by 205 00:10:56,760 --> 00:10:59,880 Speaker 1: the Ukrainians, or by a non state terrorist actor for 206 00:11:00,040 --> 00:11:03,880 Speaker 1: that matter. I mean, seriously, They're the vulnerability that comes 207 00:11:03,920 --> 00:11:07,400 Speaker 1: from the mistake, the strategic mistake made by Europeans to 208 00:11:07,440 --> 00:11:10,319 Speaker 1: allow themselves to become as dependent as they had on 209 00:11:10,600 --> 00:11:14,640 Speaker 1: energy as Dan was discussing, from Russia, is an enormous 210 00:11:14,760 --> 00:11:18,560 Speaker 1: vulnerability right now. And and furthermore, the fact that a 211 00:11:18,679 --> 00:11:21,040 Speaker 1: country in Ukraine is a big delegation here right now 212 00:11:21,520 --> 00:11:24,760 Speaker 1: is fighting fighting for their survival, fighting to avoid being 213 00:11:24,760 --> 00:11:27,680 Speaker 1: wiped off the map by the President of Russia. And 214 00:11:27,679 --> 00:11:30,360 Speaker 1: they're doing that fighting in part so that the polls 215 00:11:30,559 --> 00:11:33,240 Speaker 1: don't have to so the balls don't have to. The 216 00:11:33,280 --> 00:11:36,400 Speaker 1: Europeans do feel that, not all of them. Okay, maybe 217 00:11:36,400 --> 00:11:38,160 Speaker 1: you talk to Belgians here, maybe they don't feel as 218 00:11:38,200 --> 00:11:41,079 Speaker 1: strong about that. The Germans do. The polls do they matter? 219 00:11:41,160 --> 00:11:42,719 Speaker 1: The Fins and the Swedes who are about to join 220 00:11:42,760 --> 00:11:47,400 Speaker 1: NATO do so. I mean, don't underestimate how much of 221 00:11:47,440 --> 00:11:50,559 Speaker 1: a change this reflects for a europe that for thirty 222 00:11:50,640 --> 00:11:54,440 Speaker 1: years felt like national security didn't matter for them. How 223 00:11:54,480 --> 00:11:57,079 Speaker 1: do we support them? We had always understood here and 224 00:11:57,120 --> 00:12:00,520 Speaker 1: if it's every nation for itself a phrase Ian that 225 00:12:00,640 --> 00:12:04,280 Speaker 1: you codified from eight miles of the finished border down 226 00:12:04,320 --> 00:12:07,720 Speaker 1: to air Twan with Turkish learror through sixteen and the 227 00:12:07,800 --> 00:12:12,120 Speaker 1: incredible calculus he has with the Boss, the Darknells, the 228 00:12:12,120 --> 00:12:15,440 Speaker 1: Bosphorus and up to the Black See in that huge 229 00:12:15,480 --> 00:12:20,920 Speaker 1: span of the new Eastern Front. How does America respond? Well, 230 00:12:21,000 --> 00:12:27,959 Speaker 1: forty billion dollars is the one way. Look, when I'll 231 00:12:27,960 --> 00:12:30,880 Speaker 1: bring back the Biden Taiwan thing. When Biden says the 232 00:12:30,920 --> 00:12:34,160 Speaker 1: United States will defend Taiwan, my view is what he's 233 00:12:34,160 --> 00:12:37,200 Speaker 1: saying is not changing the policy. Biden feels like we're 234 00:12:37,200 --> 00:12:40,800 Speaker 1: defending Ukraine, not because there aren't boots on the ground, 235 00:12:41,360 --> 00:12:43,160 Speaker 1: They're not doing a no fly zone. But are the 236 00:12:43,200 --> 00:12:46,079 Speaker 1: Americans defending Ukraine? And when you talk about the level 237 00:12:46,160 --> 00:12:49,880 Speaker 1: of sanctions when you literally freeze half of Russia's global 238 00:12:50,160 --> 00:12:53,640 Speaker 1: assets the central Bank, when you literally cut them off 239 00:12:53,679 --> 00:12:56,040 Speaker 1: from the G seven, when you support with the Ukrainians 240 00:12:56,040 --> 00:12:58,720 Speaker 1: with the intelligence, put the money with the arms. The 241 00:12:58,800 --> 00:13:03,160 Speaker 1: reason the Ukrainian still exists is first and foremost because 242 00:13:03,200 --> 00:13:06,960 Speaker 1: of the courageousness of the Ukrainian fighters, but secondarily because 243 00:13:06,960 --> 00:13:09,280 Speaker 1: of what the Americans and the American allies are actually doing. 244 00:13:09,320 --> 00:13:11,680 Speaker 1: And if Putin had any clue that that was going 245 00:13:11,720 --> 00:13:15,160 Speaker 1: to happen, he wouldn't have invaded. Is an advantage for 246 00:13:15,360 --> 00:13:20,080 Speaker 1: Mr Putin? The new character of American isolationism? Is it 247 00:13:20,120 --> 00:13:23,320 Speaker 1: a different isolation He thought it was. He thought it was. 248 00:13:23,360 --> 00:13:25,040 Speaker 1: I thought it, well, what is the character of our 249 00:13:25,080 --> 00:13:28,400 Speaker 1: new isolationism if we're going to choose to engage in 250 00:13:28,520 --> 00:13:32,520 Speaker 1: China or choose to engage in Ukraine. I think that 251 00:13:32,600 --> 00:13:37,080 Speaker 1: if Trump gets the nomination for the Republican presidency and 252 00:13:37,120 --> 00:13:40,920 Speaker 1: he says, why are you sending forty billion dollars to 253 00:13:40,960 --> 00:13:43,520 Speaker 1: the Ukraine's wise is our fight? Why would we antagonize 254 00:13:43,520 --> 00:13:45,920 Speaker 1: the Russians, which, by the way his son has been 255 00:13:45,920 --> 00:13:47,720 Speaker 1: tweeting over the course of the past few days, I 256 00:13:47,760 --> 00:13:50,480 Speaker 1: think the view will be different there it is today. Meanwhile, 257 00:13:50,480 --> 00:13:53,520 Speaker 1: we just saw the Treasury Department agree to end some 258 00:13:53,679 --> 00:13:57,080 Speaker 1: of the exemptions that's basically going to force Russia into 259 00:13:57,120 --> 00:13:59,520 Speaker 1: the fall and its people surprise, they didn't do that 260 00:13:59,520 --> 00:14:01,840 Speaker 1: a month ago. Correct, But how much of a liability 261 00:14:01,880 --> 00:14:05,000 Speaker 1: does this become? That the US is using and weaponizing 262 00:14:05,040 --> 00:14:07,480 Speaker 1: the financial prowess of the nation in a way that 263 00:14:07,600 --> 00:14:11,840 Speaker 1: it really hasn't before. Um. I think that the United 264 00:14:11,880 --> 00:14:15,400 Speaker 1: States is showing that some red lines actually matter. Maybe 265 00:14:15,400 --> 00:14:19,280 Speaker 1: not Obama's red line on Syrian chemical weapons use. Um, 266 00:14:19,400 --> 00:14:22,800 Speaker 1: but this maybe maybe not you know, Bush's line. But 267 00:14:22,960 --> 00:14:25,000 Speaker 1: is that how it's being perceived by the rest of 268 00:14:25,040 --> 00:14:27,120 Speaker 1: the world. It depends on who you're talking to. I 269 00:14:27,160 --> 00:14:29,800 Speaker 1: think the Chinese are taking lessons from the fact that 270 00:14:29,840 --> 00:14:32,640 Speaker 1: the Americans and the Europeans actually really do care. Certainly 271 00:14:32,680 --> 00:14:34,960 Speaker 1: that affects the way they think about Taiwan. Um. But 272 00:14:35,160 --> 00:14:37,880 Speaker 1: you're right, I mean, the dollar is being weaponized, American 273 00:14:37,920 --> 00:14:40,000 Speaker 1: financial systems and weaponized. But you know, what where else 274 00:14:40,040 --> 00:14:42,480 Speaker 1: are you going? I mean, if there were credible alternatives, 275 00:14:42,960 --> 00:14:45,880 Speaker 1: then I think that there would be a significant challenge 276 00:14:46,000 --> 00:14:50,320 Speaker 1: to America's global reserve status. But if my grandmother had wheels, 277 00:14:50,320 --> 00:14:53,600 Speaker 1: should be a bicycle. I mean, those are not useful comparison. Well, 278 00:14:53,600 --> 00:14:56,520 Speaker 1: do you see any kind of move away from the US. 279 00:14:56,640 --> 00:14:59,880 Speaker 1: Is this basically increase the fragmentation that we're seeing in 280 00:15:00,000 --> 00:15:02,880 Speaker 1: frankly the strength of the alliance between say, China and 281 00:15:02,960 --> 00:15:06,320 Speaker 1: Russia and even Saudi Arabia. No, you don't think so, No, 282 00:15:06,400 --> 00:15:08,520 Speaker 1: I don't. I think that the Chinese are angry, and 283 00:15:08,520 --> 00:15:11,400 Speaker 1: I understand why they're angry because they have a similar 284 00:15:11,440 --> 00:15:14,600 Speaker 1: worldview with Putin that's very aligned. But the Chinese economy 285 00:15:14,680 --> 00:15:17,480 Speaker 1: is ten x the Russian economy. So are we seeing 286 00:15:17,480 --> 00:15:20,080 Speaker 1: them break American sanctions? No? Why because they don't want 287 00:15:20,080 --> 00:15:22,360 Speaker 1: to lose their business with the Americans, the Europeans, the Japanese, 288 00:15:22,360 --> 00:15:24,440 Speaker 1: and we seen them provide military support to the Russians. 289 00:15:24,480 --> 00:15:27,520 Speaker 1: Know what we saw is that a China that feels 290 00:15:27,520 --> 00:15:32,120 Speaker 1: antagonized and annoyed did some military exercises with the Chinese. 291 00:15:32,160 --> 00:15:36,640 Speaker 1: Wild Biden was in Asia symbolically important, economically useless. The 292 00:15:36,760 --> 00:15:39,880 Speaker 1: single biggest thing I've gotten wrong in international relations was 293 00:15:39,880 --> 00:15:42,200 Speaker 1: the end of yelts. What does the end of Putin 294 00:15:42,280 --> 00:15:45,880 Speaker 1: look like no time soon? I mean, the likelihood that 295 00:15:45,880 --> 00:15:50,880 Speaker 1: Putin is gonna removed is extremely low until after it happens, right, 296 00:15:51,000 --> 00:15:53,760 Speaker 1: I mean, clearly, if you're thinking about trying it, you're 297 00:15:53,800 --> 00:15:55,840 Speaker 1: not letting anybody know, or it's it for you and 298 00:15:55,840 --> 00:15:57,880 Speaker 1: your friends and your family. Um. But the fact is 299 00:15:57,920 --> 00:16:01,000 Speaker 1: the Putin is quite popular in Russia right now, and 300 00:16:01,040 --> 00:16:03,440 Speaker 1: it's not just because they control information. It's also because 301 00:16:03,640 --> 00:16:06,200 Speaker 1: they believe that they've been humiliated by the West four 302 00:16:06,280 --> 00:16:08,040 Speaker 1: decades and Putin is the guy that is saying I 303 00:16:08,080 --> 00:16:11,360 Speaker 1: won't have it. Um, that's populism. You've seen in the 304 00:16:11,440 --> 00:16:13,400 Speaker 1: United States, you seen Brazilians in a lot of countries. 305 00:16:13,920 --> 00:16:19,240 Speaker 1: If Putin leaves that feeling of resentment and antagonism towards 306 00:16:19,240 --> 00:16:21,040 Speaker 1: the West West kind of well, no, it'll be someone 307 00:16:21,120 --> 00:16:23,880 Speaker 1: else from the National Security Council. I got ten seconds. 308 00:16:23,920 --> 00:16:26,200 Speaker 1: How many times did you rewrite the power of crisis 309 00:16:27,160 --> 00:16:29,560 Speaker 1: since it had to go to press on the six 310 00:16:29,800 --> 00:16:33,040 Speaker 1: of May. Uh those last two days were very significant, 311 00:16:33,480 --> 00:16:41,360 Speaker 1: Dr brother, thank you. So is with Eurasia Grove, we 312 00:16:41,400 --> 00:16:44,640 Speaker 1: will attempt to migrate to what matters. And with Scott Miner, 313 00:16:44,760 --> 00:16:47,240 Speaker 1: who has been of such support to us in our 314 00:16:47,240 --> 00:16:51,320 Speaker 1: coverage of the Federal Reserve. As Chief Investment Officer of Guggenheim, 315 00:16:51,360 --> 00:16:53,640 Speaker 1: we are going to digress because we are three days 316 00:16:53,680 --> 00:16:57,640 Speaker 1: in here and we have yet to mention the collapse 317 00:16:57,840 --> 00:17:00,640 Speaker 1: of bitcoin and the rest of critical it. So this 318 00:17:00,760 --> 00:17:04,040 Speaker 1: is a side topic for Mr Minor is certainly not 319 00:17:04,119 --> 00:17:07,639 Speaker 1: his wheelhouse. But you've been focused on it. When you 320 00:17:07,720 --> 00:17:11,640 Speaker 1: talk about crypto, what does everyone else at Guggenheim think? 321 00:17:11,760 --> 00:17:16,280 Speaker 1: Are they? Do they leave forward and hang on every word? Uh? Well, yes, 322 00:17:16,320 --> 00:17:19,040 Speaker 1: because I'm probably the only person who spends enough time 323 00:17:19,119 --> 00:17:22,520 Speaker 1: looking at it. Um, I mean it's it's uh, you know, Tom, 324 00:17:22,560 --> 00:17:26,320 Speaker 1: I was an early believer in crypto. I remember getting 325 00:17:26,600 --> 00:17:30,240 Speaker 1: looking into bitcoin first when it was at a hundred dollars. Uh. 326 00:17:30,400 --> 00:17:35,320 Speaker 1: I did a presentation up at the Nantucket Project on crypto, Uh, 327 00:17:35,400 --> 00:17:37,320 Speaker 1: you know, how to deal with it, how to invest 328 00:17:37,359 --> 00:17:40,080 Speaker 1: in it? And I really thought that, um, you know, 329 00:17:40,200 --> 00:17:44,119 Speaker 1: this is a viable investment vehicle. But one of my 330 00:17:44,160 --> 00:17:48,879 Speaker 1: big concerns is that no one has cracked the paradigm 331 00:17:48,920 --> 00:17:52,480 Speaker 1: in crypto. And when I say they cracked the paradigm, uh, 332 00:17:52,520 --> 00:17:56,119 Speaker 1: it's use as a currency, right, as you know, the 333 00:17:56,200 --> 00:17:58,879 Speaker 1: definition of a currency is that it's a medium of exchange, 334 00:17:58,880 --> 00:18:01,280 Speaker 1: it's a store of value, it's a unit of account 335 00:18:01,280 --> 00:18:03,959 Speaker 1: that the last ninety days not at all. And so 336 00:18:04,160 --> 00:18:07,280 Speaker 1: we we've learned that none of this stuff stable coins, 337 00:18:07,720 --> 00:18:10,720 Speaker 1: the whole bit everything is suspect. You're a really, really 338 00:18:10,760 --> 00:18:14,280 Speaker 1: bright guy. I want you to explain the divide between 339 00:18:14,359 --> 00:18:18,080 Speaker 1: Alan Hour at the Bank of International Settlements, who owns 340 00:18:18,080 --> 00:18:20,879 Speaker 1: a high ground, with Ken Rogoff at Harvard on the 341 00:18:21,080 --> 00:18:27,880 Speaker 1: study of bitcoin and in the entire scarcity that derives 342 00:18:27,880 --> 00:18:31,720 Speaker 1: scarcity of it, with the community of bitcoin that just 343 00:18:31,760 --> 00:18:36,320 Speaker 1: seems miles apart, and they won't read Alan Hour right now. Well, 344 00:18:36,359 --> 00:18:42,440 Speaker 1: I think, look, because bitcoin and any any cryptocurrency at 345 00:18:42,440 --> 00:18:46,680 Speaker 1: this point has not really established itself as a credible 346 00:18:47,160 --> 00:18:53,040 Speaker 1: institutional investment, right Uh, It's really become the market of 347 00:18:53,080 --> 00:18:56,600 Speaker 1: a bunch of Yahoo's and backwaters. And I know I'm 348 00:18:56,600 --> 00:18:59,199 Speaker 1: already going to be plastered on Twitter now for what 349 00:18:59,280 --> 00:19:01,800 Speaker 1: I just said. You get back to your desk exactly. 350 00:19:02,040 --> 00:19:05,760 Speaker 1: Use the cell phone just melted down over there. But 351 00:19:05,800 --> 00:19:09,080 Speaker 1: you know, when you consider we have nineteen thousand digital 352 00:19:09,160 --> 00:19:12,240 Speaker 1: currencies or cryptos or whatever we want to call them today, 353 00:19:12,720 --> 00:19:15,360 Speaker 1: most of them are junk. They don't make any sense whatsoever. 354 00:19:15,520 --> 00:19:18,359 Speaker 1: Do you have any crypto asset investments? We did. We 355 00:19:18,440 --> 00:19:21,800 Speaker 1: had bitcoin. We bought it around twenty thousand. We soldered 356 00:19:21,800 --> 00:19:25,199 Speaker 1: at forty thousand UM, and I really thought we were 357 00:19:25,240 --> 00:19:28,280 Speaker 1: going to correct, you know, after we got to sixty, 358 00:19:28,359 --> 00:19:31,360 Speaker 1: I thought we would correct to thirty. We got there. Uh, 359 00:19:31,400 --> 00:19:33,880 Speaker 1: and then I began to look at it and say, 360 00:19:34,280 --> 00:19:37,160 Speaker 1: why are we stopping here? And so my latest work, 361 00:19:37,680 --> 00:19:40,280 Speaker 1: which is entirely technical because there's nothing else to look 362 00:19:40,320 --> 00:19:42,960 Speaker 1: at here, is that we were probably going to hit 363 00:19:43,000 --> 00:19:46,080 Speaker 1: eight thousand dollars before what was the number eight thousand 364 00:19:46,160 --> 00:19:50,880 Speaker 1: until we totally flush. I mean, if I were, i'd 365 00:19:50,880 --> 00:19:55,119 Speaker 1: be short. That'll get me shot to You've been predictably 366 00:19:55,200 --> 00:19:57,960 Speaker 1: barished for a while talking about how you do think 367 00:19:58,000 --> 00:20:00,720 Speaker 1: that the US is heading towards recession, but you've remained 368 00:20:00,720 --> 00:20:03,560 Speaker 1: a sanguine on certain risk assets amid this because of 369 00:20:03,640 --> 00:20:06,800 Speaker 1: the short term. Has that changed as people bring forward 370 00:20:07,080 --> 00:20:10,399 Speaker 1: the slow slowing growth narrative, It definitely. It isn't the 371 00:20:10,440 --> 00:20:15,040 Speaker 1: slowing growth narrative that caused me to change. It was 372 00:20:15,240 --> 00:20:17,919 Speaker 1: my time at Stanford a few weeks ago at the 373 00:20:17,920 --> 00:20:23,360 Speaker 1: Hoover Central Bank Conference, and I saw current FED officials, 374 00:20:24,000 --> 00:20:29,840 Speaker 1: ex Fed officials and the uniformly were extremely hawkish. Um 375 00:20:29,880 --> 00:20:33,000 Speaker 1: I engaged in opportunities to talk about the market and 376 00:20:33,160 --> 00:20:35,240 Speaker 1: the functioning of the market, and so on and so forth. 377 00:20:35,600 --> 00:20:41,199 Speaker 1: The bottom line is is that short of uh a 378 00:20:41,320 --> 00:20:44,919 Speaker 1: sudden collapse in in equity prices, I don't believe the 379 00:20:44,920 --> 00:20:48,359 Speaker 1: Federal Reserve is going to respond. The words I kept 380 00:20:48,400 --> 00:20:52,520 Speaker 1: saying is as long as the decline remains orderly, we 381 00:20:52,560 --> 00:20:56,880 Speaker 1: would like to see financial conditions tighten. And that that 382 00:20:57,160 --> 00:20:59,399 Speaker 1: I think is the game plan in the land of 383 00:20:59,480 --> 00:21:02,800 Speaker 1: Michael us In, particularly in the land of John Taylor, 384 00:21:02,920 --> 00:21:06,400 Speaker 1: in the Taylor rule. Obviously this is a whole original 385 00:21:06,480 --> 00:21:10,640 Speaker 1: architecture for everybody involved in economics. But if a central 386 00:21:10,640 --> 00:21:14,080 Speaker 1: bank blinks, how is that expressed? Is it going to 387 00:21:14,119 --> 00:21:18,520 Speaker 1: be expressed through dollar dynamics? Absolutely? I think give the 388 00:21:18,520 --> 00:21:20,560 Speaker 1: Fed blinks, we're gonna make some news here, give me 389 00:21:20,600 --> 00:21:23,359 Speaker 1: a dollar call. Well, I think as long as we 390 00:21:23,440 --> 00:21:25,520 Speaker 1: stay the course on tightening, which I think we will 391 00:21:25,560 --> 00:21:27,920 Speaker 1: through the summer, the dollar is going to do fun. 392 00:21:28,480 --> 00:21:32,359 Speaker 1: But if the Fed blinks because of of financial panic, 393 00:21:32,440 --> 00:21:35,040 Speaker 1: which I think there's a high probability of towards the 394 00:21:35,080 --> 00:21:37,040 Speaker 1: second half of the year, and then I think that 395 00:21:37,320 --> 00:21:39,840 Speaker 1: the dollar will come under pressure. What happens though, if 396 00:21:39,880 --> 00:21:41,639 Speaker 1: it doesn't, if the FED doesn't blink because of that, 397 00:21:41,720 --> 00:21:44,040 Speaker 1: but because growth is actually slowing, which is basically what 398 00:21:44,080 --> 00:21:46,440 Speaker 1: people are pricing in right now, right. But I think 399 00:21:46,480 --> 00:21:50,040 Speaker 1: that for the FED, the dynamic is not the slowing growth, 400 00:21:50,600 --> 00:21:54,880 Speaker 1: it's the inflation number, right, and the the growth can 401 00:21:54,920 --> 00:21:58,199 Speaker 1: slow and we can still have high inflation, which you 402 00:21:58,200 --> 00:22:02,720 Speaker 1: know Tom is very familiar with. We called it stag inflation. Um, 403 00:22:02,760 --> 00:22:05,879 Speaker 1: and uh, I don't buy into that whole dynamic, but 404 00:22:05,960 --> 00:22:08,720 Speaker 1: I'm just saying that that they're they're tightening. I think 405 00:22:08,760 --> 00:22:12,480 Speaker 1: financial conditions faster than they can you use a tailor rule. 406 00:22:13,320 --> 00:22:19,160 Speaker 1: Given the fiscal impulse we had off a natural medical disaster. Well, 407 00:22:19,240 --> 00:22:23,199 Speaker 1: I don't think so. And I think, um, Tom, what 408 00:22:23,320 --> 00:22:25,879 Speaker 1: we're looking at here is more akin to the post 409 00:22:26,359 --> 00:22:28,679 Speaker 1: Second World War period. So you're gonna give me a 410 00:22:28,680 --> 00:22:32,359 Speaker 1: forty seven analogy here exactly. And the the analogy is 411 00:22:32,400 --> 00:22:37,720 Speaker 1: that we had inflation in the FED stopped expanding, the 412 00:22:37,720 --> 00:22:42,879 Speaker 1: balance sheet, stopped monetizing debt, phisical spending was reduced. At 413 00:22:42,880 --> 00:22:45,560 Speaker 1: the end of the war, we had supply shocks as 414 00:22:45,840 --> 00:22:49,679 Speaker 1: as consumers looked to buy consumer goods. At the end 415 00:22:49,720 --> 00:22:53,240 Speaker 1: of the war, factories were geared for wartime, and by 416 00:22:53,280 --> 00:22:56,240 Speaker 1: forty nine we had a mild recession. Stocks had pulled 417 00:22:56,240 --> 00:23:00,399 Speaker 1: back and it went fine. It's the problem I'm seeing 418 00:23:00,520 --> 00:23:03,560 Speaker 1: is that we're raising rates and we're gonna shrink the 419 00:23:03,560 --> 00:23:05,920 Speaker 1: balance sheet at the same time. And I can remember 420 00:23:05,920 --> 00:23:09,720 Speaker 1: sitting I think with you on Bloomberg back in December 421 00:23:09,760 --> 00:23:13,199 Speaker 1: of two thousand eighteen when the chair made his famous 422 00:23:13,240 --> 00:23:16,280 Speaker 1: statement that the the shrinking of the balance sheet was 423 00:23:16,280 --> 00:23:19,680 Speaker 1: on autopilot. And the next day we were mopping up 424 00:23:19,960 --> 00:23:23,119 Speaker 1: from the Fed and the stock market was down. I 425 00:23:23,160 --> 00:23:27,000 Speaker 1: can't remember what I had for dinner last night. It 426 00:23:27,119 --> 00:23:29,840 Speaker 1: Scott minored of GUK and I'm thank you so much, 427 00:23:29,880 --> 00:23:33,840 Speaker 1: and hopefully you will remember many more things from this meeting. 428 00:23:33,880 --> 00:23:35,560 Speaker 1: I know that it has been very productive for you 429 00:23:35,600 --> 00:23:45,520 Speaker 1: and for many people joining us now. Neila Richardson, chief 430 00:23:45,520 --> 00:23:49,720 Speaker 1: economist at a DP and proud mother. The trends here 431 00:23:49,800 --> 00:23:54,360 Speaker 1: are international, but there's a domestic overlay. Mr Gentalini, speaking 432 00:23:54,359 --> 00:23:57,159 Speaker 1: of recession, I'm worn out by it. Brian Moyne had 433 00:23:57,200 --> 00:24:00,919 Speaker 1: a Bank of America making clear yeah to happen, But no, 434 00:24:01,520 --> 00:24:04,320 Speaker 1: what is the call of your steam group? You know? 435 00:24:04,480 --> 00:24:07,440 Speaker 1: I think that the fundamentals in the US they're still 436 00:24:07,480 --> 00:24:11,680 Speaker 1: pretty strong. Whenever the FED starts raising interest rates, the 437 00:24:12,119 --> 00:24:15,320 Speaker 1: specter of inflation goes from the back burner to the 438 00:24:15,359 --> 00:24:17,680 Speaker 1: front burner and people are talking about it. I also 439 00:24:17,800 --> 00:24:21,560 Speaker 1: think that ten years of economic expansion has dulled our 440 00:24:21,640 --> 00:24:26,600 Speaker 1: senses that recessions are routine. They happen periodically, um, and 441 00:24:26,640 --> 00:24:29,680 Speaker 1: it doesn't imply that even a recession will be deep 442 00:24:29,840 --> 00:24:33,240 Speaker 1: or long. But that being said, I think globally there 443 00:24:33,240 --> 00:24:37,600 Speaker 1: are going to be countries that have some really serious challenges. 444 00:24:38,000 --> 00:24:41,119 Speaker 1: And the purpose of Davos is to go beyond the 445 00:24:41,200 --> 00:24:45,960 Speaker 1: domestic and recognize that what happens abroad doesn't stay abroad, 446 00:24:46,119 --> 00:24:48,280 Speaker 1: it comes back home. So what's the most notable thing 447 00:24:48,320 --> 00:24:52,080 Speaker 1: that you've discussed while at Davos about that interconnectiveness. I 448 00:24:52,119 --> 00:24:56,800 Speaker 1: think this tension around deglobalization is being dismantled. And so 449 00:24:56,920 --> 00:24:59,760 Speaker 1: this is my hope, um, with all the concerns and 450 00:25:00,040 --> 00:25:04,080 Speaker 1: crisis there are in the world when it comes to everything, 451 00:25:04,160 --> 00:25:09,359 Speaker 1: even my perspective something very domestic labor markets. You can't 452 00:25:09,560 --> 00:25:13,119 Speaker 1: stay local, not even with labor If you look at 453 00:25:13,160 --> 00:25:16,160 Speaker 1: the trends that are moving the jobs markets a real 454 00:25:16,240 --> 00:25:21,440 Speaker 1: economy over the next ten years, it's democratic, democrat, demographics 455 00:25:21,480 --> 00:25:26,040 Speaker 1: and digitization. Those are not local phenomena. So we're talking 456 00:25:26,119 --> 00:25:28,360 Speaker 1: about a lot of secular changes amid some of these 457 00:25:28,400 --> 00:25:31,320 Speaker 1: crises that we're talking about. Whether it's the Ukrainian War 458 00:25:31,480 --> 00:25:34,760 Speaker 1: that's very much focusing the conversation, or the shutdowns over 459 00:25:34,920 --> 00:25:38,399 Speaker 1: in China. People are honing in on data that is 460 00:25:38,400 --> 00:25:41,440 Speaker 1: starting to slow soft data. Do you think that will 461 00:25:41,440 --> 00:25:44,320 Speaker 1: be reflected in the hard data enough to really move 462 00:25:44,320 --> 00:25:48,679 Speaker 1: away from some of the hard landing scenarios? You know, 463 00:25:49,480 --> 00:25:53,680 Speaker 1: the risks are accelerating, and I think every country has 464 00:25:53,760 --> 00:25:59,200 Speaker 1: experienced the pandemic slightly differently, and so there is uh 465 00:25:59,440 --> 00:26:03,720 Speaker 1: no gear and tee that there won't be turbulence for everybody. Um, 466 00:26:03,800 --> 00:26:08,600 Speaker 1: we're hoping that there won't be crashes, but hard landings 467 00:26:08,640 --> 00:26:11,720 Speaker 1: I think are inevitable. Excuse me, sorry, no, I know 468 00:26:11,760 --> 00:26:16,520 Speaker 1: it's my bad. But as a group, bad folks group bad. 469 00:26:17,560 --> 00:26:19,640 Speaker 1: But where do you expect the hard landings to come? 470 00:26:19,960 --> 00:26:24,040 Speaker 1: The places where the food crisis is most acute? So, um, 471 00:26:24,080 --> 00:26:25,960 Speaker 1: I know that we spend a lot of time talking 472 00:26:26,000 --> 00:26:29,760 Speaker 1: about monetary policy. I'm coming from the really economy, and 473 00:26:29,880 --> 00:26:31,960 Speaker 1: nothing's more real than what you play. Let's get on 474 00:26:32,000 --> 00:26:33,639 Speaker 1: the curve. This is aport. I had a panel of 475 00:26:33,680 --> 00:26:36,400 Speaker 1: this morning with get to Go Open f Masicado Uh 476 00:26:36,480 --> 00:26:42,000 Speaker 1: and Uh Jim Jim Uh shadow of marisk and of 477 00:26:42,240 --> 00:26:45,320 Speaker 1: Semens and I quoted from the New York Times in 478 00:26:45,359 --> 00:26:50,160 Speaker 1: the paper this morning of renters in New York now 479 00:26:50,240 --> 00:26:54,480 Speaker 1: pay over fifty of their income for their monthly rent. 480 00:26:54,760 --> 00:26:57,760 Speaker 1: The middle class and you any peep guy, they know 481 00:26:57,800 --> 00:27:01,359 Speaker 1: this better than anybody. The middle class is flat on 482 00:27:01,560 --> 00:27:05,399 Speaker 1: their back. Is there a policy prescription you see in 483 00:27:05,520 --> 00:27:09,560 Speaker 1: Washington to not protect them but assist them as we 484 00:27:09,640 --> 00:27:13,119 Speaker 1: come off this high nominal GDP? The operative word in 485 00:27:13,200 --> 00:27:16,240 Speaker 1: that question is now. I would argue that that's been 486 00:27:16,280 --> 00:27:19,560 Speaker 1: a decade long or more challenged, that the housing market 487 00:27:19,600 --> 00:27:22,919 Speaker 1: has been chronically undersupplied, and in fact, at least New 488 00:27:23,000 --> 00:27:25,600 Speaker 1: York City has, you know, subsidized rents in a way 489 00:27:25,640 --> 00:27:29,240 Speaker 1: that most of America doesn't have. But it is a 490 00:27:29,320 --> 00:27:31,800 Speaker 1: key challenge. Is a challenge that there used to be 491 00:27:31,840 --> 00:27:36,800 Speaker 1: a housing platform around um but that platform was dismantled 492 00:27:36,880 --> 00:27:40,520 Speaker 1: during the Great Recession, and it hasn't been completely restored, 493 00:27:40,800 --> 00:27:43,159 Speaker 1: and so we do have a policy challenge when it 494 00:27:43,160 --> 00:27:47,000 Speaker 1: comes to affordable housing, and it's everywhere. How lone is 495 00:27:47,000 --> 00:27:50,159 Speaker 1: Brian moyneheady pops to twenty two dollars per hour with 496 00:27:50,280 --> 00:27:53,800 Speaker 1: a set of other initiatives for people under a hundred thousand? 497 00:27:54,280 --> 00:27:57,520 Speaker 1: Is he alone or is that a new trend for rich, 498 00:27:57,560 --> 00:28:02,920 Speaker 1: fancy America. I would argue, yes, he's not alone. There 499 00:28:02,960 --> 00:28:05,760 Speaker 1: are There is a trend, and I think we'll see 500 00:28:05,800 --> 00:28:10,080 Speaker 1: that contenue. But there's only so much raising wages will 501 00:28:10,160 --> 00:28:15,639 Speaker 1: do to address the chronically low housing supply. It just 502 00:28:15,800 --> 00:28:19,320 Speaker 1: makes the rent absolutely and in the short term that's 503 00:28:19,359 --> 00:28:22,280 Speaker 1: that's really really valuable. In the longer term, you have 504 00:28:22,359 --> 00:28:26,000 Speaker 1: to build and that requires investments at a local level, 505 00:28:26,040 --> 00:28:28,320 Speaker 1: which is a challenge in this country. When do you 506 00:28:28,359 --> 00:28:31,000 Speaker 1: think that we're going to see an appropriate level of 507 00:28:31,080 --> 00:28:34,480 Speaker 1: wage gains? And I say this because talking to Tom's point, 508 00:28:34,880 --> 00:28:37,600 Speaker 1: people are now saying the wage gains are too problematic 509 00:28:37,680 --> 00:28:40,680 Speaker 1: because they're going to just fuel inflation. What's the appropriate 510 00:28:40,760 --> 00:28:44,320 Speaker 1: rate that we should be looking for? It depends on 511 00:28:44,360 --> 00:28:46,440 Speaker 1: who you ask, because if you look at the people 512 00:28:46,440 --> 00:28:49,840 Speaker 1: who have experienced the greatest wage gains. That's the lowest 513 00:28:49,920 --> 00:28:53,400 Speaker 1: quartile of people who are getting paid right now in 514 00:28:53,520 --> 00:28:57,640 Speaker 1: terms of the hourly wages. They are actually making your 515 00:28:57,720 --> 00:29:01,520 Speaker 1: over your wages according to ADP data, UH of eight 516 00:29:01,560 --> 00:29:03,840 Speaker 1: point three percent. You're on ye. What's the middle doing? 517 00:29:03,880 --> 00:29:07,160 Speaker 1: They're keeping up with the inflation. It's closer to three percent. 518 00:29:07,320 --> 00:29:11,120 Speaker 1: Tom on the middle, so the lower But you have 519 00:29:11,200 --> 00:29:13,160 Speaker 1: to look at not just the rate of change, but 520 00:29:13,280 --> 00:29:17,880 Speaker 1: the levels. What's that eight percent represents. It's basically less 521 00:29:17,880 --> 00:29:20,480 Speaker 1: than two dollars an hour. It doesn't even fill your 522 00:29:20,560 --> 00:29:24,480 Speaker 1: gas tank. That's that's really important in terms of the 523 00:29:24,520 --> 00:29:27,320 Speaker 1: most important domestic comment we've heard since we've been here. 524 00:29:27,360 --> 00:29:30,000 Speaker 1: What's the instagram the length on the X axis of 525 00:29:30,040 --> 00:29:33,480 Speaker 1: this negative wage growth? Are you looking at three quarters? 526 00:29:33,680 --> 00:29:38,040 Speaker 1: Are you looking at three years? I think three years? 527 00:29:39,120 --> 00:29:44,280 Speaker 1: Remember that even with even with called years of expansion, 528 00:29:44,680 --> 00:29:47,960 Speaker 1: it took a very long time to see any thing 529 00:29:48,000 --> 00:29:50,880 Speaker 1: other than wage sag nation. It took a long time 530 00:29:50,920 --> 00:29:53,680 Speaker 1: to see an acceleration of wages at the low end 531 00:29:54,040 --> 00:29:57,880 Speaker 1: ten years. UM. If you fast forward that the three years, 532 00:29:57,920 --> 00:30:00,880 Speaker 1: I hope you see stronger wage gains than inflation, but 533 00:30:01,000 --> 00:30:04,280 Speaker 1: it's not guaranteed. UM and it's not happening now. That's 534 00:30:04,480 --> 00:30:06,800 Speaker 1: we will continue with Neilor Richardson on our job. Say 535 00:30:06,800 --> 00:30:09,840 Speaker 1: when's the neck? Were like, I've lost the calendar early June. 536 00:30:09,840 --> 00:30:11,440 Speaker 1: We have a job to day right, yeah, what month? 537 00:30:11,520 --> 00:30:13,880 Speaker 1: We had a couple of weeks Tailor Richardson there with 538 00:30:13,920 --> 00:30:20,600 Speaker 1: a DP. This is a joy right now. And there's 539 00:30:20,640 --> 00:30:23,320 Speaker 1: a joy because you know the visibility of someone like 540 00:30:23,400 --> 00:30:26,120 Speaker 1: Ray Dalio and of course we gazed yesterday on the 541 00:30:26,200 --> 00:30:29,600 Speaker 1: dal Yo goat farm with Bob Prince. There's Rebecca Patterson. 542 00:30:29,640 --> 00:30:32,160 Speaker 1: Now there's a Bridgewater. They've got a full force compliment 543 00:30:32,240 --> 00:30:36,120 Speaker 1: this year. But beneath the names, you know, are really 544 00:30:36,240 --> 00:30:39,920 Speaker 1: first order people. One is Richard Falkrath, who was with 545 00:30:40,080 --> 00:30:44,360 Speaker 1: us years ago expert on Russia and security and folded 546 00:30:44,360 --> 00:30:48,880 Speaker 1: into that is sustainable Investing. Karen Karney Oak Timber is 547 00:30:48,960 --> 00:30:51,240 Speaker 1: Chief Investment Officer, I should say co c i O 548 00:30:51,720 --> 00:30:55,360 Speaker 1: of Sustainable Investing at Bridgewater Associate. So you and Falcon 549 00:30:55,440 --> 00:30:58,720 Speaker 1: Roth on speaking terms, love Richard, who's such a great guy. 550 00:30:58,760 --> 00:31:03,400 Speaker 1: How do you fold in your analysis the geopolitics of 551 00:31:03,520 --> 00:31:07,680 Speaker 1: what everyone wants is some better outcome in climate? With 552 00:31:07,840 --> 00:31:12,800 Speaker 1: his dead serious analysis of geo security, I think that 553 00:31:12,920 --> 00:31:15,800 Speaker 1: what is happening now is that there's sort of a 554 00:31:15,800 --> 00:31:19,840 Speaker 1: tough realization that to make progress on climate, a lot 555 00:31:19,840 --> 00:31:21,960 Speaker 1: of the levers that we've put out there, for the 556 00:31:21,960 --> 00:31:25,800 Speaker 1: most effective levers are actually pretty inflationary, and that's more 557 00:31:25,840 --> 00:31:28,880 Speaker 1: difficult to do at a time when inflation is already rising. 558 00:31:29,280 --> 00:31:31,760 Speaker 1: And at the same time, we can't really think about 559 00:31:31,880 --> 00:31:34,760 Speaker 1: energy without also thinking about energy security. So now we've 560 00:31:34,800 --> 00:31:37,360 Speaker 1: gone from sort of a one dimensional equation bring carbon 561 00:31:37,400 --> 00:31:40,400 Speaker 1: down to a three dimensional equation to it acceptably given 562 00:31:40,440 --> 00:31:43,440 Speaker 1: inflation and handle energy security at the same time. This 563 00:31:43,520 --> 00:31:46,640 Speaker 1: is a critical question, and particularly I mentioned Newcastle Cole 564 00:31:46,720 --> 00:31:49,240 Speaker 1: only because if I don't mention Australia every fifteen minutes, 565 00:31:49,440 --> 00:31:52,280 Speaker 1: I can't be on air. But Cole is you can't 566 00:31:52,280 --> 00:31:56,000 Speaker 1: even do a standard deviation analysis on Australian call. It's 567 00:31:56,000 --> 00:31:58,959 Speaker 1: such a it's such a moonshot. Right now, are you 568 00:31:59,120 --> 00:32:02,840 Speaker 1: amending the Bridgewater E s G view or are you 569 00:32:03,080 --> 00:32:07,000 Speaker 1: pausing it waiting for a place to restart the present 570 00:32:07,280 --> 00:32:10,440 Speaker 1: E s G view? You know, for us there's two 571 00:32:10,480 --> 00:32:13,400 Speaker 1: types of quote s G views. One is just you 572 00:32:13,480 --> 00:32:17,000 Speaker 1: can't really analyze any markets anymore without thinking about environmental 573 00:32:17,080 --> 00:32:19,880 Speaker 1: social and governance issues. It's almost silly and outdated to 574 00:32:19,960 --> 00:32:21,760 Speaker 1: think that you could really imagine what's going on in in 575 00:32:21,800 --> 00:32:24,160 Speaker 1: the world without talking about what are people gonna do 576 00:32:24,160 --> 00:32:27,400 Speaker 1: about climate change? Is governance gonna work for us, what's 577 00:32:27,440 --> 00:32:30,760 Speaker 1: gonna happen within equality? To just critical issues. And then 578 00:32:30,800 --> 00:32:33,240 Speaker 1: there's a different call, which is people increasingly coming to 579 00:32:33,320 --> 00:32:35,560 Speaker 1: us and saying, you know, I don't just care about 580 00:32:35,640 --> 00:32:37,600 Speaker 1: risk and return, I do want to think about the 581 00:32:37,600 --> 00:32:39,200 Speaker 1: impact of my money is having. And coal is a 582 00:32:39,200 --> 00:32:41,960 Speaker 1: great example because you might do great financial analysis and 583 00:32:42,000 --> 00:32:43,680 Speaker 1: say maybe I can make a lot of money actually 584 00:32:43,720 --> 00:32:46,280 Speaker 1: investing in coal and get the answer back of actually, 585 00:32:46,400 --> 00:32:49,120 Speaker 1: I want my money to be supporting the transition. I 586 00:32:49,120 --> 00:32:51,680 Speaker 1: don't want my money benefiting off of that. So that's 587 00:32:51,680 --> 00:32:53,720 Speaker 1: really a paradigm shift in our view we're seeing in 588 00:32:53,760 --> 00:32:56,120 Speaker 1: global investors. There's also been a lot of discussion about 589 00:32:56,120 --> 00:32:59,880 Speaker 1: greenwashing this year, and Elon Musk's comments for very much 590 00:32:59,880 --> 00:33:02,800 Speaker 1: of the Forefront where he basically really challenged some of 591 00:33:02,840 --> 00:33:05,680 Speaker 1: the legitimacy of the E s G criteria. What's your 592 00:33:05,680 --> 00:33:08,200 Speaker 1: response to that, especially given the fact that Brian Moynehannet 593 00:33:08,240 --> 00:33:10,960 Speaker 1: Bank of America seemed to support what Elon Musk was saying. 594 00:33:11,680 --> 00:33:14,320 Speaker 1: I think that you need to think about splitting what's 595 00:33:14,360 --> 00:33:16,800 Speaker 1: the point in time picture and what's the forward looking picture. 596 00:33:17,160 --> 00:33:19,400 Speaker 1: For point time, we should just have good answers right 597 00:33:19,440 --> 00:33:21,080 Speaker 1: the same way that we know if a company today 598 00:33:21,280 --> 00:33:23,840 Speaker 1: is profitable, we should have good answers about whether or 599 00:33:23,840 --> 00:33:26,000 Speaker 1: not companies are emitting and what they're doing today and 600 00:33:26,080 --> 00:33:28,160 Speaker 1: all these standards and sec and everything. It's gonna move 601 00:33:28,240 --> 00:33:29,560 Speaker 1: us there. We're gonna get to the point where we 602 00:33:29,600 --> 00:33:31,880 Speaker 1: know the answer. But then forward looking, you know, there's 603 00:33:31,880 --> 00:33:34,280 Speaker 1: always been disagreement. Why do we have equity analysts. One 604 00:33:34,280 --> 00:33:35,960 Speaker 1: analyst is gonna tell you this product is gonna work. 605 00:33:35,960 --> 00:33:37,680 Speaker 1: One equity analyst can tell it's probably going to fail. 606 00:33:37,720 --> 00:33:39,840 Speaker 1: That's how it should be. They should be analyzing what's 607 00:33:39,840 --> 00:33:42,400 Speaker 1: happening in the future. This is no different. Investors are 608 00:33:42,440 --> 00:33:44,640 Speaker 1: paid to predict the future. And if you're looking at 609 00:33:44,640 --> 00:33:46,480 Speaker 1: a company and saying, how are they going to do 610 00:33:46,520 --> 00:33:48,720 Speaker 1: over the next ten years? Are they going to succeed 611 00:33:48,920 --> 00:33:51,480 Speaker 1: in transitioning what they're doing. If a company is promising 612 00:33:51,480 --> 00:33:53,600 Speaker 1: you I'm gonna get out of the you know, regular 613 00:33:53,680 --> 00:33:55,560 Speaker 1: vehicle business, I'm not. I'm gonna make all e v s. 614 00:33:55,880 --> 00:33:57,600 Speaker 1: You gotta decide if you trust that, and that's no 615 00:33:57,680 --> 00:33:59,800 Speaker 1: different than assessing other things about the future. They are 616 00:33:59,840 --> 00:34:02,320 Speaker 1: on certain times. So you were talking about the inflationary 617 00:34:02,360 --> 00:34:06,520 Speaker 1: aspect of having a secure and frankly a greener energy system. 618 00:34:06,800 --> 00:34:09,680 Speaker 1: It's not just energy, right, it's broadly across the entire 619 00:34:09,920 --> 00:34:13,120 Speaker 1: ecosystem that supply chain, and people are talking about how 620 00:34:13,160 --> 00:34:15,440 Speaker 1: do you make things more sustainable If you have to 621 00:34:15,719 --> 00:34:18,040 Speaker 1: look and see if it's sustainable in China, all of 622 00:34:18,080 --> 00:34:20,319 Speaker 1: a sudden, you might have to pay people a lot 623 00:34:20,360 --> 00:34:22,080 Speaker 1: more and do it somewhere else to do it. How 624 00:34:22,160 --> 00:34:26,040 Speaker 1: much have we actually factored in the inflationary aspects of 625 00:34:26,120 --> 00:34:28,839 Speaker 1: some of this shift in E s G types of investing. Well, 626 00:34:28,880 --> 00:34:31,160 Speaker 1: I think these are some of the forces, the secular 627 00:34:31,200 --> 00:34:35,040 Speaker 1: forces underpinning the shift from deflation to inflation. Every investment 628 00:34:35,040 --> 00:34:37,520 Speaker 1: we made abroad for forty years was extremely you know, 629 00:34:37,560 --> 00:34:40,200 Speaker 1: efficiency producing, You've got cheaper things out of it. And 630 00:34:40,239 --> 00:34:42,319 Speaker 1: now if we want to invest because we need to 631 00:34:42,360 --> 00:34:45,960 Speaker 1: turn over our energy system, by definition, we're rebuilding what 632 00:34:46,000 --> 00:34:47,560 Speaker 1: we have and we need to do that in order 633 00:34:47,600 --> 00:34:49,760 Speaker 1: to get have client change. If we want to rebuild 634 00:34:49,760 --> 00:34:52,240 Speaker 1: because we want security, So we don't want certain providers, 635 00:34:52,239 --> 00:34:54,080 Speaker 1: we want others, or we just want to have resilience 636 00:34:54,080 --> 00:34:55,640 Speaker 1: in the supply chain. If this one goes down, I 637 00:34:55,640 --> 00:34:58,560 Speaker 1: can have these three others. That's proactive new spending that 638 00:34:58,600 --> 00:35:01,040 Speaker 1: doesn't create savings the way that old ones did. So 639 00:35:01,120 --> 00:35:04,680 Speaker 1: these are secular reasons why you're going to get inflationary spending. Karen, 640 00:35:05,040 --> 00:35:08,480 Speaker 1: we have a Bloomberg hut Rathi. It was leading our 641 00:35:08,520 --> 00:35:11,000 Speaker 1: coverage on green. He write some newsletter called net zero 642 00:35:11,080 --> 00:35:14,560 Speaker 1: which is read worldwide. And his religion off of his 643 00:35:14,640 --> 00:35:18,960 Speaker 1: chemistry work, is it's science based. Are the corporations that 644 00:35:19,080 --> 00:35:23,040 Speaker 1: Bridgewaters talking to are they science based or are they 645 00:35:23,080 --> 00:35:27,319 Speaker 1: almost pr and policy based? Is there science underneath the 646 00:35:27,320 --> 00:35:30,800 Speaker 1: E S G of business? Mean, Look, there's a wide 647 00:35:30,880 --> 00:35:33,279 Speaker 1: range because this is all changing so fast. So I'd 648 00:35:33,280 --> 00:35:35,560 Speaker 1: say two years ago, the average investor we talked to 649 00:35:35,600 --> 00:35:37,919 Speaker 1: it sort of say it's great you guys doing sustainability, 650 00:35:37,960 --> 00:35:40,040 Speaker 1: but that's not part of what I do. That's totally 651 00:35:40,080 --> 00:35:43,960 Speaker 1: different today, and so companies are getting really increasing pressures 652 00:35:44,000 --> 00:35:46,680 Speaker 1: from their investors. They're asking tougher questions, they have better data, 653 00:35:46,920 --> 00:35:49,239 Speaker 1: So what was sufficient you know, even six months or 654 00:35:49,239 --> 00:35:52,160 Speaker 1: a year ago might be something glossy that doesn't mean much. 655 00:35:52,719 --> 00:35:56,000 Speaker 1: It's increasingly being consed big oil right now. Is Delio 656 00:35:56,160 --> 00:35:58,839 Speaker 1: up to his eyeballs in big oil? I would say 657 00:35:58,920 --> 00:36:01,920 Speaker 1: that in a strategy where you care about the impact 658 00:36:01,960 --> 00:36:04,680 Speaker 1: of your money alongside risk and return, no big oil 659 00:36:04,719 --> 00:36:07,800 Speaker 1: company as yet reached that bar, but it can because honestly, 660 00:36:07,880 --> 00:36:10,640 Speaker 1: they have a lot of expertise that could really meaningfully contribute, 661 00:36:10,880 --> 00:36:13,319 Speaker 1: and so we could easily see in the next you know, 662 00:36:13,560 --> 00:36:16,000 Speaker 1: year less an big oil company saying this is how 663 00:36:16,040 --> 00:36:18,399 Speaker 1: we're gonna use your expertise. But how much does this 664 00:36:18,440 --> 00:36:21,560 Speaker 1: moment challenge the move to green Considering the fact that 665 00:36:21,600 --> 00:36:25,680 Speaker 1: everyone's rushing head over heels into commodities to protect against inflation, 666 00:36:25,840 --> 00:36:30,640 Speaker 1: including big oil, I think that commodities are a very 667 00:36:30,719 --> 00:36:33,960 Speaker 1: important inflation hedge, and that the idea that you wouldn't 668 00:36:33,960 --> 00:36:37,400 Speaker 1: own commodities if you care about the transition is totally wrong. 669 00:36:37,520 --> 00:36:39,120 Speaker 1: Do you know how much we need to get out 670 00:36:39,120 --> 00:36:41,600 Speaker 1: of the ground of things that are not oil, whether 671 00:36:41,640 --> 00:36:44,480 Speaker 1: it's copp or lithium, iron, you name it, in order 672 00:36:44,520 --> 00:36:47,319 Speaker 1: to have a transition. There's no transition without commodities. And 673 00:36:47,360 --> 00:36:49,560 Speaker 1: so this idea that to be green. You know, they're 674 00:36:49,600 --> 00:36:53,040 Speaker 1: definitely bad practices at some of the miners, but responsible 675 00:36:53,040 --> 00:36:55,480 Speaker 1: investors should try to shift those practices because there's no 676 00:36:55,600 --> 00:36:58,040 Speaker 1: future without getting more of those things out. And the 677 00:36:58,120 --> 00:37:01,160 Speaker 1: reality is these are long supplied man dynamics. It takes 678 00:37:01,160 --> 00:37:03,360 Speaker 1: you years to get a copper mine up and running 679 00:37:03,360 --> 00:37:05,960 Speaker 1: and actually supply on. So for an investor that's seeing 680 00:37:06,080 --> 00:37:09,040 Speaker 1: supply demand pressures and saying an inflationary protection, these are 681 00:37:09,080 --> 00:37:13,560 Speaker 1: grain inflation protection assets. Karen think Karen Colonel Timber with 682 00:37:13,719 --> 00:37:21,440 Speaker 1: us with Bridgewater Associates. I got a lovely email yesterday 683 00:37:21,840 --> 00:37:25,160 Speaker 1: as with the former Prime Minister of Finland. I tried 684 00:37:25,200 --> 00:37:28,759 Speaker 1: to mention something most Americans don't know about, and that 685 00:37:28,920 --> 00:37:31,919 Speaker 1: is the Winter War. I believe it was thirty nine 686 00:37:32,000 --> 00:37:35,520 Speaker 1: were five thousand of Finland and so many others of 687 00:37:35,560 --> 00:37:39,640 Speaker 1: Scandinavia gave their lives. This is front and center for 688 00:37:39,760 --> 00:37:43,680 Speaker 1: the discussion of Finland and Sweden as they consider a 689 00:37:43,719 --> 00:37:47,520 Speaker 1: new Russia. Mcael Donberg as a Swedish finance minister and 690 00:37:47,640 --> 00:37:50,440 Speaker 1: joins us this morning. This morning at is front and 691 00:37:50,440 --> 00:37:53,640 Speaker 1: center your Prime Minister, Prime Minister Anderson, with these very 692 00:37:53,680 --> 00:37:57,640 Speaker 1: difficult decisions for a neutral suite and I believe to 693 00:37:57,800 --> 00:38:02,280 Speaker 1: fifteen twenty three. How are abrupt is this change for Sweden, 694 00:38:02,680 --> 00:38:05,439 Speaker 1: knowing the history of World War two and knowing where 695 00:38:05,480 --> 00:38:08,480 Speaker 1: we're going now with Russia. It's a huge decision for 696 00:38:08,560 --> 00:38:11,800 Speaker 1: us because we've been non aligned for two hundred years. 697 00:38:11,840 --> 00:38:14,000 Speaker 1: So actually we're one of the countries in the world 698 00:38:14,000 --> 00:38:16,920 Speaker 1: that has been in peace for the longest time. So 699 00:38:17,000 --> 00:38:20,080 Speaker 1: for us taking the decision after the Russian invasion of 700 00:38:20,160 --> 00:38:24,319 Speaker 1: Ukraine to change and to see that our security is 701 00:38:24,360 --> 00:38:28,800 Speaker 1: stronger within NATO than outside, it is a historic decision. 702 00:38:28,800 --> 00:38:34,480 Speaker 1: From am I've never understood the politics and social humor 703 00:38:34,719 --> 00:38:39,200 Speaker 1: or seriousness from the distance from Oslo to Helsinki, across 704 00:38:39,239 --> 00:38:42,400 Speaker 1: in Denmark as well across all of Scandinavia. I'm not 705 00:38:42,520 --> 00:38:49,120 Speaker 1: informed on it. How colst How united is Scandinavia, Denmark, Norway, Sweden, 706 00:38:49,360 --> 00:38:54,919 Speaker 1: Finland at this time of crisis, enormous unity because we 707 00:38:54,920 --> 00:38:58,960 Speaker 1: we we share borders, we share history. As you mentioned, Finland, 708 00:38:59,000 --> 00:39:02,840 Speaker 1: Finland and Sweden us the same country for hundreds of years. 709 00:39:03,000 --> 00:39:06,280 Speaker 1: Before Finland became their own country, they were part of Sweden, 710 00:39:06,680 --> 00:39:10,200 Speaker 1: and my grandfather actually died in in the Winter War 711 00:39:10,280 --> 00:39:13,799 Speaker 1: nineteen nine. My mother was four years old when she 712 00:39:13,880 --> 00:39:17,759 Speaker 1: was sent from Helsinki to Sweden as a ward child. 713 00:39:17,800 --> 00:39:22,480 Speaker 1: What was Mr Putin thinking knowing that history, I don't understand. 714 00:39:23,160 --> 00:39:26,680 Speaker 1: Given everything I've read about the resiliency of the Baltic 715 00:39:26,760 --> 00:39:30,760 Speaker 1: Sea and the people that surrounded frankly, including northern Germany 716 00:39:30,760 --> 00:39:34,719 Speaker 1: at the time, what did he misjudge about Sweden? I 717 00:39:34,760 --> 00:39:39,360 Speaker 1: think he misjudged the situation in Ukraine. He thought that 718 00:39:39,480 --> 00:39:42,480 Speaker 1: he could just go in take Ukraine and the brother 719 00:39:43,080 --> 00:39:46,480 Speaker 1: people of Ukraine and Russia would unite in Greater Russia. 720 00:39:46,520 --> 00:39:49,399 Speaker 1: I think that was a very mistake because now they 721 00:39:49,400 --> 00:39:53,080 Speaker 1: invaded a democratic country. They sent a signal not least 722 00:39:53,080 --> 00:40:00,239 Speaker 1: to Finland with one thirty miles mile in English. I 723 00:40:00,239 --> 00:40:04,840 Speaker 1: don't know the English world, but very very long boarder. 724 00:40:06,040 --> 00:40:10,520 Speaker 1: Extremely historic moment with your bid for NATO. It's also 725 00:40:10,680 --> 00:40:13,960 Speaker 1: historic moment with some of the economic backdrop that you're 726 00:40:14,000 --> 00:40:17,799 Speaker 1: facing as finance minister and the inflationary inputs. I know 727 00:40:17,880 --> 00:40:20,600 Speaker 1: that a lot of European countries are turning to subsidies 728 00:40:20,760 --> 00:40:23,879 Speaker 1: to offset the burden, particularly for lower income What are 729 00:40:23,960 --> 00:40:27,040 Speaker 1: you working toward? What is your next plan? First of all, 730 00:40:27,080 --> 00:40:29,440 Speaker 1: Sweden is in a different position. We don't have a 731 00:40:29,480 --> 00:40:32,480 Speaker 1: dependence on Russian oil or gas. We have a hundred 732 00:40:32,520 --> 00:40:35,799 Speaker 1: percent fossile free energy system in Sweden, but we get 733 00:40:35,800 --> 00:40:39,600 Speaker 1: affected anyway because of the joint pricing system in Europe, 734 00:40:39,640 --> 00:40:42,080 Speaker 1: so the prices are very high. So with this winter 735 00:40:42,160 --> 00:40:45,120 Speaker 1: we actually went in and gave support to household with 736 00:40:45,320 --> 00:40:48,120 Speaker 1: very high electricity bills. And now we also have a 737 00:40:48,160 --> 00:40:50,880 Speaker 1: scheme that we we lowered the kind of burden on 738 00:40:51,000 --> 00:40:53,720 Speaker 1: people that drives car. Sweden it's a very long country 739 00:40:53,719 --> 00:40:56,359 Speaker 1: that you have to have a car to actually live 740 00:40:56,400 --> 00:40:58,680 Speaker 1: your life and go to work. How is you how 741 00:40:58,680 --> 00:41:01,800 Speaker 1: do you counter the fragmentation of a system that is 742 00:41:01,920 --> 00:41:06,160 Speaker 1: unified only about how high the prices are for everyone nobody. 743 00:41:06,200 --> 00:41:09,880 Speaker 1: I think Europe has shown tremendous unity and together with 744 00:41:10,040 --> 00:41:13,560 Speaker 1: US on sanctions on Russia. So just six months or 745 00:41:13,600 --> 00:41:16,480 Speaker 1: a year ago, people are talking to Europe, can Europe unite? 746 00:41:16,600 --> 00:41:19,240 Speaker 1: Will Europe split up? Now we see a more united 747 00:41:19,280 --> 00:41:22,280 Speaker 1: Europe than ever. So I think this crisis has actually 748 00:41:22,280 --> 00:41:26,839 Speaker 1: brought Europe together in a tremendous way. Swedish economics is acclaimed. 749 00:41:27,200 --> 00:41:31,480 Speaker 1: The contribution of the central bank to monetary theory and 750 00:41:31,560 --> 00:41:35,880 Speaker 1: thinking has been there forever tell us about the Swedish 751 00:41:35,960 --> 00:41:39,520 Speaker 1: currency with Europe. I mean, we look at euro swissy, 752 00:41:39,600 --> 00:41:43,800 Speaker 1: we look at euro Hungarian foreign is a mortgage proxy 753 00:41:43,920 --> 00:41:47,720 Speaker 1: as well. Tell us how you treat the Swedish currency. 754 00:41:47,960 --> 00:41:53,640 Speaker 1: It's the central bank that handles the currency. But I 755 00:41:54,080 --> 00:41:58,560 Speaker 1: could go to the Constitutional Committee to have opinion about 756 00:41:58,600 --> 00:42:01,160 Speaker 1: the central bank in Sweden because it's under the parliament, 757 00:42:01,160 --> 00:42:03,640 Speaker 1: not under the government. But they have made decision to 758 00:42:03,719 --> 00:42:06,440 Speaker 1: hire interest rate and they have a plan for it 759 00:42:06,680 --> 00:42:10,080 Speaker 1: going a bit faster than the European Central Bank, but 760 00:42:10,360 --> 00:42:13,600 Speaker 1: a bit after the American Fed. So I think this. 761 00:42:13,840 --> 00:42:18,319 Speaker 1: We usually are in between US and Europe and don't 762 00:42:18,320 --> 00:42:20,880 Speaker 1: mean to interrupt, but this is too important. Do you 763 00:42:20,960 --> 00:42:24,920 Speaker 1: have Swedish Central Bank minutes like we do. We report 764 00:42:24,920 --> 00:42:28,120 Speaker 1: our minutes six weeks after the meeting. Yeah. Do you 765 00:42:28,160 --> 00:42:31,840 Speaker 1: read them? Yes? And and the central bank always calls 766 00:42:31,920 --> 00:42:35,320 Speaker 1: me and tells me about their decision, So I understand it. Okay, 767 00:42:35,360 --> 00:42:41,600 Speaker 1: really you're asking for justification for you but we all 768 00:42:41,600 --> 00:42:45,400 Speaker 1: know this. I know he's looking for justification from the 769 00:42:45,440 --> 00:42:49,560 Speaker 1: Finance Minister of Sweden for not reading the minutes. He didn't. 770 00:42:51,160 --> 00:42:54,960 Speaker 1: I think it's fascinating. Thank you so much. I will 771 00:42:55,000 --> 00:42:57,560 Speaker 1: read them for you. Thank you so much, Thank you 772 00:42:57,719 --> 00:43:05,360 Speaker 1: too much. Was time right now and this is an 773 00:43:05,440 --> 00:43:09,760 Speaker 1: important conversation for markets. Is something that is in Davos, 774 00:43:09,800 --> 00:43:14,160 Speaker 1: but I think in a really clumsy way. In Davos, 775 00:43:14,239 --> 00:43:18,399 Speaker 1: painted on every hotel, on every wall, on every storefront 776 00:43:19,160 --> 00:43:22,440 Speaker 1: is a nation or a company bragging about infrastructure. We're 777 00:43:22,440 --> 00:43:27,560 Speaker 1: gonna build this, We're gonna build that. Infrastructure is misunderstood. 778 00:43:28,000 --> 00:43:31,359 Speaker 1: Infrastructure is something it's easy to talk about and it's 779 00:43:31,440 --> 00:43:34,960 Speaker 1: much harder to do at Carlyle doing it as a 780 00:43:35,000 --> 00:43:38,600 Speaker 1: gentleman from Quebec Hydro of years ago in Montreal, Macital 781 00:43:38,719 --> 00:43:43,000 Speaker 1: joins US now Global Infrastructure Chairman of Carlyle. Thank you 782 00:43:43,080 --> 00:43:46,120 Speaker 1: so much for joining us UH this morning. What is 783 00:43:46,160 --> 00:43:51,080 Speaker 1: the biggest thing we get wrong about the ginormous infrastructure 784 00:43:51,120 --> 00:43:54,920 Speaker 1: projects you're looking at well, I think as as you 785 00:43:55,320 --> 00:43:58,880 Speaker 1: the reason why you see that everywhere in Davas is 786 00:43:58,920 --> 00:44:01,879 Speaker 1: for a good reason. The world is in dire need 787 00:44:01,920 --> 00:44:06,760 Speaker 1: of infrastructure. For decades, there has been under investment across 788 00:44:06,800 --> 00:44:10,880 Speaker 1: the sector and infrastructure need. If you look at civil infrastructure, 789 00:44:11,000 --> 00:44:14,279 Speaker 1: are roads or bridges or water systems. If you look 790 00:44:14,320 --> 00:44:19,719 Speaker 1: at the energy infrastructure, if you look at other sectors 791 00:44:19,800 --> 00:44:24,040 Speaker 1: digital infrastructure. In the more recent past, the economy has 792 00:44:24,080 --> 00:44:28,560 Speaker 1: been fast digitalizing across sectors. That has been accelerated by 793 00:44:28,560 --> 00:44:33,920 Speaker 1: the pandemic that creates huge investment requirement in data in 794 00:44:34,520 --> 00:44:38,120 Speaker 1: data center, in UH, fiber into homes and the like. 795 00:44:38,320 --> 00:44:41,600 Speaker 1: What is the constraint? What is the holding up of this? If? 796 00:44:41,680 --> 00:44:45,400 Speaker 1: If Carlisle and others are up to their eyeballs in capital, 797 00:44:46,120 --> 00:44:50,399 Speaker 1: why is infrastructure delayed? Um, it is delayed by the 798 00:44:50,480 --> 00:44:54,800 Speaker 1: needs of all the infrastructure but also new sectors. UH. 799 00:44:55,000 --> 00:44:59,759 Speaker 1: The energy transition is requiring humongous, huge quantities of in 800 00:45:00,040 --> 00:45:03,000 Speaker 1: ESSE months to be able to meet that climate challenge 801 00:45:03,040 --> 00:45:07,080 Speaker 1: to Earth Faces. I was mentioning digital infrastructure, So I 802 00:45:07,120 --> 00:45:11,160 Speaker 1: think the challenge is the sheer nature of the investment needs. 803 00:45:11,360 --> 00:45:14,239 Speaker 1: I think governments are doing what they can, but the 804 00:45:14,320 --> 00:45:18,560 Speaker 1: private sector and private groups like carl and private equity 805 00:45:18,600 --> 00:45:21,640 Speaker 1: groups have a role to play because we have the capital, 806 00:45:21,719 --> 00:45:27,080 Speaker 1: expertsise and and capability to also contribute to filling that gap. 807 00:45:27,360 --> 00:45:29,960 Speaker 1: But it is the size of it. How difficult is 808 00:45:30,000 --> 00:45:34,000 Speaker 1: it to game out profitability of a company in transition? 809 00:45:34,080 --> 00:45:37,319 Speaker 1: That's sort of it is sort of bedrock of a transition, 810 00:45:37,520 --> 00:45:41,759 Speaker 1: particularly with energy well, we take as a principle to 811 00:45:41,920 --> 00:45:45,680 Speaker 1: carefully select our investment, to make sure that every every 812 00:45:45,719 --> 00:45:49,520 Speaker 1: investment we make is profitable. We manage money for our 813 00:45:49,520 --> 00:45:54,160 Speaker 1: own peace who represent you know, private people. So we 814 00:45:54,239 --> 00:45:59,200 Speaker 1: believe that that's present everywhere. In particular, and energy transition, Lissa, 815 00:45:59,400 --> 00:46:04,360 Speaker 1: I mean the investment opportunity created by the energy transition, 816 00:46:04,440 --> 00:46:07,560 Speaker 1: we think is significant. It's possibly one of the most 817 00:46:07,560 --> 00:46:10,719 Speaker 1: significant in the investment space. So can you give us 818 00:46:10,760 --> 00:46:14,360 Speaker 1: a sense of tangible types of investments and the possible 819 00:46:14,520 --> 00:46:17,120 Speaker 1: r o I that you're looking at. Yes, of course, Well, 820 00:46:17,600 --> 00:46:21,240 Speaker 1: in particular, let's take renewable energy, which is an area 821 00:46:21,400 --> 00:46:25,560 Speaker 1: that we have been active into insectors like wind, solar, 822 00:46:26,320 --> 00:46:30,799 Speaker 1: in emerging sectors like batteries, energy storage in the form 823 00:46:30,840 --> 00:46:33,719 Speaker 1: of battery. You have emerging sectors which I will get 824 00:46:33,760 --> 00:46:37,440 Speaker 1: into in a second. In that case, clearly, if you 825 00:46:37,520 --> 00:46:41,239 Speaker 1: have the skill set and capacity to develop these projects, 826 00:46:41,640 --> 00:46:45,680 Speaker 1: to properly locate a solar project in the right location, 827 00:46:46,200 --> 00:46:49,560 Speaker 1: close to a lot center, close to the right interconnection, 828 00:46:49,840 --> 00:46:52,799 Speaker 1: where there is a good solar resource, you're able to 829 00:46:52,920 --> 00:46:58,080 Speaker 1: generate with that capacity robust double digit returns as a 830 00:46:58,160 --> 00:47:01,400 Speaker 1: result of that development and being able to deliver that 831 00:47:01,520 --> 00:47:05,480 Speaker 1: project to customers that have an appetite for that clean power. 832 00:47:05,840 --> 00:47:11,120 Speaker 1: If you invest in existing, already developed renewable projects, then 833 00:47:11,160 --> 00:47:15,040 Speaker 1: you do not have that development premium, and so you're 834 00:47:15,080 --> 00:47:19,279 Speaker 1: investing into more operating renewable projects. In that case, you 835 00:47:19,320 --> 00:47:23,360 Speaker 1: may be looking at a single digit load doable digitire, 836 00:47:23,520 --> 00:47:25,920 Speaker 1: but more in the single digit I would say, given 837 00:47:26,000 --> 00:47:29,319 Speaker 1: the lower risk returned profile, if rates go up, does 838 00:47:29,360 --> 00:47:31,960 Speaker 1: your r R go up? Where are we in the 839 00:47:32,080 --> 00:47:35,040 Speaker 1: continue do you see a longer rate, higher rate regime 840 00:47:35,120 --> 00:47:39,400 Speaker 1: before Highers Just well, I mean, Tim, you're referring to 841 00:47:39,440 --> 00:47:42,000 Speaker 1: the fact that we are in an environment where rates 842 00:47:42,000 --> 00:47:45,160 Speaker 1: are increasing, where there is inflation, and what I would 843 00:47:45,200 --> 00:47:49,200 Speaker 1: say it's an important point for investors is to face 844 00:47:49,320 --> 00:47:54,200 Speaker 1: that challenging environment. There is a need for a diversified portfolio, 845 00:47:54,520 --> 00:47:59,279 Speaker 1: and we believe that infrastructure contributes in a robust way 846 00:47:59,600 --> 00:48:02,359 Speaker 1: to a portfolio that's going to be more resilient in 847 00:48:02,360 --> 00:48:05,960 Speaker 1: that environment. The reason that they are that these infrastructure 848 00:48:06,000 --> 00:48:10,360 Speaker 1: investments by their nature, where you have high visibility on 849 00:48:10,480 --> 00:48:15,000 Speaker 1: the revenue. Often if you take renewable project, the revenues 850 00:48:15,000 --> 00:48:19,799 Speaker 1: are contracted long term with indexation mechanism. In the contracts. 851 00:48:20,040 --> 00:48:22,239 Speaker 1: So I don't think you make more money out of 852 00:48:22,440 --> 00:48:25,840 Speaker 1: higher interest rates, but you get the degree of protection 853 00:48:25,880 --> 00:48:30,960 Speaker 1: because your revenues are indexed to that. I please visit 854 00:48:31,040 --> 00:48:32,880 Speaker 1: us in New York. I mean, there's so much to 855 00:48:32,920 --> 00:48:36,120 Speaker 1: talk about here. McTell got one question. We see the 856 00:48:36,200 --> 00:48:40,560 Speaker 1: miracle of a Guardia, world's worst airport. Finally with a 857 00:48:40,640 --> 00:48:45,239 Speaker 1: constortion of investors. Is fine. There's optimism. They're optimisms that 858 00:48:45,320 --> 00:48:48,719 Speaker 1: we can refurbish and that we can rebuild quickly. Here 859 00:48:49,000 --> 00:48:53,080 Speaker 1: can Carlile taken on the Montreal Canadians and refurbish and 860 00:48:53,160 --> 00:48:57,799 Speaker 1: rebuild them. Is Canada's infrastructure project that would be I'm 861 00:48:57,840 --> 00:49:03,160 Speaker 1: sure a project that you know the challenge might be difficult. 862 00:49:03,480 --> 00:49:06,600 Speaker 1: I would remind you that the Mantrel can agent finished 863 00:49:06,600 --> 00:49:09,120 Speaker 1: close to last or last in the league, so that 864 00:49:09,200 --> 00:49:15,000 Speaker 1: might be more difficult. Thank you that investment. I'm sorry, 865 00:49:15,600 --> 00:49:19,480 Speaker 1: Zone Belloo, there's no internal ready to return this year 866 00:49:19,520 --> 00:49:23,880 Speaker 1: on the Montreal Canadians. He of Montreal mackital Carlisle with 867 00:49:24,080 --> 00:49:32,160 Speaker 1: us today now without question, my most important interview of 868 00:49:32,239 --> 00:49:35,760 Speaker 1: his Davos on Asia, the focal point of the South China. 869 00:49:35,760 --> 00:49:38,440 Speaker 1: See because sure marble Bonni joins us to say that 870 00:49:38,480 --> 00:49:41,840 Speaker 1: he's Distinguished Fellow of the Asia Research Institute at the 871 00:49:41,960 --> 00:49:46,160 Speaker 1: National University of Singapore barely describes his contribution to the 872 00:49:46,239 --> 00:49:49,000 Speaker 1: highest compliment I could give him. Even the people that 873 00:49:49,200 --> 00:49:52,279 Speaker 1: disagree with him read his books to go to try 874 00:49:52,320 --> 00:49:57,960 Speaker 1: to understand the true the Swirl of Asia Marble Bonnie, 875 00:49:58,000 --> 00:50:00,360 Speaker 1: thank you so much for joining Bloomberg to my leisure. 876 00:50:00,840 --> 00:50:05,279 Speaker 1: Has China One? What a provocative book a number of 877 00:50:05,400 --> 00:50:10,040 Speaker 1: years ago. Give us the update we need. Has China One? Well? 878 00:50:10,080 --> 00:50:15,480 Speaker 1: I think clearly twenty twenty two is a bad year 879 00:50:15,560 --> 00:50:21,000 Speaker 1: for China, and because partly because they're struggling to get 880 00:50:21,000 --> 00:50:24,880 Speaker 1: out of COVID nineteen domestics, a domestic storm they have 881 00:50:25,000 --> 00:50:28,960 Speaker 1: to deal with, and then Joe politically. Of course, China 882 00:50:29,040 --> 00:50:33,719 Speaker 1: has also suffered from the Russian invasion of Ukraine on 883 00:50:33,719 --> 00:50:37,320 Speaker 1: several counts, just a few examples. Number one, as I said, 884 00:50:37,440 --> 00:50:40,520 Speaker 1: China wanted stability into any two because they're having a 885 00:50:40,560 --> 00:50:45,439 Speaker 1: major political conference lator this year. Instead they get instability. 886 00:50:45,680 --> 00:50:49,239 Speaker 1: The number one strategic partner, Russia has been weakened. They 887 00:50:49,280 --> 00:50:52,080 Speaker 1: wanted to deal with the United States and Europe separately. 888 00:50:52,640 --> 00:50:55,640 Speaker 1: Now there's been a consolidation of the West, which is 889 00:50:55,680 --> 00:50:58,719 Speaker 1: obviously a negative for China. And fourthfully, of course they 890 00:50:58,719 --> 00:51:01,480 Speaker 1: didn't expect the Russians and of bank reserves could be 891 00:51:01,520 --> 00:51:05,440 Speaker 1: taken away so easily by the West and China. As 892 00:51:05,480 --> 00:51:08,720 Speaker 1: you know, Russians only have seven billions, but the Chinese 893 00:51:08,800 --> 00:51:12,400 Speaker 1: have three point two trillion dollars of assets, and the 894 00:51:12,560 --> 00:51:16,920 Speaker 1: assets cannot become liability, so too, therefore is a bad year. 895 00:51:18,080 --> 00:51:21,560 Speaker 1: But I think the Chinese have also shown a capacity 896 00:51:21,600 --> 00:51:25,160 Speaker 1: to manage crisis very well. So I would say same 897 00:51:25,200 --> 00:51:28,920 Speaker 1: time next year when you come back, things will probably 898 00:51:28,920 --> 00:51:32,239 Speaker 1: be better for China and the long term trajectory will 899 00:51:32,280 --> 00:51:36,719 Speaker 1: continue after lockdown. And I'm thinking of Robert T. Caplan's 900 00:51:36,760 --> 00:51:41,959 Speaker 1: wonderful Asia's Cauldron of the tour around yourself China see 901 00:51:41,960 --> 00:51:47,880 Speaker 1: including your Singapore. After the lockdown, China feels they own 902 00:51:48,080 --> 00:51:52,240 Speaker 1: a huge part of that body of water. How does 903 00:51:52,719 --> 00:51:57,560 Speaker 1: Asia's Cauldron respond to China and particularly after the election 904 00:51:57,600 --> 00:52:02,160 Speaker 1: of Marcos Jr. In Philippines. Well, the good news I 905 00:52:02,160 --> 00:52:06,120 Speaker 1: can give you is that even though the Chinese have 906 00:52:06,280 --> 00:52:12,080 Speaker 1: drawn a nine dash line which seems to imply that 907 00:52:12,200 --> 00:52:16,120 Speaker 1: they're claiming ownership of the South China see, I can 908 00:52:16,280 --> 00:52:20,440 Speaker 1: categorically say that they do not claim ownership of the 909 00:52:20,480 --> 00:52:23,840 Speaker 1: South China Sea, and they actually allow total freedom of 910 00:52:23,960 --> 00:52:28,360 Speaker 1: navigation through those waters, and China doesn't regard those waters 911 00:52:28,440 --> 00:52:32,359 Speaker 1: as internal waters. How badly to Singapore and the other 912 00:52:32,480 --> 00:52:35,759 Speaker 1: nations of the Pacific RIM need the United States to 913 00:52:35,840 --> 00:52:39,719 Speaker 1: show the flag with the dynamic navy and also with 914 00:52:39,800 --> 00:52:44,279 Speaker 1: the reinvigorated based structure across the Pacific RIM. Well, as 915 00:52:44,280 --> 00:52:47,600 Speaker 1: you know, the reason why East Asia is the most 916 00:52:47,640 --> 00:52:53,200 Speaker 1: successful and most dynamic economic region in the world is 917 00:52:53,239 --> 00:52:56,640 Speaker 1: because the United States has had this is I'm talking 918 00:52:56,640 --> 00:53:02,719 Speaker 1: about fifty sixty years a consistent commitment to keeping that 919 00:53:02,760 --> 00:53:08,239 Speaker 1: region stable and secure and allowing growth and prosperity. And 920 00:53:08,400 --> 00:53:12,080 Speaker 1: Asian you know, the Southeast Asia tends out. These Asian 921 00:53:12,200 --> 00:53:17,839 Speaker 1: nations have done very well primarily also because of the 922 00:53:17,880 --> 00:53:20,880 Speaker 1: American presence. And just give you one statistic. In the 923 00:53:20,960 --> 00:53:25,600 Speaker 1: year two thousand, Japan's economy was eight times the size 924 00:53:25,680 --> 00:53:28,720 Speaker 1: of US Ian. Now it's only one point five times 925 00:53:28,800 --> 00:53:37,080 Speaker 1: larger by any bigger than Japan and down just like radio, 926 00:53:37,239 --> 00:53:39,960 Speaker 1: you're getting an endorsement right there. Now, there is a 927 00:53:40,040 --> 00:53:43,640 Speaker 1: really very real question underpinning of what you've just discussed, 928 00:53:43,800 --> 00:53:48,080 Speaker 1: which is the rise of China, maybe paused by the pandemic. 929 00:53:48,120 --> 00:53:51,040 Speaker 1: It's been a very bad year. How far have they 930 00:53:51,080 --> 00:53:55,080 Speaker 1: pushed out their overtaking the US in terms of size 931 00:53:55,080 --> 00:53:59,480 Speaker 1: of their economy? Well, I mean the Chinese economy has 932 00:53:59,600 --> 00:54:05,040 Speaker 1: literally exploded. Let me give you another statistic. In twenty twelve, 933 00:54:05,200 --> 00:54:08,520 Speaker 1: ten years ago, China's g NP was eight and a 934 00:54:08,520 --> 00:54:15,480 Speaker 1: half trillion dollars. Two, it's eighteen trillion dollars. No country 935 00:54:15,719 --> 00:54:19,560 Speaker 1: in human history has added ten trillion dollars to its 936 00:54:19,600 --> 00:54:24,640 Speaker 1: economy in one decade. So the long term growth trajectory 937 00:54:24,680 --> 00:54:27,520 Speaker 1: of China, this in t T two will slow down, 938 00:54:27,640 --> 00:54:30,880 Speaker 1: no doubt whatsoever, but he will bounce back up because 939 00:54:30,880 --> 00:54:35,759 Speaker 1: the Chinese have made massive investments, you know, in the economy. 940 00:54:35,880 --> 00:54:38,680 Speaker 1: Do you think that people here at Davos, the representatives 941 00:54:38,719 --> 00:54:41,400 Speaker 1: fully understand this at a time when China is not 942 00:54:41,480 --> 00:54:44,880 Speaker 1: represented and the main focus has really been on Ukraine 943 00:54:44,920 --> 00:54:48,240 Speaker 1: and Russia. Well, as you know, Davos is like an onion. 944 00:54:49,800 --> 00:54:54,239 Speaker 1: What you see in the open sessions and public sessions 945 00:54:54,320 --> 00:54:59,680 Speaker 1: is what they're talking about publicly, but equally important at 946 00:54:59,680 --> 00:55:03,480 Speaker 1: the all of the onion of Davos, that hundreds of 947 00:55:03,560 --> 00:55:09,040 Speaker 1: private conversations, private dinners, private encounters. And as someone who 948 00:55:09,040 --> 00:55:12,320 Speaker 1: wrote a book called has China One, I can assure 949 00:55:12,320 --> 00:55:16,120 Speaker 1: you that there's a lot of interest in China and 950 00:55:16,320 --> 00:55:21,360 Speaker 1: what it means. I mean, people know intuitively that within 951 00:55:21,480 --> 00:55:25,160 Speaker 1: ten to fifteen years China will have the largest economy 952 00:55:25,160 --> 00:55:28,640 Speaker 1: in the world and the world will be very different. 953 00:55:29,280 --> 00:55:31,840 Speaker 1: So how are people positioning for that in those private 954 00:55:32,400 --> 00:55:37,040 Speaker 1: conversations inside the onion? Well, I think what's happening is 955 00:55:37,080 --> 00:55:41,160 Speaker 1: that there seems to be a bifurcation between the Western 956 00:55:41,200 --> 00:55:44,279 Speaker 1: approaches and the rest of the world. And by the way, 957 00:55:44,320 --> 00:55:48,720 Speaker 1: out of the world's population, twelve percent live in the West, 958 00:55:49,280 --> 00:55:52,759 Speaker 1: eight percent live outside the West, and most of the 959 00:55:52,800 --> 00:55:56,680 Speaker 1: eight percent in Latin America. And just give it quickly 960 00:55:56,680 --> 00:56:01,080 Speaker 1: one statistic. Ten years ago, it took Brazil like one 961 00:56:01,160 --> 00:56:03,880 Speaker 1: year to export one billion dollars to China. Now it's 962 00:56:03,880 --> 00:56:07,279 Speaker 1: exempted two hours. Okay, So you see that, You see 963 00:56:07,280 --> 00:56:11,360 Speaker 1: the dramatic changes. So the rest of the world understands 964 00:56:11,480 --> 00:56:14,240 Speaker 1: that they have to adapt and adjust to a new China. 965 00:56:14,840 --> 00:56:18,160 Speaker 1: And the more we can engage China multilaterally, and this 966 00:56:18,200 --> 00:56:20,640 Speaker 1: is what we hope the United States will do in 967 00:56:20,680 --> 00:56:25,439 Speaker 1: a sense and mash China in various multilateral arrangements, which 968 00:56:25,440 --> 00:56:30,920 Speaker 1: will then frankly, a strange China. I think as of now, 969 00:56:32,239 --> 00:56:35,640 Speaker 1: while they are still number two, I think they're very 970 00:56:35,840 --> 00:56:39,839 Speaker 1: the Chinese, you know, Chinese, in the Chinese psyche, after 971 00:56:39,920 --> 00:56:44,040 Speaker 1: four thousand years of Chinese civilization, what they fear most 972 00:56:44,200 --> 00:56:48,040 Speaker 1: is chaos. That's a Chinese word for it. Loe. And 973 00:56:48,080 --> 00:56:51,040 Speaker 1: if rules, if rules give stability, they'll accept the rules 974 00:56:51,120 --> 00:56:54,000 Speaker 1: were running out of time. And this is so important 975 00:56:54,000 --> 00:56:56,839 Speaker 1: because I can't say enough about it. Do we need 976 00:56:56,880 --> 00:57:00,960 Speaker 1: a dose in America of kissingerion real politic? I mean, 977 00:57:01,040 --> 00:57:05,840 Speaker 1: what do you need from America to change the dialogue? 978 00:57:05,880 --> 00:57:08,960 Speaker 1: Where the fact is the legislature of the United States 979 00:57:09,320 --> 00:57:13,560 Speaker 1: does not want to engage with China. So what's the 980 00:57:13,600 --> 00:57:17,800 Speaker 1: real politics that we need to begin to look post 981 00:57:17,840 --> 00:57:21,840 Speaker 1: World War two, post Vietnam in a new Pacific rim. 982 00:57:22,160 --> 00:57:25,600 Speaker 1: You're absolutely right. In fact, the central insight of my 983 00:57:25,680 --> 00:57:29,240 Speaker 1: book Has China One is based on a lunch conversation 984 00:57:29,320 --> 00:57:32,040 Speaker 1: I had one on one with Henry Kissinger where he 985 00:57:32,200 --> 00:57:37,040 Speaker 1: said that what the United States really needs is a comprehensive, 986 00:57:37,200 --> 00:57:41,400 Speaker 1: long term strategy for managing the rise of China to 987 00:57:41,600 --> 00:57:45,760 Speaker 1: match the comprehensive long term strategy that China has to 988 00:57:45,960 --> 00:57:49,320 Speaker 1: manage its relationship with the United States. So it is 989 00:57:49,320 --> 00:57:52,760 Speaker 1: Henry Kissinger who gave me the central insight for my book. 990 00:57:54,200 --> 00:57:56,360 Speaker 1: Thank you so much for taking the time of the 991 00:57:56,440 --> 00:58:00,520 Speaker 1: National University of Singapore. This is the Bloomberg Surveillance of podcast. 992 00:58:00,760 --> 00:58:04,120 Speaker 1: Thanks for listening. Join us live weekdays from seven to 993 00:58:04,200 --> 00:58:08,280 Speaker 1: ten am Eastern on Bloomberg Radio and on Bloomberg Television 994 00:58:08,640 --> 00:58:12,600 Speaker 1: each day from six to nine am for insight from 995 00:58:12,640 --> 00:58:17,200 Speaker 1: the best in economics, finance, investment, and international relations. And 996 00:58:17,320 --> 00:58:22,440 Speaker 1: subscribe to the Surveillance podcast on Apple podcast, SoundCloud, Bloomberg 997 00:58:22,520 --> 00:58:25,840 Speaker 1: dot com, and of course on the terminal. I'm Tom 998 00:58:25,920 --> 00:58:28,240 Speaker 1: Keene and this is Bloomberg