1 00:00:00,520 --> 00:00:03,760 Speaker 1: This is Bloomberg Wall Street Week. We turn our attention 2 00:00:03,840 --> 00:00:07,120 Speaker 1: to the markets this week. U s CPI members reinforcing 3 00:00:07,160 --> 00:00:10,639 Speaker 1: concerns about inflation. The financial stories that chief are worth 4 00:00:10,720 --> 00:00:13,480 Speaker 1: a really different reaction to mark. Its more indications of 5 00:00:13,640 --> 00:00:16,239 Speaker 1: just how hot the U. S economy really is. Through 6 00:00:16,239 --> 00:00:19,520 Speaker 1: the eyes of the most influential voices. Larry Summers, the 7 00:00:19,560 --> 00:00:22,479 Speaker 1: former Treker Secretary, Katherine Keating, CEO of v n Y 8 00:00:22,600 --> 00:00:26,160 Speaker 1: Mallin Sam's l Sharmon and founder of Equatic Group Investment. 9 00:00:26,200 --> 00:00:30,240 Speaker 1: In Bloomberg Wall Street Week with David Weston from Bloomberg Radio, 10 00:00:30,440 --> 00:00:33,920 Speaker 1: a FED chair speaks, President delivers his blueprint for the 11 00:00:33,960 --> 00:00:37,519 Speaker 1: next two years. Earnings roll in, but a tragedy and 12 00:00:37,600 --> 00:00:41,440 Speaker 1: Turkey overshadows them all. This is Bloomberg Wall Street Week. 13 00:00:41,560 --> 00:00:45,400 Speaker 1: I'm David Weston. This week's special contributor Larry Summers of 14 00:00:45,479 --> 00:00:47,920 Speaker 1: Harvard on whether we're headed for a landing at all, 15 00:00:48,240 --> 00:00:52,880 Speaker 1: soft or hard. I think to FED understands that it 16 00:00:53,000 --> 00:00:56,760 Speaker 1: doesn't understand. Stephen Meyer, the man responsible for New York 17 00:00:56,840 --> 00:00:59,840 Speaker 1: City pension funds, on investing for the long term in 18 00:01:00,000 --> 00:01:03,480 Speaker 1: this uncertain market. There's a lot of things to consider 19 00:01:03,520 --> 00:01:07,360 Speaker 1: out there. The risk of recession here and abroad. And 20 00:01:07,440 --> 00:01:10,200 Speaker 1: Josh Bolton of the Business Roundtable on what the President's 21 00:01:10,200 --> 00:01:13,640 Speaker 1: State of the Union message means for American business. You 22 00:01:13,720 --> 00:01:15,839 Speaker 1: won't find a single member of the Business round Table 23 00:01:15,959 --> 00:01:33,000 Speaker 1: saying please put me in a completely unregulated environment. There 24 00:01:33,040 --> 00:01:34,920 Speaker 1: was a lot for Global Wall Street to pay attention 25 00:01:34,920 --> 00:01:37,160 Speaker 1: to this week, but the tragedy of the earthquakes in 26 00:01:37,200 --> 00:01:40,560 Speaker 1: southeastern Turkey cast a shadow over it all as the 27 00:01:40,600 --> 00:01:43,480 Speaker 1: death toll reached into the tens of thousands and the 28 00:01:43,520 --> 00:01:50,760 Speaker 1: difficulties of reaching those in need seemed almost insurmountable. But 29 00:01:50,880 --> 00:01:53,440 Speaker 1: even as the world came to terms with human disaster, 30 00:01:53,760 --> 00:01:57,520 Speaker 1: we also focused on the economy and inflation. When fitzher J. 31 00:01:57,640 --> 00:02:00,800 Speaker 1: Powell talked with Bloombergs David Rubinstein about the latest jobs 32 00:02:00,880 --> 00:02:04,600 Speaker 1: numbers and whether they changed his mind on further rate hikes. 33 00:02:04,880 --> 00:02:08,079 Speaker 1: This process is likely to take quite a bit of time. Uh, 34 00:02:08,160 --> 00:02:11,000 Speaker 1: it's not going to be We don't think smooth. It's 35 00:02:11,040 --> 00:02:14,080 Speaker 1: probably gonna be bumpy. President Biden delivered his annual State 36 00:02:14,120 --> 00:02:18,040 Speaker 1: of the Union address and called for bipartisanship even over 37 00:02:18,080 --> 00:02:20,880 Speaker 1: the cat calls from Republicans on things like the border. 38 00:02:21,800 --> 00:02:28,760 Speaker 1: Congress must restore the right and and energy policy. I said, 39 00:02:28,760 --> 00:02:32,280 Speaker 1: we're gonna need oil for at least another decade, and 40 00:02:32,320 --> 00:02:36,520 Speaker 1: I'm going to exceed and beyond that. The follow out 41 00:02:36,560 --> 00:02:39,960 Speaker 1: from that Chinese by balloon continued with questions about whether 42 00:02:40,080 --> 00:02:42,639 Speaker 1: if it was a Chinese test of US defenses in 43 00:02:42,840 --> 00:02:46,800 Speaker 1: the US passed that test. They wanted to display weakness, 44 00:02:46,800 --> 00:02:48,440 Speaker 1: and I think to some extent they got that. I 45 00:02:48,520 --> 00:02:52,720 Speaker 1: don't know why this wasn't shut down prior to entering 46 00:02:52,919 --> 00:02:56,840 Speaker 1: US airspace. Earnings continued to pour in, with Disney surprising 47 00:02:56,880 --> 00:03:00,280 Speaker 1: the upside on earnings, the downside on subscribers, and newly 48 00:03:00,320 --> 00:03:03,840 Speaker 1: returned CEO Bob Iger announcing a major restructuring and the 49 00:03:03,880 --> 00:03:08,320 Speaker 1: trimming of thousands of jobs. We will aggressively curate our 50 00:03:08,440 --> 00:03:13,040 Speaker 1: general entertainment content. We will reassess all markets we have 51 00:03:13,120 --> 00:03:16,320 Speaker 1: launched in and also determine the right balance between global 52 00:03:16,560 --> 00:03:20,720 Speaker 1: and local content. The markets reacted to all of this 53 00:03:20,800 --> 00:03:23,960 Speaker 1: by being all over the place. The Spire started out 54 00:03:24,000 --> 00:03:27,280 Speaker 1: lower on Monday, spiked up after Pile's talk on Tuesday, 55 00:03:27,440 --> 00:03:30,040 Speaker 1: only to come back down to earth on Friday, ending 56 00:03:30,040 --> 00:03:33,160 Speaker 1: the week down just over one. The NASDAG had a 57 00:03:33,160 --> 00:03:35,880 Speaker 1: tougher time of it. It too, shot up on Tuesday, 58 00:03:36,080 --> 00:03:38,760 Speaker 1: but settled for the week down two point four percent, 59 00:03:38,880 --> 00:03:41,880 Speaker 1: while the yield on the tenure rose more steadily through 60 00:03:41,880 --> 00:03:44,880 Speaker 1: the week, starting out at three point five and any 61 00:03:44,960 --> 00:03:47,960 Speaker 1: of just over three point seven percent. To help us 62 00:03:47,960 --> 00:03:50,240 Speaker 1: sort it all out, we welcome to Christina Hooper, she's 63 00:03:50,240 --> 00:03:54,040 Speaker 1: investco chief Global Market Strategists and Joanne Feeny, partner in 64 00:03:54,120 --> 00:03:56,960 Speaker 1: Advisor's Capital Management. Welcome back to both of you. Great 65 00:03:57,000 --> 00:03:58,240 Speaker 1: to have you here, Joe, and let me start you 66 00:03:58,320 --> 00:04:01,280 Speaker 1: with with you if I could it. Uh, the markets 67 00:04:01,320 --> 00:04:02,800 Speaker 1: get a little bit more sober by the end of 68 00:04:02,800 --> 00:04:06,600 Speaker 1: the week. They seemed a little u fouric after Tuesday. Yeah, David, 69 00:04:06,640 --> 00:04:09,000 Speaker 1: I think that's exactly what we saw. You know, the 70 00:04:09,040 --> 00:04:11,120 Speaker 1: Fed has had a hard time convincing the markets that 71 00:04:11,160 --> 00:04:13,080 Speaker 1: there's a lot more work to be got to bring 72 00:04:13,120 --> 00:04:15,800 Speaker 1: down inflation, you know, and they need to understand the 73 00:04:15,840 --> 00:04:17,680 Speaker 1: market needs to understand that rates are going to go 74 00:04:17,760 --> 00:04:19,760 Speaker 1: higher and they're likely to stay higher through the year. 75 00:04:20,160 --> 00:04:22,600 Speaker 1: We're almost there in terms of the markets forecast. They 76 00:04:22,600 --> 00:04:24,479 Speaker 1: do still expect one rate cut at the end of 77 00:04:24,480 --> 00:04:27,280 Speaker 1: the year, but you know that is quite a different 78 00:04:27,520 --> 00:04:29,960 Speaker 1: position and being relative to the beginning of last year 79 00:04:30,279 --> 00:04:33,360 Speaker 1: where we saw many rate hikes. So there's certainly less 80 00:04:33,360 --> 00:04:35,719 Speaker 1: of a head wind this year from further rate hikes. 81 00:04:35,800 --> 00:04:38,039 Speaker 1: But we're also not likely to get that break that 82 00:04:38,080 --> 00:04:41,320 Speaker 1: the market is hoping for any time this year. Well, Christina, 83 00:04:41,320 --> 00:04:44,279 Speaker 1: what is the market slowly giving up on that break? Glord? 84 00:04:44,520 --> 00:04:46,080 Speaker 1: Later in the year, we had been told the markets 85 00:04:46,080 --> 00:04:47,560 Speaker 1: saying that we're gonna have a cut by the end 86 00:04:47,560 --> 00:04:49,279 Speaker 1: of the year. It looks like they're not so sure 87 00:04:49,279 --> 00:04:53,240 Speaker 1: of that anymore. Well, hopefully, um, they get accustomed to 88 00:04:53,279 --> 00:04:55,440 Speaker 1: that idea, because I don't think we're going to see 89 00:04:55,440 --> 00:04:57,760 Speaker 1: a cut by the end of this year. Um. The 90 00:04:57,760 --> 00:05:01,159 Speaker 1: economy is in better shape than I think most anticipated. 91 00:05:01,400 --> 00:05:04,640 Speaker 1: So there really isn't a reason for the Fed to 92 00:05:04,720 --> 00:05:06,880 Speaker 1: cut rates later this year. Something would have to go 93 00:05:07,640 --> 00:05:10,159 Speaker 1: very wrong. Um for the Fed to need to cut 94 00:05:10,240 --> 00:05:12,240 Speaker 1: rates by the end of the year. It looks like 95 00:05:12,360 --> 00:05:15,680 Speaker 1: it's going to be a softish landing. So Joan, what 96 00:05:15,680 --> 00:05:18,120 Speaker 1: about the economy looking stronger? Can we talk about the 97 00:05:18,120 --> 00:05:20,279 Speaker 1: economy because you talk about different parts of the economy, 98 00:05:20,520 --> 00:05:22,560 Speaker 1: you get different results. I mean, look at housing, it 99 00:05:22,560 --> 00:05:24,760 Speaker 1: doesn't look that strong at all. And some people this 100 00:05:24,760 --> 00:05:27,120 Speaker 1: week we're talking about a so called rolling recession. I 101 00:05:27,160 --> 00:05:30,120 Speaker 1: know that's something you take issue with. Well, yeah, we're 102 00:05:30,120 --> 00:05:33,120 Speaker 1: certainly seeing some parts of the economy in contraction housing, 103 00:05:33,120 --> 00:05:35,719 Speaker 1: as you pointed out, certain parts of the technology sector 104 00:05:35,760 --> 00:05:39,960 Speaker 1: where we've heard about lots of layoffs, shrinking, PC production 105 00:05:40,480 --> 00:05:43,440 Speaker 1: significantly down year a year. So there's certainly parts of 106 00:05:43,480 --> 00:05:46,360 Speaker 1: the economy that are suffering contraction. But there are also 107 00:05:46,400 --> 00:05:49,480 Speaker 1: parts of the economy that continue to expand. And when 108 00:05:49,480 --> 00:05:51,800 Speaker 1: you look at the aggregate of what consumers have to 109 00:05:51,839 --> 00:05:54,120 Speaker 1: work with in terms of spending power, we have seen 110 00:05:54,160 --> 00:05:57,560 Speaker 1: real disposable income rise for the last six months, so 111 00:05:57,640 --> 00:05:59,800 Speaker 1: consumers still have more to work with, and I think 112 00:05:59,800 --> 00:06:02,960 Speaker 1: that's why we're continue to see relatively robust numbers in 113 00:06:03,040 --> 00:06:05,960 Speaker 1: terms of spending. Joanne, this is an important point you 114 00:06:06,080 --> 00:06:08,000 Speaker 1: made to me. I want to make sure we unpack it, 115 00:06:08,080 --> 00:06:09,560 Speaker 1: which is we have a tendency to take a look 116 00:06:09,560 --> 00:06:11,839 Speaker 1: at wages and we say real wages have not gone up, 117 00:06:11,920 --> 00:06:14,880 Speaker 1: they've even gone down, and that's for individuals. But if 118 00:06:14,920 --> 00:06:17,000 Speaker 1: you look at the additional people coming to the workforce, 119 00:06:17,160 --> 00:06:19,720 Speaker 1: you can have the aggregate actually going up, which says 120 00:06:19,760 --> 00:06:23,760 Speaker 1: something strong about the economy. Yeah, that's exactly right, and 121 00:06:23,800 --> 00:06:26,320 Speaker 1: In fact, if you look more granulally at the data, 122 00:06:26,960 --> 00:06:29,720 Speaker 1: In fact, over the last few months, we're seeing an 123 00:06:29,720 --> 00:06:33,000 Speaker 1: increase in real wages as well. So you combine that 124 00:06:33,080 --> 00:06:35,480 Speaker 1: with more people in the workforce, that gets a lot 125 00:06:35,520 --> 00:06:38,360 Speaker 1: of support for consumer spending. Now, it doesn't mean that 126 00:06:38,400 --> 00:06:40,720 Speaker 1: a recession may not be coming at some point in 127 00:06:40,720 --> 00:06:43,960 Speaker 1: the future. High entry straits are clearly an impediment to 128 00:06:44,040 --> 00:06:47,640 Speaker 1: economic activity, whether it's firms investing or households squarrowing for 129 00:06:47,640 --> 00:06:49,880 Speaker 1: the next car or or to buy the next house. 130 00:06:50,160 --> 00:06:53,279 Speaker 1: So we're by no means sanguine that the recession threat 131 00:06:53,360 --> 00:06:56,680 Speaker 1: is over, but we do see continued strength for now, 132 00:06:56,720 --> 00:06:59,680 Speaker 1: at least from the consumer side. Well, consumers as you know, 133 00:06:59,880 --> 00:07:02,039 Speaker 1: or is all what it's all about. What is something 134 00:07:02,080 --> 00:07:05,080 Speaker 1: like the economy as consumer? So what is the state 135 00:07:05,120 --> 00:07:07,000 Speaker 1: of the consumer as far as you can tell, Well, 136 00:07:07,040 --> 00:07:10,400 Speaker 1: I think that consumer is in fairly good shape what 137 00:07:10,440 --> 00:07:13,360 Speaker 1: we see. Of course, it's an incredibly tight labor market. 138 00:07:13,680 --> 00:07:15,920 Speaker 1: That's a problem perhaps for the Fed in terms of 139 00:07:15,920 --> 00:07:19,120 Speaker 1: its concerns about inflation, but it's it's a wonderful thing 140 00:07:19,200 --> 00:07:22,240 Speaker 1: to have. Um when you have rates going up, right, 141 00:07:22,320 --> 00:07:25,760 Speaker 1: you have so many people employed. Um, yes, they've come 142 00:07:25,840 --> 00:07:29,400 Speaker 1: under some pressure in different areas because of the rate hikes, um, 143 00:07:29,480 --> 00:07:32,920 Speaker 1: but in general people can still afford to go out 144 00:07:32,960 --> 00:07:36,080 Speaker 1: and shop, and so it's a very different environment than 145 00:07:36,200 --> 00:07:39,400 Speaker 1: what we saw when when the Fed was was hiking 146 00:07:39,520 --> 00:07:42,720 Speaker 1: rates and unemployment was higher. I mean, this is a 147 00:07:42,840 --> 00:07:48,000 Speaker 1: very very appealing labor market that leads to a fundamentally 148 00:07:48,120 --> 00:07:51,880 Speaker 1: sound consumer in general. Joan als so much this depends 149 00:07:51,920 --> 00:07:54,120 Speaker 1: obviously on what the Fed things. Now, what we think, 150 00:07:54,120 --> 00:07:55,840 Speaker 1: what the Fed thinks. So what do you think the 151 00:07:55,840 --> 00:07:57,840 Speaker 1: Fed is looking at? What will look at? Is it 152 00:07:57,920 --> 00:08:00,240 Speaker 1: ties eyes whether to keep moving up and how far 153 00:08:00,320 --> 00:08:02,160 Speaker 1: to keep moving up and how long to hold it 154 00:08:02,240 --> 00:08:03,920 Speaker 1: up there? Well, you know, David, the Vets made it 155 00:08:03,920 --> 00:08:07,800 Speaker 1: pretty clear that they're really focused on a persistent source 156 00:08:07,840 --> 00:08:10,720 Speaker 1: of inflation, which could be coming through wages, and so 157 00:08:10,840 --> 00:08:13,560 Speaker 1: nominal wages are still rising. They look also at the 158 00:08:13,600 --> 00:08:17,520 Speaker 1: e c I, the Employment cost Compensation Index, which gives 159 00:08:17,520 --> 00:08:19,360 Speaker 1: you are a much more accurate view of what's really 160 00:08:19,360 --> 00:08:22,200 Speaker 1: going on in terms of compensation. So they're concerned that 161 00:08:22,200 --> 00:08:25,000 Speaker 1: that's continuing to rise at a decent clip and that 162 00:08:25,000 --> 00:08:28,080 Speaker 1: that could feed into inflation. They're seeing inflation still in 163 00:08:28,120 --> 00:08:32,080 Speaker 1: their super core measure that is services excluding housing, and 164 00:08:32,120 --> 00:08:34,360 Speaker 1: so they're going to watch that really carefully. And that's 165 00:08:34,360 --> 00:08:36,440 Speaker 1: why when they say their data dependent, that's really what 166 00:08:36,480 --> 00:08:38,520 Speaker 1: it means. If they see that start to slow down, 167 00:08:38,840 --> 00:08:40,640 Speaker 1: then I think everybody can breathe a bit of a 168 00:08:40,679 --> 00:08:43,440 Speaker 1: sigh of relief. But right now, right we're still seeing 169 00:08:43,440 --> 00:08:45,440 Speaker 1: a lot of demand for services that are keeping that 170 00:08:45,480 --> 00:08:49,120 Speaker 1: inflation pretty robust. At the same time, we're seeing more 171 00:08:49,240 --> 00:08:52,120 Speaker 1: labor flow into the services sector. So if you think 172 00:08:52,120 --> 00:08:54,719 Speaker 1: to the fundamentals of inflation, it was all about shortages 173 00:08:54,840 --> 00:08:58,320 Speaker 1: of supply. Now we're starting to see supply rolling back 174 00:08:58,360 --> 00:09:01,760 Speaker 1: through into services that could help the FED solve this problem. 175 00:09:01,840 --> 00:09:03,959 Speaker 1: But that's what they're going to be watching. Christina. There's 176 00:09:03,960 --> 00:09:05,880 Speaker 1: a lot of talk about plateau ng or holding at 177 00:09:05,880 --> 00:09:07,800 Speaker 1: some point, maybe not quite yet, but having maybe a 178 00:09:07,840 --> 00:09:10,920 Speaker 1: couple more rad hikes. What if that's not enough. I mean, 179 00:09:10,920 --> 00:09:13,720 Speaker 1: you know, there's long and variable legs from mont withven 180 00:09:13,800 --> 00:09:17,520 Speaker 1: facts inflation does not come in. How dangerous it is 181 00:09:18,040 --> 00:09:21,200 Speaker 1: if the FED levels off and then resumes hiking because 182 00:09:21,240 --> 00:09:24,160 Speaker 1: inflation comes back. Well, that's the concern, right That's the 183 00:09:24,200 --> 00:09:26,920 Speaker 1: ghost of Paul Vulker, is that if you don't extinguish 184 00:09:27,040 --> 00:09:30,840 Speaker 1: every ember of inflation, it could come back and and 185 00:09:31,440 --> 00:09:35,800 Speaker 1: fan the flames of higher inflation. However, I think we 186 00:09:35,840 --> 00:09:39,440 Speaker 1: can take a page from the Bank of Canada's playbook. Uh. 187 00:09:39,640 --> 00:09:42,480 Speaker 1: They announced recently that they would have a conditional pause, 188 00:09:42,720 --> 00:09:45,880 Speaker 1: so they're going to be very very data dependent, watching 189 00:09:46,000 --> 00:09:49,120 Speaker 1: the economic data and inflation data like hawks. And I 190 00:09:49,160 --> 00:09:52,640 Speaker 1: think that that could be a model for the FED. UM. 191 00:09:52,679 --> 00:09:56,240 Speaker 1: That means that if anything is concerning, they can move 192 00:09:56,320 --> 00:09:59,000 Speaker 1: right back into action, and markets know that that is 193 00:09:59,040 --> 00:10:01,240 Speaker 1: hanging over them. Well, that's interesting. What do you think 194 00:10:01,280 --> 00:10:02,880 Speaker 1: of that, Joanna? That would that to get care of 195 00:10:02,920 --> 00:10:04,680 Speaker 1: the problem for the market, so they wouldn't react to 196 00:10:04,720 --> 00:10:07,839 Speaker 1: adversely if they had to hike some more. Oh, I 197 00:10:07,880 --> 00:10:09,960 Speaker 1: think the market still would really like to see the 198 00:10:09,960 --> 00:10:14,520 Speaker 1: head cut um. So you know, if they signal, if 199 00:10:14,559 --> 00:10:17,520 Speaker 1: they say okay, we're done for now, and they'll always 200 00:10:17,559 --> 00:10:20,680 Speaker 1: say their data dependent, I think the market might grow 201 00:10:20,720 --> 00:10:22,600 Speaker 1: a little bit too enthusiastic. And then if the FET 202 00:10:22,679 --> 00:10:25,240 Speaker 1: does turn around some months later and say, oh sorry, 203 00:10:25,360 --> 00:10:27,320 Speaker 1: we we still have to raise rates some more, they'll 204 00:10:27,360 --> 00:10:30,719 Speaker 1: be one of these resets again. So I think we're 205 00:10:30,760 --> 00:10:33,480 Speaker 1: in for a year of volatility, both because of what 206 00:10:33,520 --> 00:10:36,560 Speaker 1: the FETE is doing and the larger risks that the 207 00:10:36,559 --> 00:10:38,800 Speaker 1: world economy is still in the middle of, whether it's 208 00:10:38,840 --> 00:10:43,160 Speaker 1: the war, energy price and supply dynamics. I just think 209 00:10:43,200 --> 00:10:46,520 Speaker 1: it's a it's a tough year heading heading through this 210 00:10:46,679 --> 00:10:49,600 Speaker 1: because of this ongoing recession risk and the unknowns about 211 00:10:49,720 --> 00:10:52,360 Speaker 1: rate increases. Thank you so much to Christina Hooper and 212 00:10:52,440 --> 00:10:54,560 Speaker 1: jo and Feeny. They're staying with us as we turned 213 00:10:54,600 --> 00:10:57,760 Speaker 1: to questions of asset allocation in this As Joanne just said, 214 00:10:57,960 --> 00:11:01,240 Speaker 1: very uncertain market. That's gonna up next on Wall Street 215 00:11:01,280 --> 00:11:10,400 Speaker 1: Week on Bloomberg. This is Bloomberg Wall Street Week with 216 00:11:10,559 --> 00:11:19,840 Speaker 1: David Weston from Bloomberg Radio. Actually, it turned out to 217 00:11:19,840 --> 00:11:23,240 Speaker 1: be a remarkably good week for the president. His approval 218 00:11:23,360 --> 00:11:27,520 Speaker 1: ratings have never been higher, suggesting that if only two 219 00:11:27,640 --> 00:11:31,800 Speaker 1: or three more scandals can break between now in Washington's birthday, 220 00:11:32,360 --> 00:11:35,840 Speaker 1: he'll have every American behind him. His State of the 221 00:11:35,920 --> 00:11:39,839 Speaker 1: Union address, which began with a plea for fiscal responsibility 222 00:11:40,200 --> 00:11:43,839 Speaker 1: and continued with an extensive laundry list of brand new 223 00:11:43,880 --> 00:11:47,720 Speaker 1: ways to extend governmental power and spending, seems to have 224 00:11:47,760 --> 00:11:51,480 Speaker 1: played beautifully in Peoria. Not to mention, but Keepsie in 225 00:11:51,520 --> 00:11:55,199 Speaker 1: Palm Springs. That was Lewis Rockheiser with his firm and 226 00:11:55,559 --> 00:11:57,560 Speaker 1: his tongue firmly in his cheek on Wall Street week 227 00:11:57,600 --> 00:12:00,199 Speaker 1: back in j You may remember that was the week 228 00:12:00,280 --> 00:12:02,679 Speaker 1: after the Monica Lewinsky scandal broke. That's what he's talking 229 00:12:02,679 --> 00:12:06,200 Speaker 1: about with another presidential scandal. Titanic was the number one 230 00:12:06,240 --> 00:12:08,960 Speaker 1: movie that week, and the number one song was Together 231 00:12:09,120 --> 00:12:12,160 Speaker 1: Again by Janet Jackson. Still with us are joe Anfini 232 00:12:12,240 --> 00:12:15,360 Speaker 1: of Advisor's Capital Management and Christina Hooper fro Vesco. Christina, 233 00:12:15,440 --> 00:12:17,559 Speaker 1: let me start with you, because we've just talked about 234 00:12:17,559 --> 00:12:18,960 Speaker 1: what we think are going to the FED, what's going 235 00:12:19,000 --> 00:12:21,120 Speaker 1: on the economy. How do you put together portfolio? How 236 00:12:21,160 --> 00:12:24,760 Speaker 1: do you allocate your assets in this world? Well, first, David, 237 00:12:24,760 --> 00:12:26,640 Speaker 1: I have to answer the question I keep getting asked, 238 00:12:26,679 --> 00:12:31,240 Speaker 1: which is is the sixty portfolio still alive? And I 239 00:12:31,280 --> 00:12:34,200 Speaker 1: think to a certain extent it very much is. The 240 00:12:34,240 --> 00:12:37,360 Speaker 1: concept of diversification is so important and I think we 241 00:12:37,440 --> 00:12:40,240 Speaker 1: will see the benefits of it this year, and actually 242 00:12:40,280 --> 00:12:42,800 Speaker 1: not just equities and fixed income, but some alts in 243 00:12:42,840 --> 00:12:48,200 Speaker 1: there as well to provide um lower correlating assets. My 244 00:12:48,280 --> 00:12:51,480 Speaker 1: view is, as with Joanne um I believe we're going 245 00:12:51,520 --> 00:12:54,800 Speaker 1: to see a significant amount of volatility, especially in the 246 00:12:54,800 --> 00:12:56,640 Speaker 1: first half of this year. There's just an awful lot 247 00:12:56,640 --> 00:13:00,520 Speaker 1: of uncertainty. So we're going to want to have exposure 248 00:13:00,559 --> 00:13:04,200 Speaker 1: to fixed income and some dividend paying stocks. We need 249 00:13:04,240 --> 00:13:07,760 Speaker 1: that income to stabilize as we move up and down UM. 250 00:13:07,800 --> 00:13:11,360 Speaker 1: I also believe that that as we move further into 251 00:13:11,360 --> 00:13:14,079 Speaker 1: the year, we're likely to see markets start to discount 252 00:13:14,080 --> 00:13:16,720 Speaker 1: in economic recovery, and so that would be a time 253 00:13:16,760 --> 00:13:20,560 Speaker 1: to start to perhaps increase sequity allocations, especially among the 254 00:13:20,600 --> 00:13:23,480 Speaker 1: more cyclical parts of the stock market. But fixed income 255 00:13:23,520 --> 00:13:28,160 Speaker 1: looks attractive, especially in investment grade communis UM. Those are 256 00:13:28,800 --> 00:13:30,719 Speaker 1: very attractive yields right now. I like to think of 257 00:13:30,760 --> 00:13:33,840 Speaker 1: this as almost a golden age of fixed income UM. So, 258 00:13:33,840 --> 00:13:37,040 Speaker 1: so that's an important component of portfolios right now. Joanna, 259 00:13:37,080 --> 00:13:38,560 Speaker 1: what do you think? I mean, it sounds like a 260 00:13:38,640 --> 00:13:41,720 Speaker 1: fairly diversified approach, but with an emphasis on getting some cash, 261 00:13:41,760 --> 00:13:45,800 Speaker 1: whether from dividends or otherwise. Yeah, we offer a range 262 00:13:45,800 --> 00:13:48,600 Speaker 1: of opportunities. It really depends on the client, on the investor, 263 00:13:48,679 --> 00:13:51,280 Speaker 1: and what their time horizon is. You know, at this point, 264 00:13:51,280 --> 00:13:53,560 Speaker 1: there are certainly some opportunities in the market that if 265 00:13:53,559 --> 00:13:56,200 Speaker 1: you're a long term investor, you can be all in 266 00:13:56,200 --> 00:13:58,000 Speaker 1: on equities. But you know, a lot of our clients 267 00:13:58,040 --> 00:14:01,840 Speaker 1: are also looking for that ash flow, and so you know, 268 00:14:02,000 --> 00:14:06,080 Speaker 1: we like to offer them choices a mixture of stocks 269 00:14:06,120 --> 00:14:10,240 Speaker 1: that will appreciate versus stocks that will deliver that yield 270 00:14:10,280 --> 00:14:14,160 Speaker 1: alongside a fixed income and let the client really decide, 271 00:14:14,480 --> 00:14:16,280 Speaker 1: you know, how much they want to put into equities 272 00:14:16,280 --> 00:14:18,560 Speaker 1: at this point, based on their time horizon and their risk. 273 00:14:18,640 --> 00:14:21,480 Speaker 1: But yeah, I mean, I agree, given the volatility that 274 00:14:21,480 --> 00:14:24,000 Speaker 1: we've just talked about, this is an awfully good time 275 00:14:24,040 --> 00:14:28,320 Speaker 1: for a balanced strategy to protect the principle in the portfolio. 276 00:14:28,720 --> 00:14:31,320 Speaker 1: And hopefully if you can get enough of yield on 277 00:14:31,360 --> 00:14:33,960 Speaker 1: the dividend side and also on the fixed income side, 278 00:14:34,400 --> 00:14:37,160 Speaker 1: you can eat your cash flow to pay your expenses 279 00:14:37,200 --> 00:14:39,640 Speaker 1: if you're in retirement, and that will save you from 280 00:14:39,640 --> 00:14:42,920 Speaker 1: having to sell stocks when the market does go down. Christina, 281 00:14:42,960 --> 00:14:44,480 Speaker 1: what about you, is it can't be the case we're 282 00:14:44,480 --> 00:14:46,040 Speaker 1: gonna have as many rate hikes this year as we 283 00:14:46,080 --> 00:14:48,400 Speaker 1: did last year. I don't think at least, So what 284 00:14:48,440 --> 00:14:50,320 Speaker 1: does that mean? Certainly has said something about bonds, but 285 00:14:50,360 --> 00:14:52,240 Speaker 1: beyond that, what does it tell you as an investorment, 286 00:14:52,480 --> 00:14:56,120 Speaker 1: I do think that it gives certainly UM some space 287 00:14:56,240 --> 00:14:59,880 Speaker 1: to technology, right that the tech sector is likely to 288 00:15:00,200 --> 00:15:04,880 Speaker 1: to start to see better performance, especially as as rates 289 00:15:04,960 --> 00:15:08,480 Speaker 1: come down UM. But I also believe that what it 290 00:15:08,520 --> 00:15:11,280 Speaker 1: really does is clear the way for an economic recovery. 291 00:15:11,400 --> 00:15:15,160 Speaker 1: Right that once we have a stabilization um of of 292 00:15:15,960 --> 00:15:19,640 Speaker 1: rates UM, that is really when the economy can start 293 00:15:19,640 --> 00:15:22,400 Speaker 1: to recover accelerate, and I think stocks are going to 294 00:15:22,440 --> 00:15:25,280 Speaker 1: anticipate that, so so we're likely to see smaller caps 295 00:15:25,320 --> 00:15:27,160 Speaker 1: perform well. I also think the dollar is going to 296 00:15:27,200 --> 00:15:29,120 Speaker 1: be relatively weak this year. That's a trend that's going 297 00:15:29,160 --> 00:15:32,800 Speaker 1: to continue. So emerging markets equities, especially Asia e M. 298 00:15:32,840 --> 00:15:35,240 Speaker 1: We haven't even talked about the China reopening, but that 299 00:15:35,360 --> 00:15:38,160 Speaker 1: is gonna be really powerful for Asia e M. What 300 00:15:38,200 --> 00:15:40,560 Speaker 1: about Joan briefly here at the end, it's strong bounce back. 301 00:15:40,600 --> 00:15:43,880 Speaker 1: Do you think this year in the overall stock market? 302 00:15:44,040 --> 00:15:47,440 Speaker 1: I think I think the jury is still out on that. Uh, 303 00:15:47,480 --> 00:15:49,400 Speaker 1: you know, it looks pretty good from the consumer side. 304 00:15:49,600 --> 00:15:52,760 Speaker 1: Fuer rate increases is a good thing, but ultimately we 305 00:15:52,800 --> 00:15:55,640 Speaker 1: do have a pretty substantial decline in certain sectors of 306 00:15:55,640 --> 00:15:57,640 Speaker 1: this economy. We have to see if housing comes back. 307 00:15:58,040 --> 00:16:00,320 Speaker 1: So I think it's it's an open our ship, and 308 00:16:00,360 --> 00:16:04,120 Speaker 1: that's why we are counseling to really diversify and be 309 00:16:04,280 --> 00:16:07,400 Speaker 1: prepared for volatility. Sounds wise. Thank you so much to 310 00:16:07,480 --> 00:16:11,000 Speaker 1: Christina Hooper of Investco and Joanne Fini of Advisor's Capital Management. 311 00:16:11,680 --> 00:16:15,440 Speaker 1: We welcome now a big time, serious long term investor, 312 00:16:15,680 --> 00:16:18,240 Speaker 1: and he is Stephen Meyer. He is the chief investment 313 00:16:18,240 --> 00:16:21,160 Speaker 1: officer for the New York City Retirement System. Welcome, it's 314 00:16:21,160 --> 00:16:22,560 Speaker 1: great to have you here. Thank you, David. It's a 315 00:16:22,560 --> 00:16:24,640 Speaker 1: pleasure to be here. So you've got a big responsible 316 00:16:24,640 --> 00:16:27,120 Speaker 1: to two d fifty billion dollars. Seven and fifty thousand 317 00:16:27,160 --> 00:16:30,800 Speaker 1: people are depending on this. We've got fireman, policeman, teachers 318 00:16:30,840 --> 00:16:33,400 Speaker 1: for their pensions. Tell us about the investment climate as 319 00:16:33,440 --> 00:16:35,240 Speaker 1: you see it today, it's a bit different than it 320 00:16:35,280 --> 00:16:37,160 Speaker 1: was just two or three years ago, given work over 321 00:16:37,200 --> 00:16:39,840 Speaker 1: with interest rates, inflation growth. Yeah, well, David, I think 322 00:16:39,880 --> 00:16:42,560 Speaker 1: it's gonna be another challenging a year in three for 323 00:16:42,880 --> 00:16:46,400 Speaker 1: the US economy and financial markets. As a long term investment, 324 00:16:46,400 --> 00:16:48,440 Speaker 1: we tend to look less at the fluctuates, short term 325 00:16:48,480 --> 00:16:52,840 Speaker 1: fluctuations and asset prices. We have diversified portfolios that actually 326 00:16:52,840 --> 00:16:56,000 Speaker 1: are geared to weather all different markets. My hope and 327 00:16:56,080 --> 00:17:00,440 Speaker 1: expectation is for the global economy to bob for growth 328 00:17:00,480 --> 00:17:04,520 Speaker 1: to um bottom out this year UH, and inflation start 329 00:17:04,600 --> 00:17:08,600 Speaker 1: to decline more meaningfully. We have inflation coming down the States, UH, 330 00:17:08,880 --> 00:17:11,320 Speaker 1: less so in Europe at this point. You know, there's 331 00:17:11,359 --> 00:17:13,840 Speaker 1: a lot of things to consider out there. We look 332 00:17:13,880 --> 00:17:17,320 Speaker 1: at UM the risk of a recession here and abroad. 333 00:17:17,920 --> 00:17:20,440 Speaker 1: We're coming off of one of the most aggressive interest 334 00:17:20,520 --> 00:17:22,960 Speaker 1: rate hike cycles that we've seen by the FED in 335 00:17:23,000 --> 00:17:26,879 Speaker 1: forty years. UM. You know that monetary policy operates with 336 00:17:26,960 --> 00:17:29,760 Speaker 1: a long and variable lag, so we really haven't seen 337 00:17:29,800 --> 00:17:32,159 Speaker 1: the impact of those rate hikes yet. And those rate 338 00:17:32,240 --> 00:17:35,639 Speaker 1: hikes continue. The Fed hikes basis points earlier this month. 339 00:17:35,920 --> 00:17:38,119 Speaker 1: They've hinted that they're probably gonna do another two and 340 00:17:38,160 --> 00:17:42,080 Speaker 1: that's what fit from futures are pricing in UM. We also, 341 00:17:42,280 --> 00:17:45,440 Speaker 1: as I said, inflation abroad is still sticky on the upside. 342 00:17:45,840 --> 00:17:48,280 Speaker 1: I also think there's a heightened level of geopolitical risk 343 00:17:48,320 --> 00:17:52,840 Speaker 1: to consider. The war the Russian invasion Ukraine is problematic. 344 00:17:52,920 --> 00:17:55,560 Speaker 1: We worry about that escalating, and I do think from 345 00:17:55,560 --> 00:17:58,960 Speaker 1: a longer term perspective, the dynamic between the US and 346 00:17:59,040 --> 00:18:02,120 Speaker 1: China and the relations ship. I think we'll have UH 347 00:18:02,200 --> 00:18:08,000 Speaker 1: implications for growth, competition, asset allocation for years to come. 348 00:18:08,359 --> 00:18:10,200 Speaker 1: So see when you have the luxury of a long 349 00:18:10,320 --> 00:18:12,679 Speaker 1: term perspective. On the other hand, you have to have 350 00:18:12,760 --> 00:18:15,600 Speaker 1: the money when the pensioners need the money. It's you 351 00:18:15,640 --> 00:18:18,520 Speaker 1: have to generate returns. As you say, it was a 352 00:18:18,600 --> 00:18:21,800 Speaker 1: rough year. We had stocks and bonds both down. What 353 00:18:21,840 --> 00:18:25,240 Speaker 1: does that tell you as an asset allocator about stocks, 354 00:18:25,240 --> 00:18:28,200 Speaker 1: bonds and maybe the alternative to the above. So stock 355 00:18:28,280 --> 00:18:30,240 Speaker 1: and bonds, you know, it's rare that they go down 356 00:18:30,240 --> 00:18:33,400 Speaker 1: in tandem, but it's not unprecedented, And you were right, David, 357 00:18:33,440 --> 00:18:36,040 Speaker 1: last year was a tough year. We had that traditional 358 00:18:36,080 --> 00:18:39,240 Speaker 1: sixty forty equity fixed income bond split generated a negative 359 00:18:39,280 --> 00:18:44,080 Speaker 1: return of that's painful for all manner of investor um. 360 00:18:44,160 --> 00:18:46,359 Speaker 1: We do again look on a long term horizon. We 361 00:18:46,400 --> 00:18:49,440 Speaker 1: want that balanced portfolio. But you're absolutely right we had 362 00:18:49,600 --> 00:18:53,720 Speaker 1: the offset, if you will, of private assets. We have 363 00:18:53,840 --> 00:19:00,000 Speaker 1: about allocation into private assets, spanning private equity, private credit, 364 00:19:00,040 --> 00:19:03,360 Speaker 1: it UH, infrastructure, core non core real estate, as well 365 00:19:03,400 --> 00:19:06,480 Speaker 1: as hedge funds. So we do have those offsets that 366 00:19:06,480 --> 00:19:10,000 Speaker 1: that that can help drive that performance irrespect of what 367 00:19:10,119 --> 00:19:13,639 Speaker 1: happens in the public markets. You've had a cap of 368 00:19:14,320 --> 00:19:16,959 Speaker 1: centers I understand it that's now been raised at by 369 00:19:17,000 --> 00:19:19,720 Speaker 1: the governor, got the hocoll Do you expect to use 370 00:19:19,760 --> 00:19:23,159 Speaker 1: a lot of that increased cap. Well, it's a wonderful question. 371 00:19:23,200 --> 00:19:25,720 Speaker 1: So you know, the new legislation was signed in the 372 00:19:25,760 --> 00:19:28,000 Speaker 1: law by the Governor at the end of the year. Uh, 373 00:19:28,040 --> 00:19:30,920 Speaker 1: and it definitely will give us an expand an opportunity set. 374 00:19:31,359 --> 00:19:35,080 Speaker 1: We'll be able to have a more optimal portfolio. My 375 00:19:35,200 --> 00:19:37,399 Speaker 1: expectation is, you know what, We're going to start the 376 00:19:37,440 --> 00:19:40,600 Speaker 1: process of reviewing our strategic asset allocations with the five 377 00:19:41,280 --> 00:19:45,240 Speaker 1: Plan Trustees and their consultants UM hoping to wrap that 378 00:19:45,280 --> 00:19:48,560 Speaker 1: work up by say October and then perhaps if there 379 00:19:48,600 --> 00:19:51,240 Speaker 1: is a change in strategy that will be implemented in 380 00:19:51,240 --> 00:19:53,960 Speaker 1: two thousand and twenty four beyond series. Really great to 381 00:19:54,000 --> 00:19:55,520 Speaker 1: have you ere in Walsh. Thank you so much for 382 00:19:55,560 --> 00:19:58,439 Speaker 1: joining us that Stephen Meyer, he's the chief investment officer 383 00:19:58,480 --> 00:20:02,800 Speaker 1: for the New York City Return from a System coming up. 384 00:20:02,880 --> 00:20:05,240 Speaker 1: We wrap up the week with our special contributor Larry 385 00:20:05,240 --> 00:20:08,919 Speaker 1: Summers of Harvard. That's next on Wall Street Week on Bloomberg. 386 00:20:12,040 --> 00:20:16,280 Speaker 1: This is Bloomberg Wall Street Week with David Weston from 387 00:20:16,359 --> 00:20:25,240 Speaker 1: Bloomberg Radio. This is Wall Street Week, Clim David Weston, 388 00:20:25,280 --> 00:20:27,479 Speaker 1: We're welcome back now our special contributor here at Wall 389 00:20:27,520 --> 00:20:30,200 Speaker 1: Street Week, he is Larry Summers of Harvard. So Larry. 390 00:20:30,200 --> 00:20:32,760 Speaker 1: One of the big events of this week was j Pile, 391 00:20:32,840 --> 00:20:35,479 Speaker 1: the Chair of the Federal Reserve, speaking with our very 392 00:20:35,520 --> 00:20:38,719 Speaker 1: own David Rubinstein the Economic Club in Washington, and the 393 00:20:38,760 --> 00:20:40,720 Speaker 1: markets came away from that saying, you know what, he 394 00:20:40,800 --> 00:20:42,719 Speaker 1: didn't go as far as we thought he would. It's 395 00:20:42,720 --> 00:20:45,760 Speaker 1: saying we've got a tighten more given those jobs numbers. 396 00:20:46,040 --> 00:20:48,720 Speaker 1: Are we becoming complacent because there's talk on Wall Street 397 00:20:48,720 --> 00:20:51,040 Speaker 1: now that there won't we any landing, whether it's soft 398 00:20:51,160 --> 00:20:54,800 Speaker 1: or hard. Basically, we'll just keep going. I didn't the 399 00:20:54,960 --> 00:20:59,560 Speaker 1: FED understands that it doesn't understand because no one can 400 00:21:00,440 --> 00:21:04,800 Speaker 1: know the future with confidence, and I think that the 401 00:21:04,880 --> 00:21:09,399 Speaker 1: Fed is determined to do what's necessary. That's certainly what 402 00:21:09,560 --> 00:21:15,440 Speaker 1: I hope is the case. In a substantially uncertain environment. 403 00:21:16,119 --> 00:21:22,240 Speaker 1: I think the consensus has become uh substantially too complacent 404 00:21:22,880 --> 00:21:30,240 Speaker 1: about inflation. For a variety of reasons. First, let's be clear, 405 00:21:30,920 --> 00:21:35,639 Speaker 1: even after the reductions we have seen, inflation today is 406 00:21:35,720 --> 00:21:41,040 Speaker 1: at levels that would have been unimaginable for inflation two 407 00:21:41,160 --> 00:21:45,640 Speaker 1: years ago. And so we haven't come all the way 408 00:21:45,640 --> 00:21:50,280 Speaker 1: down or got this fully under control. And in a way, 409 00:21:51,280 --> 00:21:53,240 Speaker 1: I guess one way to put it in Super Bowl 410 00:21:53,280 --> 00:21:56,560 Speaker 1: week here is that it's easier to move move the 411 00:21:56,600 --> 00:21:59,600 Speaker 1: ball down the field at midfield than it is when 412 00:21:59,640 --> 00:22:02,280 Speaker 1: you're in the red zone, and we're getting closer to 413 00:22:02,320 --> 00:22:05,240 Speaker 1: the red zone with respect to inflation, and so I 414 00:22:05,280 --> 00:22:08,600 Speaker 1: think the gains in terms of further reduction are going 415 00:22:08,640 --> 00:22:12,600 Speaker 1: to come harder. Second, I think there are a variety 416 00:22:12,720 --> 00:22:18,119 Speaker 1: of bounce back uh factors that we're gonna have. Uh. 417 00:22:18,359 --> 00:22:23,080 Speaker 1: You saw it in the market, wholesale use car prices 418 00:22:23,119 --> 00:22:26,240 Speaker 1: which look like they're gonna be a positive contributor to inflation. 419 00:22:26,720 --> 00:22:33,120 Speaker 1: You've seen some reversal on gasoline prices. More broadly, you've 420 00:22:33,160 --> 00:22:38,920 Speaker 1: seen a variety of prices that blipped way up nine 421 00:22:38,960 --> 00:22:42,800 Speaker 1: months or so ago, and now that's mean reverting. Now 422 00:22:42,840 --> 00:22:45,720 Speaker 1: that's coming back to normal. Well, it's not always gonna 423 00:22:45,720 --> 00:22:49,960 Speaker 1: be going down. And when those become normal, that's gonna 424 00:22:50,000 --> 00:22:55,880 Speaker 1: be an increment to the underlying UH inflation UH figure, 425 00:22:56,560 --> 00:23:01,040 Speaker 1: and so that too, I think is a cause for concern. Third, 426 00:23:01,240 --> 00:23:05,120 Speaker 1: if you look at the variables economists tend to think 427 00:23:05,520 --> 00:23:10,400 Speaker 1: that you should look at to predict what's happening with inflation, 428 00:23:11,119 --> 00:23:16,440 Speaker 1: we are an economy that's got relatively loose financial conditions. Now, 429 00:23:17,000 --> 00:23:21,320 Speaker 1: given what's happened to markets, by some measures, financial conditions 430 00:23:21,320 --> 00:23:24,680 Speaker 1: are looser than they were when all this tightening started. 431 00:23:25,000 --> 00:23:29,040 Speaker 1: That's probably misleading. But if we probably are back to 432 00:23:29,200 --> 00:23:32,960 Speaker 1: somewhere where we were late last summer in terms of 433 00:23:33,040 --> 00:23:39,280 Speaker 1: the degree of tightness in UH financial markets, and we've 434 00:23:39,359 --> 00:23:41,639 Speaker 1: got that at a time when we still have a 435 00:23:41,720 --> 00:23:48,000 Speaker 1: record level of vacancies relative to unemployment. So I think 436 00:23:48,320 --> 00:23:53,120 Speaker 1: with that kind of picture, the prospect that we are 437 00:23:53,240 --> 00:23:57,720 Speaker 1: not on a trajectory now where inflation is going to 438 00:23:57,880 --> 00:24:03,920 Speaker 1: get to the target level, and therefore this tightening cycle 439 00:24:04,680 --> 00:24:09,600 Speaker 1: is not just about one more, two more, three more 440 00:24:10,720 --> 00:24:17,760 Speaker 1: basis point increases, but something more fundamental. That's a substantial 441 00:24:17,880 --> 00:24:23,680 Speaker 1: probability UH in UH this environment. So I don't think 442 00:24:23,720 --> 00:24:30,560 Speaker 1: it's a moment for any kind of UH euphoria UM. 443 00:24:30,680 --> 00:24:35,520 Speaker 1: And I think there is some complacency that's setting in 444 00:24:35,520 --> 00:24:39,080 Speaker 1: in many places, Larry. We heard from Chair Powell on Tuesday. 445 00:24:39,160 --> 00:24:40,960 Speaker 1: A few hours later, we heard from the President of 446 00:24:41,080 --> 00:24:43,320 Speaker 1: States Joe Biden, as he gave his State of the 447 00:24:43,359 --> 00:24:46,119 Speaker 1: Union a rest to Congress. UH. He did talk about 448 00:24:46,119 --> 00:24:48,600 Speaker 1: some economic things fair number in there, including something you 449 00:24:48,640 --> 00:24:50,840 Speaker 1: and I have talked about, such as by America. What 450 00:24:50,880 --> 00:24:54,800 Speaker 1: did you make of the economic part President Biden speech. Look, 451 00:24:54,880 --> 00:24:58,560 Speaker 1: I think the most important thing to say about the 452 00:24:58,600 --> 00:25:03,000 Speaker 1: President's State of the Union was that it was probably 453 00:25:03,040 --> 00:25:09,320 Speaker 1: the clearest, strongest exposition of his economic philosophy that he 454 00:25:09,400 --> 00:25:14,480 Speaker 1: has delivered during his two years as president. I did 455 00:25:14,600 --> 00:25:20,080 Speaker 1: worry that as I heard him talk and speak powerfully, 456 00:25:20,119 --> 00:25:24,800 Speaker 1: and I thought persuasively about the junk fee issues and 457 00:25:24,920 --> 00:25:28,520 Speaker 1: the extra money people are paying for airline baggage or 458 00:25:28,600 --> 00:25:33,760 Speaker 1: paying for overdraft UH fees or a variety of those 459 00:25:33,800 --> 00:25:38,240 Speaker 1: other junk fees. I like that because it was recognizing 460 00:25:38,800 --> 00:25:43,600 Speaker 1: that people's incomes, people's spending power is what matters, and 461 00:25:43,640 --> 00:25:46,040 Speaker 1: that depends on how much they earned, and it also 462 00:25:46,080 --> 00:25:50,720 Speaker 1: depends on the prices they pay. I hope the administration 463 00:25:50,920 --> 00:25:56,560 Speaker 1: is being very careful about that comprehensively. My guests would 464 00:25:56,560 --> 00:26:00,080 Speaker 1: be that the extra taxes people are gonna pay a 465 00:26:00,640 --> 00:26:04,959 Speaker 1: because projects are going to cost more because of buy America, 466 00:26:05,560 --> 00:26:10,000 Speaker 1: the extra prices people pay because of tariffs that we 467 00:26:10,200 --> 00:26:15,080 Speaker 1: put on in the name of create or maintain in 468 00:26:15,119 --> 00:26:19,320 Speaker 1: the name of creating American jobs. My guess is that 469 00:26:19,960 --> 00:26:24,639 Speaker 1: those higher prices from things that we're doing through policy 470 00:26:25,240 --> 00:26:28,800 Speaker 1: probably add more to consumer burdens that all the junk 471 00:26:28,920 --> 00:26:32,639 Speaker 1: fees that the presidents spoke about. So I think we 472 00:26:32,680 --> 00:26:38,120 Speaker 1: need to look very very carefully at UH those UH policies. 473 00:26:38,440 --> 00:26:40,359 Speaker 1: Who One thing that you and I have not talked about. 474 00:26:40,359 --> 00:26:43,520 Speaker 1: I don't believe is Israel and that managment now is 475 00:26:43,600 --> 00:26:45,959 Speaker 1: new government over in Israel. There are a lot of 476 00:26:46,000 --> 00:26:48,399 Speaker 1: political and legal issues involved, but there are also some 477 00:26:48,400 --> 00:26:50,840 Speaker 1: economic issues. As you know, a number of U. S 478 00:26:50,880 --> 00:26:53,639 Speaker 1: economists you I don't think we're involved, wrote a letter 479 00:26:53,680 --> 00:26:56,840 Speaker 1: really expressing concern about some of the proposed changes in 480 00:26:56,840 --> 00:26:59,920 Speaker 1: the judiciary what that could mean for the Israeli economy. 481 00:27:00,240 --> 00:27:02,200 Speaker 1: I was a little surprised to see your name came 482 00:27:02,280 --> 00:27:05,159 Speaker 1: up actually in the Times of Israel as having talked 483 00:27:05,320 --> 00:27:07,760 Speaker 1: to the Prime Minister Benjamin Nille. What do you want 484 00:27:07,760 --> 00:27:10,200 Speaker 1: to tell us about what they're doing over there. So David, 485 00:27:10,240 --> 00:27:15,560 Speaker 1: I don't I don't talk about my UH conversations with 486 00:27:15,760 --> 00:27:20,960 Speaker 1: government officials, as you know, but I have been following 487 00:27:21,000 --> 00:27:24,439 Speaker 1: this issue closely, and I think the temperature has to 488 00:27:24,520 --> 00:27:30,119 Speaker 1: come down on both sides. I think there is a 489 00:27:30,119 --> 00:27:36,680 Speaker 1: taste for strong case for judicial reform UH in Israel. 490 00:27:37,240 --> 00:27:42,200 Speaker 1: It's unusual by international standards for judges to be chosen 491 00:27:42,680 --> 00:27:47,679 Speaker 1: by currently sitting judges. It's unusual for courts to be 492 00:27:47,800 --> 00:27:52,960 Speaker 1: able to rule out legislation UH simply by judging that 493 00:27:53,040 --> 00:27:57,800 Speaker 1: it's unreasonable without having a constitution UH to point to. 494 00:27:58,720 --> 00:28:04,040 Speaker 1: On the other hand, it's very clear from the context 495 00:28:04,119 --> 00:28:07,800 Speaker 1: of the way this is being done that it is 496 00:28:08,400 --> 00:28:12,080 Speaker 1: feeling to a large number of people and a large 497 00:28:12,160 --> 00:28:15,159 Speaker 1: number of people with the capacity to move their money 498 00:28:15,520 --> 00:28:21,359 Speaker 1: in and out of Israel, particularly in the entrepreneurial community, 499 00:28:21,400 --> 00:28:28,440 Speaker 1: that an overly rapid not carefully done judicial reform could 500 00:28:28,560 --> 00:28:32,920 Speaker 1: raise serious and profound questions about the rule of law, 501 00:28:33,640 --> 00:28:37,080 Speaker 1: and that, it seems to me, could have quite serious 502 00:28:37,240 --> 00:28:43,160 Speaker 1: adverse effects on the Israeli economy. And finally, at the 503 00:28:43,240 --> 00:28:45,760 Speaker 1: end of the week, we received word that Mr Kazua 504 00:28:45,880 --> 00:28:48,560 Speaker 1: Huaida may well be appointed the next Governor of the 505 00:28:48,560 --> 00:28:50,960 Speaker 1: Bank of Japan. He is an academic economist as I 506 00:28:51,080 --> 00:28:53,200 Speaker 1: understand it. He has served in the past on the 507 00:28:53,240 --> 00:28:56,400 Speaker 1: Bank of Japan Policy Board. Do you have thoughts about 508 00:28:56,440 --> 00:28:58,920 Speaker 1: either Mr Uaida or where the Bank of Japan needs 509 00:28:58,920 --> 00:29:01,600 Speaker 1: to go next? You know, I think we can think 510 00:29:01,640 --> 00:29:07,720 Speaker 1: of him has been UH Japan's Ben burn Anky. He 511 00:29:07,880 --> 00:29:10,320 Speaker 1: studied at m I T at about the same time 512 00:29:10,360 --> 00:29:14,920 Speaker 1: that Ben did, with the same thesis advisor that Ben 513 00:29:14,960 --> 00:29:19,520 Speaker 1: burn Ank he had. He specialized in similar areas of 514 00:29:19,720 --> 00:29:26,880 Speaker 1: monetary economics and has a soft spoken academic way about him, 515 00:29:27,520 --> 00:29:33,880 Speaker 1: but is also capable of being UH decisive. And I 516 00:29:33,920 --> 00:29:38,760 Speaker 1: think Japan has a very complicated issue ahead of it. 517 00:29:39,240 --> 00:29:41,720 Speaker 1: I don't think it's going to be able to maintain 518 00:29:42,440 --> 00:29:47,320 Speaker 1: yield control for an indefinite horizon, and he has big 519 00:29:47,320 --> 00:29:52,840 Speaker 1: shoes to fill. I've known UH Corona soon for more 520 00:29:52,920 --> 00:30:02,400 Speaker 1: than thirty years. He's an extraordinarily UH capable analytical but 521 00:30:02,600 --> 00:30:07,400 Speaker 1: also with a real measure of cunning UH central banker, 522 00:30:07,600 --> 00:30:11,400 Speaker 1: and he he will be UH. He will be missed. 523 00:30:11,680 --> 00:30:15,720 Speaker 1: But knowing Mr Huweita, I've got quite a bit of 524 00:30:15,760 --> 00:30:19,960 Speaker 1: confidence in his ability to chart a course forward. Larry, 525 00:30:20,000 --> 00:30:22,000 Speaker 1: thank you so very much as Larry Summers are Harvard 526 00:30:22,000 --> 00:30:26,280 Speaker 1: a very special contributor here on Wall Street Week. Coming 527 00:30:26,360 --> 00:30:29,320 Speaker 1: up on the road again to New York, to Virginia, 528 00:30:29,440 --> 00:30:33,840 Speaker 1: to Australia, but to Hong Kong. That's next down Wall 529 00:30:33,880 --> 00:30:44,360 Speaker 1: Street Week on Bluebird. Finally, one more thought on the 530 00:30:44,480 --> 00:30:48,560 Speaker 1: road again. The pandemic hit traveled like nobody's business. During 531 00:30:48,600 --> 00:30:51,960 Speaker 1: the pandemic, people stayed at home, they didn't go to movies, 532 00:30:52,120 --> 00:30:55,840 Speaker 1: they didn't leave their homes, they didn't travel. As the 533 00:30:55,880 --> 00:30:59,640 Speaker 1: world's economy shut down, so did the airlines and hotels. 534 00:31:00,200 --> 00:31:02,160 Speaker 1: I think we've never seen an economy coming out of 535 00:31:02,200 --> 00:31:04,600 Speaker 1: a shop down like this at a moment like this, 536 00:31:04,800 --> 00:31:08,400 Speaker 1: when the world is in the kind of unusual and 537 00:31:08,520 --> 00:31:11,520 Speaker 1: unique spot that it's in. But now things are coming back, 538 00:31:11,760 --> 00:31:14,680 Speaker 1: with the airlines adding business as fast as they can. 539 00:31:15,000 --> 00:31:17,560 Speaker 1: It's a billion pound ball perspective. With the to be achieved. 540 00:31:17,600 --> 00:31:20,640 Speaker 1: Also the highest drainings ever in the last quarter in 541 00:31:20,680 --> 00:31:25,000 Speaker 1: the company's history, and Airbnb reporting a big jump in demand. 542 00:31:25,360 --> 00:31:28,760 Speaker 1: What we're seeing as hosts made record earnings this past summer. 543 00:31:29,080 --> 00:31:31,960 Speaker 1: Given the upstick and tourism, it's no surprise that governments 544 00:31:32,000 --> 00:31:34,720 Speaker 1: are back in the business of luring visitors. New York 545 00:31:34,800 --> 00:31:38,400 Speaker 1: urges visitors to come check out the slopes. There's something 546 00:31:38,480 --> 00:31:41,360 Speaker 1: for everyone in New York State. Virginia urges us to 547 00:31:41,400 --> 00:31:47,400 Speaker 1: come back to Williamsburg, and even Australia is getting in 548 00:31:47,480 --> 00:31:50,440 Speaker 1: on the act with a campaign featuring Hollywood stars will 549 00:31:50,520 --> 00:31:54,240 Speaker 1: our Nett and Rose Burn, or at least computer animated 550 00:31:54,360 --> 00:31:58,600 Speaker 1: versions of them. There's nothing like Australia. But perhaps the 551 00:31:58,640 --> 00:32:02,800 Speaker 1: most remarkable of these campaigns is Hello Hong Kong, complete 552 00:32:02,800 --> 00:32:07,280 Speaker 1: with offers of five hundred thousand free airline tickets steal 553 00:32:07,480 --> 00:32:10,880 Speaker 1: in Hong Kong, which is badly needed given the reported 554 00:32:10,960 --> 00:32:13,360 Speaker 1: plummet in tourist visas to Hong Kong for a pre 555 00:32:13,520 --> 00:32:17,080 Speaker 1: pandemic high of fifty six million to report it one 556 00:32:17,160 --> 00:32:22,960 Speaker 1: hundred thousand in two though putting prominent Hong Kong citizens 557 00:32:22,960 --> 00:32:25,880 Speaker 1: on trial for national security violations isn't like to help 558 00:32:25,960 --> 00:32:29,840 Speaker 1: that situation much. One thing is for sure. The Secretary 559 00:32:29,840 --> 00:32:32,000 Speaker 1: of State B. Lincoln won't be traveling to Hong Kong. 560 00:32:32,320 --> 00:32:34,520 Speaker 1: He had to cancel his China trip because of that 561 00:32:34,640 --> 00:32:39,400 Speaker 1: pesky spy balloon. We concluded that conditions were not conducive 562 00:32:39,800 --> 00:32:42,880 Speaker 1: for a constructive visit at this time, and there is 563 00:32:42,960 --> 00:32:45,880 Speaker 1: one legendary football player who will not be traveling to 564 00:32:45,960 --> 00:32:48,800 Speaker 1: Phoenix for the Super Bowl. Though, Tom Brady's decision to 565 00:32:48,800 --> 00:32:51,840 Speaker 1: retire managed to drive up the price of beach front property, 566 00:32:52,200 --> 00:32:54,640 Speaker 1: or at least the beach he was sitting on when 567 00:32:54,640 --> 00:32:59,040 Speaker 1: he made his announcement from retiring for good, with reports 568 00:32:59,040 --> 00:33:01,719 Speaker 1: that a jar of and from that beach was bit 569 00:33:01,840 --> 00:33:05,000 Speaker 1: up to almost one hundred thousand dollars on eBay at 570 00:33:05,040 --> 00:33:08,240 Speaker 1: one point. And even if Mr Brady doesn't make it 571 00:33:08,240 --> 00:33:10,680 Speaker 1: back to the super Bowl, he can always head to 572 00:33:10,800 --> 00:33:15,880 Speaker 1: Orlando that doesn't. For this episode of Wall Street Week, 573 00:33:15,960 --> 00:33:18,760 Speaker 1: I'm David Weston. This is Bloomberg. See you next week.