1 00:00:00,240 --> 00:00:05,000 Speaker 1: This is Bloomberg Wall Street Week. Market shruggle, higher consumer prices, 2 00:00:05,040 --> 00:00:07,400 Speaker 1: The economy is in the process of rebounding. Will the 3 00:00:07,400 --> 00:00:10,479 Speaker 1: Federal Reserve have its own digital currency? The financial stories 4 00:00:10,520 --> 00:00:12,879 Speaker 1: that cheap hard work. Many people think the eels are 5 00:00:12,880 --> 00:00:15,080 Speaker 1: just going to keep marching up. We have more spending 6 00:00:15,120 --> 00:00:17,160 Speaker 1: coming out of Congress. One of the big questions I 7 00:00:17,200 --> 00:00:19,880 Speaker 1: think on investor's minds inflations through the eyes of the 8 00:00:19,920 --> 00:00:23,560 Speaker 1: most influential voices. Larry Summer is the former Treasury Secretary, 9 00:00:23,640 --> 00:00:27,240 Speaker 1: Bryan Wynahan of Bank of America, will CEO of Charlie Sharp. 10 00:00:27,360 --> 00:00:31,560 Speaker 1: Bloomberg wool Street Week with David Weston from Bloomberg Radio, 11 00:00:31,960 --> 00:00:35,320 Speaker 1: waiting for answers on the economy, on Russia and Ukraine, 12 00:00:35,360 --> 00:00:38,519 Speaker 1: on COVID, and of course on the Fed. This is 13 00:00:38,520 --> 00:00:42,639 Speaker 1: Bloomberg Wall Street Week. I'm David Weston. So far two 14 00:00:42,680 --> 00:00:45,640 Speaker 1: has given us more questions than it has given us answers. 15 00:00:45,880 --> 00:00:48,200 Speaker 1: As U s CPI numbers this week came in even 16 00:00:48,320 --> 00:00:51,720 Speaker 1: higher than expected, an annual rate of seven point five 17 00:00:52,600 --> 00:00:55,800 Speaker 1: that's the highest in forty years. Continuing to press the 18 00:00:55,880 --> 00:00:59,640 Speaker 1: all important question of whether we've overheated the economy With 19 00:00:59,760 --> 00:01:02,880 Speaker 1: all all that fiscal stimulus and if so, whether we 20 00:01:02,880 --> 00:01:05,880 Speaker 1: can bring it off the boil without doing serious damage, 21 00:01:06,000 --> 00:01:08,800 Speaker 1: with Mike Wilson of Morgan Stanley saying that is the 22 00:01:08,959 --> 00:01:13,080 Speaker 1: big question. This is the strained the question how much 23 00:01:13,120 --> 00:01:16,880 Speaker 1: titany can defend actually do um if growth is slowing. 24 00:01:17,280 --> 00:01:19,720 Speaker 1: And for all the high level diplomacy this week gave 25 00:01:19,840 --> 00:01:24,160 Speaker 1: us no real answers about Ukraine, with President Putin insisting 26 00:01:24,280 --> 00:01:27,000 Speaker 1: he has not decided to invade and is willing to 27 00:01:27,040 --> 00:01:30,920 Speaker 1: keep talking. While German Chancellor Schultz visited, President Biden came 28 00:01:30,920 --> 00:01:33,360 Speaker 1: out saying Germany stood with the West when it comes 29 00:01:33,400 --> 00:01:37,200 Speaker 1: to potential sanctions, although he didn't say what exactly. Everyone 30 00:01:37,400 --> 00:01:40,880 Speaker 1: was the United on We are acting together. We are 31 00:01:41,000 --> 00:01:44,720 Speaker 1: absolutely united, and we will not taking different steps. We 32 00:01:44,840 --> 00:01:47,240 Speaker 1: will do the same steps and they will be very 33 00:01:47,319 --> 00:01:50,560 Speaker 1: very hot to Russia and they should understand. And when 34 00:01:50,560 --> 00:01:52,680 Speaker 1: it came to COVID, the answers we got were a 35 00:01:52,720 --> 00:01:55,840 Speaker 1: mixed bag, with a range of governors easing off on 36 00:01:55,960 --> 00:02:00,360 Speaker 1: mask mandates, including Governor Kathy Hokel of New York. At 37 00:02:00,400 --> 00:02:03,120 Speaker 1: this time, we say that is the right decision to 38 00:02:03,240 --> 00:02:08,200 Speaker 1: lift this mandate for indoor businesses and let counties cities 39 00:02:08,360 --> 00:02:11,920 Speaker 1: and businesses to make their own decisions on what they 40 00:02:11,960 --> 00:02:14,600 Speaker 1: want to do. At the same time that Rochelle will 41 00:02:14,639 --> 00:02:17,440 Speaker 1: Unski of the c d C was saying it recommends 42 00:02:17,480 --> 00:02:21,040 Speaker 1: keeping the masks on at this time. We continue to 43 00:02:21,040 --> 00:02:25,280 Speaker 1: recommend masking in areas of high and substantial transmission um 44 00:02:25,360 --> 00:02:29,000 Speaker 1: that's much of the country right now, in public indoor settings. 45 00:02:29,040 --> 00:02:31,680 Speaker 1: And what did all of this mean? Well, in the markets, 46 00:02:31,680 --> 00:02:34,120 Speaker 1: it made for a truly wild week, starting with three 47 00:02:34,200 --> 00:02:37,160 Speaker 1: days of relative hope and calm followed by two days 48 00:02:37,240 --> 00:02:41,040 Speaker 1: of real turmoil as CPI numbers on Thursday drove yield 49 00:02:41,240 --> 00:02:43,480 Speaker 1: up and stocks down, with the yield in the two 50 00:02:43,560 --> 00:02:46,480 Speaker 1: year rocketing up thirty basis points on Thursday a loane, 51 00:02:46,919 --> 00:02:50,000 Speaker 1: only to have National Security Advisor Jake Sullivan come out 52 00:02:50,040 --> 00:02:53,240 Speaker 1: Friday afternoon to warn that a Russian invasion of Ukraine 53 00:02:53,280 --> 00:02:56,480 Speaker 1: could be imminent despite what President Putin has been saying, 54 00:02:56,919 --> 00:03:00,160 Speaker 1: which drove people back into bonds at the same time 55 00:03:00,160 --> 00:03:02,760 Speaker 1: they continue to sell their stocks, which took the ten 56 00:03:02,840 --> 00:03:06,080 Speaker 1: year yield back down under two again and sent the 57 00:03:06,200 --> 00:03:09,560 Speaker 1: SMP and five five hundred and nasdack sharply down, while 58 00:03:09,600 --> 00:03:12,400 Speaker 1: Brent crude climbed over ninety five dollars a barrel for 59 00:03:12,400 --> 00:03:15,120 Speaker 1: the first time since two thousand fourteen. So where did 60 00:03:15,160 --> 00:03:17,960 Speaker 1: we end up? When the dust settled? More or less? 61 00:03:18,200 --> 00:03:20,480 Speaker 1: The yield on the tenure was back down to one 62 00:03:20,520 --> 00:03:22,840 Speaker 1: point nine just about where it started the week. Actually, well, 63 00:03:22,840 --> 00:03:25,120 Speaker 1: the SMP five dred was off one point eight percent 64 00:03:25,360 --> 00:03:27,800 Speaker 1: and the NASDAC was down almost two point two percent 65 00:03:28,160 --> 00:03:30,800 Speaker 1: for the week. To take us through this very difficult 66 00:03:30,840 --> 00:03:33,520 Speaker 1: week in the markets, we welcome now Sonny Bechelis CEO 67 00:03:33,639 --> 00:03:36,200 Speaker 1: of Rock Creek and Rick Reader black Rock, CEO for 68 00:03:36,240 --> 00:03:39,040 Speaker 1: fixed Income and head of the global allocation team there. 69 00:03:39,120 --> 00:03:41,400 Speaker 1: So Rick will start with you, and a week full 70 00:03:41,400 --> 00:03:43,800 Speaker 1: of surprises for most of us, what surprised you the most? 71 00:03:43,840 --> 00:03:46,240 Speaker 1: What was the biggest surprise that two year move on Thursday? 72 00:03:47,600 --> 00:03:49,240 Speaker 1: It's hard to count it up. Actually, if you go 73 00:03:49,280 --> 00:03:51,680 Speaker 1: back to last Friday, we get the payroll report. You 74 00:03:51,760 --> 00:03:54,600 Speaker 1: got a blockbuster payroll report that was surprising and that 75 00:03:54,720 --> 00:03:58,080 Speaker 1: you think about during o Macron how many people could 76 00:03:58,160 --> 00:04:01,160 Speaker 1: we hire and you got this explosive number the CPI reported, 77 00:04:01,240 --> 00:04:04,000 Speaker 1: you said, which was a bit surprising, and we're moving 78 00:04:04,040 --> 00:04:07,880 Speaker 1: away from reopening components driving inflation. It was pervasive across 79 00:04:07,880 --> 00:04:11,120 Speaker 1: the board, and then the volatility that we just got 80 00:04:11,160 --> 00:04:14,640 Speaker 1: today uh in and around the Ukraine situation. So boy, 81 00:04:14,720 --> 00:04:17,080 Speaker 1: this was you talk about tumultuous weeks. This was this 82 00:04:17,120 --> 00:04:19,200 Speaker 1: will go down the hall of fame. It's uh as 83 00:04:19,279 --> 00:04:21,320 Speaker 1: one of them and as sudden, what did you make 84 00:04:21,360 --> 00:04:23,640 Speaker 1: of all of it? I agree with Drick, it's hard 85 00:04:23,680 --> 00:04:27,400 Speaker 1: to say that one event was was more turbulent than 86 00:04:27,440 --> 00:04:29,719 Speaker 1: the other. And as you said, to top it off 87 00:04:29,880 --> 00:04:36,640 Speaker 1: was the news about Russia, which which impacted everything again drastically. 88 00:04:36,400 --> 00:04:39,440 Speaker 1: When it comes to inflation, what's causing it? In your estimation, 89 00:04:39,480 --> 00:04:41,799 Speaker 1: because what's causing it will directly affect what we should 90 00:04:41,800 --> 00:04:43,640 Speaker 1: do about it, you know, David, I mean there is 91 00:04:43,680 --> 00:04:47,000 Speaker 1: I mean, clearly the demand function in the system is high. 92 00:04:47,080 --> 00:04:49,840 Speaker 1: But what what's But more than that, you've got to 93 00:04:49,880 --> 00:04:52,800 Speaker 1: supply sort of supply components that is pretty dramatic that 94 00:04:52,920 --> 00:04:55,279 Speaker 1: I mean obviously got the supply chain shocks. You know, 95 00:04:55,320 --> 00:04:57,919 Speaker 1: you look at components like rent where it's just not 96 00:04:58,120 --> 00:05:01,480 Speaker 1: enough inventory today that's creating some of it. Some of 97 00:05:01,480 --> 00:05:04,360 Speaker 1: this dynamic you know, obviously come out of these oil 98 00:05:04,600 --> 00:05:07,680 Speaker 1: input costs. And so you've got across the board set 99 00:05:07,680 --> 00:05:10,200 Speaker 1: of influences that that's probably gonna stick with us for 100 00:05:10,240 --> 00:05:12,400 Speaker 1: a period of time. I do think you're gonna come 101 00:05:12,440 --> 00:05:15,400 Speaker 1: down in the second second half of the year. By 102 00:05:15,440 --> 00:05:16,720 Speaker 1: the way, there's something I was just looking at the 103 00:05:16,760 --> 00:05:18,760 Speaker 1: University of Michigan day that came out. It was the 104 00:05:18,800 --> 00:05:22,039 Speaker 1: worst sentiment reading in ten years. And when you look 105 00:05:22,080 --> 00:05:25,560 Speaker 1: at things like time to buy a home or attractive 106 00:05:25,640 --> 00:05:27,520 Speaker 1: is to buy a home or a car, it's plummeting. 107 00:05:27,600 --> 00:05:30,760 Speaker 1: So there's a really interesting dynamic at play. Prices are 108 00:05:30,800 --> 00:05:34,320 Speaker 1: moving higher, it's dulling consumer sentiment, which will read, which 109 00:05:34,360 --> 00:05:36,560 Speaker 1: is again why I think you'll see some shifting over 110 00:05:36,600 --> 00:05:39,719 Speaker 1: the next few months away from these these price increases 111 00:05:39,760 --> 00:05:41,560 Speaker 1: are causing people to say step back and said, guess 112 00:05:41,600 --> 00:05:43,280 Speaker 1: I'm gonna wait for a bit of time, because I 113 00:05:43,320 --> 00:05:45,920 Speaker 1: was going to ask you, if you listen to cecili 114 00:05:46,000 --> 00:05:49,200 Speaker 1: Ras or others in the administration, the assumption was by 115 00:05:49,200 --> 00:05:52,039 Speaker 1: the end of this year in the inflation rates could 116 00:05:52,080 --> 00:05:55,200 Speaker 1: be about half of what they we started the year. 117 00:05:55,600 --> 00:05:58,479 Speaker 1: Do you think we will end up the year at 118 00:05:58,880 --> 00:06:00,800 Speaker 1: three to four percent or do you think will be 119 00:06:00,839 --> 00:06:03,040 Speaker 1: closer to five? You know, when we when we do 120 00:06:03,120 --> 00:06:04,880 Speaker 1: run all our analytics and we look at all the 121 00:06:04,960 --> 00:06:07,200 Speaker 1: quantitative data that gets into it. We actually have it 122 00:06:07,320 --> 00:06:09,640 Speaker 1: coming down to core pc if any on how you 123 00:06:09,640 --> 00:06:12,880 Speaker 1: measure core PCE core c P I, we have coming 124 00:06:12,880 --> 00:06:16,120 Speaker 1: down to around three. There's a few few factors at play. 125 00:06:16,200 --> 00:06:18,200 Speaker 1: One of the big one is the base effects. You 126 00:06:18,240 --> 00:06:20,000 Speaker 1: know when you look at year on year that one 127 00:06:20,040 --> 00:06:21,880 Speaker 1: will start to start to kick in, some of the 128 00:06:21,920 --> 00:06:26,520 Speaker 1: supply chain dynamics come off, and then m and as 129 00:06:26,560 --> 00:06:29,559 Speaker 1: well as you think that commodity prices will start to peak. 130 00:06:29,640 --> 00:06:32,039 Speaker 1: So there's a series of factors that that will bring 131 00:06:32,040 --> 00:06:34,560 Speaker 1: it down. The thing that is pretty incredible, things like 132 00:06:34,640 --> 00:06:37,440 Speaker 1: rent are hard to bring down because the inventory dynamic. 133 00:06:37,800 --> 00:06:40,240 Speaker 1: The other one that you know it's going to continue 134 00:06:40,240 --> 00:06:43,479 Speaker 1: to be with us is wages continue to accelerate. So listen, 135 00:06:43,480 --> 00:06:45,240 Speaker 1: I think they're gonna be sticky higher, but if you 136 00:06:45,440 --> 00:06:48,960 Speaker 1: quantitatively um it does suggest when to come down significantly 137 00:06:49,000 --> 00:06:51,440 Speaker 1: by year end. Okay Rick creator of black Rock and 138 00:06:51,640 --> 00:06:54,000 Speaker 1: Study besche Lass of Rock Creek, who's staying with us 139 00:06:54,240 --> 00:06:56,640 Speaker 1: as we go on to continue to talk about really 140 00:06:56,680 --> 00:06:59,640 Speaker 1: wild chaatic week in the market, talk about liquidity and 141 00:06:59,680 --> 00:07:01,479 Speaker 1: also by the way, we better get back to Ukraine. 142 00:07:01,680 --> 00:07:04,200 Speaker 1: That's gonna have next on Wall Street Week on Bloomberg. 143 00:07:07,360 --> 00:07:11,320 Speaker 1: This is Bloomberg Wall Street Week with David Weston from 144 00:07:11,440 --> 00:07:14,560 Speaker 1: Bloomberg Radio. We are back with our roundtable of Rick Reader, 145 00:07:14,600 --> 00:07:16,920 Speaker 1: a Black Rocket of Sunday specialists of Rock Creek where 146 00:07:17,040 --> 00:07:20,760 Speaker 1: continue talking about this truly extraordinary week in the market. So, Rick, 147 00:07:20,800 --> 00:07:22,200 Speaker 1: I want to come back to you and something you've 148 00:07:22,200 --> 00:07:24,760 Speaker 1: talked about repeatedly in the past, and that's liquidity and 149 00:07:24,800 --> 00:07:27,560 Speaker 1: the effect of liquidity or lack of liquidity in the marketplace. 150 00:07:27,640 --> 00:07:29,760 Speaker 1: Where are we liquidity right now? How much is on 151 00:07:29,800 --> 00:07:34,840 Speaker 1: the volatibility are we seeing? Is because people are withdrawing liquidity. Yeah, 152 00:07:34,920 --> 00:07:37,040 Speaker 1: David A man that that is part of why these 153 00:07:37,080 --> 00:07:40,960 Speaker 1: markets are so volatile. There is no conviction in today's markets. 154 00:07:40,960 --> 00:07:43,800 Speaker 1: And so what happens is markets tend to uh always 155 00:07:43,840 --> 00:07:45,720 Speaker 1: look at top of the book liquidity, meaning in the 156 00:07:45,720 --> 00:07:48,640 Speaker 1: equity market, how much can you executed the price? And 157 00:07:48,960 --> 00:07:50,320 Speaker 1: much of the time this week it was a couple 158 00:07:50,360 --> 00:07:53,160 Speaker 1: of million dollars worth that that number is usually many, 159 00:07:53,200 --> 00:07:56,240 Speaker 1: many multiples. So that what happens is people when you 160 00:07:56,280 --> 00:08:00,760 Speaker 1: get all of these ambiguityous ambiguous indicators, where is growth 161 00:08:00,800 --> 00:08:02,960 Speaker 1: going to be? How aggressive the Fed's gonna be gosh. Now, 162 00:08:03,120 --> 00:08:05,680 Speaker 1: just through the Russi of Ukraine into the equation, the 163 00:08:05,760 --> 00:08:08,160 Speaker 1: liquidia in the markets go away. And part of why 164 00:08:08,200 --> 00:08:09,960 Speaker 1: the market of the licuid in the markets go away. 165 00:08:10,000 --> 00:08:14,239 Speaker 1: People always think about what's working in my portfolio, what's 166 00:08:14,240 --> 00:08:16,640 Speaker 1: working as a hedge? And you think about what's happened 167 00:08:16,680 --> 00:08:20,400 Speaker 1: this year. Bonds are bonds here before today, Bonds are 168 00:08:20,440 --> 00:08:23,320 Speaker 1: going down in price, equities are going down in price. 169 00:08:23,640 --> 00:08:25,920 Speaker 1: What is how do I think about that? And how 170 00:08:25,920 --> 00:08:27,360 Speaker 1: do I think about a hedge? Because you get it, 171 00:08:27,400 --> 00:08:29,600 Speaker 1: you get something like like the russ of Ukraine thing, 172 00:08:30,040 --> 00:08:32,440 Speaker 1: and all of a sudden, treasuries rally. So whereas I was, 173 00:08:32,720 --> 00:08:34,600 Speaker 1: I'm worried about interest rates being higher. So you've got 174 00:08:34,679 --> 00:08:37,400 Speaker 1: to be careful about that as a hedge because now 175 00:08:37,520 --> 00:08:40,280 Speaker 1: now they start to rally, it creates a dynamic in 176 00:08:40,320 --> 00:08:43,640 Speaker 1: the market. There's not enough conviction, there's not enough hedging ability, 177 00:08:44,080 --> 00:08:45,959 Speaker 1: is not enough mitigans to manage risk. So you just 178 00:08:46,000 --> 00:08:48,920 Speaker 1: gotta bring risk down. You gotta run smaller position, higher 179 00:08:49,000 --> 00:08:51,280 Speaker 1: levels of cash, and that means a liquid in the 180 00:08:51,320 --> 00:08:54,880 Speaker 1: markets because people don't have conviction, because people aren't putting 181 00:08:54,920 --> 00:08:57,680 Speaker 1: as much money to work. Then you have a market 182 00:08:57,720 --> 00:09:00,760 Speaker 1: that is skin deep and and you've gotta be really 183 00:09:00,800 --> 00:09:04,440 Speaker 1: thoughtful about how you want to execute these markets. Stiddy, 184 00:09:04,440 --> 00:09:06,679 Speaker 1: I wonder about you as an investor, because you invest 185 00:09:06,720 --> 00:09:09,200 Speaker 1: in the longer term. It looks like we're going through 186 00:09:09,240 --> 00:09:11,560 Speaker 1: a change in the paradigm right now, one of a 187 00:09:11,640 --> 00:09:14,280 Speaker 1: lot of support monetary and fiscal support for the markets, 188 00:09:14,360 --> 00:09:15,960 Speaker 1: and it looks like we may be going away from 189 00:09:16,040 --> 00:09:18,880 Speaker 1: that neutrality or even some tightening. What does that mean 190 00:09:18,920 --> 00:09:21,280 Speaker 1: for you as investor? What are good investments in that climate? 191 00:09:21,360 --> 00:09:25,040 Speaker 1: What are bad investments? You certainly need to move to 192 00:09:25,160 --> 00:09:28,360 Speaker 1: more active investment in in this kind of period. And 193 00:09:28,360 --> 00:09:31,240 Speaker 1: as we said, uh, if we go back to pre 194 00:09:31,360 --> 00:09:34,640 Speaker 1: COVID days, we already were having some of these liquidity 195 00:09:34,679 --> 00:09:37,440 Speaker 1: problems right there were you know they that that was 196 00:09:37,480 --> 00:09:40,160 Speaker 1: what we used to talk about before COVID, And of 197 00:09:40,200 --> 00:09:44,040 Speaker 1: course it's coming back with a vengeance. And so looking 198 00:09:44,320 --> 00:09:48,120 Speaker 1: forward into the markets, as we're seeing, interestingly, global markets 199 00:09:48,120 --> 00:09:51,000 Speaker 1: are doing better than the US this year, and even 200 00:09:51,120 --> 00:09:54,040 Speaker 1: places like Europe and emerging markets despite all the things 201 00:09:54,080 --> 00:09:57,959 Speaker 1: that are going on in both have been doing much better. 202 00:09:58,440 --> 00:10:02,520 Speaker 1: A small cap and then again I think with what's 203 00:10:02,559 --> 00:10:07,319 Speaker 1: going on to your politically. I'm actually bullish on clean 204 00:10:07,400 --> 00:10:10,079 Speaker 1: energy because people are going to be investing in it 205 00:10:10,240 --> 00:10:13,120 Speaker 1: as a as a hedge to what is going on 206 00:10:13,520 --> 00:10:15,720 Speaker 1: in right in front of our eyes right now. Record 207 00:10:15,760 --> 00:10:19,640 Speaker 1: about the geopolitics are investing. We saw we've seen a 208 00:10:19,640 --> 00:10:21,840 Speaker 1: pattern here of the US being the place to be 209 00:10:22,120 --> 00:10:23,559 Speaker 1: compared to the rest of the world. A lot of 210 00:10:23,600 --> 00:10:25,880 Speaker 1: people expecting as we turn here, it's going to go 211 00:10:25,920 --> 00:10:28,160 Speaker 1: back to Europe, it's gonna go back to emerging markets. 212 00:10:28,320 --> 00:10:30,800 Speaker 1: They're gonna be more the better investments the part because 213 00:10:30,800 --> 00:10:33,400 Speaker 1: evaluations are lower, and by the way, their monetary policy 214 00:10:33,440 --> 00:10:35,560 Speaker 1: and a lot of em countries is quite different. Does 215 00:10:35,600 --> 00:10:38,440 Speaker 1: this sort of geopolitical conflict have the potential to reverse that? 216 00:10:40,480 --> 00:10:42,400 Speaker 1: Uh So, listen, I'd say a couple of links. First 217 00:10:42,400 --> 00:10:44,839 Speaker 1: of all, this is a pretty complex situation. Your question 218 00:10:44,920 --> 00:10:49,000 Speaker 1: enough sullenly about about transitory. Mike senses, this isn't going 219 00:10:49,040 --> 00:10:52,360 Speaker 1: to get resolved. There's not gonna be a checkered flag 220 00:10:52,400 --> 00:10:55,280 Speaker 1: of it's it's it's free to get to to move forward. 221 00:10:55,320 --> 00:10:56,960 Speaker 1: So I think there's going to be with us for 222 00:10:57,000 --> 00:10:59,920 Speaker 1: a period of time, and markets don't like that. Markets 223 00:11:00,000 --> 00:11:03,199 Speaker 1: I can put things in boxes and understand like as 224 00:11:03,200 --> 00:11:05,360 Speaker 1: a FED hawkersh do of it is economy good bad? 225 00:11:05,400 --> 00:11:07,319 Speaker 1: They just want they just want to put things in boxes. 226 00:11:07,360 --> 00:11:08,839 Speaker 1: This won't be able to be put in the box 227 00:11:09,160 --> 00:11:10,440 Speaker 1: for a period of time. So what do you how 228 00:11:10,480 --> 00:11:13,440 Speaker 1: do you invest relative to that? Listen, I mean, we 229 00:11:13,440 --> 00:11:16,360 Speaker 1: we like still investing in the US. We definitely believe 230 00:11:16,679 --> 00:11:20,319 Speaker 1: the growth paradigm is better. You've clearly got a moving FED, 231 00:11:20,760 --> 00:11:24,120 Speaker 1: but you've still got so many opportunities, and particularly what's 232 00:11:24,120 --> 00:11:26,679 Speaker 1: happened the last few weeks and things like technology stocks 233 00:11:27,000 --> 00:11:30,800 Speaker 1: coming under such traumatic pressure. So we still prefer the US. 234 00:11:30,840 --> 00:11:34,439 Speaker 1: In Europe and parts of emerging markets, there's still opportunities, 235 00:11:34,720 --> 00:11:36,960 Speaker 1: but you've got to watch this playoff for a period 236 00:11:36,960 --> 00:11:38,559 Speaker 1: of time. So you know, we we started to dip 237 00:11:38,559 --> 00:11:42,200 Speaker 1: our toe into marging markets, but very very slowly, and 238 00:11:42,240 --> 00:11:44,960 Speaker 1: the view was, gosh, we've got some time. A you 239 00:11:44,960 --> 00:11:46,640 Speaker 1: need to see where the FED is going to play 240 00:11:46,640 --> 00:11:49,640 Speaker 1: out and be when you have situations like this, you've 241 00:11:49,640 --> 00:11:52,440 Speaker 1: just got to be really careful and slow to enter, 242 00:11:52,920 --> 00:11:55,240 Speaker 1: and you know, take where where you think there's convexity 243 00:11:55,280 --> 00:11:58,040 Speaker 1: to the upside, you think there's real upside, hip your 244 00:11:58,080 --> 00:12:00,480 Speaker 1: toe in a little bit but but got to be 245 00:12:00,520 --> 00:12:02,200 Speaker 1: careful about it because this could take a little bit 246 00:12:02,240 --> 00:12:05,640 Speaker 1: of time to play through. And definitely, if you have 247 00:12:05,720 --> 00:12:08,959 Speaker 1: countries that have large amounts of US denominated debt, you 248 00:12:09,000 --> 00:12:11,240 Speaker 1: know you want to be careful with those. If you 249 00:12:11,520 --> 00:12:14,839 Speaker 1: have countries that are commodity based, you want to be 250 00:12:14,920 --> 00:12:18,520 Speaker 1: you know, they're they're more interesting during this period, regardless 251 00:12:18,559 --> 00:12:21,760 Speaker 1: of you know what the commodity is. So you really 252 00:12:21,760 --> 00:12:24,560 Speaker 1: have to be very actively looking at things. I think 253 00:12:24,720 --> 00:12:28,000 Speaker 1: the period of passive investing which we had over the 254 00:12:28,040 --> 00:12:31,760 Speaker 1: last ten years is kind of relatively behind us. It 255 00:12:31,760 --> 00:12:34,280 Speaker 1: doesn't mean you don't do any passive investing, but active 256 00:12:34,280 --> 00:12:37,680 Speaker 1: investments become more important as part of your portfolio. So 257 00:12:37,880 --> 00:12:40,200 Speaker 1: Rick Love, we try to reach beyond my can here. 258 00:12:40,679 --> 00:12:42,480 Speaker 1: Is it possible that we should have seen through the 259 00:12:42,520 --> 00:12:45,120 Speaker 1: markets and parts some of this coming. And what Vladia 260 00:12:45,200 --> 00:12:47,880 Speaker 1: Putin has done since two thousand fourteen, his first invasion 261 00:12:47,960 --> 00:12:50,280 Speaker 1: of Ukraine, what he's done in this economy in terms 262 00:12:50,280 --> 00:12:52,959 Speaker 1: of things like dollar denominated debt that side just referred 263 00:12:53,000 --> 00:12:56,120 Speaker 1: to his foreign currency reserve. Today he's got a much 264 00:12:56,160 --> 00:12:59,640 Speaker 1: stronger position today than he did back into the fourteen Yeah, 265 00:12:59,679 --> 00:13:01,720 Speaker 1: they are any like you said David Is. The fiscal 266 00:13:01,760 --> 00:13:05,560 Speaker 1: situation in Russia is arguably better than it's ever been. 267 00:13:05,600 --> 00:13:08,720 Speaker 1: It's it's actually arguably one of the best fiscal situations 268 00:13:09,040 --> 00:13:10,960 Speaker 1: that you see in the world today. And so in 269 00:13:11,040 --> 00:13:14,320 Speaker 1: a stable environment, you know, investment in Europe makes some sense. 270 00:13:14,320 --> 00:13:18,000 Speaker 1: A question is today how long before we see that again? 271 00:13:18,160 --> 00:13:20,400 Speaker 1: But but you're you're definitely right. I mean, the fiscal 272 00:13:20,440 --> 00:13:22,199 Speaker 1: situation is and it's probably by the way, it's part 273 00:13:22,200 --> 00:13:24,720 Speaker 1: of why it was one of the darlings for a while. 274 00:13:24,800 --> 00:13:27,839 Speaker 1: It was the darlings and the emerging market, both currency, 275 00:13:28,320 --> 00:13:31,240 Speaker 1: interest rates, etcetera. And then, like like a lot of 276 00:13:31,280 --> 00:13:34,000 Speaker 1: things in emerging markets these days, whether it's politics, whether 277 00:13:34,040 --> 00:13:37,160 Speaker 1: it's fiscal dynamics, whether whether it's amount of as a son, 278 00:13:37,160 --> 00:13:39,600 Speaker 1: he said, the amount of debt burden, a dollar denominated 279 00:13:39,640 --> 00:13:42,280 Speaker 1: debt burden, those things have been shifting around. Despite emerging 280 00:13:42,320 --> 00:13:44,760 Speaker 1: markets is a good place to invest. What you've got 281 00:13:44,760 --> 00:13:46,719 Speaker 1: to be deliberate, and you've got to be you've got 282 00:13:46,720 --> 00:13:48,440 Speaker 1: to be well measured in terms of where you're going 283 00:13:49,480 --> 00:13:51,520 Speaker 1: to keep you short on oil, but how much of 284 00:13:51,520 --> 00:13:53,000 Speaker 1: this is the price of because that's really good for 285 00:13:53,000 --> 00:13:57,640 Speaker 1: flowing putting right now no question that the current prices 286 00:13:57,679 --> 00:14:01,559 Speaker 1: are helping put in, you know, put away money, but also, um, 287 00:14:01,600 --> 00:14:04,280 Speaker 1: I don't think they will last long. You're going through 288 00:14:04,400 --> 00:14:06,480 Speaker 1: this winter and you know you're going to be in 289 00:14:06,520 --> 00:14:09,080 Speaker 1: March and we're going to be on the other side 290 00:14:09,080 --> 00:14:11,760 Speaker 1: of it. Very important point from somebody who really knows 291 00:14:11,800 --> 00:14:14,000 Speaker 1: the oil market. Very well. Thank you so much to 292 00:14:14,040 --> 00:14:16,480 Speaker 1: have Sonny Bachelis of Rock Creek and Rick Reader of 293 00:14:16,520 --> 00:14:20,680 Speaker 1: Black Rock. Really great to have you with us coming up. 294 00:14:21,080 --> 00:14:24,560 Speaker 1: Everyone is jumping into the streaming pool, whether it's viewers 295 00:14:24,600 --> 00:14:28,000 Speaker 1: binge watching at home or media companies investing hundreds of 296 00:14:28,040 --> 00:14:30,840 Speaker 1: millions of dollars in new content. But is it a 297 00:14:30,880 --> 00:14:34,440 Speaker 1: good business and what will it take to win? We 298 00:14:34,520 --> 00:14:38,040 Speaker 1: asked Kevin Mayer, co chair of Candle Media. There's still 299 00:14:38,080 --> 00:14:40,600 Speaker 1: a lot of headroom for for continued investment in content, 300 00:14:40,720 --> 00:14:45,720 Speaker 1: being appetite for consumers is voracious. This is Wall Street 301 00:14:45,720 --> 00:14:50,480 Speaker 1: Week on Bloomberg. My Alzheimer's diagnosis was hard to take, 302 00:14:50,760 --> 00:14:53,120 Speaker 1: but early detection allowed us to take control of the 303 00:14:53,200 --> 00:14:56,640 Speaker 1: situation together. Talk to your family about seeing a doctor. 304 00:14:56,760 --> 00:14:59,240 Speaker 1: Go to a l z dot org slash time to talk. 305 00:14:59,360 --> 00:15:02,360 Speaker 1: A message for the Alzheimer's Association and the Ad Council. 306 00:15:03,360 --> 00:15:07,320 Speaker 1: This is Bloomberg Wall Street Week with David Weston from 307 00:15:07,440 --> 00:15:14,320 Speaker 1: Bloomberg Radio Video. It's the part of the media we've 308 00:15:14,400 --> 00:15:17,280 Speaker 1: never been able to resist, and now, through the magic 309 00:15:17,280 --> 00:15:20,239 Speaker 1: of streaming, we can have access to a virtually unlimited 310 00:15:20,280 --> 00:15:24,360 Speaker 1: supply of it whenever and however we want. What started 311 00:15:24,360 --> 00:15:27,880 Speaker 1: with Netflix was supercharged with the addition of big players 312 00:15:27,920 --> 00:15:31,520 Speaker 1: like Amazon and Disney and a pandemic that forced us 313 00:15:31,560 --> 00:15:34,840 Speaker 1: to stay home and binge watch, leading to growth. Jonathan 314 00:15:34,840 --> 00:15:39,160 Speaker 1: carsonive Antennis says, is amazing. The amazing thing that's happening 315 00:15:39,280 --> 00:15:43,120 Speaker 1: in this market right now is just the acceleration of 316 00:15:43,160 --> 00:15:47,000 Speaker 1: growth in in subscription streaming in general. But now the 317 00:15:47,080 --> 00:15:50,840 Speaker 1: question is whether the trees can keep growing towards the sky. 318 00:15:50,960 --> 00:15:53,880 Speaker 1: With Netflix getting hit hard last quarter for reasons not 319 00:15:54,120 --> 00:15:58,000 Speaker 1: entirely clear even to its own CFO Spencer Newman, we're 320 00:15:58,040 --> 00:16:00,800 Speaker 1: trying to pinpoint what that is. It's it's to say 321 00:16:00,800 --> 00:16:04,320 Speaker 1: exactly why our acquisition hasn't, you know, kind of recovered 322 00:16:04,360 --> 00:16:08,080 Speaker 1: to pre COVID levels. Um, it's probably a bit of 323 00:16:08,080 --> 00:16:12,200 Speaker 1: just overall COVID overhang. But whatever hit Netflix has yet 324 00:16:12,240 --> 00:16:15,520 Speaker 1: to slow down. Disney as it reported higher subscriber growth 325 00:16:15,560 --> 00:16:19,520 Speaker 1: than anyone expected, and CEO Bob Chpeck said he expected 326 00:16:19,600 --> 00:16:22,840 Speaker 1: more to come. We expect that, uh, we're going to 327 00:16:22,920 --> 00:16:25,640 Speaker 1: actually add more substance second half of the year than 328 00:16:25,680 --> 00:16:27,640 Speaker 1: the first half of the year. The one thing we 329 00:16:27,720 --> 00:16:30,680 Speaker 1: know for certain is that whoever is up or down 330 00:16:30,800 --> 00:16:33,840 Speaker 1: quarter to quarter, there's a lot of money being invested 331 00:16:33,880 --> 00:16:37,400 Speaker 1: in a lot of content, raising the question which companies 332 00:16:37,480 --> 00:16:41,240 Speaker 1: will prevail and how good a business will streaming end 333 00:16:41,360 --> 00:16:47,520 Speaker 1: up being, and when it comes to video in the 334 00:16:47,560 --> 00:16:49,920 Speaker 1: media world, there is no one and I sincerely no 335 00:16:50,000 --> 00:16:52,560 Speaker 1: one who knows it better than Kevin Mayer. He is 336 00:16:52,600 --> 00:16:55,760 Speaker 1: now the co founder and co chair of Candle Media. 337 00:16:55,840 --> 00:16:58,960 Speaker 1: He's also chairman of the Zone. I knew invest back 338 00:16:58,960 --> 00:17:00,560 Speaker 1: in the Walt Disney Company, where he was ahead of 339 00:17:00,560 --> 00:17:04,040 Speaker 1: our strategic planning operation. He was the one who was 340 00:17:04,119 --> 00:17:07,440 Speaker 1: with Bob Iger through so many of those strategic acquisitions. Kevin, 341 00:17:07,440 --> 00:17:09,399 Speaker 1: thank you so much for being with us here at 342 00:17:09,440 --> 00:17:11,960 Speaker 1: Wall Street Week. Let's start with streaming video. You know 343 00:17:12,000 --> 00:17:14,960 Speaker 1: that so well. You helped amass that really are made 344 00:17:15,119 --> 00:17:18,240 Speaker 1: of material, the content that Disney has. Now we saw 345 00:17:18,480 --> 00:17:21,720 Speaker 1: Netflix took a bit of a stumble Disney subscribers. We 346 00:17:21,720 --> 00:17:23,280 Speaker 1: don't know. They go up and they go down from 347 00:17:23,320 --> 00:17:26,280 Speaker 1: month to month, quarter to quarter. But overall, are there 348 00:17:26,320 --> 00:17:28,520 Speaker 1: too many players in this space? Does there need to 349 00:17:28,560 --> 00:17:32,760 Speaker 1: be some consolidation or shaking out. Well, nice to be here, David, 350 00:17:32,760 --> 00:17:35,320 Speaker 1: Thanks for having me. As always, it's a pleasure. UM. 351 00:17:35,359 --> 00:17:39,520 Speaker 1: I would say the streaming the market for the streaming 352 00:17:39,520 --> 00:17:42,800 Speaker 1: services on a global basis continues to grow, So I 353 00:17:42,800 --> 00:17:44,960 Speaker 1: think you're right to point out that some months are 354 00:17:45,200 --> 00:17:47,840 Speaker 1: higher and summer lower in terms of subscriber growth. And 355 00:17:47,880 --> 00:17:50,959 Speaker 1: there's something called churn where people UM subscribers and their 356 00:17:51,000 --> 00:17:54,359 Speaker 1: subscription neither temporarily or permanently. So there's ins and outs 357 00:17:54,359 --> 00:17:57,000 Speaker 1: of the of the business. And the US market, where 358 00:17:57,080 --> 00:17:59,399 Speaker 1: you know where you are and I spend most of 359 00:17:59,400 --> 00:18:02,720 Speaker 1: my time, has seen some maturity because these streaming services 360 00:18:02,720 --> 00:18:04,159 Speaker 1: have been around for a long time. But if you 361 00:18:04,160 --> 00:18:07,119 Speaker 1: look globally, there are many markets around the world where 362 00:18:07,160 --> 00:18:09,879 Speaker 1: these streaming services are just being launched or still have 363 00:18:09,920 --> 00:18:11,199 Speaker 1: a lot of growth in front of them. So I 364 00:18:11,200 --> 00:18:13,840 Speaker 1: think you'll see on the global basis a fair amount 365 00:18:13,840 --> 00:18:19,640 Speaker 1: of continued study growth for the leading services. Having said that, yeah, 366 00:18:19,680 --> 00:18:23,320 Speaker 1: you know, not all of these UM streamers that have 367 00:18:23,840 --> 00:18:27,159 Speaker 1: pretensions of being a big, global successful player can make it. 368 00:18:27,440 --> 00:18:30,159 Speaker 1: You have the big guys, you have Netflix, obviously, Disney 369 00:18:30,160 --> 00:18:33,480 Speaker 1: Plus is already a success. I can't see that being 370 00:18:33,480 --> 00:18:37,640 Speaker 1: dislodged in any way. HBO Max, you know, Amazon through 371 00:18:37,680 --> 00:18:40,879 Speaker 1: Prime has hundreds of hundreds, over a hundred million subscribers. 372 00:18:41,040 --> 00:18:43,280 Speaker 1: So there's the There are big, big players. The question 373 00:18:43,359 --> 00:18:45,639 Speaker 1: is on the margin some of these smaller players who 374 00:18:45,640 --> 00:18:48,600 Speaker 1: are trying to make headway globally, can they do it? 375 00:18:48,600 --> 00:18:50,720 Speaker 1: And I think you'll see some consolidation and some people 376 00:18:50,760 --> 00:18:53,880 Speaker 1: just falling out over time. Thus far, we've seen sort 377 00:18:53,880 --> 00:18:56,399 Speaker 1: of a growth industry, and it's an investment phase, so 378 00:18:56,400 --> 00:18:58,480 Speaker 1: people not talking about profits making money off what they're 379 00:18:58,480 --> 00:19:00,959 Speaker 1: talking about investing in order to qua are those subscribers 380 00:19:00,960 --> 00:19:02,959 Speaker 1: you referred to. At some point there has to be 381 00:19:03,040 --> 00:19:06,680 Speaker 1: more maturity. Can these enterprises continue to invest in new 382 00:19:06,720 --> 00:19:09,960 Speaker 1: content at the rate they're investing right now given the 383 00:19:10,080 --> 00:19:13,080 Speaker 1: revenue structure? You know, I believe they can. There's still 384 00:19:13,119 --> 00:19:16,200 Speaker 1: a lot of headroom for for continued investment and content um. 385 00:19:16,320 --> 00:19:18,960 Speaker 1: Netflix is spending probably almost twenty billion dollars a year 386 00:19:18,960 --> 00:19:20,840 Speaker 1: on content. I think the old Disney company said in 387 00:19:20,880 --> 00:19:23,639 Speaker 1: the last earnings that they spend including sports rights and 388 00:19:24,160 --> 00:19:26,400 Speaker 1: movies and television shows around the world, like thirty three 389 00:19:26,440 --> 00:19:29,160 Speaker 1: billion dollars or something like that. Uh. It's a lot 390 00:19:29,160 --> 00:19:34,320 Speaker 1: being spent. The appetite from consumers is voracious, uh, and 391 00:19:34,359 --> 00:19:37,200 Speaker 1: I think that that will continue for the foreseeable future. 392 00:19:37,200 --> 00:19:40,119 Speaker 1: Has been double digit growth in demand for content for 393 00:19:40,200 --> 00:19:42,600 Speaker 1: these streaming services around the world. And Kevin, some people 394 00:19:42,640 --> 00:19:44,439 Speaker 1: have said that this streaming is sort of like the 395 00:19:44,480 --> 00:19:47,399 Speaker 1: next thing after cable. We had broadcasts, and we had cable. 396 00:19:47,520 --> 00:19:49,520 Speaker 1: Now we have the streaming. But there's one way it 397 00:19:49,560 --> 00:19:51,239 Speaker 1: strikes me that it might be quite different than that 398 00:19:51,400 --> 00:19:54,679 Speaker 1: is how sticky the revenue is. And cable, as you 399 00:19:54,720 --> 00:19:57,160 Speaker 1: know at ESPN, as I recall those rights, agreams could 400 00:19:57,200 --> 00:19:59,480 Speaker 1: go for multiple years, five six, seven years. You knew 401 00:19:59,480 --> 00:20:02,480 Speaker 1: that revenue was coming in even in broadcast, so much 402 00:20:02,560 --> 00:20:04,159 Speaker 1: of that spot at least for a year, you know 403 00:20:04,200 --> 00:20:06,560 Speaker 1: what's going in. Subscribers can come and go month to month, 404 00:20:07,760 --> 00:20:09,720 Speaker 1: they can, and they do. But again, I think the 405 00:20:09,720 --> 00:20:14,240 Speaker 1: penetration rates, the overall level of subscriptions is progressing nicely 406 00:20:14,280 --> 00:20:17,080 Speaker 1: in almost every territory. Okay, Kevin, I really appreciate spending 407 00:20:17,080 --> 00:20:19,040 Speaker 1: time with you. It was truly helpful. That's Kevin Mayer 408 00:20:19,320 --> 00:20:24,120 Speaker 1: of Candle Media coming up. We wrap up the week 409 00:20:24,160 --> 00:20:30,000 Speaker 1: with special contributor Larry Summers of Harvard. This is wal 410 00:20:30,080 --> 00:20:35,680 Speaker 1: Spring Week on Bloomberg. The possibility of lung cancer can 411 00:20:35,720 --> 00:20:38,640 Speaker 1: be pretty scary, especially if you're one of approximately eight 412 00:20:38,640 --> 00:20:41,480 Speaker 1: million current or former smokers at high risk. That's why 413 00:20:41,480 --> 00:20:43,399 Speaker 1: I Saved by the Scan dot org wants you to 414 00:20:43,440 --> 00:20:46,040 Speaker 1: know that now there's a breakthrough low dose CT scan 415 00:20:46,160 --> 00:20:48,800 Speaker 1: that can detect lung cancer early and it only takes 416 00:20:48,800 --> 00:20:52,959 Speaker 1: sixty seconds. You stop smoking now, starts screening for an 417 00:20:52,960 --> 00:20:55,600 Speaker 1: easy quiz to see if you're eligible. Visit Saved by 418 00:20:55,640 --> 00:20:58,480 Speaker 1: the Scan dot org. It could save your life. Saved 419 00:20:58,520 --> 00:21:00,000 Speaker 1: by the Scan dot Org is brought to you by 420 00:21:00,000 --> 00:21:02,919 Speaker 1: the American Long Associations, Luenforced Initiative and the AD Council. 421 00:21:04,160 --> 00:21:08,120 Speaker 1: This is Bloomberg Wall Street Week with David Weston from 422 00:21:08,240 --> 00:21:11,240 Speaker 1: Bloomberg Radio. This is Wall Street Week. I'm David Weston. 423 00:21:11,320 --> 00:21:13,879 Speaker 1: We're delighted to welcome back now our special contributor Larry 424 00:21:13,960 --> 00:21:16,199 Speaker 1: Summers of Harvard to Wall Street Week. Thank you for 425 00:21:16,240 --> 00:21:19,040 Speaker 1: being with us once again. Larry, So the big news. 426 00:21:19,160 --> 00:21:21,840 Speaker 1: The big news this week were those CPI numbers. Consumer 427 00:21:21,880 --> 00:21:24,439 Speaker 1: price numbers game in seven point five percent up here 428 00:21:24,440 --> 00:21:26,399 Speaker 1: every year. Frankly, one of the things that struck me 429 00:21:26,640 --> 00:21:30,120 Speaker 1: was durable goods were up eighteen point four percent. Your here, 430 00:21:30,200 --> 00:21:32,760 Speaker 1: you've been talking about this, saying the FED needs to 431 00:21:32,800 --> 00:21:35,400 Speaker 1: get on it. Obviously the FED is behind it, as 432 00:21:35,440 --> 00:21:38,000 Speaker 1: you said, The question now is what do they new 433 00:21:38,160 --> 00:21:40,879 Speaker 1: to do to catch up? Let me very very specific. 434 00:21:40,920 --> 00:21:44,400 Speaker 1: Should they have a special meeting? David? Look, these numbers 435 00:21:44,480 --> 00:21:48,760 Speaker 1: were in line with the numbers that we've had. I 436 00:21:48,800 --> 00:21:53,200 Speaker 1: don't understand why people keep being so surprised when there's 437 00:21:53,280 --> 00:21:59,960 Speaker 1: evidence that inflation is entrenched. This confirms, uh, just how 438 00:22:00,080 --> 00:22:04,200 Speaker 1: far behind the curve the FED has gotten. And this, 439 00:22:04,480 --> 00:22:07,639 Speaker 1: along with the fact that it now looks like build 440 00:22:07,640 --> 00:22:12,560 Speaker 1: back Better is in trouble, UH, confirms what a serious 441 00:22:12,760 --> 00:22:16,840 Speaker 1: error the excessive stimulus of last March was. Here's what 442 00:22:16,920 --> 00:22:19,639 Speaker 1: I think the FED should do. I think the FED 443 00:22:20,040 --> 00:22:26,240 Speaker 1: should have a special meeting right now to end QUEI. 444 00:22:27,640 --> 00:22:33,040 Speaker 1: It is nothing short of preposterous that in an economy 445 00:22:33,119 --> 00:22:37,919 Speaker 1: was seven and a half percent inflation in an economy 446 00:22:38,119 --> 00:22:42,280 Speaker 1: with the tightest labor markets we've seen in more than 447 00:22:42,320 --> 00:22:48,280 Speaker 1: two generations that the Central Bank is still as we speak, 448 00:22:49,000 --> 00:22:53,000 Speaker 1: growing its bound sheet. And I think the FED could 449 00:22:54,119 --> 00:22:59,679 Speaker 1: show that at last it really gets it by have 450 00:22:59,840 --> 00:23:05,960 Speaker 1: a a special meeting for the purpose of simply ending QUI. 451 00:23:06,800 --> 00:23:09,560 Speaker 1: It's not that the marginal purchases they're going to do 452 00:23:09,680 --> 00:23:13,240 Speaker 1: over the next month are all that consequential. They're not 453 00:23:13,320 --> 00:23:17,560 Speaker 1: probably very consequential at all. But I think the symbolism 454 00:23:17,760 --> 00:23:22,719 Speaker 1: of ending it tomorrow would sick, would show that the 455 00:23:22,760 --> 00:23:27,760 Speaker 1: FED has gotten a major wake up call. What about 456 00:23:27,880 --> 00:23:30,480 Speaker 1: rate hikes? We also had Jim Boyard, the president of 457 00:23:30,520 --> 00:23:32,080 Speaker 1: the Kansas City FED, this week come out and say, 458 00:23:32,080 --> 00:23:34,200 Speaker 1: look at I think we should raise rates by a 459 00:23:34,280 --> 00:23:36,240 Speaker 1: hundred basis points by June. And by the way, we 460 00:23:36,280 --> 00:23:39,879 Speaker 1: should not limit to igrements. What about raising rates? Should 461 00:23:39,880 --> 00:23:42,320 Speaker 1: it be done before the March meeting? And should we 462 00:23:42,400 --> 00:23:46,200 Speaker 1: be looking at things more than basis point increases. I 463 00:23:46,240 --> 00:23:49,000 Speaker 1: don't think there's any need to do it before uh 464 00:23:49,680 --> 00:23:53,320 Speaker 1: the March meeting. I think the FED needs to be 465 00:23:53,560 --> 00:23:58,800 Speaker 1: much more careful about the use of the forward guidance 466 00:23:58,920 --> 00:24:02,359 Speaker 1: instrument in a world where it has shown itself to 467 00:24:02,440 --> 00:24:06,000 Speaker 1: be so dismal. A forecaster of what's going to happen 468 00:24:06,000 --> 00:24:08,720 Speaker 1: in the economy. Most of that is not the most 469 00:24:08,760 --> 00:24:11,320 Speaker 1: of the poor forecasting is not the Fed's fault to 470 00:24:11,960 --> 00:24:19,320 Speaker 1: tract the consensus and reflects the inherent difficulty of forecasting. 471 00:24:19,840 --> 00:24:25,880 Speaker 1: But nimble and humble does not mean making announcements about 472 00:24:25,920 --> 00:24:28,480 Speaker 1: what you're gonna do over periods of six months or 473 00:24:28,520 --> 00:24:32,960 Speaker 1: a year in a highly volatile economy, and the FED 474 00:24:33,040 --> 00:24:37,720 Speaker 1: needs to go back to UH, the old ways, which 475 00:24:37,720 --> 00:24:43,560 Speaker 1: are much more about UH nimble and nimble and humble. 476 00:24:44,000 --> 00:24:48,520 Speaker 1: I think it's a close call on the March. On 477 00:24:48,640 --> 00:24:53,359 Speaker 1: the March meeting, I would be inclined to think that 478 00:24:53,680 --> 00:24:58,880 Speaker 1: markets are going to increasingly build that in, and if 479 00:24:58,920 --> 00:25:02,760 Speaker 1: they do, I don't think the FED should be surprising 480 00:25:02,840 --> 00:25:07,639 Speaker 1: them on the dovish side, and I don't think the 481 00:25:07,680 --> 00:25:11,360 Speaker 1: FED should be trying to guide them to UH the 482 00:25:11,440 --> 00:25:14,960 Speaker 1: dovish side. So I think there's a good chance that 483 00:25:15,040 --> 00:25:21,199 Speaker 1: there's gonna be a progression towards UH near inevitability of 484 00:25:22,040 --> 00:25:26,320 Speaker 1: the fifty basis points. And if so, that's okay. But 485 00:25:26,440 --> 00:25:29,960 Speaker 1: if markets don't go that way, I also don't think 486 00:25:30,040 --> 00:25:35,000 Speaker 1: that is a terrible, a terrible thing. Yeah, I should 487 00:25:35,040 --> 00:25:37,439 Speaker 1: correct myself. Mr Buller, of course as President St. Louis Fed, 488 00:25:37,520 --> 00:25:39,639 Speaker 1: not the Kansas City FED. At the same time, we 489 00:25:39,720 --> 00:25:41,960 Speaker 1: have some economists coming out and saying, let's be patient, 490 00:25:42,040 --> 00:25:45,560 Speaker 1: let's not overreact. We had Paul Stigletz actually this week 491 00:25:45,600 --> 00:25:48,160 Speaker 1: come out and say, really a lot, as we'll take 492 00:25:48,160 --> 00:25:50,280 Speaker 1: care of itself and as far as it doesn't. Instead 493 00:25:50,280 --> 00:25:54,000 Speaker 1: of contracting demand through tightening monetary policy, we should expand 494 00:25:54,040 --> 00:25:57,800 Speaker 1: supply through fiscal policy. You tweeted about that and said 495 00:25:57,800 --> 00:26:01,120 Speaker 1: that that was a sort of wishful thinking. Your reaction 496 00:26:01,160 --> 00:26:03,920 Speaker 1: to the supply vers demands that of the equation. Joe 497 00:26:03,960 --> 00:26:10,160 Speaker 1: Stiggs is a brilliant Nobel Prize richly deserved micro economic theorist, 498 00:26:10,920 --> 00:26:17,520 Speaker 1: but as a practical, data driven macro economist, he's practicing 499 00:26:17,960 --> 00:26:23,360 Speaker 1: tooth fairy economics. Of course, it would be wonderful if 500 00:26:23,400 --> 00:26:26,960 Speaker 1: we could have more cars all of a sudden. Of course, 501 00:26:27,000 --> 00:26:30,760 Speaker 1: it would be wonderful if the participation rate in the 502 00:26:30,880 --> 00:26:37,080 Speaker 1: labor force UH suddenly increased. But here's the here's the thing. 503 00:26:37,760 --> 00:26:41,040 Speaker 1: You can only fill water into your bathtub to the 504 00:26:41,119 --> 00:26:45,760 Speaker 1: size your bathtub is, and demand has got to be 505 00:26:45,840 --> 00:26:50,920 Speaker 1: constrained by what we know about supply and the way 506 00:26:50,960 --> 00:26:55,120 Speaker 1: we tell how demand is doing relative to supply as 507 00:26:55,160 --> 00:26:58,760 Speaker 1: we look at the behavior of prices and they and 508 00:26:58,920 --> 00:27:05,240 Speaker 1: particularly wages have been screaming red alert on demand versus 509 00:27:05,280 --> 00:27:11,080 Speaker 1: supply for months now, and so it's preposterous wishful thinking 510 00:27:11,520 --> 00:27:15,200 Speaker 1: to somehow suggest that all of a sudden, we're gonna 511 00:27:15,240 --> 00:27:20,840 Speaker 1: conjure into being UH lots more supply. Administration is absolutely 512 00:27:20,880 --> 00:27:23,919 Speaker 1: doing the right thing with its policies to try to 513 00:27:23,960 --> 00:27:28,919 Speaker 1: clear things up UH in the ports and the like. 514 00:27:29,600 --> 00:27:34,800 Speaker 1: Any bit of mileage we can get in reducing bottlenecks 515 00:27:35,080 --> 00:27:40,320 Speaker 1: is all to the good. But to somehow suggest that 516 00:27:40,320 --> 00:27:43,960 Speaker 1: that's gonna be our salvation and we don't need to 517 00:27:44,000 --> 00:27:51,520 Speaker 1: pay attention to the evidence of UH demand outstripping UH 518 00:27:51,920 --> 00:27:57,840 Speaker 1: supply is just UH complete wishful thinking. Let's talk about Ukraine. 519 00:27:57,920 --> 00:28:00,440 Speaker 1: At crisis brewing over in Ukraine. The lot of talk 520 00:28:00,480 --> 00:28:03,600 Speaker 1: about sanctions, a wide range of possible sanctions, economic sanctions 521 00:28:03,640 --> 00:28:07,320 Speaker 1: on Russia. If in fact it does move further into Ukraine. 522 00:28:07,440 --> 00:28:10,199 Speaker 1: You were Secretary Treasury, you had to supervise sanctions like 523 00:28:10,320 --> 00:28:12,040 Speaker 1: that in other parts of the world. Do they work? 524 00:28:12,840 --> 00:28:18,200 Speaker 1: Sanctions David are usually a bad alternative, but there's sometimes 525 00:28:18,400 --> 00:28:24,160 Speaker 1: UH the best alternative. There are provocations for which it's 526 00:28:24,200 --> 00:28:28,680 Speaker 1: just not acceptable to mount no response and in which 527 00:28:28,720 --> 00:28:33,520 Speaker 1: it would be catastrophic to mount a kinetic military response, 528 00:28:34,200 --> 00:28:38,480 Speaker 1: and that's what drives us to US sanctions. Well, I 529 00:28:38,520 --> 00:28:42,120 Speaker 1: think the Biden administration has been working very well at 530 00:28:43,000 --> 00:28:46,480 Speaker 1: is trying to make sure that we multilateralize our sanctions, 531 00:28:47,040 --> 00:28:51,480 Speaker 1: because often unilateral sanctions can be a stop or I'll 532 00:28:51,480 --> 00:28:54,880 Speaker 1: shoot myself in the foot kind of policy where we 533 00:28:55,000 --> 00:28:59,320 Speaker 1: sanction the country it hurts American producers, but it doesn't 534 00:28:59,400 --> 00:29:01,440 Speaker 1: hurt the country free because they're able to get the 535 00:29:01,560 --> 00:29:08,560 Speaker 1: stuff elsewhere. So sanctions with a multilateral perspective, I think 536 00:29:08,640 --> 00:29:13,440 Speaker 1: that's probably uh the right kind of policy. But I 537 00:29:13,480 --> 00:29:18,960 Speaker 1: think the devil is in uh, the devils in the details. 538 00:29:19,040 --> 00:29:22,640 Speaker 1: And I must say, having been critical of them in 539 00:29:22,960 --> 00:29:26,640 Speaker 1: uh some areas, this seems to me to be something 540 00:29:26,720 --> 00:29:34,040 Speaker 1: where so far the Biden administration is proceeding with great skill, 541 00:29:34,160 --> 00:29:39,000 Speaker 1: care and uh thoughtfulness. Okay, Larry, thank you so very much. 542 00:29:39,000 --> 00:29:40,680 Speaker 1: As such a treat to have our special contributor in 543 00:29:40,680 --> 00:29:45,040 Speaker 1: wall Stree Week, Larry Summers of Harvard. Finally, one more thought, 544 00:29:46,000 --> 00:29:49,400 Speaker 1: once in a lifetime day, that's what NBC is calling 545 00:29:49,520 --> 00:29:52,440 Speaker 1: this Sunday because for the first time ever, the Super 546 00:29:52,480 --> 00:29:55,840 Speaker 1: Bowl will be played during the Winter Olympics, and NBC, 547 00:29:56,080 --> 00:29:58,640 Speaker 1: let's be honest, could use the help given the Olympics 548 00:29:58,720 --> 00:30:02,920 Speaker 1: ratings so far, they were over the opening ceremonies, making 549 00:30:02,920 --> 00:30:05,320 Speaker 1: it hard to cover the nut of the billions of 550 00:30:05,360 --> 00:30:08,200 Speaker 1: dollars NBC has invested in the Olympics in its multi 551 00:30:08,280 --> 00:30:11,040 Speaker 1: year deal. So here comes the Super Bowl with a 552 00:30:11,080 --> 00:30:13,640 Speaker 1: super matchup of the l A Rams playing in their 553 00:30:13,640 --> 00:30:16,920 Speaker 1: new home stadium and the Cincinnati Bengals featuring a quarterback 554 00:30:16,920 --> 00:30:19,479 Speaker 1: who has been in the league only two years, thirty 555 00:30:19,520 --> 00:30:22,160 Speaker 1: second ads who will be going for six point five 556 00:30:22,280 --> 00:30:24,760 Speaker 1: million dollars apiece, and judging from what we saw in 557 00:30:24,760 --> 00:30:27,280 Speaker 1: the playoffs, a fair number of those spots will be 558 00:30:27,360 --> 00:30:31,760 Speaker 1: for online gambling from Eli and Peyton manning for Caesar's 559 00:30:31,920 --> 00:30:34,440 Speaker 1: would have hit him in the numbers, probably the Jerry 560 00:30:34,520 --> 00:30:42,240 Speaker 1: Rice for Draft Kings. Oh. Yes, Online betting has been 561 00:30:42,240 --> 00:30:45,440 Speaker 1: exploding in the United States, with one million Americans now 562 00:30:45,480 --> 00:30:49,280 Speaker 1: able to bet legally online, and that certainly includes a 563 00:30:49,320 --> 00:30:52,400 Speaker 1: Super Bowl, with wagers on the Big Game expected to 564 00:30:52,480 --> 00:30:57,120 Speaker 1: exceed one billion dollars, something Commissioner Roger Goodell five years 565 00:30:57,120 --> 00:31:00,440 Speaker 1: ago resisted long after other leagues had changed their minds. 566 00:31:00,520 --> 00:31:05,480 Speaker 1: We have been on the record and actually opposed legalized gambling. 567 00:31:05,520 --> 00:31:07,360 Speaker 1: We don't think it's in the best interesting of the 568 00:31:07,560 --> 00:31:10,560 Speaker 1: integrity of our game. Well, the time sure have changed, 569 00:31:10,680 --> 00:31:13,040 Speaker 1: and if you listen to those in the industry, people 570 00:31:13,080 --> 00:31:15,920 Speaker 1: like Jason Robbins, the CEO of Draftkins, well they say 571 00:31:16,080 --> 00:31:18,840 Speaker 1: it's just a matter of convenience. Obviously, there's a lot 572 00:31:18,880 --> 00:31:21,160 Speaker 1: of great experience in person that you get at a 573 00:31:21,160 --> 00:31:24,080 Speaker 1: brick and mortar facility, and that's something that will always 574 00:31:24,080 --> 00:31:26,600 Speaker 1: appeal to people, I think. But I think there's a 575 00:31:26,600 --> 00:31:28,960 Speaker 1: lot of benefit also to being able to do things 576 00:31:29,040 --> 00:31:32,720 Speaker 1: on you know, convenient terms. But others, like former Congressman 577 00:31:32,800 --> 00:31:36,600 Speaker 1: Bob Goodlad of Virginia worry about the damage online gambling 578 00:31:36,600 --> 00:31:39,360 Speaker 1: could do to people and families. I do not believe 579 00:31:39,400 --> 00:31:42,720 Speaker 1: gambling is a victimless activity. In fact, I think that 580 00:31:42,840 --> 00:31:47,200 Speaker 1: online gambling in particular can be more destructive to families 581 00:31:47,240 --> 00:31:51,080 Speaker 1: and communities of addictive gamblers than if a bricks and 582 00:31:51,160 --> 00:31:54,920 Speaker 1: mortar casino were built next door. So, while SEC Chair 583 00:31:55,080 --> 00:31:59,480 Speaker 1: Gary Gensler is worried about the gamification of stock trading well. Also, 584 00:31:59,520 --> 00:32:04,600 Speaker 1: I think hopefully be taking up what's called digital engagement practices, 585 00:32:04,680 --> 00:32:07,960 Speaker 1: what some people call gamification, and what to do there. 586 00:32:08,520 --> 00:32:11,760 Speaker 1: How concerned should we be about the gamification of gambling 587 00:32:11,840 --> 00:32:15,200 Speaker 1: on real games that does it? For this episode of 588 00:32:15,200 --> 00:32:18,200 Speaker 1: Wall Street Week, I'm David Weston. This is Bloomberg. See 589 00:32:18,240 --> 00:32:19,400 Speaker 1: you next week.