1 00:00:02,520 --> 00:00:08,400 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. We have an opportunity 2 00:00:08,400 --> 00:00:11,080 Speaker 1: to bring you a fascinating conversation. It's underway right now 3 00:00:11,080 --> 00:00:14,200 Speaker 1: at the Bloomberg sell Side leaders Forum in New York. 4 00:00:14,360 --> 00:00:17,320 Speaker 1: Our colleague, Bloomberg's Eric Shatsker sitting down with Rob Kaplan, 5 00:00:17,400 --> 00:00:20,200 Speaker 1: vice chair at Goldman Sachs, former Dallas FED President. 6 00:00:20,280 --> 00:00:22,200 Speaker 2: Let's listen live. I'm Bloomberg TV and Radio. 7 00:00:23,640 --> 00:00:29,880 Speaker 3: Your career has taken a very interesting trajectory Goldman, Harvard, 8 00:00:30,120 --> 00:00:33,239 Speaker 3: the Fed. Goldman again. Tell us a bit about it, 9 00:00:33,320 --> 00:00:35,880 Speaker 3: how because I think it really helps to establish context 10 00:00:36,159 --> 00:00:37,520 Speaker 3: for what you're going to hear from Rob. 11 00:00:37,800 --> 00:00:40,320 Speaker 4: Well, So, I'm from Kansas City, and I went to 12 00:00:40,280 --> 00:00:43,560 Speaker 4: her City, Kansas, but I went to business school and 13 00:00:43,680 --> 00:00:45,680 Speaker 4: I loved the markets from the time I was young. 14 00:00:45,720 --> 00:00:48,040 Speaker 4: So I went to Goldman Sachs and it was I 15 00:00:48,080 --> 00:00:52,000 Speaker 4: think the perfect place for me. I stayed for twenty 16 00:00:52,000 --> 00:00:54,760 Speaker 4: two to twenty three years, but then I took a 17 00:00:54,840 --> 00:00:58,000 Speaker 4: leave of absence to teach leadership at Harvard Business School. 18 00:00:58,040 --> 00:01:01,120 Speaker 4: I went from instructor to professor senior associate. Them did 19 00:01:01,120 --> 00:01:04,520 Speaker 4: that for ten years, and then a former client was 20 00:01:04,600 --> 00:01:06,959 Speaker 4: chairman of the board of the Dallas FED and I 21 00:01:07,000 --> 00:01:10,080 Speaker 4: always wanted to do public service, and so that's how 22 00:01:10,080 --> 00:01:12,920 Speaker 4: I moved to Dallas to be head of the Dallas FED. 23 00:01:13,000 --> 00:01:16,360 Speaker 4: And in terms of coming back to Goldman, it's a 24 00:01:16,360 --> 00:01:18,520 Speaker 4: different firm. I've been gone for a long time, but 25 00:01:18,640 --> 00:01:21,960 Speaker 4: I was part of recruiting David Solomon and John Waldrin 26 00:01:22,000 --> 00:01:25,640 Speaker 4: to the firm. Believe it or not, I felt like 27 00:01:25,720 --> 00:01:29,160 Speaker 4: I could help, and with what I've learned since I left, 28 00:01:29,200 --> 00:01:31,759 Speaker 4: I felt I could particularly help. So it's been about 29 00:01:31,760 --> 00:01:33,880 Speaker 4: a year and it's been a great experience so far 30 00:01:33,920 --> 00:01:34,400 Speaker 4: to be back. 31 00:01:35,000 --> 00:01:39,399 Speaker 3: Tell us as a vice chairman about your focus, your 32 00:01:39,440 --> 00:01:44,520 Speaker 3: responsibilities and to the degree that they've been articulated for you, 33 00:01:44,600 --> 00:01:46,880 Speaker 3: and to the degree that you've been able to formulate 34 00:01:46,880 --> 00:01:49,320 Speaker 3: them yourself about your objectives. 35 00:01:49,880 --> 00:01:51,639 Speaker 2: So it's funny. 36 00:01:51,680 --> 00:01:56,040 Speaker 4: David and I talked over a year ago about this 37 00:01:56,120 --> 00:01:59,280 Speaker 4: concept and it's held pretty true. I spend two thirds 38 00:01:59,320 --> 00:02:02,240 Speaker 4: of my time on clients all over the world. I'm 39 00:02:02,280 --> 00:02:05,960 Speaker 4: an investment banker by training, but I spend a portion 40 00:02:06,080 --> 00:02:08,840 Speaker 4: of my time in investment banking. I spend a lot 41 00:02:08,880 --> 00:02:10,960 Speaker 4: of my time with trading clients. I spend a lot 42 00:02:10,960 --> 00:02:13,520 Speaker 4: of my time with asset management and private wealth clients 43 00:02:13,919 --> 00:02:17,000 Speaker 4: all over the world, and then because of my leadership 44 00:02:17,720 --> 00:02:23,440 Speaker 4: teaching background, I will teach a leadership class in between 45 00:02:23,480 --> 00:02:26,640 Speaker 4: client meetings somewhere in the world in Golden Sets. Every week, 46 00:02:26,760 --> 00:02:32,160 Speaker 4: I mentor and coach, I annoy people. I try to 47 00:02:32,200 --> 00:02:35,919 Speaker 4: coach business leaders, division heads, heads of the firm about 48 00:02:35,960 --> 00:02:40,480 Speaker 4: things I think we could do better. And that's pretty 49 00:02:40,520 --> 00:02:44,079 Speaker 4: much what we agreed coming in and it's been so far. 50 00:02:44,120 --> 00:02:47,280 Speaker 4: It's been a great experience. It's a fifty billion revenue 51 00:02:47,280 --> 00:02:51,720 Speaker 4: firm with fifty thousand people, so the pool is deep 52 00:02:52,240 --> 00:02:55,120 Speaker 4: and there's more to do than I can do, and 53 00:02:55,200 --> 00:02:57,320 Speaker 4: it's been a fabulous experience so far. 54 00:02:57,800 --> 00:03:00,480 Speaker 3: One of the things Rob that I've always a preciated 55 00:03:00,720 --> 00:03:05,239 Speaker 3: about you and talking to you, is the systematic approach 56 00:03:05,840 --> 00:03:08,760 Speaker 3: you take to studying problems. I'm assuming that this started 57 00:03:09,360 --> 00:03:11,400 Speaker 3: in your earlier days in Goldensacts, but no doubt you 58 00:03:11,480 --> 00:03:14,160 Speaker 3: perfected it while you were teaching at Harvard. We're in 59 00:03:14,200 --> 00:03:19,120 Speaker 3: the midst We're quite clearly in the midst of major 60 00:03:19,560 --> 00:03:23,799 Speaker 3: policy driven structural changes in the US economy, both domestically 61 00:03:23,840 --> 00:03:29,400 Speaker 3: and internationally. Everyone in the room is wrestling with the 62 00:03:29,440 --> 00:03:34,120 Speaker 3: implications of these changes give us your framework how to 63 00:03:34,120 --> 00:03:34,720 Speaker 3: think about this. 64 00:03:35,280 --> 00:03:37,440 Speaker 4: So one of the things I brought to the FED 65 00:03:37,880 --> 00:03:41,640 Speaker 4: is a focus on structural drivers. I'm a business person, 66 00:03:41,760 --> 00:03:44,800 Speaker 4: not an economist, and business people, as most of you know, 67 00:03:44,920 --> 00:03:48,920 Speaker 4: focus on structural drivers. You look at cyclical factors and data, 68 00:03:49,640 --> 00:03:51,400 Speaker 4: but ultimately those come as a. 69 00:03:51,360 --> 00:03:52,840 Speaker 2: Result of structural drivers. 70 00:03:53,120 --> 00:03:58,600 Speaker 4: There's five big structural economic changes going on right now. 71 00:03:58,880 --> 00:04:02,080 Speaker 4: That's a lot for any point in time. What are 72 00:04:02,120 --> 00:04:06,040 Speaker 4: the five? Number one, the administration is trying to take 73 00:04:06,080 --> 00:04:10,120 Speaker 4: what they perceive as an over leveraged US government. It's 74 00:04:10,160 --> 00:04:13,880 Speaker 4: gone from mid seventies debt to GDP pre COVID to. 75 00:04:13,920 --> 00:04:15,200 Speaker 2: Now over one hundred percent. 76 00:04:15,680 --> 00:04:19,839 Speaker 4: And they come into this into their new administration wanting 77 00:04:19,880 --> 00:04:22,919 Speaker 4: to de leverage, to take six and a half seven 78 00:04:22,960 --> 00:04:27,160 Speaker 4: percent of GDP deficits lower. This is where you can 79 00:04:27,200 --> 00:04:30,120 Speaker 4: debate the tactics, but this is where Doze came from, 80 00:04:31,120 --> 00:04:33,080 Speaker 4: and a number of other things. But they would like 81 00:04:33,200 --> 00:04:36,120 Speaker 4: to deleverage. We'll see at the end of day how 82 00:04:36,120 --> 00:04:39,400 Speaker 4: far they get without carving it in titlements. They're doing 83 00:04:39,440 --> 00:04:43,960 Speaker 4: a regulatory review of every industry with the hope that 84 00:04:44,000 --> 00:04:48,160 Speaker 4: we can improve productivity growth. Three ways to grow grow 85 00:04:48,200 --> 00:04:53,120 Speaker 4: the workforce, improve productivity and leverage up. We've exhausted leveraging 86 00:04:53,680 --> 00:04:59,440 Speaker 4: and so productivity growth through a regulatory review is one driver. 87 00:05:00,040 --> 00:05:05,000 Speaker 4: They are trying to do a overhaul of the energy ecosystem, 88 00:05:05,040 --> 00:05:08,840 Speaker 4: So what does that mean. They're trying to increase the 89 00:05:08,839 --> 00:05:12,760 Speaker 4: global oil production. They hope to do it domestically, but 90 00:05:12,800 --> 00:05:15,760 Speaker 4: it's not so easy at lower prices. But they're pushing 91 00:05:15,800 --> 00:05:18,320 Speaker 4: OPEC and Saudi Arabia to produce more. They're going to 92 00:05:18,360 --> 00:05:21,000 Speaker 4: make it easier to run a refinery, permit a refinery, 93 00:05:21,080 --> 00:05:22,000 Speaker 4: do transmission. 94 00:05:22,400 --> 00:05:23,560 Speaker 2: So why are they doing this? 95 00:05:23,680 --> 00:05:27,839 Speaker 4: Because they're sensitive that there are tens of millions of 96 00:05:27,920 --> 00:05:30,320 Speaker 4: families in this country that roll down on an income 97 00:05:30,640 --> 00:05:32,839 Speaker 4: of fifty thousand dollars a year or less. 98 00:05:33,120 --> 00:05:36,160 Speaker 2: They've lost twenty five percent purchasing power. They're struggling to 99 00:05:36,200 --> 00:05:36,839 Speaker 2: make ends meet. 100 00:05:37,240 --> 00:05:40,120 Speaker 4: They help this administration get elected, they want to show 101 00:05:40,160 --> 00:05:41,760 Speaker 4: them a tangible benefit. 102 00:05:42,160 --> 00:05:43,320 Speaker 2: Fourth Big Change. 103 00:05:43,720 --> 00:05:47,359 Speaker 4: One of the reasons the US economy has outgrown the world. 104 00:05:47,600 --> 00:05:49,960 Speaker 4: One of them is, i would argue, is very high 105 00:05:50,040 --> 00:05:53,440 Speaker 4: levels of fiscal spending and special programs. But the other 106 00:05:53,480 --> 00:05:56,920 Speaker 4: reason is we've had a surge in labor force growth 107 00:05:57,320 --> 00:06:04,320 Speaker 4: heavily due to immigration, much of it. Undocumented, they are 108 00:06:04,680 --> 00:06:07,200 Speaker 4: risk of state in the Obviously they are shutting that down. 109 00:06:08,360 --> 00:06:12,159 Speaker 4: They haven't yet ramped up legal immigration, but hopefully they will. 110 00:06:12,720 --> 00:06:16,080 Speaker 4: And they are also working to deport at a minimum, 111 00:06:16,560 --> 00:06:19,640 Speaker 4: people with criminal records. The issue is, which we can 112 00:06:19,680 --> 00:06:24,679 Speaker 4: talk more about. There are many millions of workers in agriculture, 113 00:06:24,760 --> 00:06:28,320 Speaker 4: in construction, other industries who are undocumented. 114 00:06:28,640 --> 00:06:32,560 Speaker 2: They're probably thirteen million Green card holders in the United States. 115 00:06:32,600 --> 00:06:34,839 Speaker 4: In addition, and I would say at a minimum, the 116 00:06:34,880 --> 00:06:38,520 Speaker 4: undocumented workers are very unsure of their status. 117 00:06:38,839 --> 00:06:39,920 Speaker 2: I'm hearing from businesses. 118 00:06:39,960 --> 00:06:43,279 Speaker 4: They're not in some cases coming into work, They're not 119 00:06:43,360 --> 00:06:45,640 Speaker 4: sending their kids in some cases to school, they're certainly 120 00:06:45,680 --> 00:06:48,919 Speaker 4: not shopping. It's having a chilling effect on the workforce 121 00:06:49,279 --> 00:06:52,360 Speaker 4: and probably on consumption. So that's the fourth one, and 122 00:06:52,160 --> 00:06:53,800 Speaker 4: then it gets to the one. We're getting all the 123 00:06:53,839 --> 00:06:59,880 Speaker 4: airtime tariffs and suffice it to say, I had thought 124 00:07:00,120 --> 00:07:03,599 Speaker 4: going into this, if you want to level the playing field, 125 00:07:04,520 --> 00:07:08,920 Speaker 4: which I think makes sense, fairer trade, better access, and 126 00:07:08,960 --> 00:07:14,640 Speaker 4: you want to encourage reshoring, the challenge is you'd probably 127 00:07:14,760 --> 00:07:18,280 Speaker 4: carve out Mexico and Canada because that allows you logistics 128 00:07:18,280 --> 00:07:21,680 Speaker 4: and supply chain arrangements which allows people to domicile here. 129 00:07:22,240 --> 00:07:26,160 Speaker 4: You might even carve out poorer countries who don't have 130 00:07:26,200 --> 00:07:29,640 Speaker 4: a hope to buy our goods. Vietnam might be an example, 131 00:07:29,960 --> 00:07:32,880 Speaker 4: where their GDP per capita is four thousand a person. 132 00:07:33,560 --> 00:07:36,840 Speaker 4: They tend to do lower value added manufacturing. We probably 133 00:07:36,840 --> 00:07:39,520 Speaker 4: don't want here, and they're going to struggle to buy 134 00:07:39,600 --> 00:07:42,360 Speaker 4: US goods because their GDP per capita, And you would 135 00:07:43,080 --> 00:07:46,000 Speaker 4: center on a handful of countries you really want to 136 00:07:46,080 --> 00:07:52,960 Speaker 4: rebalance the arrangement with we've instead created terrace on everyone. 137 00:07:53,760 --> 00:07:57,600 Speaker 4: And I think we're now negotiating deals one by one. 138 00:07:57,640 --> 00:08:01,800 Speaker 4: But it takes time to negotiate a trade deal, and 139 00:08:01,840 --> 00:08:05,160 Speaker 4: it's very critical that there are many things we do 140 00:08:05,280 --> 00:08:09,600 Speaker 4: with China. Yes, they're an adversary in certain things, they're 141 00:08:09,760 --> 00:08:14,320 Speaker 4: a competitor in others, and there's some places where inextricably 142 00:08:14,360 --> 00:08:18,280 Speaker 4: linked agriculture market for our farmers rare earth back to 143 00:08:18,400 --> 00:08:22,560 Speaker 4: US intermediate goods is forty percent of the imports. And 144 00:08:22,640 --> 00:08:25,080 Speaker 4: so I think what you're seeing now is a working 145 00:08:25,160 --> 00:08:27,400 Speaker 4: through one by one how. 146 00:08:27,240 --> 00:08:27,560 Speaker 2: Do we. 147 00:08:29,920 --> 00:08:33,760 Speaker 4: Lower these tariffs because US companies right now are struggling 148 00:08:34,600 --> 00:08:37,600 Speaker 4: to do all this at once in an abrupt way, 149 00:08:38,240 --> 00:08:40,640 Speaker 4: and so that's the process we're working through. But those 150 00:08:40,640 --> 00:08:44,560 Speaker 4: are the five big changes. And if that sounds like 151 00:08:44,600 --> 00:08:47,680 Speaker 4: a lot, it's because it's a lot, and it's a 152 00:08:47,720 --> 00:08:49,360 Speaker 4: lot going on at once. 153 00:08:49,800 --> 00:08:54,080 Speaker 3: There is more going on. Are you leaving those things 154 00:08:54,160 --> 00:08:57,600 Speaker 3: out because they are not big enough or because they 155 00:08:57,600 --> 00:08:58,840 Speaker 3: amount to noise? 156 00:09:00,160 --> 00:09:02,600 Speaker 4: The other things you're referring to, will just say what 157 00:09:02,640 --> 00:09:06,840 Speaker 4: you're I think you're referring to the things going on 158 00:09:06,960 --> 00:09:16,280 Speaker 4: with higher education, other battles away, and I'm I'm always 159 00:09:16,360 --> 00:09:19,600 Speaker 4: careful in my previous job and my current job to 160 00:09:19,640 --> 00:09:22,720 Speaker 4: stay away from the you know, the political parts of these. 161 00:09:22,760 --> 00:09:26,120 Speaker 4: But the one thing I do see around the world 162 00:09:26,800 --> 00:09:31,200 Speaker 4: in pools of capital, which we talk with regularly, is 163 00:09:31,800 --> 00:09:35,480 Speaker 4: countries that maybe a month ago a lot of the 164 00:09:35,679 --> 00:09:38,440 Speaker 4: uncertainty had to do with the abrupt nature of the 165 00:09:38,480 --> 00:09:41,800 Speaker 4: tariffs and adjusting to it. I think it is broadened 166 00:09:41,800 --> 00:09:45,880 Speaker 4: out a little bit where countries and investors around the world, 167 00:09:45,960 --> 00:09:50,280 Speaker 4: including here, are asking what's the institutional makeup of the 168 00:09:50,400 --> 00:09:53,640 Speaker 4: United States, what will it be in the next three 169 00:09:53,720 --> 00:09:57,080 Speaker 4: or four years, and whereas they came into the years 170 00:09:57,080 --> 00:09:59,600 Speaker 4: saying if in doubt, I want to over allocate to 171 00:09:59,640 --> 00:10:02,960 Speaker 4: the dom at a minimum, they're saying, maybe I want 172 00:10:02,960 --> 00:10:06,400 Speaker 4: to be more balanced, and even in some cases they're saying, 173 00:10:06,440 --> 00:10:08,920 Speaker 4: I want to reduce my exposure to the dollar. And 174 00:10:08,920 --> 00:10:12,040 Speaker 4: we're seeing a little bit in weakness of dollar rallying, gold, 175 00:10:12,480 --> 00:10:15,760 Speaker 4: ten year treasury backing up. And I think all this 176 00:10:15,880 --> 00:10:18,760 Speaker 4: is part of a mosaic that we can work through, 177 00:10:19,360 --> 00:10:23,880 Speaker 4: but it's creating this amount of uncertainty, including institutional uncertainty, 178 00:10:24,480 --> 00:10:28,959 Speaker 4: is affecting asset allocation and access to capital for the 179 00:10:29,080 --> 00:10:29,720 Speaker 4: United States. 180 00:10:29,840 --> 00:10:33,520 Speaker 3: There's no question rob in uncertainty is the word on 181 00:10:33,559 --> 00:10:34,280 Speaker 3: everyone's lips. 182 00:10:34,320 --> 00:10:34,720 Speaker 2: You hear it. 183 00:10:34,760 --> 00:10:38,800 Speaker 3: Perhaps now I haven't used the Bloomberg and the AI 184 00:10:38,920 --> 00:10:42,560 Speaker 3: tools that we've been given to determine yet you know 185 00:10:42,600 --> 00:10:45,920 Speaker 3: how much more often we're hearing it. But anecdotally it 186 00:10:46,000 --> 00:10:50,840 Speaker 3: seems like never before. You mentioned earlier, you told us, 187 00:10:50,840 --> 00:10:52,640 Speaker 3: in fact earlier that you spent about two thirds of 188 00:10:52,679 --> 00:10:55,840 Speaker 3: your time with clients. What is the mood in the 189 00:10:55,840 --> 00:10:59,160 Speaker 3: c suite and in the boardroom is it? Would you 190 00:10:59,200 --> 00:11:01,400 Speaker 3: go so far as to say it's one of sort 191 00:11:01,400 --> 00:11:03,559 Speaker 3: of paralysis. 192 00:11:04,080 --> 00:11:07,280 Speaker 4: I wouldn't go that far. In that Listen, we started 193 00:11:07,280 --> 00:11:09,520 Speaker 4: the year. It's interesting because a lot's happened in a 194 00:11:09,520 --> 00:11:14,800 Speaker 4: short period. We started the year with great enthusiasm and optimism, 195 00:11:14,880 --> 00:11:18,680 Speaker 4: and I think the regulatory review was a big part 196 00:11:18,720 --> 00:11:21,000 Speaker 4: of that. And the company said, you know, I'd love 197 00:11:21,040 --> 00:11:23,840 Speaker 4: to improve productivity. We're sort of being constrained in all 198 00:11:23,880 --> 00:11:27,640 Speaker 4: these different ways, and I'm excited that we're going to 199 00:11:27,679 --> 00:11:33,280 Speaker 4: be able to be freer to run a capitalist business. 200 00:11:33,000 --> 00:11:37,959 Speaker 4: That a number of these changes happened, the terriff uncertainty, 201 00:11:38,520 --> 00:11:41,720 Speaker 4: and I'd say i'd say businesses by and large, because 202 00:11:41,760 --> 00:11:44,600 Speaker 4: that's sort of the DNA, including me, of most business people. 203 00:11:44,960 --> 00:11:50,199 Speaker 4: You want to be optimistic, cautiously optimistic, but they're struggling 204 00:11:50,320 --> 00:11:53,959 Speaker 4: right now to be to figure out how they want 205 00:11:54,000 --> 00:11:57,199 Speaker 4: to adjust either supply chains or their business or their 206 00:11:57,200 --> 00:12:01,560 Speaker 4: access to workforce. And they'll, well, they'll work through this. 207 00:12:01,760 --> 00:12:06,400 Speaker 4: Business people adapt. Capital allocators also adapt, but business people 208 00:12:06,480 --> 00:12:10,320 Speaker 4: will adapt. I think to the extent we negotiate, for example, 209 00:12:10,400 --> 00:12:15,960 Speaker 4: tariffs down to mutually zero versus say ten percent or 210 00:12:16,040 --> 00:12:19,400 Speaker 4: twenty percent with these various countries, it will make it 211 00:12:19,559 --> 00:12:23,480 Speaker 4: easier for them to adjust. And right now they don't 212 00:12:23,600 --> 00:12:25,760 Speaker 4: know what the endpoint is going to be in the 213 00:12:25,800 --> 00:12:29,120 Speaker 4: timing of it, and that's why they're wrestling to work 214 00:12:29,160 --> 00:12:32,040 Speaker 4: through the ones that are wrestling. The most last comment 215 00:12:32,200 --> 00:12:36,080 Speaker 4: is big businesses have a lot more levers. Small businesses 216 00:12:36,320 --> 00:12:40,440 Speaker 4: we're hearing are struggling in that they don't have a 217 00:12:40,440 --> 00:12:43,360 Speaker 4: lot of levers and they don't know how to replace 218 00:12:43,520 --> 00:12:46,400 Speaker 4: the supply they've gotten, but they're afraid they're not going 219 00:12:46,440 --> 00:12:48,840 Speaker 4: to be competitive. And many more small businesses we talk 220 00:12:48,920 --> 00:12:52,319 Speaker 4: to are more nervous at this moment about their business 221 00:12:52,360 --> 00:12:55,640 Speaker 4: failing and certainly not being able to employ as many 222 00:12:55,640 --> 00:12:58,040 Speaker 4: people as the employer, certainly not being able to employ 223 00:12:58,080 --> 00:12:58,760 Speaker 4: them full time. 224 00:12:59,400 --> 00:13:04,000 Speaker 3: Problem is that now there are we presume because we 225 00:13:04,040 --> 00:13:06,800 Speaker 3: don't have a ton of visibility into the details, but 226 00:13:06,840 --> 00:13:10,319 Speaker 3: we presume there are multiple negotiations going on with multiple 227 00:13:10,320 --> 00:13:12,520 Speaker 3: countries on multiple timelines. 228 00:13:12,640 --> 00:13:12,760 Speaker 2: Right. 229 00:13:13,160 --> 00:13:15,800 Speaker 3: David Solomon, in fact, was saying earlier today that the 230 00:13:15,840 --> 00:13:20,200 Speaker 3: delay in tariffs didn't decrease the level of uncertainty. In 231 00:13:20,240 --> 00:13:24,400 Speaker 3: some ways, the delay increased the level of uncertainty. So, 232 00:13:25,480 --> 00:13:28,240 Speaker 3: with the feedback that you've been getting from clients, what 233 00:13:28,440 --> 00:13:34,720 Speaker 3: is it that business leaders, CEOs, members of the board 234 00:13:34,920 --> 00:13:39,280 Speaker 3: will need to see to feel a degree of certainty, 235 00:13:39,280 --> 00:13:43,720 Speaker 3: a degree of confidence such that they're more willing to transact. 236 00:13:43,760 --> 00:13:47,840 Speaker 3: They're more willing to commit capital. They're more willing, for example, 237 00:13:47,960 --> 00:13:50,560 Speaker 3: to do what they're largely not doing now, which is 238 00:13:50,800 --> 00:13:51,840 Speaker 3: investing cap X. 239 00:13:52,960 --> 00:13:56,480 Speaker 4: So CEOs are watching the news and their teams are 240 00:13:56,480 --> 00:14:00,080 Speaker 4: watching the news more than they're historically a customer. By 241 00:14:00,120 --> 00:14:03,920 Speaker 4: the way, this administration is talking to businesses very extensively, 242 00:14:04,160 --> 00:14:07,520 Speaker 4: so they're giving their views, but depend on who they are. 243 00:14:07,600 --> 00:14:11,479 Speaker 4: What's an example, many businesses want to see the relationship 244 00:14:11,520 --> 00:14:16,960 Speaker 4: with Canada and Mexico resolved because they need the logistics 245 00:14:16,960 --> 00:14:20,120 Speaker 4: and supply chain arrangements, and if they're going to change those, 246 00:14:20,720 --> 00:14:24,520 Speaker 4: it's not a thirty day process. It is an extensive 247 00:14:25,000 --> 00:14:28,920 Speaker 4: process to move them. They're watching carefully the negotiation going 248 00:14:28,960 --> 00:14:35,240 Speaker 4: on with Japan, and so they're literally just I think 249 00:14:35,240 --> 00:14:38,800 Speaker 4: what would help businesses if they're encouraged listen. They're also 250 00:14:38,840 --> 00:14:42,120 Speaker 4: where it takes a long time to negotiate a trade deal. 251 00:14:42,280 --> 00:14:44,560 Speaker 2: Trail deals are very complicated. 252 00:14:44,920 --> 00:14:47,480 Speaker 4: Normally in the past it might take nine months or 253 00:14:47,480 --> 00:14:49,480 Speaker 4: a year or longer to do a trade deal. 254 00:14:49,840 --> 00:14:51,200 Speaker 2: So they're watching. 255 00:14:51,480 --> 00:14:54,360 Speaker 4: Maybe there's going to be an agreement in principle lower 256 00:14:54,400 --> 00:14:57,600 Speaker 4: the tariffs, then negotiate the details. But I think the 257 00:14:57,640 --> 00:15:01,320 Speaker 4: more progress that's visible over the next couple of weeks 258 00:15:01,440 --> 00:15:04,200 Speaker 4: or thirty days, it will make people think that more 259 00:15:04,280 --> 00:15:07,720 Speaker 4: progress is coming. But every company I talk to has 260 00:15:07,760 --> 00:15:11,800 Speaker 4: a little different supply chain arrangement, whether it's with Vietnam 261 00:15:12,240 --> 00:15:16,840 Speaker 4: or with Canada or Mexico or elsewhere. They're ready to 262 00:15:16,960 --> 00:15:20,040 Speaker 4: adjust that, they're not sure how. The one thing they 263 00:15:20,120 --> 00:15:24,880 Speaker 4: do say is it probably isn't at the moment. Unless 264 00:15:24,920 --> 00:15:29,160 Speaker 4: there is really very high level technology, it's hard to 265 00:15:29,200 --> 00:15:33,880 Speaker 4: imagine replacing all of it in the US and being 266 00:15:33,880 --> 00:15:34,880 Speaker 4: globally competitive. 267 00:15:34,880 --> 00:15:37,640 Speaker 2: And that's the key every question every. 268 00:15:37,400 --> 00:15:39,400 Speaker 4: CEO wants to whatever they're going to do, it's got 269 00:15:39,440 --> 00:15:43,320 Speaker 4: to be globally competitive. The irony is on China, what 270 00:15:43,400 --> 00:15:46,680 Speaker 4: they're looking for is not more news. They're actually looking 271 00:15:46,800 --> 00:15:49,600 Speaker 4: for less. And I was joking around with someone the 272 00:15:49,680 --> 00:15:53,720 Speaker 4: other day. If you hear no discussion from our administration 273 00:15:53,880 --> 00:15:56,600 Speaker 4: or either side about China for a few days, I 274 00:15:56,600 --> 00:15:59,960 Speaker 4: think it may increase confidence that negotiations are going on, 275 00:16:00,560 --> 00:16:05,560 Speaker 4: because with China they need to go on unseen behind 276 00:16:05,640 --> 00:16:09,040 Speaker 4: closed doors, not in the press, And so maybe the 277 00:16:09,120 --> 00:16:11,880 Speaker 4: less said on China that would also encourage businesses. 278 00:16:12,400 --> 00:16:17,680 Speaker 3: I was in Washington last week and had some conversations 279 00:16:17,720 --> 00:16:21,480 Speaker 3: with people in the administration, and one thing I was told, 280 00:16:21,600 --> 00:16:24,920 Speaker 3: which I'm not sure it necessarily surprised me, but it 281 00:16:25,000 --> 00:16:30,480 Speaker 3: stuck with me, is that, of course CEOs are complaining right, 282 00:16:30,520 --> 00:16:33,600 Speaker 3: they're highly self interested. They're either self interested because it's 283 00:16:33,640 --> 00:16:38,320 Speaker 3: their job to husband the bottom lines of their companies, 284 00:16:38,960 --> 00:16:42,720 Speaker 3: or in a similar vein they may be even more 285 00:16:42,720 --> 00:16:45,560 Speaker 3: self interested because their conversation is so closely linked to 286 00:16:45,600 --> 00:16:49,960 Speaker 3: their stock price and so certain. And the message to 287 00:16:50,000 --> 00:16:53,360 Speaker 3: me was that some of what the administration is hearing 288 00:16:53,360 --> 00:16:55,400 Speaker 3: from corporate America is being discounted? 289 00:16:56,240 --> 00:16:56,840 Speaker 2: Is that fair? 290 00:16:58,680 --> 00:17:03,080 Speaker 4: I can't speak for the administration, should they be? I 291 00:17:03,120 --> 00:17:07,160 Speaker 4: think my senses they're listening. What CEOs are now trying 292 00:17:07,200 --> 00:17:10,200 Speaker 4: to also gauge is is this going to lead to 293 00:17:10,240 --> 00:17:14,159 Speaker 4: a modest slowing or something more severe? And that's the 294 00:17:14,240 --> 00:17:18,280 Speaker 4: other thing they're gauging. And the other thing that's a 295 00:17:18,280 --> 00:17:22,520 Speaker 4: little jarring. They're watching the dollar, they're watching gold, and 296 00:17:22,560 --> 00:17:25,320 Speaker 4: they're watching the long end of the curve because I 297 00:17:25,400 --> 00:17:31,560 Speaker 4: think they would be heartened by seeing a capital allocation 298 00:17:31,680 --> 00:17:36,000 Speaker 4: away from dollars and US treasuries come the other way. 299 00:17:36,520 --> 00:17:36,920 Speaker 2: And so. 300 00:17:39,560 --> 00:17:42,600 Speaker 4: CEOs their job is to express their views, be advocates 301 00:17:42,600 --> 00:17:44,639 Speaker 4: for their companies. The job of the administration is to 302 00:17:44,680 --> 00:17:48,080 Speaker 4: make good policy they think's the right thing. There's attension there, 303 00:17:48,080 --> 00:17:49,840 Speaker 4: and there probably ought to be attention. 304 00:17:49,560 --> 00:17:52,879 Speaker 3: There, whether it's from CEOs, whether it's from current or 305 00:17:52,960 --> 00:17:56,760 Speaker 3: former diplomats. There is some level of concern about what 306 00:17:56,840 --> 00:18:00,920 Speaker 3: these changes that we're getting in the world of policy 307 00:18:00,960 --> 00:18:05,520 Speaker 3: from the Trump administration will mean for America's place in 308 00:18:05,560 --> 00:18:06,040 Speaker 3: the world. 309 00:18:06,240 --> 00:18:07,040 Speaker 2: Share with us your. 310 00:18:06,960 --> 00:18:14,840 Speaker 4: Thoughts well, so listen us. Exceptionalism is real. There are 311 00:18:14,880 --> 00:18:20,080 Speaker 4: many distinctive elements of that. We've got the most I mean, 312 00:18:20,760 --> 00:18:24,000 Speaker 4: we have the most most outstanding companies in the world, 313 00:18:24,480 --> 00:18:28,080 Speaker 4: extremely innovative. We're a magnet. We've been a magnet for 314 00:18:28,200 --> 00:18:31,879 Speaker 4: talent globally. Our higher university system has been part of 315 00:18:31,920 --> 00:18:36,240 Speaker 4: that story where we attracted great talent who now run 316 00:18:36,760 --> 00:18:41,119 Speaker 4: and work in many of our most innovative companies. We 317 00:18:41,320 --> 00:18:43,800 Speaker 4: have been a place that workers around the world want 318 00:18:43,840 --> 00:18:46,640 Speaker 4: to come to. My grandparents were not born here, and 319 00:18:47,080 --> 00:18:51,600 Speaker 4: that's been critical. And it's been a place where you 320 00:18:51,760 --> 00:18:53,720 Speaker 4: always know rule of law. 321 00:18:54,760 --> 00:18:55,960 Speaker 2: And other aspects. 322 00:18:56,000 --> 00:19:00,479 Speaker 4: You can have confidence in our own institutional framework. And 323 00:19:00,560 --> 00:19:04,640 Speaker 4: I think people are very hopeful and I'd say cautiously optimistic, 324 00:19:05,119 --> 00:19:07,040 Speaker 4: but they're hopeful that will come out of this period 325 00:19:07,119 --> 00:19:11,440 Speaker 4: with those intact, because that those are critical to our future. 326 00:19:12,280 --> 00:19:16,800 Speaker 3: To the degree that maybe I'll put it differently, American 327 00:19:16,840 --> 00:19:21,800 Speaker 3: companies have in some ways been ambassadors for American exceptionalism 328 00:19:23,080 --> 00:19:26,240 Speaker 3: as America was leading the trade liberalization of the world 329 00:19:26,359 --> 00:19:30,520 Speaker 3: in the post war period. It was led by companies 330 00:19:30,640 --> 00:19:33,600 Speaker 3: like Coca Cola, for example, or Procter and Gamble on 331 00:19:33,640 --> 00:19:36,480 Speaker 3: the consumer goods side, but also companies like Golden Sacks 332 00:19:36,480 --> 00:19:39,359 Speaker 3: and JP Morgan on the financial side. Will it become 333 00:19:39,400 --> 00:19:42,359 Speaker 3: more difficult for American companies to do business outside of 334 00:19:42,359 --> 00:19:43,520 Speaker 3: the United States. 335 00:19:43,280 --> 00:19:45,600 Speaker 4: So this is a blow. So we run a goods 336 00:19:45,640 --> 00:19:48,199 Speaker 4: deficit with the world, and we know that some of 337 00:19:48,200 --> 00:19:50,440 Speaker 4: it is for low value added goods, some of it's 338 00:19:50,440 --> 00:19:54,120 Speaker 4: for intermediate goods, and some of this has to be rebalanced. 339 00:19:54,600 --> 00:19:56,560 Speaker 4: On the other hand, I think you're getting this. We 340 00:19:56,640 --> 00:20:00,920 Speaker 4: also are very aware we run a large service sector 341 00:20:01,240 --> 00:20:05,160 Speaker 4: surplus with the rest of the world. Our leading companies 342 00:20:05,200 --> 00:20:09,040 Speaker 4: here do a lot of business around the globe, and 343 00:20:09,160 --> 00:20:12,080 Speaker 4: when in doubt, we are great beneficiary of that. And 344 00:20:12,119 --> 00:20:15,800 Speaker 4: I think people are also hopeful that we make improvements 345 00:20:15,840 --> 00:20:20,040 Speaker 4: on the manufacturing side, but we don't in retaliation, we 346 00:20:20,200 --> 00:20:25,760 Speaker 4: don't lose our edge on the very distinctive competitive advantage 347 00:20:25,800 --> 00:20:29,600 Speaker 4: we have for services, which is enormously beneficial to the 348 00:20:29,680 --> 00:20:33,520 Speaker 4: United States and causes us to run a big services surplus. 349 00:20:34,119 --> 00:20:38,840 Speaker 3: Let's go back for a moment to your five point 350 00:20:39,520 --> 00:20:42,080 Speaker 3: structural framework that we talked about at the beginning of 351 00:20:42,119 --> 00:20:47,080 Speaker 3: the conversation. One of the things there is, at least 352 00:20:47,119 --> 00:20:50,080 Speaker 3: there would appear to be an underlying objective to each 353 00:20:50,160 --> 00:20:53,439 Speaker 3: of those five things, and you articulated it quite well. 354 00:20:54,240 --> 00:20:58,600 Speaker 3: But what's missing, what I hear from business leaders is 355 00:20:58,640 --> 00:21:06,880 Speaker 3: missing is a coherent narrative. What's the objective, what's the endgame, 356 00:21:06,960 --> 00:21:08,200 Speaker 3: who's supposed to benefit? 357 00:21:08,840 --> 00:21:09,800 Speaker 2: Is there a strategy? 358 00:21:09,920 --> 00:21:13,440 Speaker 4: Yeah, so I think i'll give I'll take a stab 359 00:21:13,480 --> 00:21:17,240 Speaker 4: at that because I think the narrative, if I would 360 00:21:17,320 --> 00:21:21,919 Speaker 4: articulate it, is we want a less government spending led economy, 361 00:21:22,640 --> 00:21:25,879 Speaker 4: more private sector organically driven economy. 362 00:21:26,560 --> 00:21:29,800 Speaker 2: We want we want tough. 363 00:21:29,600 --> 00:21:33,080 Speaker 4: Regulation, but more balanced we can get more productivity growth. 364 00:21:35,720 --> 00:21:40,520 Speaker 4: And I think the purpose of this is to create 365 00:21:41,359 --> 00:21:45,720 Speaker 4: an economy where low moderate income workers can get good 366 00:21:45,800 --> 00:21:52,560 Speaker 4: jobs and with living wages, and we can become more 367 00:21:53,119 --> 00:21:55,800 Speaker 4: globally competitive. I guess that would be the narrative I 368 00:21:55,800 --> 00:21:58,879 Speaker 4: would put on it, and I think most CEOs and 369 00:21:59,000 --> 00:22:03,600 Speaker 4: business leaders in this country share those aspirations. I think 370 00:22:03,640 --> 00:22:06,040 Speaker 4: the debate we're having these days is just more on 371 00:22:06,080 --> 00:22:09,680 Speaker 4: the tactics and the implementation. I think the objectives are 372 00:22:09,960 --> 00:22:11,320 Speaker 4: ones that many people share. 373 00:22:12,320 --> 00:22:16,119 Speaker 3: Speaking of tactics, we should talk about the elephant in 374 00:22:16,119 --> 00:22:18,359 Speaker 3: the room that I've ignored up until now, which is 375 00:22:18,400 --> 00:22:21,159 Speaker 3: the Federal Reserve. Given that you are observed as the 376 00:22:21,200 --> 00:22:23,439 Speaker 3: president of the Dallas FED, your point of view on 377 00:22:23,480 --> 00:22:28,560 Speaker 3: the subject is important and certainly relevant. Chairman Powell is 378 00:22:28,600 --> 00:22:31,160 Speaker 3: the target, as we all know of repeated attacks by 379 00:22:31,200 --> 00:22:33,639 Speaker 3: the president, not quite daily, but it's getting to the 380 00:22:33,640 --> 00:22:36,520 Speaker 3: point where it's close. He has a nickname now too late. 381 00:22:40,600 --> 00:22:43,639 Speaker 3: Try to walk us through Chairman Powell's mindset right now? 382 00:22:43,720 --> 00:22:44,640 Speaker 2: What is he thinking? 383 00:22:45,320 --> 00:22:50,520 Speaker 4: So we come into twenty twenty five with it's interesting. 384 00:22:51,640 --> 00:22:55,639 Speaker 4: Service sector inflation still sticky, running in the low to 385 00:22:55,720 --> 00:22:59,639 Speaker 4: mid threes, but goods inflation in pretty good shape. Goods 386 00:22:59,640 --> 00:23:04,040 Speaker 4: have been disinflating, and so why did we have sticky services? 387 00:23:04,320 --> 00:23:07,520 Speaker 4: Probably a little bit of excess demand. You might attribute 388 00:23:07,560 --> 00:23:11,000 Speaker 4: some of that to excess government spending. Okay, we're now 389 00:23:11,080 --> 00:23:17,439 Speaker 4: shifting to seeing a cost shock, which we don't know 390 00:23:17,440 --> 00:23:18,960 Speaker 4: how it's going to unfold because we don't know what 391 00:23:19,000 --> 00:23:20,560 Speaker 4: these tariff deals are going to be. But at the 392 00:23:20,560 --> 00:23:23,280 Speaker 4: minimum we got right now ten percent tariffs. So we're 393 00:23:23,320 --> 00:23:28,359 Speaker 4: having a cost shock, which affecting goods, which which had 394 00:23:28,440 --> 00:23:29,560 Speaker 4: sort of been helping us. 395 00:23:30,119 --> 00:23:30,640 Speaker 2: And so. 396 00:23:32,119 --> 00:23:36,080 Speaker 4: This is a big structural change, and I think Japali's 397 00:23:36,119 --> 00:23:38,959 Speaker 4: handled this very well. And what he's trying to do 398 00:23:39,040 --> 00:23:43,440 Speaker 4: is say, listen, we are watching carefully. If there's a downturn, 399 00:23:43,600 --> 00:23:46,800 Speaker 4: we're going to carefully monitor market function. If there's any 400 00:23:47,000 --> 00:23:50,040 Speaker 4: question that there's not orderly market function, we're prepared. 401 00:23:50,000 --> 00:23:51,840 Speaker 2: To step in. But we don't see that yet. 402 00:23:52,160 --> 00:23:55,080 Speaker 4: And what we want to assess is how significant is 403 00:23:55,119 --> 00:23:59,360 Speaker 4: the cost shock, and in particular is the drop in 404 00:24:00,080 --> 00:24:04,600 Speaker 4: growth going to which should be disinflationary help offset some 405 00:24:04,680 --> 00:24:07,840 Speaker 4: of the cost shock. While he's waiting to see that, 406 00:24:09,600 --> 00:24:13,520 Speaker 4: he needs to anchor inflation expectations. What I mean anchor 407 00:24:13,920 --> 00:24:17,320 Speaker 4: You don't want inflation expectations to get away from you 408 00:24:17,600 --> 00:24:18,440 Speaker 4: because that'll. 409 00:24:18,200 --> 00:24:19,760 Speaker 2: Make it harder to cut rates. 410 00:24:19,920 --> 00:24:22,600 Speaker 4: So I would argue the speech he gave last week 411 00:24:22,640 --> 00:24:26,000 Speaker 4: in Chicago and other things you're hearing. They're trying to 412 00:24:26,080 --> 00:24:30,400 Speaker 4: keep inflation expectations anchored while they have time to see 413 00:24:30,400 --> 00:24:33,720 Speaker 4: how these policies are going to unfold. Does not mean 414 00:24:34,200 --> 00:24:37,320 Speaker 4: that Jpal and the FED won't be ready to act, 415 00:24:37,760 --> 00:24:41,280 Speaker 4: but they need to understand better. And the last thing 416 00:24:41,320 --> 00:24:43,760 Speaker 4: they want to do is telegraph we're going to abandon 417 00:24:44,119 --> 00:24:46,400 Speaker 4: or ease up on the inflation fight. We've just gone 418 00:24:46,440 --> 00:24:49,879 Speaker 4: through an inflation trauma. I think for many low modern 419 00:24:49,920 --> 00:24:53,040 Speaker 4: income families. He doesn't want to signal that they're going 420 00:24:53,119 --> 00:24:56,680 Speaker 4: to ease up, and so it's a pretty complicated communication 421 00:24:57,640 --> 00:25:02,080 Speaker 4: and tactical balances trying to weave. And I think that's 422 00:25:02,119 --> 00:25:07,840 Speaker 4: what you're seeing. And the irony is if j palll 423 00:25:07,880 --> 00:25:10,040 Speaker 4: could find his way clear in the committee, and if 424 00:25:10,040 --> 00:25:12,040 Speaker 4: I were there, if I could find my way clear 425 00:25:12,080 --> 00:25:14,680 Speaker 4: at the lower rates, I'd love to, but I need 426 00:25:14,680 --> 00:25:17,280 Speaker 4: to understand how this is going to unfold. I doubt 427 00:25:17,280 --> 00:25:20,960 Speaker 4: they'll be able to figure it out by May. They're 428 00:25:20,960 --> 00:25:23,520 Speaker 4: going to take at one meeting at a time. They're 429 00:25:23,560 --> 00:25:26,600 Speaker 4: not going to be prognosticators. They're going to be risk managers, 430 00:25:27,000 --> 00:25:29,159 Speaker 4: and I think that's what you're seeing. 431 00:25:31,040 --> 00:25:34,320 Speaker 3: We have taken for the past forty years, certainly since 432 00:25:35,800 --> 00:25:39,200 Speaker 3: I first recall hearing the term interest rates in the 433 00:25:39,240 --> 00:25:43,840 Speaker 3: early nineteen eighties. Two things is gospel right, the respectful 434 00:25:43,920 --> 00:25:46,760 Speaker 3: dynamic in the relationship between the White House and the 435 00:25:46,760 --> 00:25:50,480 Speaker 3: Federal Reserve, and the importance of cimple bank independence. What's 436 00:25:50,640 --> 00:25:52,800 Speaker 3: at stake if they go away? 437 00:25:53,880 --> 00:25:58,520 Speaker 4: So I've always felt, and I do believe today after 438 00:25:58,640 --> 00:26:01,200 Speaker 4: having looked intensively at this and lived at the FED, 439 00:26:01,760 --> 00:26:07,280 Speaker 4: a mark of a successful country in the modern era 440 00:26:07,400 --> 00:26:11,159 Speaker 4: has been an independent central bank. Now they each of 441 00:26:11,200 --> 00:26:13,840 Speaker 4: them have different objectives. We have a dual mandate here, 442 00:26:14,000 --> 00:26:16,760 Speaker 4: some have just had an inflation mandate. But you want 443 00:26:17,040 --> 00:26:21,320 Speaker 4: there are times where you can have a crisis and 444 00:26:21,359 --> 00:26:24,440 Speaker 4: you need an independent central bank to have the independence 445 00:26:24,440 --> 00:26:26,960 Speaker 4: to come in and help with that crisis. 446 00:26:27,240 --> 00:26:28,960 Speaker 2: There are also times. 447 00:26:28,760 --> 00:26:32,800 Speaker 4: Where maybe we get overheated, and the FED, as it's 448 00:26:32,800 --> 00:26:34,280 Speaker 4: done in the last few years, has got to do 449 00:26:34,359 --> 00:26:38,000 Speaker 4: something very unpopular, or Paul Volker did in the late 450 00:26:38,080 --> 00:26:42,639 Speaker 4: seventies early eighties, very unpopular, but necessary in order to 451 00:26:42,760 --> 00:26:47,679 Speaker 4: tamp down inflation. And I think that independence that's not 452 00:26:47,880 --> 00:26:51,840 Speaker 4: wrapped up in the political system has been critical to 453 00:26:52,600 --> 00:26:54,959 Speaker 4: the success of our economy now. I think people have 454 00:26:54,960 --> 00:26:56,680 Speaker 4: worked at the FED would be the first to say 455 00:26:56,960 --> 00:27:00,280 Speaker 4: there have been mistakes along the way and lessons learned, and. 456 00:27:00,520 --> 00:27:01,720 Speaker 2: I would certainly say that. 457 00:27:02,000 --> 00:27:06,320 Speaker 4: But I think the independence is a is a cornerstone 458 00:27:06,800 --> 00:27:09,159 Speaker 4: of what one of the many factors that's helped the 459 00:27:09,240 --> 00:27:11,040 Speaker 4: United States be successful in the world. 460 00:27:11,359 --> 00:27:13,120 Speaker 3: I want to touch on one thing before we run 461 00:27:13,160 --> 00:27:19,080 Speaker 3: out of time, and it concerns the time that you've 462 00:27:19,080 --> 00:27:22,160 Speaker 3: spent a Golden Sacks since starting there out of business 463 00:27:22,200 --> 00:27:24,440 Speaker 3: school in nineteen eighty three and now for the past 464 00:27:24,440 --> 00:27:27,320 Speaker 3: eleven months. Back there as vice chairman, Mike shared with 465 00:27:27,400 --> 00:27:32,320 Speaker 3: us the fantastic anecdote about programming and Fortrand. You know 466 00:27:32,840 --> 00:27:36,600 Speaker 3: what has changed the most, clearly, nobody's programming in Fortrand 467 00:27:36,640 --> 00:27:39,080 Speaker 3: and punching in cards any longer. We do things at 468 00:27:39,080 --> 00:27:42,240 Speaker 3: Bloomberg very differently. What's most different at Goldman Sachs about 469 00:27:42,240 --> 00:27:44,720 Speaker 3: the way the firm operates now relative to the way 470 00:27:44,760 --> 00:27:45,920 Speaker 3: things were done when you got there. 471 00:27:45,960 --> 00:27:49,080 Speaker 4: So there might have been I forget, maybe two thousand 472 00:27:49,080 --> 00:27:52,800 Speaker 4: people at the firm when I joined, we were primarily us. 473 00:27:54,600 --> 00:27:56,480 Speaker 2: Today we are a global firm. 474 00:27:56,720 --> 00:28:00,000 Speaker 4: We're in a number of divisions, and businesses, including asset manager. 475 00:28:00,240 --> 00:28:01,639 Speaker 2: We weren't in when I joined. 476 00:28:01,840 --> 00:28:08,200 Speaker 4: We've got fifty thousand people, much bigger footprint. So globalization 477 00:28:08,920 --> 00:28:11,399 Speaker 4: was sort of the headline, I would argue in the 478 00:28:11,520 --> 00:28:14,920 Speaker 4: eighties and the nineties. Goldman was part of it. Many 479 00:28:15,040 --> 00:28:19,560 Speaker 4: US businesses became globalized. There's been a change, I would 480 00:28:19,720 --> 00:28:22,080 Speaker 4: argue in the last ten or fifteen years, and we 481 00:28:22,160 --> 00:28:25,280 Speaker 4: see it in our business. I'd say, if you lost 482 00:28:25,320 --> 00:28:29,159 Speaker 4: your job in the United States twenty years ago, was 483 00:28:29,160 --> 00:28:31,879 Speaker 4: probably might have been due to globalization. In the last 484 00:28:31,880 --> 00:28:35,760 Speaker 4: ten or fifteen years, probably more likely due to technology 485 00:28:36,160 --> 00:28:42,120 Speaker 4: and technology enabled disruption and businesses the rate of disruption 486 00:28:42,360 --> 00:28:46,840 Speaker 4: innovation has accelerated. That has been critical the Goldman Sachs 487 00:28:46,920 --> 00:28:50,120 Speaker 4: and the opportunity for us, But it's also changed our 488 00:28:50,200 --> 00:28:55,040 Speaker 4: economy to where the United States probably hasn't done as 489 00:28:55,080 --> 00:28:56,880 Speaker 4: good a job. And that's why many of us at 490 00:28:56,920 --> 00:29:00,320 Speaker 4: the firm are involved in education early childhood literally see 491 00:29:00,360 --> 00:29:04,760 Speaker 4: secondary education, digital divide skills training. We've got to improve 492 00:29:04,880 --> 00:29:08,400 Speaker 4: that in the United States to help people make the adjustment. 493 00:29:08,640 --> 00:29:12,120 Speaker 4: There'll be plenty of jobs that will require improved education, 494 00:29:12,520 --> 00:29:15,920 Speaker 4: and I think we're seeing those changes in our businesses. 495 00:29:15,920 --> 00:29:20,000 Speaker 4: At Goldman Sachs globally, and I think, I think the 496 00:29:20,920 --> 00:29:23,720 Speaker 4: society has got a different set of policy decisions to 497 00:29:23,720 --> 00:29:24,479 Speaker 4: make because of that. 498 00:29:24,760 --> 00:29:29,080 Speaker 3: You've experienced and observed as well as anyone what it 499 00:29:29,160 --> 00:29:33,280 Speaker 3: takes to be successful, not just at a firm like Goldman, 500 00:29:33,560 --> 00:29:39,000 Speaker 3: but at an industry well represented here Wall Street. If 501 00:29:39,040 --> 00:29:44,160 Speaker 3: you will, what about those ingredients to success are the 502 00:29:44,200 --> 00:29:47,640 Speaker 3: same as they were in nineteen eighty three, and which 503 00:29:47,640 --> 00:29:48,560 Speaker 3: ones are different today? 504 00:29:48,560 --> 00:29:49,360 Speaker 2: And why so? 505 00:29:50,080 --> 00:29:54,440 Speaker 4: Business principle Number one, client's interests come first. If they succeed, 506 00:29:54,440 --> 00:29:58,520 Speaker 4: our own interests will follow. It's always been number one. 507 00:29:58,560 --> 00:30:01,320 Speaker 4: And number two, our people are our most important asset. 508 00:30:02,400 --> 00:30:05,000 Speaker 4: And you better take care of your people, mentoring, coaching, 509 00:30:05,120 --> 00:30:09,040 Speaker 4: developing your people. That was true forty years ago, and 510 00:30:09,120 --> 00:30:13,080 Speaker 4: it's never been more true. That's never been more true today. 511 00:30:13,120 --> 00:30:16,960 Speaker 3: Also, anything different, anything new. 512 00:30:18,040 --> 00:30:22,720 Speaker 4: The complexity We always were a teamwork oriented firm was 513 00:30:22,760 --> 00:30:26,320 Speaker 4: one of the keys to the firm today. You multiply 514 00:30:26,480 --> 00:30:29,600 Speaker 4: that statement by fifty. In order to serve a client, 515 00:30:29,960 --> 00:30:34,800 Speaker 4: we bring the whole firm together. Globally, we've got to 516 00:30:34,840 --> 00:30:38,120 Speaker 4: get dramatically better. The world is so much more complex. 517 00:30:39,040 --> 00:30:41,160 Speaker 4: Clients don't want to hire an individual. They want to 518 00:30:41,200 --> 00:30:43,959 Speaker 4: hire a firm and know that that person covering them. 519 00:30:43,960 --> 00:30:46,320 Speaker 4: Our team will bring the whole firm to bear. That's 520 00:30:46,440 --> 00:30:48,000 Speaker 4: key to our business.