WEBVTT - The Latest on the Fed and Gold 0:00:02.520 --> 0:00:13.760 Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 0:00:13.840 --> 0:00:17.920 Surveillance Podcast. Catch us live weekdays at seven am Eastern 0:00:18.200 --> 0:00:21.240 on Apple car Play or Android Auto with the Bloomberg 0:00:21.320 --> 0:00:24.840 Business app. Listen on demand wherever you get your podcasts, 0:00:25.280 --> 0:00:27.120 or watch us live on YouTube. 0:00:27.320 --> 0:00:30.000 Joining us now, wasting too much time, I'm sorry, folks. 0:00:30.480 --> 0:00:35.560 Richard Clarida of Columbia University, of PIMCO and of course 0:00:35.600 --> 0:00:38.919 the former vice chairman of the FED, Professor CLARDA. Were 0:00:39.000 --> 0:00:41.120 thrilled to have you in today. Can I go nerd 0:00:41.159 --> 0:00:43.479 for a moment? Sure? Okay. I never talk about the 0:00:43.520 --> 0:00:46.639 Nobel Prize in economics. It's like bad luck, and I'm 0:00:46.640 --> 0:00:49.800 not doing that with somebody qualified to get the call 0:00:49.880 --> 0:00:52.600 from Scandinavia. But I want to go back. This is 0:00:52.640 --> 0:00:56.440 really important, Richard Clarida. There can be like in nineteen eighty, 0:00:56.480 --> 0:00:59.520 I've had the honor of talking to Joe Stiglitz about 0:00:59.560 --> 0:01:03.880 Gross and Stiglitz, which in nineteen eighty I'm not kidding, folks, 0:01:04.160 --> 0:01:08.280 it was like a four page paper. It was small, 0:01:08.680 --> 0:01:11.800 it was focused. And then with you and you know, 0:01:12.000 --> 0:01:13.640 I don't want to get into you know this or 0:01:13.680 --> 0:01:20.400 that there's Clarita Girtler and A Gali okay, up at 0:01:20.400 --> 0:01:24.040 Brown University. When you make a paper like that that 0:01:24.240 --> 0:01:28.000 is treasured by this is on DSGE folks, it's treasured 0:01:28.040 --> 0:01:32.120 by all of economics, how do you get that paper done? 0:01:32.680 --> 0:01:35.120 That ends up being like, hey, should they win a 0:01:35.160 --> 0:01:38.880 Nobel Prize? What was the process of doing? You know, 0:01:39.080 --> 0:01:42.760 name the paper, but I'll go to Girtler The Science 0:01:42.800 --> 0:01:45.240 of Monetary Policies just one example. 0:01:46.360 --> 0:01:50.040 Well, it was an interesting time because the authors Mark Gertler, 0:01:50.120 --> 0:01:54.040 Jerdi Galli and I were sort of either early or late. 0:01:54.160 --> 0:01:57.360 But we felt there was a vacuum in academic economics 0:01:57.560 --> 0:02:00.360 in that it treated monetary policy as a black box, 0:02:00.440 --> 0:02:03.280 and we thought these guys are trying to do something sensible. 0:02:03.320 --> 0:02:07.000 So we actually worked out essentially a forward looking tailor 0:02:07.080 --> 0:02:09.880 rule to describe actual monetary policy. And it turned out 0:02:09.919 --> 0:02:11.560 that it actually did a good job and it made 0:02:11.560 --> 0:02:14.160 a lot more sense than the black box. But when 0:02:14.200 --> 0:02:16.239 we wrote that paper, I don't think we had any 0:02:16.240 --> 0:02:18.080 idea that it would have the impact. 0:02:17.760 --> 0:02:20.000 That it did. We thought it could get ignored, okay, 0:02:20.120 --> 0:02:24.040 away from you. In modern economics, there's a nineteenth century 0:02:24.040 --> 0:02:27.240 what's called plug and chug which you have an equation, folks, 0:02:27.520 --> 0:02:30.120 and you fill in the little blanks of the algebraic 0:02:30.200 --> 0:02:33.880 equation the tailor rule. You can't do that because you 0:02:33.919 --> 0:02:36.240 don't know where the output gap is right right out? Yeah, 0:02:36.400 --> 0:02:38.680 is Jerome Powell flying blind? 0:02:40.040 --> 0:02:45.240 Well, he's certainly flying with an obscured vision out the cockpit, 0:02:45.840 --> 0:02:48.480 for sure. And I think there's always some uncertainty about 0:02:48.560 --> 0:02:51.320 things like what is our star? What's the full natural 0:02:51.360 --> 0:02:55.239 rate of unemployment? But it's probably elevated now. And the stakes, 0:02:55.320 --> 0:02:57.440 let's be honest, I guess, let me cut to the punchline. 0:02:57.680 --> 0:03:00.640 The stakes are higher now because of the fact that 0:03:00.680 --> 0:03:03.400 for the last four years inflation has been above target, 0:03:03.400 --> 0:03:05.520 and of course in twenty twenty one and twenty twenty 0:03:05.520 --> 0:03:08.280 two it served and was not transitory. And so I 0:03:08.320 --> 0:03:10.440 would argue that the stakes are higher now for the 0:03:10.480 --> 0:03:11.359 FED than they have been. 0:03:11.360 --> 0:03:14.239 Really, going back to Paul Volker forty years. 0:03:14.040 --> 0:03:18.000 Ago, does the government shutdown impact the Fed's ability to 0:03:18.080 --> 0:03:22.480 manage its mandate here in terms of managing interest rates? 0:03:23.160 --> 0:03:26.560 The longer it goes on, the more that becomes a factor. 0:03:27.440 --> 0:03:30.320 In particular, because a lot of the data comes from 0:03:30.400 --> 0:03:33.480 the government, including you know, inflation data and the labor 0:03:33.520 --> 0:03:37.840 market data. Now, the FED, like many other organizations and 0:03:38.320 --> 0:03:40.960 in the private sector, looks at a wide range of 0:03:41.040 --> 0:03:44.280 high frequency data. You get ADP, you get a lot 0:03:44.320 --> 0:03:47.640 of different indicators of the labor market. But yes, the 0:03:47.720 --> 0:03:51.280 longer this goes on, the more challenging it is to 0:03:51.360 --> 0:03:53.320 determine exactly where the economy is. 0:03:53.840 --> 0:03:56.840 What do you think is the bigger risk for this economy? 0:03:56.880 --> 0:03:59.040 Is it from the Fed's perspective, is it the labor market? 0:03:59.080 --> 0:04:01.320 Is this inflation? Are they evenly balanced here? What do 0:04:01.320 --> 0:04:02.680 you think the bigger risk? 0:04:02.720 --> 0:04:05.120 Well that was what was important about the September meeting 0:04:05.120 --> 0:04:08.720 because up until September, Jay Powell and many on the 0:04:08.760 --> 0:04:12.680 committee had said, look, we have dual mandate employment and inflation, 0:04:12.840 --> 0:04:15.640 and they seem to be roughly in balance. And at 0:04:15.640 --> 0:04:18.240 the September meeting they said, we're now more concerned about 0:04:18.279 --> 0:04:21.800 the balance of risk in the labor market. And I 0:04:21.880 --> 0:04:25.279 respect that, But the reality is inflation now using the 0:04:25.320 --> 0:04:28.280 FEDS preferred measures two point nine percent, that's where it 0:04:28.360 --> 0:04:32.280 was eighteen months ago. It's well above two and so 0:04:32.440 --> 0:04:34.800 there is a risk to both sides. There's a risk 0:04:34.839 --> 0:04:37.400 if you don't cut rates the unemployment rate goes up 0:04:37.400 --> 0:04:38.919 a lot. There is a risk that if you do 0:04:39.040 --> 0:04:42.040 cut rates a year from now, inflation stuck in the threes. 0:04:42.600 --> 0:04:44.719 Richard Claiter, with this talk, is a former vice chairman 0:04:44.760 --> 0:04:47.880 of the FED. For an extensive conversation. When we invented this, Paul, 0:04:47.960 --> 0:04:50.560 I mean to go from Man Deep Singh with his 0:04:50.680 --> 0:04:53.279 brilliance on AI to Professor Claiter, I mean, this is 0:04:53.279 --> 0:04:54.720 the way you roll, That's how you do it. This 0:04:54.760 --> 0:04:56.159 is how you do it. We said good morning to 0:04:56.200 --> 0:05:00.200 all of you across America worldwide as well. Okay, I'm 0:05:00.200 --> 0:05:02.880 in the basement of the of our building in London 0:05:03.160 --> 0:05:06.520 with a guy named Jean Claude Trichet, the engineer from Leon. 0:05:07.160 --> 0:05:10.680 He's brilliant. He goes Tom, I think you call me Tom. 0:05:10.760 --> 0:05:14.560 I can't remember, and he says it is about diffusion, 0:05:14.760 --> 0:05:18.720 and we're talking about productivity. I hate the phrase K 0:05:18.960 --> 0:05:24.520 shaped economy because it implies a symmetric distribution baloney. The 0:05:24.560 --> 0:05:28.119 productivity that we're all witnessing right now. Maybe Jeff Sachs 0:05:28.160 --> 0:05:31.480 would be good at this. Yeah, the productivity that we're witnessing. 0:05:31.800 --> 0:05:35.039 You can't tell me it's evenly diffused. Across some mirror. 0:05:36.000 --> 0:05:40.920 How asymmetric are we in this productivity? Boom? 0:05:41.520 --> 0:05:44.599 Well, I think you're one hundred percent right. You know 0:05:44.680 --> 0:05:47.800 the term in economics, you know, is is it labor 0:05:47.839 --> 0:05:49.280 augmenting technical change? 0:05:49.320 --> 0:05:50.640 And I think the answer is yes. 0:05:50.720 --> 0:05:53.960 But more labor is augmented, another lager over time may 0:05:53.960 --> 0:05:56.920 be substituted for. And I think that is really the 0:05:56.920 --> 0:05:59.720 potential disruption from AI is not only does it lift 0:05:59.720 --> 0:06:02.039 out at per hour, but it also could result in 0:06:02.279 --> 0:06:05.400 at some point in some displacement as well. So I 0:06:05.400 --> 0:06:07.480 think it's too soon to tell, but the minimum we 0:06:07.520 --> 0:06:09.120 know it's not evenly distributed. 0:06:09.200 --> 0:06:12.200 Dominic Constume over at Missou and now Brilliant out of Oxford, 0:06:12.279 --> 0:06:16.479 Doctor Constum would say, there's a capital deepening issue here. 0:06:16.600 --> 0:06:20.880 Explain to our audience this wall of AI money and 0:06:20.920 --> 0:06:24.200 what that does to the capital dynamics of America. 0:06:24.440 --> 0:06:27.320 Well, the interesting point is, you remember a couple decades ago, 0:06:27.800 --> 0:06:30.320 the talk in the US was about the witless economy, 0:06:30.360 --> 0:06:33.320 that we could get all this GDP without bricks and mortar. 0:06:33.680 --> 0:06:35.560 And it turns out that at least for this part 0:06:35.560 --> 0:06:37.560 of the new economy, you need a lot of bricks, 0:06:37.600 --> 0:06:39.400 a lot of mortar, a lot of servers, and a 0:06:39.400 --> 0:06:42.520 lot of power generation. So in some ways to get 0:06:42.560 --> 0:06:46.839 to the very new economy, you need old economy capital spending. 0:06:46.920 --> 0:06:49.560 And that's a pretty interesting period to be in. We 0:06:49.560 --> 0:06:51.880 think it's going to go on for five to ten years, 0:06:51.880 --> 0:06:54.520 but it's a different economy than we were used to 0:06:54.520 --> 0:06:56.400 thinking about in the last twenty years. 0:06:56.880 --> 0:06:59.120 You strip out the AI spend, a lot of folks 0:06:59.120 --> 0:07:01.640 will tell you this economy not that strong. Capital spending 0:07:01.720 --> 0:07:03.200 is not that good. 0:07:03.240 --> 0:07:06.320 How do you think about that arithmetically? That's correct. 0:07:06.360 --> 0:07:08.160 You know, in the first half of the year GDP 0:07:08.320 --> 0:07:11.920 growth was about one point six one point seven. If 0:07:12.000 --> 0:07:15.320 you strip out tech investment then it was somewhere between 0:07:15.440 --> 0:07:17.679 zero and half of that, and you have to adjust 0:07:17.720 --> 0:07:20.520 for imports. But clearly in the first half of the 0:07:20.560 --> 0:07:25.720 year it's really been an AI driven capex economy. 0:07:25.840 --> 0:07:28.880 So one of the issues out there that I guess 0:07:28.880 --> 0:07:31.120 it's got to push the background a little bit, maybe 0:07:31.200 --> 0:07:34.960 just because fatigue is tariffs and the impact on the economy. 0:07:35.320 --> 0:07:40.520 We have not necessarily seen meaningful inflation resulting from the tariffs. 0:07:42.160 --> 0:07:44.760 Growth seems to be kind of hanging in everything. Strong 0:07:44.800 --> 0:07:47.560 gd for in a few weeks ago. How do you 0:07:47.560 --> 0:07:50.040 think tariffs will impact the economy if at all. 0:07:51.160 --> 0:07:58.120 The economy has been refreshingly and surprisingly resilient. I don't 0:07:58.120 --> 0:08:01.040 think there's any doubt about that. So at PIMCO, we've 0:08:01.200 --> 0:08:04.480 revised up our outlook. You know, Atlanta Fed is now 0:08:04.520 --> 0:08:08.480 saying Q three could come in north of three percent. 0:08:09.320 --> 0:08:11.600 So I actually think it actually in part. 0:08:11.400 --> 0:08:13.600 Is because of at the same time we've had the 0:08:13.640 --> 0:08:17.960 tariff hit to the economy, we've also had a justifiable 0:08:18.000 --> 0:08:22.680 optimism about tech and capital spending, so that that's been 0:08:22.720 --> 0:08:26.680 an important feature. I think the other important feature is that, 0:08:27.360 --> 0:08:29.760 you know, some of the tariffs have been absorbed either 0:08:29.800 --> 0:08:32.000 by the profits of US companies that had a lot 0:08:32.000 --> 0:08:35.240 of profits to absorb or foreign exporters. And then the 0:08:35.280 --> 0:08:38.920 third piece is we're probably not yet at the at 0:08:38.960 --> 0:08:41.600 the endpoint of teriffs. They will continue to show up 0:08:41.600 --> 0:08:44.760 in the inflation data at least for a while, but 0:08:44.800 --> 0:08:46.920 I think increasingly I and the Federal of the view, 0:08:46.920 --> 0:08:49.760 and that the FEDS what's important that this is really 0:08:49.800 --> 0:08:52.400 not going to be an inflationary story. It's a price 0:08:52.520 --> 0:08:55.200 level adjustment that we're sort of in the middle innings 0:08:55.240 --> 0:08:56.160 of getting through. 0:08:56.160 --> 0:08:59.240 Against some nerd knowledge here, folks, Good morning Global Wall Street. 0:08:59.600 --> 0:09:02.440 Richard Clara with this with PIMCO, and of course forever 0:09:02.520 --> 0:09:07.480 with his Columbia University. Okay, my path in foreign exchange 0:09:07.520 --> 0:09:11.880 is Mundel, Mundel, Fleming, Jacob Frankel. Out of Chicago, a 0:09:11.880 --> 0:09:15.000 guy named Rogoff shows up, No excuse me than Rudy 0:09:15.040 --> 0:09:19.680 Dornbush up at Amputeen this upstart Rogoff and so getting 0:09:19.760 --> 0:09:22.440 ops felt out at Berkeley. They show up and it 0:09:22.480 --> 0:09:24.880 goes on and on and on. Let's take it back 0:09:24.880 --> 0:09:28.880 to Colombia, where you have this incredible that you helped build, 0:09:29.440 --> 0:09:35.319 this incredible synthesis of international economics. Explain to America with 0:09:35.559 --> 0:09:39.640 Xavier Salah, m Lartin or Robert Mundel the Giant would 0:09:39.679 --> 0:09:44.160 say about how screwed up, messed up Japan is. With 0:09:44.400 --> 0:09:50.800 weekend log convex interest rates moving higher, the real rage 0:09:50.920 --> 0:09:54.440 chart published out of Tokyo today by Bloomberg is grim. 0:09:54.920 --> 0:09:58.800 Explain why our listeners and viewers should care about the 0:09:58.800 --> 0:09:59.920 fragility of Japan. 0:10:01.240 --> 0:10:04.800 Well, because Japan is obviously a major economy, but it's 0:10:04.840 --> 0:10:08.880 also an even bigger part of you know, international financial system. 0:10:09.000 --> 0:10:12.360 With the yen an important currency, especially in risk off episodes. 0:10:12.960 --> 0:10:16.000 Somebody has to hold all the jgbs. 0:10:15.320 --> 0:10:18.320 That the government has been issuing, and so what happens 0:10:18.320 --> 0:10:22.960 in Japan also spills over into US capital markets and 0:10:23.000 --> 0:10:26.800 the global economy. And I think what's important for the 0:10:26.920 --> 0:10:30.160 listeners to understand now is that markets and investors have 0:10:30.240 --> 0:10:32.640 had sort of a rule of thumb about Japan, which 0:10:32.679 --> 0:10:34.559 is it sort of goes off in its own it's 0:10:34.600 --> 0:10:38.240 got deflation. Eventually they'll figure out their fiscal situation. And 0:10:38.280 --> 0:10:41.320 now Japan has broken out of deflation. They now have inflation, 0:10:41.679 --> 0:10:44.480 they have positive interest rates, and they're now very much 0:10:44.480 --> 0:10:46.920 a player in the global financial system. 0:10:47.200 --> 0:10:48.439 Is there is there. 0:10:48.360 --> 0:10:53.520 Any precedent for a successful reflation. I don't see it 0:10:53.559 --> 0:10:56.760 in the literature. It's original to Japan, isn't it. 0:10:58.080 --> 0:11:01.439 Well, Japan was went through about a two decade period 0:11:01.440 --> 0:11:04.360 where they had deflation. It wasn't a spiral, but prices 0:11:04.360 --> 0:11:06.280 were negative. I think to me, Tom, one of the 0:11:06.320 --> 0:11:10.280 interesting things about Japan is although the boj was trying 0:11:10.280 --> 0:11:13.839 to reflate the economy, the politicians in the public actually 0:11:13.880 --> 0:11:16.720 didn't get a vote. They actually liked deflation. You know, 0:11:16.760 --> 0:11:19.400 if you've got you've got your savings in yen under 0:11:19.400 --> 0:11:21.840 the mattress. You know, deflation is good for you. So 0:11:21.840 --> 0:11:24.640 I think a challenge right now in Japan is they finally, 0:11:24.679 --> 0:11:27.640 after twenty five years, achieved the positive two or three 0:11:27.679 --> 0:11:31.640 percent inflation. But it's creating substantial political tension as well. 0:11:31.679 --> 0:11:34.400 Well, I can't emphasize that that was brilliant. We'll try 0:11:34.440 --> 0:11:36.440 to do that single best idea. We'll see if the 0:11:36.480 --> 0:11:41.520 interns get the cut today. Well, the societal change. I 0:11:41.640 --> 0:11:44.199 was at the White House correspondence dinner and you got 0:11:44.200 --> 0:11:47.960 this whole security idiocy because the President's there and Martin 0:11:48.000 --> 0:11:50.480 Feldstein's standing in front of me. I think rogue off 0:11:50.600 --> 0:11:53.320 was my guest. Martin Feldstein's standing in front of me. 0:11:53.679 --> 0:11:56.720 We'd all had six martinis. And he turns around and 0:11:56.760 --> 0:12:01.120 he says, Tom, Japan has been lost for two decades. Yep, 0:12:01.240 --> 0:12:03.000 that was a societal struggle. 0:12:03.320 --> 0:12:04.600 Is Japan now found? 0:12:05.040 --> 0:12:07.360 Is it out of the wilderness at this point? 0:12:07.400 --> 0:12:07.840 Do you think? 0:12:08.120 --> 0:12:10.720 Well, as I mentioned, you know, narrowly, it certainly is 0:12:10.800 --> 0:12:12.400 no longer in deflation. 0:12:12.600 --> 0:12:14.960 It has positive interests. 0:12:15.080 --> 0:12:17.920 I will say, just an anecdote, if I'm allowed an anecdote, 0:12:17.920 --> 0:12:21.160 I visit Japan almost every year for the last thirty years. 0:12:21.480 --> 0:12:22.840 And most recently this summer. 0:12:22.880 --> 0:12:26.440 I was struck by not only the boom in the economy, 0:12:26.720 --> 0:12:29.000 but it is a real tourist magnet now. In fact, 0:12:29.040 --> 0:12:31.679 if anything, in Japan, the politics is such that there 0:12:31.679 --> 0:12:33.800 are too many tour right, which is a problem they 0:12:33.800 --> 0:12:35.400 did not have for twenty five years. 0:12:35.440 --> 0:12:37.000 Professor, I got to ask you, or I should say 0:12:37.080 --> 0:12:39.880 Vice Chairman, I've got to ask you. Lisa Cook gets 0:12:39.880 --> 0:12:43.000 an extended stay at the Fed. What is the significance 0:12:43.240 --> 0:12:46.560 of Lisa Cook remaining at the Federal Reserved table. 0:12:47.120 --> 0:12:49.600 Well, obviously the case is at the Supreme Court, and 0:12:49.640 --> 0:12:52.800 so we'll know next year where they end up. But 0:12:52.880 --> 0:12:55.719 what's important is, you know, she continues to serve as 0:12:55.720 --> 0:12:59.760 a governor and continues to vote on monetary policy. 0:13:00.480 --> 0:13:03.479 And I think that that is right. I think that's appropriate. 0:13:03.840 --> 0:13:07.559 Did Columbia pay for Sala E. Martin's bright colored jackets? 0:13:08.280 --> 0:13:09.360 Is that part of his deal? 0:13:09.720 --> 0:13:12.400 During my time as chair, we did not subsidize the 0:13:12.920 --> 0:13:16.280 jackets or the m and ms that he distributes to class. 0:13:17.080 --> 0:13:19.600 But I'm not sure about the current practice. This is 0:13:19.720 --> 0:13:23.280 your dovo. Sally Martin's like three quarters of a mile away, 0:13:23.559 --> 0:13:25.800 and he's there in bright orange, just like there's the 0:13:25.840 --> 0:13:29.480 growth guy from Columbia, Richie Claire brilliant. Thank you so much, really, 0:13:29.520 --> 0:13:32.240 treasure of the comments there. Maybe we'll get him back 0:13:32.280 --> 0:13:37.280 once we figure out who Scandinavia annoints this week as well. 0:13:37.480 --> 0:13:41.400 Clarida is with Pimco. Stay with us. More from Bloomberg 0:13:41.559 --> 0:13:43.600 Surveillance coming up after this. 0:13:50.840 --> 0:13:54.439 You're listening to the Bloomberg Surveillance podcast. Catch us Live 0:13:54.480 --> 0:13:58.000 weekday afternoons from seven to ten am Eastern Listen on Apple, 0:13:58.040 --> 0:14:01.400 Karplay and Android Otto with the Work Business up or 0:14:01.520 --> 0:14:03.000 what Us Live on YouTube. 0:14:03.120 --> 0:14:06.119 Joining us now. Finally, Jane Foley out of FX strategy 0:14:06.600 --> 0:14:09.360 at Robbo Bank in London. I can't say enough, folks 0:14:09.360 --> 0:14:13.280 about the difference here in the Rabobank of the Netherlands. 0:14:13.320 --> 0:14:19.840 They go back to commercial hedging utilizing foreign exchange back centuries. 0:14:20.320 --> 0:14:24.240 It's a whole different twist here on the dynamics. Jane Fowley, 0:14:24.360 --> 0:14:28.359 I want you to explain the sowhat to our American 0:14:28.440 --> 0:14:31.320 listeners and viewers and those in London frankly as well 0:14:31.960 --> 0:14:36.640 of a week Japanese yen our two point nine standard deviations, 0:14:36.960 --> 0:14:40.400 What why do I care that dollar yen could go 0:14:40.440 --> 0:14:43.440 to one fifty five shockingly week Japan? 0:14:45.160 --> 0:14:47.360 Well, I mean, gently excuse me. That's the talk this 0:14:47.400 --> 0:14:49.160 morning that we could see a move back to one 0:14:49.320 --> 0:14:52.880 fifty five. And it is all because the market thinks, well, 0:14:52.960 --> 0:14:55.200 you know, the end characterve is back on. You know, 0:14:55.240 --> 0:14:57.200 we're going to not get the Bank of the Bank 0:14:57.280 --> 0:15:00.800 of Japan interest rate hiking October after But I would 0:15:00.920 --> 0:15:04.480 warn but I think this is a really dangerous strategy 0:15:04.480 --> 0:15:08.040 in it. Why is it dangerous because if you think 0:15:08.080 --> 0:15:11.600 about the position of the LDP leader now, and she 0:15:11.760 --> 0:15:14.280 is of course quite likely to be voted in as 0:15:14.400 --> 0:15:17.440 the Prime minister maybe next week, although there's some issues 0:15:17.480 --> 0:15:20.840 there with her coalition, But assuming she is the prime minister, 0:15:20.880 --> 0:15:24.640 you've got to wonder does she actually want a weaker yen? 0:15:24.920 --> 0:15:27.560 Now the market is assuming that she is going to 0:15:27.560 --> 0:15:31.640 follow the policies of her mental Aarby. But of course 0:15:31.680 --> 0:15:35.000 when Abe was the prime minister, things were very different 0:15:35.000 --> 0:15:38.440 in Japan. They were still trying to fight deflation. Now 0:15:38.640 --> 0:15:42.760 Japan has got inflation, and she is very concerned that 0:15:42.840 --> 0:15:47.160 a lot of this inflation is because of important inflation. 0:15:47.400 --> 0:15:50.080 And of course, if you are worried about important inflation. 0:15:50.800 --> 0:15:54.720 Why would you want a weaker currency, particularly when you 0:15:54.760 --> 0:15:57.400 want to build a strong relationship with President Trump, who, 0:15:57.440 --> 0:16:01.400 according to the Japanese prayers, may start Japan in his 0:16:01.600 --> 0:16:04.080 visits to Asia and perhaps at the end of this time. 0:16:04.120 --> 0:16:07.400 So I think this could be quite a dangerous strategy. 0:16:07.440 --> 0:16:09.600 I'm not quite so certain that beat the carriage trade 0:16:09.600 --> 0:16:10.400 will be on so long. 0:16:10.560 --> 0:16:13.760 In Paul Toro Fujioko off for Tokyo Desk has a 0:16:13.760 --> 0:16:17.960 brilliant story today showing the in the new inflation, the 0:16:18.000 --> 0:16:22.960 inflation justed wages. The japan people are flat on If 0:16:23.000 --> 0:16:27.160 that happened in America, they'll literally be revolt. They're flat 0:16:27.240 --> 0:16:30.120 on their back with a negative real wage growth. 0:16:30.240 --> 0:16:33.320 Absolutely, Jane, we've got I think the story maybe this 0:16:33.360 --> 0:16:36.320 week over it. Certainly this year has been gold. We've 0:16:36.320 --> 0:16:39.240 got gold north of four thousand dollars per ounce. A 0:16:39.240 --> 0:16:42.120 lot of folks are saying, hey, this is a safe haven, 0:16:42.360 --> 0:16:44.720 maybe more so than the US dollar. What are folks 0:16:44.760 --> 0:16:47.440 in your world thinking about the relationship between the US 0:16:47.480 --> 0:16:48.120 dollar and gold. 0:16:49.320 --> 0:16:51.320 Well, certainly that seems to be you know, the fashion 0:16:51.360 --> 0:16:53.720 trade right now. But I do think that there is 0:16:53.880 --> 0:16:56.240 room for both and I do think that if we 0:16:56.280 --> 0:17:00.320 did have, say a sudden step up of geopolitician, I 0:17:00.320 --> 0:17:02.960 think we'd see the dollar and we'd see gold gold rallying, 0:17:02.960 --> 0:17:05.200 although over time the dollar, you know, if the dollar 0:17:05.240 --> 0:17:07.560 were to recover significantly, of course, I think there would 0:17:07.560 --> 0:17:08.680 be forfit taking first of. 0:17:08.600 --> 0:17:09.760 All in gold. 0:17:10.119 --> 0:17:14.160 Now, gold I think is a real true diversification trade 0:17:14.200 --> 0:17:16.320 this year, and I think this is where a lot 0:17:16.320 --> 0:17:18.280 of the buying has come from. You know, if we 0:17:18.400 --> 0:17:20.280 go back to the first five months of this year, 0:17:20.320 --> 0:17:23.240 that there was this rotation trade away from the US 0:17:23.240 --> 0:17:26.160 assets and maybe that's stop now bores turned around because 0:17:26.160 --> 0:17:28.240 we do see you know, the AI trade, the S 0:17:28.280 --> 0:17:32.200 and P making you such strong gains really since since June. 0:17:32.240 --> 0:17:36.040 But I think there is diversification still amongst that. We've 0:17:36.040 --> 0:17:39.240 seen various different stock markets, including the perform quite well 0:17:39.800 --> 0:17:42.200 this year, and we've seen silver do well, We've seen 0:17:42.240 --> 0:17:44.920 bitcoin do well, and I think there is a want 0:17:44.920 --> 0:17:48.960 by many investors really to diversify their portfolios, and I 0:17:48.960 --> 0:17:51.200 think that's where the strength in gold is coming from. 0:17:51.760 --> 0:17:54.520 Jane, We've we've seen the Bloomberg dollar index, you know, 0:17:54.600 --> 0:17:57.200 kind of stabilize here over the last month, or two 0:17:57.280 --> 0:18:00.199 here the dollars stabilized. Is this kind of a a 0:18:00.240 --> 0:18:03.439 new level you think for the dollar? 0:18:03.640 --> 0:18:05.800 Yeah, you know, the dollar is the best performing G 0:18:05.920 --> 0:18:08.520 ten currency on the one month view, despite the fact 0:18:08.520 --> 0:18:10.880 that it's still the worst performing on the year to date. 0:18:11.440 --> 0:18:14.240 And we have seen a lot of stability really over 0:18:14.280 --> 0:18:17.359 the summer months. Really sort of July is and you know, 0:18:17.400 --> 0:18:19.399 a lot has been said over the spring about the 0:18:19.920 --> 0:18:24.200 hedging strategies or the change in hedging strategies by non 0:18:24.840 --> 0:18:29.320 US dollar based fund managers, and that probably accelerated the 0:18:29.400 --> 0:18:32.440 downside of the donor certainly through the spring. But if 0:18:32.440 --> 0:18:35.080 we assume that for now, you know, that's done, maybe 0:18:35.080 --> 0:18:37.440 it could start again. But if we assume it's done, 0:18:37.600 --> 0:18:39.200 you know, I think what we've got now is short 0:18:39.240 --> 0:18:42.399 covering in the dollar because there's an awful lot of 0:18:42.520 --> 0:18:47.280 fed easine in the price. The market's still whether or 0:18:47.280 --> 0:18:48.640 not inflation will come through. 0:18:48.560 --> 0:18:51.600 Tours jargon here, let's let's translate this. Jane. You're saying, 0:18:51.640 --> 0:18:54.640 everybody bet the bank, bet the farm that there would 0:18:54.640 --> 0:18:57.480 be strong dollar, and now they're turning that trade around 0:18:57.480 --> 0:18:58.400 and going the other way. 0:18:59.560 --> 0:19:01.360 It seems that's what happened in the spring. So if 0:19:01.359 --> 0:19:04.440 we go back to the global financial crisis, we've seen 0:19:04.720 --> 0:19:07.720 you since then, a massive rally out performance of the 0:19:07.800 --> 0:19:10.280 S and P five foundred and really a massive rally 0:19:10.280 --> 0:19:12.320 in the value of the US dollars. So everyone was 0:19:12.359 --> 0:19:17.960 buying American assets and during that period non dollar based assets, 0:19:18.000 --> 0:19:21.760 so really Asian European fund managers, they were investing in 0:19:21.760 --> 0:19:23.399 a lot more money. There was a lot more money 0:19:23.600 --> 0:19:26.240 to be invested, and a lot of that was finding 0:19:26.280 --> 0:19:28.639 its way into the US. And I think come the 0:19:28.680 --> 0:19:32.480 beginning of this year, the market, okay, the dollar's done 0:19:32.560 --> 0:19:35.040 so well in recent years, we weren't that hedged, and 0:19:35.160 --> 0:19:37.200 at the start of this year they started to hedge 0:19:37.240 --> 0:19:37.719 the dollars. 0:19:37.800 --> 0:19:39.679 Jane, we're running out of time. First of all, we 0:19:39.720 --> 0:19:41.080 got to get you in the studio in New York 0:19:41.080 --> 0:19:42.840 to do like a double barrel, like a whole hair 0:19:42.880 --> 0:19:46.080 four with Jane Folly, a raval bank. Jane. People think 0:19:46.119 --> 0:19:48.200 I got hired at Bloomberg because I'm like bow tie. 0:19:48.200 --> 0:19:51.160 It's not true, folks. I mean meetings with like Matt Winkler, 0:19:51.200 --> 0:19:54.520 Peter Grauer retiring chairman, and they're going dance all our 0:19:54.600 --> 0:19:56.960 rods and cones. Where do you do that, You do 0:19:57.040 --> 0:20:00.560 that in Jane Foley space. Foreign exchange, Jane, I'm seeing 0:20:00.680 --> 0:20:06.200 huge tension. If I look at something obscure like sterling swissy, 0:20:07.160 --> 0:20:12.040 I'm out strong, Swiss franc to new territory, new points 0:20:12.440 --> 0:20:16.040 of tension. If I look at euro yen back up 0:20:16.040 --> 0:20:20.400 to a one seventy seven week en, points of tension 0:20:20.800 --> 0:20:25.240 in your world, What do those tensions mean in foreign exchange, 0:20:25.600 --> 0:20:29.080 for the stock market, for the bond market. 0:20:29.240 --> 0:20:31.040 Well, I mean the Nikai T two five has perform 0:20:31.119 --> 0:20:33.920 really quite well this year. But if you're an overseas 0:20:33.960 --> 0:20:36.800 investor investing in Japanese assets, well, you're not going to 0:20:36.840 --> 0:20:39.880 really like the en going lower. Now. 0:20:40.000 --> 0:20:41.040 The yen again. 0:20:40.920 --> 0:20:43.280 Seems out of place here because what we've seen is 0:20:43.520 --> 0:20:46.800 some Safeyvin Ausset's doing quite well, the dollar stabilizing, the 0:20:46.800 --> 0:20:49.480 Swiss frank doing well, goal doing well, but the yen 0:20:49.520 --> 0:20:51.800 again on the back foot, and that to me is 0:20:51.840 --> 0:20:56.480 another reason why this yen selloff is probably overdone. 0:20:56.800 --> 0:20:59.880 Okay, Jane Foley, thank you, thank you so much. Stay 0:21:00.119 --> 0:21:10.960 with us. More from Bloomberg Surveillance coming up after this. 0:21:10.960 --> 0:21:14.880 This is the Bloomberg Surveillance podcast. Listen live each weekday 0:21:14.920 --> 0:21:18.240 starting at seven am Eastern on Applecarplay and Android Auto 0:21:18.359 --> 0:21:21.280 with the Bloomberg Business app. You can also listen live 0:21:21.400 --> 0:21:24.960 on Amazon Alexa from our flagship New York station, Just 0:21:25.000 --> 0:21:27.560 say Alexa play Bloomberg eleven thirty. 0:21:27.800 --> 0:21:33.359 Here's the way it rolls, folks, Economics, finance, investment, international relations. 0:21:33.800 --> 0:21:38.280 It's no different than sports entertainment. Taylor Swift, did you 0:21:38.320 --> 0:21:39.440 know she has a new album out? 0:21:39.480 --> 0:21:39.960 I heard that. 0:21:40.280 --> 0:21:43.280 I think we're efforting her right now, Miss Swift. If 0:21:43.320 --> 0:21:47.160 you're listening, bring Jack with you as well. Taylor. Anyways, 0:21:47.160 --> 0:21:49.720 people keep score and as a young kid that came 0:21:49.760 --> 0:21:52.920 out of York University of York in England and all 0:21:52.960 --> 0:21:56.120 of a sudden things are working. He's with Capital Economics, 0:21:56.400 --> 0:22:00.800 which is a really wonderful firm writing clear stuff. He's 0:22:00.840 --> 0:22:05.399 global group, such a group Chief Economistic Capital Economics, but 0:22:05.600 --> 0:22:09.600 really made us a splash, like with the ft and 0:22:09.640 --> 0:22:14.000 the thinking within England of what in God's name is 0:22:14.080 --> 0:22:17.520 going on? The summary of it is a wonderful two 0:22:17.600 --> 0:22:21.640 hundred and fifty pages. The Fractured Age Martin Wolf warbles 0:22:21.680 --> 0:22:25.280 gaily on the cover. A guy named Robert Nibleta Chathamhouse 0:22:25.280 --> 0:22:27.960 shows up so does bread sets her Neil shearing with 0:22:28.040 --> 0:22:31.800 us in celebration of the fractured age? Did you time 0:22:31.920 --> 0:22:34.439 the book release for the world falling apart? 0:22:36.440 --> 0:22:38.679 Some things with the book that you need an idea, 0:22:39.160 --> 0:22:41.480 you need the support of your friends and family, and 0:22:41.520 --> 0:22:44.399 you need a bit of luck. I'm luck in space. 0:22:45.240 --> 0:22:49.119 What is the distinction of this fractured age that's not 0:22:49.240 --> 0:22:53.119 in the zeitgeist? Now, all the blood, the eighteen newspapers, 0:22:53.520 --> 0:22:57.199 the media, people like us, what are we missing of 0:22:57.240 --> 0:22:57.840 this fracture? 0:22:58.480 --> 0:23:00.720 So I think that the genesis the book was that 0:23:00.800 --> 0:23:04.320 the rhetoric of deglobalization was everywhere right. Tariff's going up, 0:23:04.400 --> 0:23:07.280 trade barriers going up, this idea that we're returning to 0:23:07.280 --> 0:23:10.719 the nineteen thirties, countries are turning inwards. And when we 0:23:10.760 --> 0:23:13.520 at capst Economics looked at the data, we saw global 0:23:13.520 --> 0:23:16.520 trade volumes going up year on year on year. So 0:23:16.640 --> 0:23:19.000 this idea, the thing that everyone's missing is the idea 0:23:19.000 --> 0:23:22.920 that the world isn't deglobalizing. But clearly something is changing. 0:23:23.440 --> 0:23:25.000 And as I argue in the Burke, and as we've 0:23:25.000 --> 0:23:27.119 written about a cap of Economics, the thing that has 0:23:27.160 --> 0:23:30.960 shifted is the relationship between the world's two major economies, 0:23:30.960 --> 0:23:34.760 the US and China, they've become superpower rivals, and that's 0:23:34.920 --> 0:23:37.960 causing those economies to both put apart or fracture, and 0:23:38.000 --> 0:23:40.320 then other economies to have to pick aside. 0:23:40.400 --> 0:23:44.200 Essentially, So again, we all grew up in a world 0:23:44.200 --> 0:23:48.159 of globalization. That's just that's several generations have grown up 0:23:48.160 --> 0:23:51.080 in that world. Is that still the world we're in 0:23:51.080 --> 0:23:54.240 in terms of globalization, because it again it doesn't feel 0:23:54.240 --> 0:23:54.560 that way. 0:23:54.840 --> 0:23:57.280 Well, globalization has certainly shifted, and if you look at 0:23:57.359 --> 0:24:00.159 trade flows you can see them see the evidence that 0:24:00.320 --> 0:24:05.679 shifting globalization. So up to about four years ago, about 0:24:05.720 --> 0:24:09.040 three quarters of US cell phones came from China. Less 0:24:09.040 --> 0:24:10.840 than one in four cell phones are going to be 0:24:10.880 --> 0:24:13.200 produced in China that are consumed in the US this year, 0:24:13.440 --> 0:24:16.320 with more coming from Vietnam and India. So we're still 0:24:16.359 --> 0:24:19.679 consuming vast amounts of cell phones and imported vast amounts 0:24:19.680 --> 0:24:22.600 of cell phones, but the location of the production is shifting, 0:24:22.840 --> 0:24:24.680 and it's shifting for these security reasons. 0:24:25.359 --> 0:24:28.280 Can the global economy truly be global if there is 0:24:28.320 --> 0:24:35.000 this seemingly broadening divide between China and the West. 0:24:35.320 --> 0:24:38.080 Well, there's going to be greater frictions within global trade 0:24:38.119 --> 0:24:41.560 and capital flows and technology flows, maybe people flows too. 0:24:42.280 --> 0:24:45.440 As I argue in the book, the key economic, key 0:24:45.520 --> 0:24:47.919 driver of the economic consequences of this fracturing it's going 0:24:47.960 --> 0:24:50.720 to be twofold. One is how do other countries align? 0:24:51.640 --> 0:24:53.720 Can the US block, which is enormous, kind of hold 0:24:53.720 --> 0:24:55.760 together or does Trump push everyone apart? 0:24:56.400 --> 0:24:58.280 And then the second, as you allude. 0:24:58.000 --> 0:25:00.840 To Poored, is the contours of the fracturing. If it's 0:25:00.880 --> 0:25:04.240 contained to things like cell phones and batteries and chips 0:25:04.280 --> 0:25:08.280 and semiconductors and pharmaceutical products, then I think the economic 0:25:08.520 --> 0:25:11.320 costs are going to be quite limited to be manageable. 0:25:11.720 --> 0:25:14.480 If we get a much wider fracturing that encompasses many 0:25:14.520 --> 0:25:16.920 more areas than the economic costs will be much larger. 0:25:17.960 --> 0:25:20.480 And if the two sides ever come to conflict, then 0:25:20.720 --> 0:25:23.000 all bets are off. We shouldn't worry about the economic costs. 0:25:22.920 --> 0:25:25.680 We're sharing with us. The fractured age is the book 0:25:25.680 --> 0:25:29.040 two hundred and fifty pages. Mister wolf Over at Financial 0:25:29.080 --> 0:25:33.760 Time says an exceptionally sensible, clear headed, and original thinker. 0:25:33.760 --> 0:25:36.320 I'll vote for that is well. One of your Catholic 0:25:36.320 --> 0:25:39.840 economics essays Europe flat and is back. We see that 0:25:39.960 --> 0:25:43.240 with the politics of France and I looked at it's 0:25:43.359 --> 0:25:46.800 sterling swissy today and my word, it looks like Britain 0:25:46.840 --> 0:25:51.800 after World War Two. How fragile is the continental and 0:25:52.000 --> 0:25:53.800 United Kingdom economy right now? 0:25:54.440 --> 0:25:56.800 I think about the UK to one side. The UK 0:25:56.920 --> 0:25:58.920 we have our own fiscal challenges, but actually I don't 0:25:58.920 --> 0:26:01.600 think they're quite as a cut as say France. Yeah, 0:26:01.600 --> 0:26:03.680 there's plans on the way to reduce the deficit in 0:26:03.720 --> 0:26:06.160 the UK. The question is, really you're optimistic the UK 0:26:06.240 --> 0:26:07.639 can get it det I think we can get to 0:26:07.720 --> 0:26:10.240 kind of muddle our way through. There's enough fiscal fudge 0:26:10.320 --> 0:26:12.280 going around that we can kind of muddle our way. 0:26:12.119 --> 0:26:12.960 Through this one. 0:26:13.200 --> 0:26:15.600 France, it seems to me, is a bit more intractable. 0:26:15.760 --> 0:26:19.520 They've had four governments now of four on the back 0:26:19.560 --> 0:26:22.040 of efforts to try to reduce the budget deficit. The 0:26:22.240 --> 0:26:25.040 parliament is fractured, there's a presidential election due in twenty 0:26:25.119 --> 0:26:28.679 twenty seven. All of this political dysfunction is fodder for 0:26:29.160 --> 0:26:31.280 nationalists populist and let's see what happens in the twenty 0:26:31.320 --> 0:26:33.920 twenty seven election. I don't think that we're going to 0:26:33.960 --> 0:26:36.119 have a repeat of the Eurozone crisis. I don't think 0:26:36.119 --> 0:26:38.600 we're going to get big debt to faults in banking crises. 0:26:38.640 --> 0:26:41.200 The banks in France look pretty well capitalized. They don't 0:26:41.240 --> 0:26:44.119 hold much government debt, but it's a fiscal crisis that 0:26:44.240 --> 0:26:44.600 is brewing. 0:26:44.920 --> 0:26:47.560 Albums. If the right takes over in France, I mean 0:26:47.560 --> 0:26:51.920 within the five party parliamentary system, the right in Hungry, 0:26:52.320 --> 0:26:54.919 the right in Poland, the right, I mean there's a 0:26:55.040 --> 0:26:58.760 huge fear almost of it. I'll call it a Trumpian 0:26:58.880 --> 0:26:59.440 right in. 0:26:59.440 --> 0:27:01.880 Europe, absolutely, and we're seeing it happen. That's what we're 0:27:01.880 --> 0:27:03.840 seeing this play out in real life. That I think 0:27:03.880 --> 0:27:07.159 the question is what type of rights that might might 0:27:08.040 --> 0:27:12.359 govern Italy is an interesting example here. We've had a 0:27:12.440 --> 0:27:15.320 kind of populist right wing government for the last couple 0:27:15.320 --> 0:27:18.880 of years under Georgia Maloney. Actually they've governed in economic 0:27:19.000 --> 0:27:21.840 matters in their relatively orthodox way. So I think it 0:27:21.880 --> 0:27:25.560 depends as much upon how they govern in if they 0:27:25.600 --> 0:27:28.480 win power as to what the rhetoric do. 0:27:28.400 --> 0:27:31.960 You think This is a seminal point for France right 0:27:32.000 --> 0:27:35.640 now to either stay the course and hope for the best, 0:27:35.720 --> 0:27:40.359 or make it some significant changes. Is this a pivot moment. 0:27:40.800 --> 0:27:42.440 I think we are kind of we're approaching one of 0:27:42.480 --> 0:27:45.240 those pivot moments, certainly when it comes to the political 0:27:45.280 --> 0:27:48.119 structure of France. If you look at the rise of 0:27:48.160 --> 0:27:49.240 the right, and you look at the rise of the 0:27:49.320 --> 0:27:51.840 right across Europe, I mean, the center is kind of 0:27:51.880 --> 0:27:54.199 holding so far. The center health in the German elections 0:27:54.280 --> 0:27:57.240 last year. The center's held so far in France. The 0:27:57.359 --> 0:28:00.159 question is would it continue to hold through to twenty 0:28:00.240 --> 0:28:02.639 twenty seven in those elections you're sharing. 0:28:02.720 --> 0:28:05.600 And the government shutdown of the United States. 0:28:05.280 --> 0:28:08.040 Of America, well, I've just spent two hours. 0:28:08.080 --> 0:28:11.480 I came. I flew into Dallas on Monday evening. I 0:28:11.520 --> 0:28:13.119 spent two and a half hours at immigration. 0:28:14.680 --> 0:28:16.520 Yeah, did you say hello to Lisamated? 0:28:17.080 --> 0:28:20.960 Exactly. So it's so it's having a real world consequence 0:28:21.000 --> 0:28:23.640 now in terms of the impact on the economy. When 0:28:23.680 --> 0:28:26.000 we look through the history of government shutdowns, we can't 0:28:26.000 --> 0:28:27.840 really see them in the economic data. It tends to 0:28:27.840 --> 0:28:29.760 be a bit of dislocation that gets made up in 0:28:29.800 --> 0:28:32.439 subsequent months. But again, a bit like France, this speaks 0:28:32.480 --> 0:28:35.359 to political dysfunction, and it is as acute here in 0:28:35.440 --> 0:28:37.600 the US as it is in Europe. 0:28:37.840 --> 0:28:42.280 Congratulations, you're sharing the fractured age. Can't say enough about it. 0:28:42.400 --> 0:28:47.640 Really an abrupt read in well timed to say the least. 0:28:48.080 --> 0:28:59.680 Stay with us. More from Bloomberg Surveillance coming up after this. 0:28:59.680 --> 0:29:03.600 This is the Bloomberg Surveillance Podcast. Listen live each weekday 0:29:03.640 --> 0:29:07.040 starting at seven am Eastern on Applecarplay and Android Auto 0:29:07.080 --> 0:29:09.920 with the Bloomberg Business app. You can also watch us 0:29:09.960 --> 0:29:13.680 live every weekday on YouTube and always on the Bloomberg Terminal. 0:29:13.920 --> 0:29:16.920 That special moment here for Bloomberg Surveillance this morning, our 0:29:17.160 --> 0:29:19.800 essay of the year I'm thrilled to announces, will do 0:29:19.880 --> 0:29:22.680 that here in a moment. Stay with us across America 0:29:22.760 --> 0:29:26.320 around the work. Can I just suggest this hour of 0:29:26.320 --> 0:29:29.480 Bloomberg Surveillance sponsored by generous. 0:29:29.120 --> 0:29:30.920 Electric Shorts Finances Chins. 0:29:30.960 --> 0:29:33.560 We'll do that maybe as well. Futures up, ten down, 0:29:33.560 --> 0:29:36.480 Futures up, one hundred and thirty eight. Bloomberg Surveillance this 0:29:36.560 --> 0:29:40.400 Morning brought you by IBKR. Well the US Consumer Sentiment 0:29:40.440 --> 0:29:45.360 Index it seeds sixty in October twenty twenty five at 0:29:45.400 --> 0:29:50.320 IBKR Forecast Trader. The yes was recently at thirty three percent. 0:29:50.600 --> 0:29:56.040 Start predicting today at ibkr dot com slash forecast. Last 0:29:56.080 --> 0:30:00.520 training day for this contract is October twenty five, So 0:30:00.920 --> 0:30:04.000 over a decade ago. David Brooks did an essay in 0:30:04.040 --> 0:30:05.600 the New York Times. It was my essay of the 0:30:05.680 --> 0:30:10.960 year on the nerds in the smooth Guys on Wall Street. 0:30:11.040 --> 0:30:15.400 It was brilliant on the cultural divide on Wall Street. 0:30:15.440 --> 0:30:19.000 I still quote it in speeches all the time. Brilliant essay. 0:30:19.800 --> 0:30:23.160 This year, My essay of the year is on the 0:30:23.280 --> 0:30:27.960 generational divide that we live every single day. Paul's limited, 0:30:28.080 --> 0:30:30.040 I'm limited, Tucker. Do you have offspring? 0:30:31.000 --> 0:30:31.120 Ah? 0:30:31.320 --> 0:30:35.840 Yeah, okay, altering as well, joining us now with my 0:30:36.080 --> 0:30:37.720 essay of the year. This was out of the Wall 0:30:37.720 --> 0:30:41.280 Street Journal a number of days ago, and she's made 0:30:41.280 --> 0:30:44.440 a huge splash with it. Is Professor Susie Welch of 0:30:44.600 --> 0:30:50.080 NYU is gen z unemployable. It has created a firestorm 0:30:50.480 --> 0:30:52.600 of comment. And I have to go to this because 0:30:52.600 --> 0:30:55.000 the last time Susie, I think I saw you was 0:30:55.040 --> 0:30:58.240 with a guy named Jack Welch. When did you decide 0:30:58.400 --> 0:31:02.040 to go into the dark caver and of academics at NYU? 0:31:02.120 --> 0:31:04.200 What was the pat You didn't have to do this? 0:31:04.280 --> 0:31:07.400 I did not I had been in broadcast journalism for 0:31:07.440 --> 0:31:09.920 a bunch of years, and then I was running a 0:31:09.960 --> 0:31:14.200 small tech music tech company, and the pandemic brought it 0:31:14.240 --> 0:31:17.160 to its knees. And then Jack passed away, and I 0:31:17.200 --> 0:31:19.360 went up to the woods of upstate New York with 0:31:19.400 --> 0:31:21.200 all my kids and all their spouses and all of 0:31:21.200 --> 0:31:24.160 our dogs. And then the pandemic ended and everybody went 0:31:24.240 --> 0:31:27.040 back to life. I had been cooking up in my 0:31:27.120 --> 0:31:29.760 mind a class called Becoming You, which was going to 0:31:29.760 --> 0:31:31.240 help people figure out what to do with their lives, 0:31:31.320 --> 0:31:32.840 which was what I was trying to figure out what 0:31:32.880 --> 0:31:33.920 to do with my life. 0:31:34.240 --> 0:31:36.120 And I brought it to n Yu Stern and to. 0:31:36.120 --> 0:31:37.800 The dean there, who I knew from my previous life, 0:31:37.800 --> 0:31:39.240 and I said, I've got this class I wish I 0:31:39.240 --> 0:31:41.800 had taken in business school that has a methodology that 0:31:41.880 --> 0:31:43.680 helps you figure out what to do with your life. 0:31:43.800 --> 0:31:46.640 And he said, well, let's try it as an experiment. 0:31:46.760 --> 0:31:50.400 Before we get to the essay. Yes, what reeks in 0:31:50.480 --> 0:31:55.760 this essay is academic rigidity. This is not some fancy 0:31:55.840 --> 0:31:59.920 person like Susie Welch who decided to get some cushy thing. 0:32:00.560 --> 0:32:03.160 There are some real work of often here. This is 0:32:03.200 --> 0:32:06.840 like legit, accountable academic research, isn't it. 0:32:06.920 --> 0:32:08.480 Yes, I'm proud to say that it is. 0:32:08.560 --> 0:32:10.560 I mean it was conducted by myself and my team, 0:32:10.600 --> 0:32:13.600 which includes all of the usual suspects of psychometricians and 0:32:13.680 --> 0:32:16.960 data analysts and so forth. So we the research, I 0:32:17.000 --> 0:32:18.840 think is I'm really proud of it. 0:32:18.840 --> 0:32:19.760 It's rock solid. 0:32:19.880 --> 0:32:24.160 Forty thousand people, seven thousand plus gen Z types. Yeah, 0:32:24.240 --> 0:32:27.600 when did the shock set in over your outcome? And 0:32:27.640 --> 0:32:28.200 describe there? 0:32:28.360 --> 0:32:31.320 Well, there's a bunch of you know, Look, I teach 0:32:31.880 --> 0:32:35.400 gen Z every single day, I mean every semester. Are 0:32:35.560 --> 0:32:38.560 hundreds of students, So my shock was perhaps less than 0:32:38.600 --> 0:32:40.080 the rest of the team because I'm in the room 0:32:40.240 --> 0:32:44.880 with them. Now, NYU students are not quite as representative 0:32:44.920 --> 0:32:47.680 of gen Z as outside of NYU. These are MBAs, 0:32:47.680 --> 0:32:49.400 so they tend to have a little bit more ger 0:32:49.560 --> 0:32:52.200 going on. I think that when we saw the two 0:32:52.280 --> 0:32:55.560 percent number which we can get to, we were all like, 0:32:55.760 --> 0:32:58.000 we checked it about thirty five timesoose. 0:32:58.040 --> 0:32:59.560 We thought that is too much in that number. 0:33:00.240 --> 0:33:01.720 So what we did is we have a tool called 0:33:01.760 --> 0:33:04.920 the Values Bridge, which we developed in our labs, and 0:33:05.000 --> 0:33:07.000 what it does is it ranks your values from one 0:33:07.040 --> 0:33:10.000 to sixteen, your personal values from one to sixteen. And 0:33:10.080 --> 0:33:13.040 so we now seventy five thousand people have taken this test, 0:33:13.040 --> 0:33:14.360 but at the time we did the research, it was 0:33:14.400 --> 0:33:16.479 forty five thousand people. And we were able to cut 0:33:16.560 --> 0:33:18.719 it by generation and we were able to see gen 0:33:18.840 --> 0:33:21.800 Z's values ranked from one to sixteen. And their number 0:33:21.800 --> 0:33:25.440 one value is something we call you ammonia, which encompasses 0:33:25.480 --> 0:33:29.320 self care, recreation, leisure, fun employment. You know, just so 0:33:29.480 --> 0:33:32.239 John Tucker, But I think we all know somebody who 0:33:32.280 --> 0:33:34.560 was in eutamonia is their number one value. Number two 0:33:34.600 --> 0:33:37.240 was authentic self expression voice as we call it, and 0:33:37.320 --> 0:33:40.320 number three was the desire to organize their life around 0:33:40.360 --> 0:33:42.560 helping other people, which is very admirable, I would say. 0:33:42.960 --> 0:33:45.000 But after I saw those top three values, I thought, 0:33:45.680 --> 0:33:48.120 I wonder what hiring managers are looking for, because my 0:33:48.160 --> 0:33:49.800 students are going out into the world to get hired. 0:33:49.800 --> 0:33:52.480 I have four adult children who are fighting out there 0:33:52.480 --> 0:33:54.360 in the world every day. So we did a separate 0:33:54.640 --> 0:33:59.400 study and we replicated it twice after that to say, okay, 0:33:59.640 --> 0:34:02.160 here the definitions of all the values hiring managers in 0:34:02.280 --> 0:34:07.520 knowledge industries mainly business, It was tech, it was accounting, finance, 0:34:07.560 --> 0:34:10.319 and so forth. The consulting what values are you looking for? 0:34:10.360 --> 0:34:11.240 And lo and behold. 0:34:11.239 --> 0:34:13.400 They were looking for the number one value of achievement, 0:34:13.600 --> 0:34:15.960 the desire to have success that other people can see. 0:34:16.200 --> 0:34:19.160 Number two was a desire for learning, stimulation and growth. 0:34:19.160 --> 0:34:21.920 And the third value was work centrism, the desire to 0:34:22.000 --> 0:34:26.560 work hard. And when you cross reference those two data sets, 0:34:26.719 --> 0:34:29.440 it ends up that it's just two percent of gen 0:34:29.560 --> 0:34:32.359 Z that have the values that hiring managers are looking for. 0:34:32.800 --> 0:34:33.320 It's interesting. 0:34:33.400 --> 0:34:38.160 I've for gen Z adjacent kind of offspring. They're all employed, 0:34:39.160 --> 0:34:42.640 but they tell me their first memories of my oldest 0:34:42.680 --> 0:34:45.640 were nine to eleven. That's their first memory. Yeah, and 0:34:45.680 --> 0:34:49.680 then they had, you know, the great financial crisis, right, 0:34:50.000 --> 0:34:52.120 their parents are impact that everybody's parents are impact. And 0:34:52.120 --> 0:34:54.400 then they had the pandemic. So they've had some stuff, 0:34:54.640 --> 0:34:57.319 you know, and I wonder have that influence is kind 0:34:57.360 --> 0:34:58.839 of how they look the view of the world. 0:34:58.960 --> 0:35:00.960 Yeah, I think they don't want to buy into a 0:35:01.000 --> 0:35:03.080 deal that their parents bought into that didn't work out 0:35:03.120 --> 0:35:03.960 for a lot of their parents. 0:35:04.080 --> 0:35:06.160 I mean, you can you can come up with. 0:35:06.080 --> 0:35:08.279 A hundred reasons why they have these values and they're 0:35:08.400 --> 0:35:10.920 entitled to them. I think that the problem is values 0:35:10.960 --> 0:35:13.960 have consequences, and so some of them also have affluence 0:35:14.000 --> 0:35:16.360 as a top value, and then they are very frustrated 0:35:16.600 --> 0:35:19.120 and frustrated to the point of kind of anger that 0:35:19.160 --> 0:35:22.240 they don't get the they don't get to have affluence 0:35:22.280 --> 0:35:23.840 also as an output. If you have the value of 0:35:23.840 --> 0:35:25.960 self care number one, so they can have their value. 0:35:26.000 --> 0:35:27.640 I don't you know how they can buy their values. 0:35:27.760 --> 0:35:29.440 I get it, there's a million reasons. I mean, their 0:35:29.480 --> 0:35:31.840 parents might be to blame. I mean, with the torrent 0:35:31.880 --> 0:35:34.200 of letters that came to the letters to the editor 0:35:34.239 --> 0:35:36.120 after the article ran, a lot of people had a 0:35:36.160 --> 0:35:38.600 lot of people they wanted to blame for this phenomenon. 0:35:39.480 --> 0:35:43.120 What does corporate America do here? Is corporate America adjust? 0:35:43.239 --> 0:35:43.600 You think that? 0:35:43.840 --> 0:35:45.960 Or do the students adjust or do they. 0:35:46.239 --> 0:35:48.000 Just find to find some common ground? 0:35:48.080 --> 0:35:49.800 Maybe this is a million dollar questions. 0:35:49.800 --> 0:35:51.480 So I've talked to a lot of business leaders since 0:35:51.520 --> 0:35:55.240 the piece came out, and so the companies with brand 0:35:55.360 --> 0:35:58.719 equity who can go higher the two percent are out 0:35:58.719 --> 0:36:01.200 looking for them earlier, and they one executive said to me, 0:36:01.440 --> 0:36:03.960 this is a cage match. We're willing to fight all right, 0:36:03.960 --> 0:36:05.600 they're going to go find that two percent. They're going 0:36:05.640 --> 0:36:07.120 to they know where they are, they're going to go 0:36:07.160 --> 0:36:09.480 get them earlier, and they're going to lock them down. 0:36:09.880 --> 0:36:11.880 And then other companies are going to have to figure 0:36:11.880 --> 0:36:14.359 out what to do about the fact that they're not 0:36:14.400 --> 0:36:18.440 going to be hiring young people who share their company values. 0:36:18.800 --> 0:36:21.560 And do they accommodate them or do they try to 0:36:21.680 --> 0:36:24.320 slowly move them over to a different. 0:36:24.040 --> 0:36:26.040 Way of thinking. It's very hard to talk people out 0:36:26.080 --> 0:36:26.600 of their values. 0:36:26.640 --> 0:36:28.560 However, Yeah, what do you find in the NBA program, 0:36:28.640 --> 0:36:31.600 Because you said those people kind of self select, they 0:36:32.680 --> 0:36:35.920 want to achieve, presumably, but again I would suspect you 0:36:35.960 --> 0:36:36.879 see some of that in your class. 0:36:37.000 --> 0:36:40.279 I mean, I see a preponderance of pneumonia, self care 0:36:40.320 --> 0:36:43.040 being a top value. I do have MBAs, okay and so, 0:36:43.600 --> 0:36:46.520 and in particular the nbas we're majoring in finance. Those 0:36:46.719 --> 0:36:49.040 they have a lot of the values that companies are 0:36:49.040 --> 0:36:50.880 looking for, and they're picked off pretty early. 0:36:52.080 --> 0:36:52.879 But I don't think this. 0:36:52.880 --> 0:36:55.520 Is true in colleges in general, and I think there's 0:36:55.520 --> 0:36:56.800 a few And this is what I mean is that 0:36:56.840 --> 0:36:58.520 companies are going to figure out where the two percent 0:36:58.520 --> 0:36:59.759 are and they're going to come get them and they're 0:36:59.760 --> 0:37:00.640 going to at them early. 0:37:01.440 --> 0:37:04.600 So how about for these these kids, though, I mean, 0:37:05.000 --> 0:37:08.800 do they recognize that maybe they are in fact different 0:37:09.000 --> 0:37:12.480 from certainly maybe their parents and maybe their grandparents and others, 0:37:12.520 --> 0:37:14.560 and they they're defiant and they're okay with them. 0:37:14.600 --> 0:37:17.560 No, they're defiant. I mean they're not just okay. They're 0:37:17.680 --> 0:37:20.600 they're they're defiant. They're like you, I mean what the 0:37:20.719 --> 0:37:23.439 letters from gen Z that I got, the emails were like, hey, 0:37:24.080 --> 0:37:27.080 shut up over there, lady, because you ruined the world. 0:37:27.120 --> 0:37:30.359 You boomer people ruined the world. And our response is this, 0:37:30.719 --> 0:37:32.879 and why would we want your values? Look what you 0:37:32.920 --> 0:37:37.840 did to us with climate change and terrorism and school shootings. 0:37:38.000 --> 0:37:41.560 You created this world? Why would we buy your version 0:37:41.600 --> 0:37:42.080 of events? 0:37:42.280 --> 0:37:45.440 Welcome all of you across America. It is my essay 0:37:45.520 --> 0:37:48.680 of the year. Susie Welch, professor at New York University. 0:37:48.719 --> 0:37:51.000 Where that's it's in the Wall Street journals. Created a 0:37:51.040 --> 0:37:55.640 firestorm of comment, including from the kids in my family 0:37:55.719 --> 0:37:57.960 as well. Susie, I had the honor of talking to 0:37:58.000 --> 0:38:00.560 a guy named Jack Welch and frankly on it fmled 0:38:00.600 --> 0:38:04.840 as well. Is the magic of the corridor from Pittsfield, Massachusetts, 0:38:05.120 --> 0:38:10.080 through Albany out the Mohawk River Valley every single nineteenth 0:38:10.239 --> 0:38:14.439 early twentieth century industrial X exercise out to the Great 0:38:14.480 --> 0:38:19.280 Eastman Kodec Company GE nineteen twelve invented a fine benefit 0:38:19.320 --> 0:38:24.040 pension plan. Those companies Carrier in Syracuse, Coodek, and Rochester. 0:38:24.400 --> 0:38:27.080 They took care of their employees. What you're going to 0:38:27.160 --> 0:38:29.839 hear in your classroom, what I hear every day is 0:38:29.880 --> 0:38:34.399 the loyalty has been broken because of the employers. What 0:38:34.440 --> 0:38:38.000 do employers need to do to increase that two percent 0:38:38.360 --> 0:38:39.920 to a much larger number. 0:38:41.040 --> 0:38:43.920 I think that they can't do what they would need 0:38:43.920 --> 0:38:47.279 to do, which is promise a long term employment. I mean, 0:38:47.320 --> 0:38:49.520 people feel loyal when they feel like, Okay, I'm investing 0:38:49.520 --> 0:38:51.200 my time in a company, and I'm going to be 0:38:51.239 --> 0:38:53.000 here in two or three years and my boss is 0:38:53.000 --> 0:38:53.480 going to be here. 0:38:53.600 --> 0:38:56.440 Disclosure Bloomberg LP every day. It's a privilege. I mean, 0:38:56.440 --> 0:38:58.440 that's where we come from, right, the three of us 0:38:58.520 --> 0:38:59.319 in this were right. 0:38:59.440 --> 0:39:01.920 Well, you probably a sense that, look, this company is 0:39:01.960 --> 0:39:04.319 healthy and it's thriving, and we're all going to be here, 0:39:04.360 --> 0:39:06.960 and I'm willing to give myself to this organization and 0:39:07.000 --> 0:39:09.000 to work the extra hours because we're all going to 0:39:09.040 --> 0:39:11.920 be here together. And but for most people going into organizations, 0:39:11.920 --> 0:39:14.560 there's this constant sense of fragility and we may not 0:39:14.680 --> 0:39:15.000 be here. 0:39:15.080 --> 0:39:16.200 I could be gone tomorrow. 0:39:16.360 --> 0:39:19.680 Why would you invest in yourself in that? And so 0:39:20.239 --> 0:39:23.680 that contract is pretty much over now. There are places 0:39:23.719 --> 0:39:25.960 I think JP Morgan, Goldman Zachs you can go and 0:39:25.960 --> 0:39:28.280 think I could try to build my whole career here. 0:39:28.280 --> 0:39:30.160 But there's not a lot of companies like that anymore. 0:39:30.480 --> 0:39:33.480 A lot of it is technology. There's so much technology 0:39:33.480 --> 0:39:35.560 out there, there's so much. Is that a net positive? 0:39:35.600 --> 0:39:37.040 Like do the kids in your class like that's a 0:39:37.080 --> 0:39:42.080 net positive? AI is probably all over your daily issues 0:39:42.200 --> 0:39:46.440 with your dealings with your students. Is that is technology 0:39:46.440 --> 0:39:48.360 with the hindsight a net positive or net negative? 0:39:48.960 --> 0:39:51.000 This is I don't know the answer. Sometimes I think 0:39:51.040 --> 0:39:53.000 it's a real net negative and what it's done to 0:39:53.120 --> 0:39:54.920 how much we talk to each other. But I will 0:39:54.960 --> 0:39:59.000 say that my students are terrified because of AI. Like right, 0:39:59.040 --> 0:40:02.279 AI is taking the job they would do AI. You know, 0:40:02.440 --> 0:40:05.440 a first year consultant or a first year analyst, they're 0:40:05.440 --> 0:40:08.520 like deer in headlights, like what jobs are left for us? 0:40:09.000 --> 0:40:13.080 How where are our entry points? That's why technology is scary. 0:40:13.200 --> 0:40:15.719 Now when it comes to using AI for. 0:40:15.680 --> 0:40:18.880 Homework, that's a totally what is your experience? What do 0:40:18.880 --> 0:40:19.120 you say? 0:40:19.400 --> 0:40:21.120 When it first came out, they were using it a lot, 0:40:21.239 --> 0:40:23.319 and then as teachers we got very savvy about how 0:40:23.360 --> 0:40:26.120 to phrase the homework, you know, from your personal experience. 0:40:26.640 --> 0:40:28.000 And then I look at my students, I say, you know, 0:40:28.000 --> 0:40:29.600 it's against the rules to use this on exams, and 0:40:29.640 --> 0:40:32.759 I'm asking you personally, for reasons of integrity, do not 0:40:32.840 --> 0:40:33.279 use AI. 0:40:33.320 --> 0:40:34.200 And generally they. 0:40:34.120 --> 0:40:39.080 Comb aerospace engineering At Boulder, I got through the Great 0:40:39.080 --> 0:40:42.520 Books English course off the cliff notes. Did you mean 0:40:42.600 --> 0:40:45.560 is there any difference between the cliff notes and AI? 0:40:47.520 --> 0:40:49.880 That's a good point. I think that AI does the 0:40:49.920 --> 0:40:52.200 thinking for them. With the cliff notes, usually you would 0:40:52.200 --> 0:40:54.480 then go into a classroom and you'd be forced to 0:40:54.480 --> 0:40:57.959 discuss issues. But AI, right, you know, does the thinking 0:40:58.000 --> 0:40:58.799 and the talking. 0:40:58.840 --> 0:41:01.520 Explain to me what I I also see, particularly what 0:41:01.640 --> 0:41:06.920 I'm giving speeches between the American gen z yeah and 0:41:06.960 --> 0:41:11.160 the hungry four is a stereotype the hungry for in 0:41:11.239 --> 0:41:15.200 a kid's recent immigrants. Second they're not buying the gen 0:41:15.320 --> 0:41:19.560 Z thing. They're focused and they're killing it in differential equations. 0:41:19.760 --> 0:41:20.640 It's stern, all right. 0:41:20.680 --> 0:41:22.640 So this is what I want to say to that, 0:41:23.400 --> 0:41:24.799 and I want to wait to the data comes in. 0:41:24.840 --> 0:41:27.120 But we are currently running the exact same study in 0:41:27.160 --> 0:41:31.200 three different places, one with first generation immigrants as part 0:41:31.200 --> 0:41:33.880 of the gen Z and then we are attempting in 0:41:33.960 --> 0:41:37.399 a collaboration with a different school to do it for 0:41:37.440 --> 0:41:39.759 this exact study in India, and I don't know if 0:41:39.760 --> 0:41:41.560 we'll be able to do it, but in China. And 0:41:41.600 --> 0:41:45.160 I think that has implications for American competitiveness because if 0:41:45.160 --> 0:41:48.920 it comes back, then in India eighty two percent of 0:41:48.960 --> 0:41:53.280 gen Z has hiring managers values. 0:41:53.640 --> 0:41:55.239 Right, that's worriesome that. 0:41:55.320 --> 0:41:57.239 Susie Welcher is my essay of the year. It's in 0:41:57.280 --> 0:42:00.400 the Wall Street Journal on gen Z. Thrilled could come 0:42:00.440 --> 0:42:05.080 in to celebrate the research of it at New York University, 0:42:05.080 --> 0:42:06.360 Paul finished it up. Please. 0:42:06.440 --> 0:42:08.839 I wonder if gen Z, because I live with them 0:42:08.840 --> 0:42:13.879 every day, will be if their values will change as 0:42:13.880 --> 0:42:18.280 they age and they say, ooh, I got a mortgage now, Okay, So. 0:42:18.520 --> 0:42:22.279 Values generally don't change, Okay, right, values are generally set 0:42:22.320 --> 0:42:24.040 by time we're twenty five years old, because a lot 0:42:24.080 --> 0:42:26.160 of things go into that too. What changes is how 0:42:26.200 --> 0:42:28.520 much we express them or repress them. So I think 0:42:28.520 --> 0:42:30.480 what will happen is gen Z will keep these values 0:42:30.480 --> 0:42:32.920 because unless you have a seismic event, your values generally 0:42:32.920 --> 0:42:36.000 stay the same your whole life. The seismic event may 0:42:36.040 --> 0:42:38.920 be not getting a job, and then therefore they'll repress 0:42:39.000 --> 0:42:42.080 certain values or they'll suppress them not happily. 0:42:43.440 --> 0:42:46.480 Do you see that as again, you're the one of 0:42:46.520 --> 0:42:48.760 the top NBA programs in the world. 0:42:48.800 --> 0:42:53.960 Here my first sponsor, first people to step up. 0:42:54.320 --> 0:42:56.480 My point is half of Global Wall Street came out 0:42:56.480 --> 0:42:57.240 of the Stern program. 0:42:57.480 --> 0:42:57.920 Everywhere. 0:42:57.960 --> 0:43:02.240 Absolutely, that's ever really true. I mean, as a student 0:43:02.239 --> 0:43:05.799 body changed there? Do you think my students who I. 0:43:05.760 --> 0:43:07.480 Don't want to make generalizations, but my students who are 0:43:07.600 --> 0:43:10.960 first generation generally are in that two percent, so they're 0:43:10.960 --> 0:43:13.400 not changing anything. They're like, they've got their parents' values 0:43:13.400 --> 0:43:17.239 and they're there to win, and they are clearly already there. 0:43:17.680 --> 0:43:20.440 I don't see the change yet right now, I just 0:43:20.560 --> 0:43:25.800 see a shock, you know, Okay, nobody doubts the research, right, 0:43:25.920 --> 0:43:27.080 they don't know what they're going to do. 0:43:27.080 --> 0:43:29.360 Do you give out c's? Okay, I just you know, 0:43:29.520 --> 0:43:32.520 just a vignette, folks. I had a privilege of Ruth 0:43:32.560 --> 0:43:37.640 Rebecca Stroic in mathematics one hundred million years ago. It 0:43:37.680 --> 0:43:41.040 was a curved grade, right like in England where it's 0:43:41.160 --> 0:43:45.319 much tougher. Could you give Professor Walch a Tito's and 0:43:45.400 --> 0:43:50.879 tang that's good morning? Drink here, Susie, Susie, I look 0:43:50.920 --> 0:43:54.600 at the great inflation and it's a joke. I mean, 0:43:54.960 --> 0:43:58.719 I killed myself for quality C in organic chemistry. 0:43:58.840 --> 0:44:01.080 Yes, I did too. I have I want you to 0:44:01.120 --> 0:44:03.160 know something. I have given a C. 0:44:04.200 --> 0:44:06.840 It's not a very common thing, but what the student 0:44:06.840 --> 0:44:09.440 maybe should have gotten was different than a C. But 0:44:09.520 --> 0:44:11.360 I gave a CE. It felt like a very brave 0:44:11.480 --> 0:44:14.400 and daring thing to do. I spoke to the academic 0:44:14.400 --> 0:44:16.560 dean beforehand, setting I'm giving a CI. 0:44:17.080 --> 0:44:17.719 No kidding me? 0:44:17.800 --> 0:44:21.600 Yeah, because look there's a there's great devlation everywhere. You know, 0:44:21.719 --> 0:44:24.920 I'd be lying to say there wasn't. Should we be 0:44:24.960 --> 0:44:26.719 giving c's the students to say, no, no, no, we 0:44:26.760 --> 0:44:27.480 got to get jobs. 0:44:27.480 --> 0:44:30.640 Please don't do that to us. But lawyers are not 0:44:30.719 --> 0:44:31.680 allowed to ask your. 0:44:31.520 --> 0:44:34.960 Gpsh no one in the control room has ever gotten 0:44:35.000 --> 0:44:37.239 a C. That's what. No, Let's go around the room. 0:44:37.600 --> 0:44:40.160 Business School back in the early nineties, you had twenty 0:44:40.239 --> 0:44:42.319 classes and if you passed all twenty, they stamped your 0:44:42.320 --> 0:44:43.799 passport and I could go back to a Wall Street 0:44:43.800 --> 0:44:46.480 at twice the pay. So though, saying was twenty p's 0:44:46.640 --> 0:44:47.440 equals sixty G. 0:44:47.840 --> 0:44:48.680 My grades mattered. 0:44:48.719 --> 0:44:50.759 My grades at Harvard Busines School, my grades at Harvard, 0:44:50.760 --> 0:44:54.160 they both mattered a lot. And I worked so hard, 0:44:54.480 --> 0:44:56.279 and I did ask do they work the. 0:44:56.280 --> 0:44:59.239 Same hard today that you lived at HBS. 0:44:59.320 --> 0:45:01.040 I don't know. I don't know because I'm not. 0:45:02.000 --> 0:45:04.239 I've asked these kids get through Michael. 0:45:03.960 --> 0:45:07.960 Porter at HBS right now. I got to believe it 0:45:08.040 --> 0:45:10.360 they can. I mean, I don't know because I'm not 0:45:10.400 --> 0:45:12.439 in that classroom. I ask my friends there. 0:45:12.440 --> 0:45:16.319 Here's what my friend, this Bloomberg LP is managed by 0:45:16.320 --> 0:45:18.799 twenty and thirty somethings, So we're the outliers. 0:45:18.880 --> 0:45:19.879 Yeah, and the. 0:45:19.920 --> 0:45:23.279 Smartest people running these businesses are to me kids. But 0:45:23.360 --> 0:45:26.880 they're so smart, they're so driven, they're so creative. I 0:45:26.960 --> 0:45:29.520 hired a bunch of them from boom Bloombir Intelligence. 0:45:29.560 --> 0:45:31.239 Yes, yeah, I'm not. 0:45:31.360 --> 0:45:33.400 I'm fine. I'm comfortable with this. 0:45:33.520 --> 0:45:34.319 The kids are all right. 0:45:34.360 --> 0:45:37.080 The kids are all right. One final question of twenty seconds, 0:45:37.160 --> 0:45:38.520 how much hate mail have you gotten? 0:45:40.440 --> 0:45:43.560 It's a good portion of it. I have to say. 0:45:43.600 --> 0:45:45.360 You know, people always like to kill the messenger. 0:45:45.480 --> 0:45:47.360 And you know, it's as if I stood up and 0:45:47.400 --> 0:45:50.719 said gen Z is unemployable at me and they did. 0:45:52.040 --> 0:45:56.319 What you've done is phenomenal. Susie Welch, thank you so much. 0:45:56.400 --> 0:45:59.960 My essay of the year is gen Z Unemployed. 0:46:01.080 --> 0:46:05.920 This is the Bloomberg Surveillance podcast, available on Apple, Spotify, 0:46:06.040 --> 0:46:09.839 and anywhere else you get your podcasts. Listen live each 0:46:09.880 --> 0:46:13.719 weekday seven to ten am Eastern on Bloomberg dot com, 0:46:13.840 --> 0:46:17.640 the iHeartRadio app, tune In, and the Bloomberg Business app. 0:46:17.960 --> 0:46:21.080 You can also watch us live every weekday on YouTube 0:46:21.360 --> 0:46:23.360 and always on the Bloomberg terminal.