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Speaker 1: This is the Bloomberg Surveillance Podcast. I'm Tom Keane, along

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Speaker 1: with Jonathan Farrell and Lisa Abramowitz. Join us each day

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Speaker 1: for insight from the best and economics, geopolitics, finance and investment.

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Speaker 1: Subscribe to Bloomberg Surveillance on demand on Apple, Spotify and

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Speaker 1: anywhere you get your podcasts, and always I'm Bloomberg dot Com,

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Speaker 1: the Bloomberg Terminal, and the Bloomberg Business App. Michael Wilson

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Speaker 1: joins us now. He's Chief US Equity Strategists in CIO

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Speaker 1: at Morgan Stanley. Of course, many of you are in

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Speaker 1: Global Wall Street hang on every word if you agree

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Speaker 1: or disagree. Mike, I see a massive polarity in the

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Speaker 1: equity markets right now. It's a select group of halves

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Speaker 1: in everybody else dragging along looking for the next narrative.

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Speaker 1: Am I right on that polarity? Yeah, that's right to

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Speaker 1: the Tom. I mean, you know, you guys are talking

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Speaker 1: about the bondom markets volatility here recently, we've been focused

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Speaker 1: on that too. We think that, you know, the bottom

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Speaker 1: market is sort of jumping ahead of what the FED

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Speaker 1: is saying, and that's the first time we've really seen

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Speaker 1: that in quite a while meaning that the bottom market

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Speaker 1: is somewhat you know, dismissing the feed stop plot, which

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Speaker 1: I find interesting because I think the equity market may

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Speaker 1: start to do that too. And it's already happening under

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Speaker 1: the circus as you alluded to, meaning small cap stocks

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Speaker 1: and anything that's sort of viewed as lower quality or

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Speaker 1: will have challenging it needs capital availability is being punished,

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Speaker 1: and then we're left with the twenty stocks kind of

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Speaker 1: carrying today. I mean the twenty stocks carrying today screams

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Speaker 1: the roll up I've been talking about for six seven,

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Speaker 1: eight months with the interest rate regime that you studied

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Speaker 1: at Michigan a few years back. With that said, is

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Speaker 1: it a return to what you and I knew years

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Speaker 1: ago or is this a new higher interest rate regime

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Speaker 1: for the stock market? Well, I think it's a little

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Speaker 1: bit of both. I think what it really is it's

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Speaker 1: just a much less predictable world. And this has been

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Speaker 1: our theme for the last couple of years, is that

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Speaker 1: we're entering a period of higher economic volatility. Right. The

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Speaker 1: last twenty years has been a world of repression where

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Speaker 1: you know, all of these metrics were somewhat predictable, and

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Speaker 1: that's you know, that's for companies, that's for the FED itself,

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Speaker 1: that's for investors. And now we're entering a world where

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Speaker 1: it's just not as predictable, and that means higher risk premiums,

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Speaker 1: whether we're talking about credit, whether we're talking about term

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Speaker 1: premium in the bomb market, or we're talking about equity

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Speaker 1: risk premium. In our view, you know, I think people

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Speaker 1: are operating as if we're going to go back to

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Speaker 1: that predictable world, and that's I think misplaced. A lot

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Speaker 1: of people have been reading your prognostications of lower earning

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Speaker 1: multiples for week after week after week, the latest from you.

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Speaker 1: Given the events of the past few weeks, we think

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Speaker 1: guidence is looking more and more unrealistic, and equity markets

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Speaker 1: are at greater risk of pricing in much lower estimates

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Speaker 1: ahead of any hard data changes. Mike, given that you've

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Speaker 1: been saying this for a while, and given the fact

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Speaker 1: that we have content I need to see resilience in

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Speaker 1: equities that refuse to go down, how do you push

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Speaker 1: back and say you guys are going to wake up.

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Speaker 1: It might not be yet even if we get disappointing earnings,

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Speaker 1: but you will, well, look, we try to navigate that

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Speaker 1: inside the equity market, right, So, I mean last year

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Speaker 1: we saw a pretty big degradation and multiples, but as

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Speaker 1: we pointed out again today, all that was due to

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Speaker 1: higher interest rates. None of it was due to higher

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Speaker 1: risk premium, which is the part of the multiple that is,

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Speaker 1: you know, pricing in what growth is going to be. Now,

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Speaker 1: I would push back on the pushback, which is that

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Speaker 1: the market is starting to revalue or devalue. What I

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Speaker 1: would say the companies that are most at risk of

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Speaker 1: missing estimates, as I mentioned earlier, you know, lower quality companies,

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Speaker 1: more cyclical companies, smaller cap companies that are going to

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Speaker 1: have a hard time with you know, what's going on

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Speaker 1: in the regional banking system. So it is happening, it's

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Speaker 1: just you know, it takes a little bit longer, and everybody,

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Speaker 1: you know, kind of focuses on the SMP five hundred

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Speaker 1: or maybe NASHDAC one hundred as these kind of you know,

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Speaker 1: ashons of safety. And that's true until it's not. Well, Okay,

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Speaker 1: so let's talk about the repricing. Last year we were

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Speaker 1: talking about big tech, and this year the repricing has

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Speaker 1: been in the opposite direction. I'm looking right now at meta.

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Speaker 1: Facebook shares up more than seventy one percent so far

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Speaker 1: year to date, Apple shares up more than twenty percent.

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Speaker 1: I mean, basically, pick your pick your poison, and it's

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Speaker 1: up dramatically. How do you push back against this, against

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Speaker 1: the recoveries of the names that supposedly we're going to

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Speaker 1: come out to pressure in a higher rate world. Well,

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Speaker 1: I think you said it right. I mean, these companies

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Speaker 1: took their punishment last year because they were, you know,

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Speaker 1: part of the tip of the spear in terms of

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Speaker 1: you know, valu wishes out of bounds when when rates

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Speaker 1: went up, they took it first. And you could argue

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Speaker 1: that a lot of those groups are you know, stocks

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Speaker 1: and sectors that they're in our intercession already right there.

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Speaker 1: That's the area we are seeing layoffs. That's the area

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Speaker 1: we are seeing retrenchment on costs. And I think the

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Speaker 1: I think the debate now, Lisa, is have those companies

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Speaker 1: cut costs and got and in front of it enough

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Speaker 1: where they can now see earnings growth again. I think

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Speaker 1: there's some appetite for that view. That's not argue. Argue

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Speaker 1: is that there's going to be probably be more cost

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Speaker 1: cutting in that space because the malinvestment was just so egregious,

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Speaker 1: and the over earning was even worse. So I think

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Speaker 1: it's just going to be kind of a drip, drip drip.

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Speaker 1: You know. My suspicion is markets tend to figure this

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Speaker 1: out ahead of the actual numbers coming down. And because

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Speaker 1: the bomb market just repriced itself overnight, we think that

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Speaker 1: risk pretty equity market is elevated now more than it's

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Speaker 1: been for the last six or twelve months. Mike, You've

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Speaker 1: been labeled to bear, and I know what it is

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Speaker 1: to be labeled to bear. Then people think that everything

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Speaker 1: they say is barish, no matter what I'm just saying,

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Speaker 1: even when potentially you do get constructive. Are there any

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Speaker 1: areas that you think have sufficiently repriced where you're starting

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Speaker 1: to see opportunity? Well, look, I mean financials have started

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Speaker 1: to reprice in a meaningful way, you know, and now

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Speaker 1: all of these companies are going to have problems, you

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Speaker 1: know that we're seeing in some of these So yeah,

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Speaker 1: I think it's happening. I Mean, the other thing I

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Speaker 1: would just point out is that, you know, financials tend

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Speaker 1: to lead the overall market, but that's one area for sure.

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Speaker 1: Some of the retail and some of the consumer areas

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Speaker 1: of repriced. It's been repricing for years. You know, we

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Speaker 1: just added a name to our fresh money by listening

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Speaker 1: as a retailer. So you know, I think these there

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Speaker 1: are definitely areas and markets go through these periods with

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Speaker 1: it's called a rolling bear market, rolling reception. We've we've

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Speaker 1: kind of I think came out with that view a

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Speaker 1: few years ago and now people have used it. But yeah,

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Speaker 1: that's the way it works. And you know, we're looking

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Speaker 1: for opportunities now at the stock level, but at the

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Speaker 1: index level, it just does not look attracted to us.

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Speaker 1: Mike Wilson. The thing that's different this time around is

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Speaker 1: the pile of money and what's called private equity. Private markets.

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Speaker 1: Can they be a catalyst for not like Milken years ago,

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Speaker 1: but can they be a catalyst for a roll up

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Speaker 1: of all these troubled companies. Well, look, I mean, first

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Speaker 1: of all, I don't think there's that many, you know,

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Speaker 1: troubled companies. I think we have a situation where evaluations

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Speaker 1: are out of bounds and we need to correct that.

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Speaker 1: I absolutely think there's ton of cash out there where

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Speaker 1: there's private or public money, public money, the meeting asset owners,

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Speaker 1: it can come in at the right price, and it will.

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Speaker 1: So whatever we're going to get here in the next

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Speaker 1: three to six months in terms of finally resetting evaluation

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Speaker 1: appropriately getting estimates down, I don't think we're going to

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Speaker 1: stay at very very low price levels for a very

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Speaker 1: long time. We're not in the camp that we're in

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Speaker 1: a secular structural bearer market. This is a cyclical bearer market.

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Speaker 1: It has some completion to it. And your question is

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Speaker 1: really around is there enough cash and investable funds out

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Speaker 1: there to kind of, you know, stabilize things. And I

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Speaker 1: think the answer is absolutely yes. Okay, Mike Wilson, thank

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Speaker 1: you for the brief this morning, hugely valuable. He is,

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Speaker 1: of course, with Morgan Stanley Lisa Hornby ahead of US

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Speaker 1: multisector fixed income at shoulders joining us now. Lisa, I

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Speaker 1: want to get your sense of what's changed. Have we

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Speaker 1: gotten enough stability in the lack of news over the

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Speaker 1: weekend to go risk on today? I think possibly temporarily.

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Speaker 1: I think there's a bit of a sigh of relief

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Speaker 1: that you know, Deutsche Bank amongst others are still standing

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Speaker 1: this Monday morning. I don't think we're quite out of

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Speaker 1: the woods. Yet you know, I guess part of it

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Speaker 1: is there's a bit of a sentiment swing. Everybody has

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Speaker 1: gotten super bearish, and you know, rates rallied really really aggressively,

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Speaker 1: and everything seems to be a little bit calmer right now.

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Speaker 1: So there's probably a bit of a technical now pointing

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Speaker 1: towards the positive direction. That being said, I mean, our

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Speaker 1: position has always been that when the FED tightens aggressively,

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Speaker 1: it exposes the excess leverage the risk in the system,

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Speaker 1: and that is going to cause things to break, and

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Speaker 1: we've certainly had an element of that. It feels like

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Speaker 1: people are having a sort of this polar experience. It's

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Speaker 1: either a bipolar experience where it's either the banks are collapsing,

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Speaker 1: We're all going straight back to zero and everyone's going

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Speaker 1: to just basically hide under their mattresses, or else the

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Speaker 1: banks are going to be fine, and then the FED

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Speaker 1: eases and then everything's also going to be amazing. It

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Speaker 1: seems like both narratives are kind of coming to a

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Speaker 1: four right now at a time when by necessity, the

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Speaker 1: FED is going to tighten credit conditions in a way

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Speaker 1: that we'll have to hurt. So at what point have

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Speaker 1: we priced that into the credit spreads, it still are

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Speaker 1: below traditional recessionary levels. I think the point you make

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Speaker 1: is just highlights how much uncertainty there is in the

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Speaker 1: market and how much potential volatility there is to come.

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Speaker 1: I mean, we could look at what's discounted for the

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Speaker 1: end of the year in terms of FED rate hikes

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Speaker 1: and say the markets pricing in give or take a

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Speaker 1: hundred basis points excuse me of rate cuts by the

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Speaker 1: end of the year, or we could say, well, that's

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Speaker 1: actually fifty percent of the market. I thinks there's two

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Speaker 1: hundred basis points of rate cuts and the rest who

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Speaker 1: think things are unchanged. You know, there's a huge gap

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Speaker 1: you'ge spread in the views out there, and I think

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Speaker 1: ultimately what that means is you need to be compensated

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Speaker 1: more to take risk. You need more risk premium embedded

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Speaker 1: in markets, not less. Lisa and SEFA level one, there's

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Speaker 1: a point where you passed and I didn't. Accounting asset

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Speaker 1: liabil of our bonds are accounted for, and the heart

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Speaker 1: of the matter to me, and the magnitude of the

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Speaker 1: rate move we've had is held to maturity accounting. Do

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Speaker 1: you atroeders have any transparency or vision of the true

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Speaker 1: state of held to maturity debt in this crisis or

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Speaker 1: is it unknown on a Monday. Well, you're asking me

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Speaker 1: to drawback on a few years here at CFA level one.

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Speaker 1: But you know, are the big banks certainly are are

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Speaker 1: regulated to a different degree than some of the smaller

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Speaker 1: regionals that have become known in the headlines more recently.

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Speaker 1: And certainly the size of those books were larger in

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Speaker 1: our view than those of the major the USG SIPs

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Speaker 1: and even some of the larger US regionals. There's there's

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Speaker 1: a threshold for when those books need to actually be

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Speaker 1: marked to marketed and when they don't on what needs

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Speaker 1: to be reported in terms of unrealized losses. So you know,

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Speaker 1: I guess the bottom line for US is you have

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Speaker 1: to know what you own, and you have to know

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Speaker 1: what those on the books of those types of issuers.

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Speaker 1: And this is where credit analysts really come into the

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Speaker 1: four because this is the type of environment where things

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Speaker 1: like that are exposed, and we've certainly seen that over

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Speaker 1: the last three weeks. I look, Lisa at the opportunity

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Speaker 1: for issues here. We saw genormous healthcare issuance last week.

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Speaker 1: Do you and Schroeder's think we'll see a lot of

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Speaker 1: issues out there. I mean there's certainly the last couple

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Speaker 1: of weeks there's been almost there's been a very very

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Speaker 1: light um, So we do think that there's a lot

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Speaker 1: of pent up issuance waiting to come. Markets stay like this,

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Speaker 1: I think we'll see a good deal of issuance. It's

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Speaker 1: interesting some of the healthcare issues that you mentioned actually

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Speaker 1: have performed quite well despite all of the volatility, So

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Speaker 1: it does show that there's still a bid for for

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Speaker 1: defensive healthcare pharma type names. I think that that does

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Speaker 1: tell you something about how the market's going to respond

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Speaker 1: to future issuance as well, which dislocation over the past

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Speaker 1: couple of weeks, were you taking advantage of Lisa, I

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Speaker 1: know that you think that perhaps you need to have

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Speaker 1: a greater risk premium, But are there any areas where

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Speaker 1: there's enough baked in that you think this is an

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Speaker 1: attractive moment? Oh? Absolutely. I mean we were fairly defensive

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Speaker 1: coming into this, and so there has been opportunity in

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Speaker 1: our view and agency mortgages, there's some opportunity, and I

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Speaker 1: think in the banking sector, you know, some of the

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Speaker 1: higher rated senior us G sibs, I think that we've

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Speaker 1: seen some opportunity there over the last couple of weeks,

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Speaker 1: particularly in the more fraught moments, some of the higher

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Speaker 1: quality industrials, the more defensive names as I as I

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Speaker 1: alluded to with healthcare, there's you know, the whole market

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Speaker 1: has cheapened. The whole market isn't worse worth less, there's

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Speaker 1: certainly diamonds in the rough, if you will, and so

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Speaker 1: it's about spotting those for in our view right now,

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Speaker 1: you still want to air on the more defensive side.

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Speaker 1: Generally speaking, we still think there's more volatility to come in,

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Speaker 1: probably in credit spreads. You know, we might be in

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Speaker 1: for a little bit of a tactical bounce. As we

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Speaker 1: said here, more market feels a little bit firmer today

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Speaker 1: and certainly people have gotten off sides and whipside with

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Speaker 1: these moves. But there's absolutely opportunity emerging. Harby, thank you

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Speaker 1: so much. Now we go to the Atlantic, to the

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Speaker 1: northern climbs of Maine and Gerard Cassidy, he's been such

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Speaker 1: an advantage to us with RBC capital markets on the banks.

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Speaker 1: Is it all quiet on the Cassidy front today, Girard?

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Speaker 1: I mean, are we beyond the crisis. I don't buy

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Speaker 1: it for a minute, Tom. I think the quiet the

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Speaker 1: crisis has really quieted down, and I think as the

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Speaker 1: deposit flight has pretty much I think we're going to

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Speaker 1: find by the end of this week and slowed down

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Speaker 1: to a trickle. You know, the numbers came out as

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Speaker 1: you probably saw it late last week, and the deposit

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Speaker 1: outflow from the smaller banks was not that material. That

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Speaker 1: was less than two percent. It was far less than

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Speaker 1: I think some of the folks were thinking. And therefore

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Speaker 1: it is calming down. And you saw, of course that

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Speaker 1: Silicon Valley. The FDAC was able to sell that over

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Speaker 1: the weekend to First Citizens. So both of the failed

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Speaker 1: banks have now been sold to private banks or banks

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Speaker 1: that are publicly traded. So we're moving in the right direction.

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Speaker 1: Isn't the all clear signal? Tom? Probably not, but we're

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Speaker 1: getting darn close. Do you think Tar, that the calls

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Speaker 1: for deposit insurance at a more generalized scale were overblown

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Speaker 1: over the past few weeks, that the need for that

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Speaker 1: kind of backstop and certainty was overstated. Lisa, thank you

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Speaker 1: for saying that. I couldn't agree with you more. I

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Speaker 1: think what people are finding out is that most depositors

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Speaker 1: have confidence in their banks. And that being said, when

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Speaker 1: you break down the size of our banks less than

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Speaker 1: one hundred million in assets or less than ten billion

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Speaker 1: in assets, the majority of those deposits in those banks

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Speaker 1: are already insured by the government because they're less than

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Speaker 1: two d and fifty thousand dollars. That doesn't mean they

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Speaker 1: may not look at a revision of lifting up the

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Speaker 1: deposit insurance levels at some point. But I think it

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Speaker 1: was to your point, overblown over and that was part

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Speaker 1: of this whole problem was Unfortunately it's spread like wildfire

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Speaker 1: on social media, and I think that's one of the

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Speaker 1: biggest issues that has to be addressed as we go forward.

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Speaker 1: So there's a conflation here. On one hand, you have

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Speaker 1: the potential for bank runs, right, and that was something

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Speaker 1: that really spurred the immediate kind of concern. But then

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Speaker 1: there's this question of just deposit flight that a lot

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Speaker 1: of people are withdrawing their money from banking accounts just

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Speaker 1: generally in order to go into money market funds and

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Speaker 1: other higher interest paying rates. And this is the issue

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Speaker 1: because you're seeing small banks, according to the data, loose deposit.

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Speaker 1: It's a much faster clip than larger banks. So at

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Speaker 1: what point is that the real problem. It's a profitability problem,

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Speaker 1: and it's a competition problem as well as a lending one.

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Speaker 1: I would say that the mix is changing to your point,

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Speaker 1: When you look at the data from the Federal Reserve,

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Speaker 1: you'll notice that something what they referred to as other deposits,

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Speaker 1: which are generally the non interest bearing or low interest

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Speaker 1: bearing deposits, have falling more aggressively. Both of the large

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Speaker 1: banks and small banks since Race have started to go higher.

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Speaker 1: What they've replaced that with, though, is time deposits, So

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Speaker 1: CDs that you know, Tom might remember back in the

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Speaker 1: eighty you could get a CD for you know, thirteen

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Speaker 1: percent twelve months. Those those types of instruments are coming back,

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Speaker 1: and believe it or not, at least back in the

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Speaker 1: nineteen eighties, fifty percent of bank funding was with CDs.

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Speaker 1: As at the fourth quarter it was less than ten percent.

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Speaker 1: So the mix is changing. What I remember about the

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Speaker 1: nineteen eighties Gerard Cassidy is you had a haircut and

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Speaker 1: a beard like Bob seeger. That's what I really remember there,

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Speaker 1: you know. Well, the smartest tweet this weekend was from

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Speaker 1: the Giant or Chicago Jim Bianco where he said, look,

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Speaker 1: it's a five percent world. Everybody get over it. How

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Speaker 1: does the profitability of the RBC capital market stocks you follow,

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Speaker 1: how does the profitability change in Bianco's five percent world?

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Speaker 1: Tommy really comes down to, once again, the mix of deposits.

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Speaker 1: And for the banks who've been working very hard and diligently,

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Speaker 1: you know, for the last twenty years and growing those

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Speaker 1: cheap core consumer deposits, the five percent world is very profitable.

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Speaker 1: What investors they know now but six months ago people

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Speaker 1: who weren't looking at the right side of a bank's

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Speaker 1: balance sheet that was fifteen years ago when rates will higher.

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Speaker 1: But when you have checking account deposits of consumers and

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Speaker 1: they're basically the consumers operating account, banks don't need to

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Speaker 1: paint the interest on it because the benefits they're giving

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Speaker 1: to the consumer are obviously the ease of use and

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Speaker 1: as well as making payments, et cetera. So the point is,

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Speaker 1: in a five percent world, if you have the right

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Speaker 1: deposit mix, like a Brain Morning and over a Bank America,

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Speaker 1: this is very positible for a company like that. Let's

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Speaker 1: get a window here into the world. The Cuts wrote

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Speaker 1: world a securities analysis in banking. Keith Horowitz is City

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Speaker 1: Group Gerrid. I mean, you know Keith works suspect. We

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Speaker 1: all know that he goes out and he puts a

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Speaker 1: bye today on M and T a Buffalo the best

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Speaker 1: run bank in America. I'm not out of tooralizing there, Girard.

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Speaker 1: You've got a moonshot on MTB. What will be the

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Speaker 1: catalyst for Horowitz is strong By and you're strong By

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Speaker 1: on MTB to work out how do you get the

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Speaker 1: moonshot on a Buffalo bank? Exactly for that reason time

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Speaker 1: you want the slow growth, steady eddies are that are

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Speaker 1: funded by these cheap cored deposits. Mnt IS probably has

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Speaker 1: one of the best deposit bases. They have the Grandma

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Speaker 1: and Grandpa deposit up in Watertown, New York that has

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Speaker 1: five thousand dollars in it. That money's not moving to

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Speaker 1: Marcus and as a result, they don't need to pay

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Speaker 1: up for it. But second, you also have a company

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Speaker 1: that never extended its duration like its peers in its

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Speaker 1: securities portfolio, and therefore they're earning far more in that portfolio.

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Speaker 1: And then third you might remember Tom they close on

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Speaker 1: the People's acquisition just over a year ago and the

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Speaker 1: cost savings from that acquisition will also drive earnings, so

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Speaker 1: they have three drivers. And then lastly, they have one

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Speaker 1: of the few banks that has excess capital. They've been

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Speaker 1: a great steward of shareholders capital and then going to

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Speaker 1: return the access capital through buybacks. We got to leave it.

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Speaker 1: They're hugely beneficial. Lisa's right now to buy ticket on Fortress.

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Speaker 1: Wilmer's right now. Gerard Cassidy with RBC Capital marks right

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Speaker 1: now joining us Torsten Slack, chief economist Apollo Global Management.

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Speaker 1: I really want to emphasize that Torston, with his work

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Speaker 1: at Deutsche Bank over the years and of course at

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Speaker 1: OECD in Paris, gives a global view to the US trauma.

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Speaker 1: Right now. You are known for one paragraph, one chart.

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Speaker 1: What's the one paragraph, the one chart that matters for

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Speaker 1: Tuesday morning? Well, what matters the most really at the

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Speaker 1: moment is, as Lisa was just saying, the uncertainty about

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Speaker 1: what is the behavioral reaction going to be in the

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Speaker 1: regional banks and the banking sects are more broadly as

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Speaker 1: a result of what we're seeing at the moment, Because

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Speaker 1: everything we're seeing on our Bloomberg screens tells you that,

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Speaker 1: oh maybe this is just the modest tightening in financial conditions.

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Speaker 1: Maybe the f OS bank funding car spread is out

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Speaker 1: about forty fifty basis points. But what we don't know

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Speaker 1: is the second order effect, name what is the behavioral

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Speaker 1: change going to be in terms of lending standards. Is

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Speaker 1: it going to be harder to get a loan, to

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Speaker 1: buy a car, to buy a house, to buy commercary estate,

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Speaker 1: to buy anything for consumers and for corporates. And as

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Speaker 1: a result of that, it is really still a bit

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Speaker 1: unknown exactly how deep this is going to be. Well, okay,

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Speaker 1: I get the idea there's unknowns here, But to me

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Speaker 1: what we may end up is not only maybe not

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Speaker 1: a worry about concentration of banking, but you know what,

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Speaker 1: We're going to clear the market, remove the people that

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Speaker 1: couldn't make it from zero to five percent, and we'll

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Speaker 1: be stronger after the fact. Is that the Apollo view, No,

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Speaker 1: so they of course outlook here is mainly driven by

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Speaker 1: the uncertainty about what is the response going to be

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Speaker 1: in terms of how much title lending consistent conditions will be.

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Speaker 1: So if you look at the quantitative response in terms

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Speaker 1: of pricing, I can see that on my Bluemberg screen,

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Speaker 1: and that clearly shows that financial conditions are tighter and

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Speaker 1: borrowing cost and funding costs for banks are higher. But

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Speaker 1: if you then start to do small regressions and think about, well,

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Speaker 1: what does the tightening in lending standards that we saw

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Speaker 1: in twenty twenty, which is where the frayes spread is,

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Speaker 1: if that corresponds to what we're seeing today, then you

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Speaker 1: might have more coming in terms of effectively be a

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Speaker 1: higher fait funds rate relative to what we have seen

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Speaker 1: in the data. He's the only guy I know that

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Speaker 1: actually understands the BTMM screen. I mean, that's what he's

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Speaker 1: talking there with fr aois the sofur s o fr

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Speaker 1: which Iris says is the new library. It's all Greek

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Speaker 1: to me, but there it is. This is the issue

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Speaker 1: though for central bankers. They don't know how much additional

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Speaker 1: tightening is being sort of implied into the market through

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Speaker 1: a tightening and landing standards, And so if they're in

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Speaker 1: the dark as well, if they don't have a clear

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Speaker 1: sense of this, and the actual data that we're getting

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Speaker 1: keeps on being strong, what's to stop them from continuing

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Speaker 1: to hike in spite of all of the naysayers in

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Speaker 1: the market that's screaming for rate cuts. You're absolutely right.

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Speaker 1: I mean, the whole situation here is a function of

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Speaker 1: data dependency. The data dependency if you say I only

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Speaker 1: look at the incoming data, then you are by definition

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Speaker 1: backward looking. So if, of course there's a lot of

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Speaker 1: uncertainty about what's coming in the future, and you don't

429
00:22:30,760 --> 00:22:32,919
Speaker 1: know how to quantify that, and no one knows that

430
00:22:32,960 --> 00:22:35,080
Speaker 1: at this point we all have to guess what are

431
00:22:35,119 --> 00:22:38,000
Speaker 1: the implications of this, then the risks are motilded to

432
00:22:38,040 --> 00:22:40,639
Speaker 1: the downside. But what they're fit and the ECB and

433
00:22:40,680 --> 00:22:42,560
Speaker 1: all central banks around the world are not waiting for.

434
00:22:42,880 --> 00:22:46,119
Speaker 1: Is this going to slow down the data? Jobless claims

435
00:22:46,160 --> 00:22:48,359
Speaker 1: going to go up every Thursday for the coming weeks.

436
00:22:48,480 --> 00:22:50,800
Speaker 1: Will we also see nonfun payrolls begin to slow down.

437
00:22:51,000 --> 00:22:54,520
Speaker 1: We've already seen durable goods and capics begin to slow down.

438
00:22:54,760 --> 00:22:56,720
Speaker 1: But the bottom line is that we already had a

439
00:22:56,760 --> 00:23:00,000
Speaker 1: slow downcoming because of the lack defects of fit hikes.

440
00:23:00,040 --> 00:23:01,919
Speaker 1: Now we're adding onto that a banking crisis, and that

441
00:23:02,000 --> 00:23:04,679
Speaker 1: of course increases the risks that this lowdown is going

442
00:23:04,720 --> 00:23:06,560
Speaker 1: to be fastest. Is it fair to call what we

443
00:23:06,600 --> 00:23:09,000
Speaker 1: have experienced a banking crisis, and this is really a

444
00:23:09,080 --> 00:23:11,359
Speaker 1: question that people are trying to wrestle with. Or a

445
00:23:11,440 --> 00:23:14,640
Speaker 1: time when we seem to see stability and there are

446
00:23:14,680 --> 00:23:18,520
Speaker 1: certain specific banks that had specific risks that blew up

447
00:23:18,680 --> 00:23:21,800
Speaker 1: and now we see ongoing sense of resilience. Is it

448
00:23:21,800 --> 00:23:23,720
Speaker 1: fair to call it a banking crisis it's going to

449
00:23:23,720 --> 00:23:26,280
Speaker 1: materially tighten lending conditions. Well, it's fair in the sense

450
00:23:26,320 --> 00:23:28,680
Speaker 1: that we have seen bank runs, and a bank run

451
00:23:28,720 --> 00:23:30,959
Speaker 1: is normally the number one characteristic of a banking crisis.

452
00:23:30,960 --> 00:23:33,520
Speaker 1: But what is very unusual is that this banking crisis

453
00:23:33,920 --> 00:23:36,720
Speaker 1: is not like normal banking crisis. A normal banking crisis,

454
00:23:36,720 --> 00:23:39,480
Speaker 1: it's because of credit lasses on the a liquid part

455
00:23:39,760 --> 00:23:43,200
Speaker 1: of books. Now we're actually seeing lasses not on the

456
00:23:43,240 --> 00:23:46,240
Speaker 1: credit side, but on the most liquid side of banks books,

457
00:23:46,280 --> 00:23:48,800
Speaker 1: namely and treasuries. So in that sense, we have basically

458
00:23:48,840 --> 00:23:51,320
Speaker 1: never before had a banking crisis in a strong economy,

459
00:23:51,440 --> 00:23:55,040
Speaker 1: and that's really unusual. So what's the distinction between a

460
00:23:55,080 --> 00:23:58,040
Speaker 1: liquidity crisis where it's just to posits being withdrawn and

461
00:23:58,080 --> 00:24:01,280
Speaker 1: a credit crisis? When is a liquidity crisis become a

462
00:24:01,320 --> 00:24:04,399
Speaker 1: credit crisis? So that's exactly why. What matters now is

463
00:24:04,400 --> 00:24:07,120
Speaker 1: how the bank's going to respond to this liquidity crisis.

464
00:24:07,119 --> 00:24:09,320
Speaker 1: Are they going to say it doesn't matter, We're just

465
00:24:09,359 --> 00:24:11,320
Speaker 1: going to lend more, or are the three head winds

466
00:24:11,320 --> 00:24:16,240
Speaker 1: they're facing from higher funding costs, also more regulatory scrutiny,

467
00:24:16,320 --> 00:24:19,480
Speaker 1: and also ultimately and look at assets in a different way.

468
00:24:19,760 --> 00:24:21,560
Speaker 1: Is that going to make them hold back? And if

469
00:24:21,600 --> 00:24:23,480
Speaker 1: they do begin to hold back, the risk of causes

470
00:24:23,560 --> 00:24:26,120
Speaker 1: that this could magnify this low downa is already. Let's

471
00:24:26,119 --> 00:24:28,679
Speaker 1: not forget we were even debating a few months ago, Oh,

472
00:24:28,720 --> 00:24:31,560
Speaker 1: this will be a hot landing even without a banking situation.

473
00:24:32,080 --> 00:24:36,320
Speaker 1: It's completely inappropriate for me to ask you about Deutsche Bank.

474
00:24:36,400 --> 00:24:38,960
Speaker 1: But there I wasn't Davos standing with you and mister

475
00:24:39,119 --> 00:24:42,200
Speaker 1: saving long ago and far away as he was coming

476
00:24:42,200 --> 00:24:45,879
Speaker 1: in to salvage the bank away from Deutsche Bank. Explain

477
00:24:45,960 --> 00:24:52,160
Speaker 1: to our American audience why European financial banking dynamics are

478
00:24:52,240 --> 00:24:55,880
Speaker 1: so different and original from the American model. Well, there's

479
00:24:56,000 --> 00:24:57,960
Speaker 1: a lot of academic studies that show you that the

480
00:24:58,240 --> 00:25:01,520
Speaker 1: deposit BEZA in other words, how sensitive deposits are to

481
00:25:01,600 --> 00:25:04,360
Speaker 1: interest rates, has tended to be lower in Europe. So

482
00:25:04,400 --> 00:25:08,120
Speaker 1: that means also therefore that the propensity to move money

483
00:25:08,160 --> 00:25:10,000
Speaker 1: quickly in and out of your accounts, like we're seeing

484
00:25:10,000 --> 00:25:12,159
Speaker 1: in the weekly data from the FIT last Friday in

485
00:25:12,200 --> 00:25:14,840
Speaker 1: the US, where money was moved from small banks about

486
00:25:14,840 --> 00:25:17,000
Speaker 1: one hundred and twenty billion outflow to sixty billion in

487
00:25:17,000 --> 00:25:20,919
Speaker 1: flows to last banks. That has basically a most significant,

488
00:25:21,080 --> 00:25:23,159
Speaker 1: more pronounced effect in the US restive to what we

489
00:25:23,200 --> 00:25:25,840
Speaker 1: see in Europe. Over the weekend, the Financial Times did

490
00:25:25,880 --> 00:25:29,200
Speaker 1: a full treatment of the Swiss culture in their banking

491
00:25:29,240 --> 00:25:31,399
Speaker 1: and again it was seventy eight percent or whatever. The

492
00:25:31,400 --> 00:25:34,520
Speaker 1: Swiss people are dead set against this mating of these

493
00:25:34,560 --> 00:25:37,320
Speaker 1: two banks, not on those two banks. But do the

494
00:25:37,440 --> 00:25:40,600
Speaker 1: people of Europe have a voice in this or is

495
00:25:40,640 --> 00:25:43,960
Speaker 1: it the elites, the elites above high they get to

496
00:25:44,000 --> 00:25:46,879
Speaker 1: fix EU banking well. One very important difference between the

497
00:25:46,960 --> 00:25:49,480
Speaker 1: US and the European banking sector is that the European

498
00:25:49,720 --> 00:25:52,600
Speaker 1: banking sector is much more dominant. In other words, we

499
00:25:52,680 --> 00:25:57,080
Speaker 1: have a bank driven finance. Last night stunning and at

500
00:25:57,119 --> 00:26:00,399
Speaker 1: least stunning the first thing I joined with at the

501
00:26:00,440 --> 00:26:03,000
Speaker 1: IMF in the early at nineteen nineties. But the conclusion

502
00:26:03,080 --> 00:26:06,160
Speaker 1: is that it is very important conclusion that US has

503
00:26:06,160 --> 00:26:08,880
Speaker 1: a market based financial system. Europe has a bank based

504
00:26:08,880 --> 00:26:10,600
Speaker 1: financial system. And when you have a more bank based

505
00:26:10,640 --> 00:26:13,320
Speaker 1: financial system, the banks just play a more important role.

506
00:26:13,520 --> 00:26:15,280
Speaker 1: And whereas in the US. Remember in the US, the

507
00:26:15,320 --> 00:26:17,760
Speaker 1: vast majority of credit in the US to the private

508
00:26:17,800 --> 00:26:21,000
Speaker 1: sector comes from outside the banks, and that's very important

509
00:26:21,040 --> 00:26:23,439
Speaker 1: because that of course means that the markets play a

510
00:26:23,520 --> 00:26:27,040
Speaker 1: much more significant role. US financial system is much more diversified.

511
00:26:27,080 --> 00:26:29,680
Speaker 1: If you want financing as a company, you could basically

512
00:26:29,680 --> 00:26:32,080
Speaker 1: go to many more sources in the US than you

513
00:26:32,119 --> 00:26:34,560
Speaker 1: can in Europe. So there are two different things here.

514
00:26:34,680 --> 00:26:36,960
Speaker 1: There's less deposit data in Europe than there is in

515
00:26:37,000 --> 00:26:40,320
Speaker 1: the US, but there is of greater dependency on banks,

516
00:26:40,320 --> 00:26:42,760
Speaker 1: So that's more susceptible. It's an economy, it's more susceptible

517
00:26:43,000 --> 00:26:46,240
Speaker 1: to issues in the banking system. So if there is

518
00:26:46,359 --> 00:26:48,639
Speaker 1: no issue in the banking system, if Credit Suite was

519
00:26:48,640 --> 00:26:50,640
Speaker 1: a troubled bank that had been troubled for a long

520
00:26:50,680 --> 00:26:53,159
Speaker 1: time that came to a head on a number of

521
00:26:53,160 --> 00:26:57,399
Speaker 1: different issues, then is lending going to remain stronger and

522
00:26:57,440 --> 00:27:00,720
Speaker 1: thus foster a stronger economy in Europe than the US,

523
00:27:00,800 --> 00:27:03,560
Speaker 1: which is more susceptible to market pricing it's moving quick. Well,

524
00:27:04,040 --> 00:27:06,199
Speaker 1: that's correct, But the issue here is also what is

525
00:27:06,200 --> 00:27:08,440
Speaker 1: the behavioral change going to be not only in US

526
00:27:08,520 --> 00:27:11,239
Speaker 1: regional banks, but in banks globally. And that's why if

527
00:27:11,280 --> 00:27:13,520
Speaker 1: you do have a behavioral change where banks globally do

528
00:27:13,640 --> 00:27:16,240
Speaker 1: begin to pull a bit back, then in a more

529
00:27:16,320 --> 00:27:19,399
Speaker 1: bank based economy you would expect a more negative effect

530
00:27:19,480 --> 00:27:22,040
Speaker 1: simply because the banks are playing a pio role. That's

531
00:27:22,040 --> 00:27:24,760
Speaker 1: why the diversification of the US financial system that you

532
00:27:24,880 --> 00:27:26,600
Speaker 1: have so many more different places to go. If we

533
00:27:26,600 --> 00:27:28,760
Speaker 1: were a company we wanted to forget financing, we could

534
00:27:28,800 --> 00:27:30,760
Speaker 1: go to a bank. If that said no, well then

535
00:27:30,760 --> 00:27:32,840
Speaker 1: we could go to bank markets, to venture capital, to

536
00:27:32,920 --> 00:27:35,679
Speaker 1: private capital, to private credit, to private equity. There's so

537
00:27:35,680 --> 00:27:39,000
Speaker 1: many more places to raise funds in US financial markets,

538
00:27:39,040 --> 00:27:41,560
Speaker 1: which is really the beauty of US capital markets that

539
00:27:41,640 --> 00:27:44,080
Speaker 1: they are so much more diversified and therefore more able

540
00:27:44,119 --> 00:27:51,360
Speaker 1: to provide the financing. It is very important that Bloomberg

541
00:27:51,440 --> 00:27:54,359
Speaker 1: Surveillance to spend our tradition for decades that we try

542
00:27:54,480 --> 00:27:59,320
Speaker 1: to capture the zeitgeist among the adults in the room

543
00:27:59,359 --> 00:28:02,399
Speaker 1: this week, and Jason Furman, who has to speak to

544
00:28:02,480 --> 00:28:06,000
Speaker 1: act ten in the room at Harvard said shut up

545
00:28:06,040 --> 00:28:08,840
Speaker 1: and read it, and basically shut up and read it

546
00:28:08,920 --> 00:28:13,600
Speaker 1: is the new to quote Furman. Professor Furman phenomenal and

547
00:28:13,800 --> 00:28:17,960
Speaker 1: hard hitting essay by Adam Posen of the Peterson Institute.

548
00:28:18,040 --> 00:28:21,800
Speaker 1: Doctor Posen is definitive on German culture. Doctor Posen is

549
00:28:21,840 --> 00:28:28,520
Speaker 1: definitive of synthesizing together American policy in our economics. Adam Posen,

550
00:28:28,600 --> 00:28:31,240
Speaker 1: I want to begin, first of all with buried in

551
00:28:31,320 --> 00:28:36,160
Speaker 1: your wonderful paragraph by paragraph article, is that Trump Biden

552
00:28:36,280 --> 00:28:41,880
Speaker 1: trade policy gives us the risk of losing American jobs.

553
00:28:42,240 --> 00:28:46,040
Speaker 1: I thought we were gaining jobs by Intel factories from

554
00:28:46,120 --> 00:28:51,200
Speaker 1: sea to shining sea. Fraid not, Tom, Initially you might

555
00:28:51,240 --> 00:28:53,520
Speaker 1: gain a few. Thank you so much for the intro

556
00:28:53,720 --> 00:28:57,560
Speaker 1: for having me today on surveillance. The issue is, first,

557
00:28:57,600 --> 00:29:00,720
Speaker 1: we've only got a finite number of skilled workers people

558
00:29:00,760 --> 00:29:06,320
Speaker 1: from these companies Intel, Qualcom, TSMC, Tokyo, Electron. They don't

559
00:29:06,440 --> 00:29:09,480
Speaker 1: have the American workers here who can do the job,

560
00:29:09,520 --> 00:29:11,440
Speaker 1: and if they do, they have to hire them away

561
00:29:11,520 --> 00:29:15,240
Speaker 1: from someplace else. It's not like skilled engineers are unemployed

562
00:29:15,280 --> 00:29:18,000
Speaker 1: in the US right now. We need an immigration to

563
00:29:18,040 --> 00:29:20,920
Speaker 1: get that up. Second, if you put all this stuff

564
00:29:20,960 --> 00:29:23,680
Speaker 1: and you force it to be built here at higher expense,

565
00:29:24,160 --> 00:29:27,480
Speaker 1: then what you get is less competitiveness for the rest

566
00:29:27,480 --> 00:29:30,480
Speaker 1: of the country. They're going to be paying more for semiconductors,

567
00:29:30,480 --> 00:29:33,120
Speaker 1: they're going to be paying more for equipment, and that's

568
00:29:33,160 --> 00:29:35,520
Speaker 1: fine if you think it serves some goal, but it's

569
00:29:35,520 --> 00:29:38,240
Speaker 1: certainly gonna hurt jobs. And third, you're never going to

570
00:29:38,320 --> 00:29:40,520
Speaker 1: export any of this, because what you're doing is you're

571
00:29:40,520 --> 00:29:44,440
Speaker 1: bringing stuff home, so to speak, in order to make

572
00:29:44,440 --> 00:29:47,280
Speaker 1: it uncompetitive. We've sort of done this with turning NAFTA

573
00:29:47,320 --> 00:29:51,400
Speaker 1: into USMCA. We've increased the rules of origin, meaning more

574
00:29:51,440 --> 00:29:55,600
Speaker 1: domestic content and as a result, fewer exports. So on

575
00:29:55,760 --> 00:29:58,520
Speaker 1: that this is not a job's creation program. Someone who

576
00:29:58,600 --> 00:30:02,000
Speaker 1: was definitive on this strength of the Peterson Institute was

577
00:30:02,080 --> 00:30:06,520
Speaker 1: William Klein. All of our debate, including GOP and Democrats,

578
00:30:06,960 --> 00:30:11,720
Speaker 1: is simplistic bilateral tension. And William Klein had the courage

579
00:30:11,760 --> 00:30:16,960
Speaker 1: to say, you've got to think multilateral and differential bilateral

580
00:30:17,000 --> 00:30:22,400
Speaker 1: of Singapore in China, Singapore in Mexico, Mexico and South Korea.

581
00:30:22,480 --> 00:30:28,040
Speaker 1: How naive are we in a simplistic China US study. Well,

582
00:30:28,120 --> 00:30:30,360
Speaker 1: Bill is right, and I'm trying to make the same

583
00:30:30,440 --> 00:30:33,920
Speaker 1: kind of case that there's what hemon is called general equilibrium,

584
00:30:34,000 --> 00:30:38,320
Speaker 1: but in international relations that the US cannot simply say

585
00:30:38,840 --> 00:30:41,080
Speaker 1: we do this. You have to play along and no

586
00:30:41,080 --> 00:30:47,520
Speaker 1: one's going to react. Other countries you mentioned Singapore, South Korea, Mexico, Australia, India,

587
00:30:47,560 --> 00:30:50,920
Speaker 1: they have agency, they do not just have to passively

588
00:30:51,000 --> 00:30:53,880
Speaker 1: deal with whatever the US does. And if the US

589
00:30:54,000 --> 00:30:57,840
Speaker 1: decides to play hardwall to make them play along, then

590
00:30:57,920 --> 00:31:02,000
Speaker 1: we become a police force, make enemies. So it's not

591
00:31:02,040 --> 00:31:04,720
Speaker 1: a viable strategy. I wouldn't ascribe it to naivete. I

592
00:31:04,840 --> 00:31:09,840
Speaker 1: describe it to overconfidence and ideological blinders and mc gunpoint.

593
00:31:10,000 --> 00:31:13,680
Speaker 1: Years ago, I was forced to read Ricardo eighteen seventeen

594
00:31:13,800 --> 00:31:16,360
Speaker 1: cover to cover and to be honest, folks, David Ricardo,

595
00:31:16,440 --> 00:31:19,040
Speaker 1: who is so much of this based off of in

596
00:31:19,160 --> 00:31:23,680
Speaker 1: eighteen seventeen? You know it's a tough read. It's there's

597
00:31:23,720 --> 00:31:27,960
Speaker 1: some distance to it centuries ago and imposing our trade

598
00:31:28,000 --> 00:31:32,400
Speaker 1: policy is based from a distance and maybe Bretton Woods,

599
00:31:32,440 --> 00:31:35,720
Speaker 1: maybe the middle twentieth century. Do we need a new

600
00:31:35,760 --> 00:31:41,520
Speaker 1: trade policy for a more open technological world. We need

601
00:31:41,560 --> 00:31:44,520
Speaker 1: a new trade policy in the US because we haven't

602
00:31:44,560 --> 00:31:47,720
Speaker 1: been open. The rest of the world's continue to open up,

603
00:31:48,000 --> 00:31:51,120
Speaker 1: continue to do more trade, more investment, and as I

604
00:31:51,240 --> 00:31:54,000
Speaker 1: argued in a Foreign affairs piece a couple of years ago,

605
00:31:54,600 --> 00:31:58,680
Speaker 1: US has been deglobalizing basically since NAFTA, certainly since two

606
00:31:58,720 --> 00:32:02,160
Speaker 1: thousand and So all this blaming everything on the China

607
00:32:02,200 --> 00:32:05,080
Speaker 1: shock doesn't make any sense, because every other country was

608
00:32:05,120 --> 00:32:07,800
Speaker 1: exposed to the China Shock and they continued to grow

609
00:32:08,480 --> 00:32:12,080
Speaker 1: or they had the same decline in manufacturing jobs. You

610
00:32:12,160 --> 00:32:15,720
Speaker 1: mentioned Germany. We did a look at North Rhine Westfallen,

611
00:32:15,840 --> 00:32:18,920
Speaker 1: the Ohio of Germany compared it directly with Ohio. They

612
00:32:19,040 --> 00:32:23,120
Speaker 1: lost more manufacturing jobs than we did, despite their trade surplus,

613
00:32:23,160 --> 00:32:26,720
Speaker 1: despite all these things that the Americans claimed the Germans did.

614
00:32:27,280 --> 00:32:30,960
Speaker 1: And so our trade policy isn't the problem. It's our

615
00:32:31,000 --> 00:32:34,400
Speaker 1: politics that is the problem, that refuses to recognize that

616
00:32:34,520 --> 00:32:38,360
Speaker 1: America can't have everything it wants and that some people

617
00:32:38,920 --> 00:32:43,320
Speaker 1: in rural manufacturing jobs have to adjust, like the people

618
00:32:43,360 --> 00:32:47,120
Speaker 1: who've been in services in cities have adjusted through the years.

619
00:32:47,600 --> 00:32:51,160
Speaker 1: Can there be a middle ground in Washington on trade

620
00:32:51,360 --> 00:32:53,280
Speaker 1: or do we just need to live to the polarity

621
00:32:53,360 --> 00:32:56,480
Speaker 1: that we've seen for the last eight, nine, ten years.

622
00:32:57,520 --> 00:32:59,720
Speaker 1: I'm not sure. This is one of the few issues

623
00:32:59,720 --> 00:33:01,800
Speaker 1: taught where I don't think it's an issue of polarity.

624
00:33:01,920 --> 00:33:05,840
Speaker 1: I think it's large part of the Democratic Republican Party

625
00:33:06,000 --> 00:33:08,960
Speaker 1: have come together. It's no, no, it's fine. But I

626
00:33:08,960 --> 00:33:12,400
Speaker 1: mean just to say the extremism is the majority position,

627
00:33:12,560 --> 00:33:15,920
Speaker 1: and just as on other issues like communism in the

628
00:33:15,960 --> 00:33:20,920
Speaker 1: fifties at home, like environmental issues before the seventies, like

629
00:33:21,400 --> 00:33:23,640
Speaker 1: civil rights. I don't mean to say this is on

630
00:33:23,720 --> 00:33:26,520
Speaker 1: a par with those, but just to say, congress and

631
00:33:26,880 --> 00:33:30,120
Speaker 1: popular views sometimes are wrong. We have to confront that

632
00:33:30,200 --> 00:33:33,760
Speaker 1: these views, even if popular and widespread, are wrong. Adam,

633
00:33:33,800 --> 00:33:38,120
Speaker 1: you lead with America's zero sum economics. I mean this

634
00:33:38,200 --> 00:33:40,440
Speaker 1: is like Chad Jones out on the West Coast talking

635
00:33:40,480 --> 00:33:42,920
Speaker 1: to a solo one oh one. I mean, how do

636
00:33:42,960 --> 00:33:45,840
Speaker 1: we get away from what we all intuitively understand it's

637
00:33:45,880 --> 00:33:49,320
Speaker 1: not a good thing, zero sum economics? How do we

638
00:33:49,440 --> 00:33:54,040
Speaker 1: get back to something constructive off of Solo nineteen fifty seven?

639
00:33:55,320 --> 00:33:58,760
Speaker 1: Great question. I think there's two tracks. One is we

640
00:33:58,920 --> 00:34:02,720
Speaker 1: have to be more aggressive about confronting China and others

641
00:34:02,760 --> 00:34:06,640
Speaker 1: in the diplomatic and military space. This a whole part

642
00:34:06,640 --> 00:34:09,040
Speaker 1: of the whole trade issue. Is people in foreign policy

643
00:34:09,080 --> 00:34:12,120
Speaker 1: security not wanting to do the dangerous and hard work

644
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Speaker 1: on the security side and hoping they can sub economics

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Speaker 1: for it. But it doesn't work. It's not that economics

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Speaker 1: is more important, it's just it doesn't work. So beef

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Speaker 1: up the security side, pick up few technologies. Really cram

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Speaker 1: on that. The second side, as you said, is solo

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Speaker 1: esque or Robert Gordon or anything like that. Huge public investment, yes,

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Speaker 1: not industrial policy to exclude other countries, not industrial policy

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Speaker 1: to maximize production at home, but made by America instead

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Speaker 1: of made in America. Money towards R and D, money

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Speaker 1: towards education, money towards supporting standards that let us get

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Speaker 1: innovation from the free world. Those are the two tracks

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Speaker 1: I would go on for buy Americans that have made

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Speaker 1: in America. And I'm posing wonderful to get started here

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Speaker 1: on our IMF coverage here, And of course it's article folks,

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Speaker 1: I really can't say enough about. Don't listen to me,

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00:35:01,360 --> 00:35:04,760
Speaker 1: listen to Professor ferman up At However, to America, zero

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Speaker 1: sum economics doesn't add up. It is without question the

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Speaker 1: read of the weekend from Adam Posen of the Peterson

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Speaker 1: Institute Subscribe to the Bloomberg Surveillance podcast on Apple, Spotify,

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00:35:16,520 --> 00:35:21,080
Speaker 1: and anywhere else you get your podcasts. Listen live every weekday,

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Speaker 1: starting at seven am Eastern. I'm Bloomberg dot Com, the

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Speaker 1: iHeartRadio app, tune In, and the Bloomberg Business app. You

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Speaker 1: can watch us live. I'm Bloomberg Television and always I'm

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Speaker 1: the Bloomberg Terminal. Thanks for listening. I'm Tom Keane, and

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Speaker 1: this is Bloomberg