WEBVTT - Surveillance: Vaccines With Germany's Scholz 0:00:05.120 --> 0:00:09.320 Welcome to the Bloomberg Surveillance Podcast Hometown Keene. Along with 0:00:09.440 --> 0:00:13.720 Jonathan Ferrill and Lisa Brownwitz Jailey, we bring you insight 0:00:13.840 --> 0:00:18.640 from the best and economics, finance, investment and international relations, 0:00:18.960 --> 0:00:23.840 Fine Bloomberg Surveillance and Apple podcast SoundCloud, Bloomberg dot Com, 0:00:23.920 --> 0:00:30.200 and of course on the Bloomberg terminal. The story in 0:00:30.240 --> 0:00:32.680 Europe much more complex. It's been a tough few months 0:00:32.720 --> 0:00:35.280 to roll out this vaccine, and now Germany has outlined 0:00:35.320 --> 0:00:37.519 some plans to gradually reopen the economy. I'm pleased to 0:00:37.560 --> 0:00:39.640 say that still with us is our colleague, Bloomberg's Mat Miller, 0:00:39.800 --> 0:00:41.760 and I'm very happy to say the German finance minister 0:00:41.840 --> 0:00:44.599 joins us. Now all have Scholtz, Minister, fantastic to catch 0:00:44.680 --> 0:00:46.360 up with you, sir. I just want to start with 0:00:46.360 --> 0:00:50.080 the vaccine strategy in Europe, which you've reportedly called, and 0:00:50.120 --> 0:00:53.360 forgive me for my language, sir, a real pile of crap. 0:00:53.960 --> 0:00:56.360 It's that a fair characterization of how you see things 0:00:56.480 --> 0:00:58.400 and how you've seen things play out in Europe over 0:00:58.440 --> 0:01:04.240 the last several months. I think there was a problem 0:01:04.280 --> 0:01:08.800 in ordering enough vaccines in the last year, but now 0:01:08.840 --> 0:01:12.200 anyone is working very hard to work that we will 0:01:12.240 --> 0:01:15.600 have enough vaccines to bring it to the people, and 0:01:15.680 --> 0:01:19.119 this is what is organized in all the countries, also 0:01:19.160 --> 0:01:26.560 in Germany. What went wrong, Minister, it's just the one sentence. 0:01:26.600 --> 0:01:30.640 I already said. There could should have been more. There 0:01:30.640 --> 0:01:34.880 should have been more activity to organize more vaccines, and 0:01:35.040 --> 0:01:39.560 especially if you understand that most of the important developments 0:01:39.600 --> 0:01:43.559 for modern vaccines have been made in Europe, and two 0:01:43.600 --> 0:01:47.640 of the three big companies that develop new vaccines Moderna 0:01:47.760 --> 0:01:51.680 and que Vac and BioNTech are from Germany. So this 0:01:51.880 --> 0:01:55.080 is a good basis for doing the right things. But 0:01:55.200 --> 0:01:57.160 in the end, I think we are now on the 0:01:57.160 --> 0:02:00.840 wreck right track, and anyone is working very hard in 0:02:00.880 --> 0:02:04.720 all the countries, and we are now fascinating the people, 0:02:04.840 --> 0:02:07.880 and we are organizing that this will happen as fast 0:02:07.920 --> 0:02:10.600 as possible, and there will be in a short time 0:02:10.720 --> 0:02:16.000 millions of people that got the ability to have their vaccine. 0:02:17.560 --> 0:02:21.600 Minister Shultz, considering that those companies are German, why didn't 0:02:21.760 --> 0:02:25.440 the government act to get them first, those vaccines out 0:02:25.440 --> 0:02:30.160 to the German people right away. I think it is 0:02:30.160 --> 0:02:33.880 absolutely clear that this is something that should be organized 0:02:34.440 --> 0:02:38.120 in Europe together and it's also clear that this is 0:02:38.160 --> 0:02:42.360 something that should be part of an international collaboration which 0:02:42.400 --> 0:02:47.600 is working necessarily for saving the world. And as you know, 0:02:47.760 --> 0:02:51.400 we are already working very hard on international and global 0:02:51.440 --> 0:02:55.400 initiatives supporting those countries who have not the means to 0:02:55.400 --> 0:02:59.119 to organize the vaccines for themselves, because if we want 0:02:59.160 --> 0:03:02.799 to fight so successfully against the pandemy, it will be 0:03:03.200 --> 0:03:06.640 necessary that we give the chance to all the people 0:03:07.000 --> 0:03:09.920 on the globe. Coming back to Europe, coming back to Germany, 0:03:09.960 --> 0:03:14.160 I think we will make it well. You're responsible for 0:03:14.240 --> 0:03:18.400 dealing with the damage done now by extended lockdowns to 0:03:18.440 --> 0:03:23.000 the German economy. Our reporter Berge yain and found that 0:03:23.040 --> 0:03:26.480 the government is considering as much as fifty billion euros 0:03:26.560 --> 0:03:30.400 in additional debt spending and supplemental debt spending in order 0:03:30.440 --> 0:03:33.640 to deal with the deeper damage from the extended lockdown. 0:03:33.720 --> 0:03:39.920 Can you confirm that we will do extra activities. Yes, 0:03:40.000 --> 0:03:42.360 this is true and we are able to do so. 0:03:42.440 --> 0:03:46.560 As you know, we were in Europe the first to 0:03:47.120 --> 0:03:51.280 fight against the pandemic with fiscal means. In the last year, 0:03:51.360 --> 0:03:55.200 we developed the first a very strong recovery program, and 0:03:55.320 --> 0:03:59.080 we managed the political activity that made it possible that 0:03:59.200 --> 0:04:04.200 the whole European Union is answering together to this crisis. 0:04:04.560 --> 0:04:08.560 The effect on the German economy is obvious. We are 0:04:09.600 --> 0:04:13.480 having a very good situation at the labor market and 0:04:13.640 --> 0:04:16.440 it is much better than anyone expected the last year. 0:04:16.800 --> 0:04:20.760 We have a very good situation in the economy, and 0:04:20.800 --> 0:04:24.560 if you compare the development of the German economy to 0:04:24.680 --> 0:04:30.239 other countries in the world, you see we are between 0:04:30.320 --> 0:04:34.840 the best fighting against the economic consequences of the crisis. 0:04:36.279 --> 0:04:38.200 Can I just push a little bit harder to get 0:04:38.200 --> 0:04:42.359 a figure here in terms of the additional spending that's necessary, 0:04:42.520 --> 0:04:46.680 Mr Minister, is fifty billion euros in additional spending necessary? 0:04:46.760 --> 0:04:52.279 Or somewhere in that ball ballpark. Your colleagues from Germany 0:04:52.320 --> 0:04:55.640 asked the same question to me, and I always gave 0:04:55.680 --> 0:04:58.919 them the same answer. You will see, I didn't expect 0:04:58.920 --> 0:05:01.160 a new answer. Just follow up on. The election is 0:05:01.200 --> 0:05:04.880 coming up later this year. You're running against Chancellor Mercle's party. 0:05:05.160 --> 0:05:07.280 You have to find some kind of daylight between her 0:05:07.640 --> 0:05:10.520 and yourself on the pandemic? Where is the daylight? What 0:05:10.560 --> 0:05:17.400 would you have done differently that wasn't done? Fighting against 0:05:17.440 --> 0:05:20.960 the pandemic? Is a common task of the whole government, 0:05:21.000 --> 0:05:23.359 and I think we have to be very hard and 0:05:23.600 --> 0:05:30.400 fighting against the health crisis which is linked to the pandemic, 0:05:30.760 --> 0:05:34.600 and save the the and save the people, and this 0:05:34.680 --> 0:05:36.919 is what we do. And so I think it is 0:05:36.960 --> 0:05:40.599 not a good idea to do campaigns on this question. 0:05:41.240 --> 0:05:44.880 But obviously I think we need something which is a 0:05:44.920 --> 0:05:47.760 plan for coming out of this situation. And this is 0:05:47.800 --> 0:05:51.000 why I urged anyone to be very very concrete on 0:05:51.080 --> 0:05:54.640 the question of testing and on the question of fascinating 0:05:54.680 --> 0:05:59.000 the people. And I was also very strict in the 0:05:59.120 --> 0:06:02.119 question we discus. Asked in the beginning that there should 0:06:02.160 --> 0:06:07.680 have been more activity in Europe about producing and buying 0:06:08.080 --> 0:06:13.400 the scenes and people are seking very hard. This will 0:06:13.480 --> 0:06:16.920 be a single issue election this year. There is no 0:06:16.960 --> 0:06:20.000 other discussion in the global economy. Right now, you're saying 0:06:20.000 --> 0:06:22.800 there's no difference between yourself and the c DU on 0:06:22.920 --> 0:06:25.960 the biggest issue of the last several decades in the 0:06:25.960 --> 0:06:28.680 global economy. There is no difference in how you would 0:06:28.680 --> 0:06:31.680 handle this crisis, on how you would reopen this economy. 0:06:31.720 --> 0:06:38.359 There is no day like whatsoever. There are differences that 0:06:38.480 --> 0:06:41.520 are discussed, but to be very clear, it is a 0:06:41.520 --> 0:06:45.320 common task and I am very much urging anyone not 0:06:45.400 --> 0:06:48.760 to do party politics and the question which is responsible, 0:06:49.120 --> 0:06:52.080 in the question which is important for the life of 0:06:52.120 --> 0:06:55.720 our people. This is something no one would accept. And 0:06:55.800 --> 0:06:59.880 there is something which is different to other countries. Noble 0:07:00.160 --> 0:07:05.360 doubted that there is really a problem with the pandemic 0:07:05.440 --> 0:07:08.880 and the Corona virus, and no one doubted that it 0:07:09.040 --> 0:07:12.000 was necessary to fight against it. So there is a 0:07:12.000 --> 0:07:16.760 consensus on this question also, not not just within the 0:07:16.800 --> 0:07:19.640 parties of the government, but also with the most of 0:07:19.680 --> 0:07:23.680 the opposition parties. And so this consensus is helpful for 0:07:23.800 --> 0:07:28.160 doing the right things now and being a very honest politician. 0:07:28.200 --> 0:07:31.080 I think doing your task is the first thing if 0:07:31.120 --> 0:07:34.920 you're running for ruling the country. And this is the 0:07:34.960 --> 0:07:39.000 task we have now. And yes, we are the one 0:07:39.000 --> 0:07:42.840 fighting for the idea that this must be done, saving 0:07:42.840 --> 0:07:46.640 the economy, working on social cohesion, looking at the people 0:07:46.920 --> 0:07:50.520 who are suffering most and supporting them, and fighting against 0:07:50.520 --> 0:07:52.920 the health prices. And this is what we have to do. 0:07:53.040 --> 0:07:54.960 They are honorable goal. Sir. Let me finish with this one, 0:07:54.960 --> 0:07:57.560 because there's a big problem in Europe developing on acceptance 0:07:57.560 --> 0:08:04.239 of the vaccine. Have you had the vaccines. I haven't 0:08:04.280 --> 0:08:08.400 been vaccined because there has been uh an agreement on 0:08:08.480 --> 0:08:11.200 who will be the first and who will be the last, 0:08:11.680 --> 0:08:14.240 and the leading politicians are not in the first role. 0:08:14.600 --> 0:08:17.760 But any one of us said and I do the 0:08:17.800 --> 0:08:22.080 same that when we are at the stage where we 0:08:22.160 --> 0:08:25.160 will be fascinated, have the chance to get the vest scene, 0:08:25.240 --> 0:08:28.200 we will take it. And I will take the one 0:08:28.320 --> 0:08:30.680 which is offered to me, and I will not choose 0:08:30.720 --> 0:08:33.280 one of the different ones, because there are a lot 0:08:33.280 --> 0:08:37.360 of very successful the scenes on the Marketisa, thanks for 0:08:37.480 --> 0:08:39.920 time today. We appreciate an important conversation on some really 0:08:39.920 --> 0:08:42.080 difficult issues. So thank you for your understanding. The German 0:08:42.120 --> 0:08:52.320 finance minister, there all have shelves right now, John, this 0:08:52.440 --> 0:08:55.600 is a joy, joy joy. The answer is we only 0:08:55.640 --> 0:08:58.959 have David Blanchelow of Dartmouth and after Cardiff football wins 0:08:59.000 --> 0:09:01.600 turn in a row. They haven't lost in ten games, 0:09:01.600 --> 0:09:06.120 which is absolutely extraordinary. So Professor blanch Blanche Flowers people 0:09:06.400 --> 0:09:09.040 have allowed him to come on air. He is definitive 0:09:09.200 --> 0:09:12.120 on the job economy, from the wage curve of decades 0:09:12.160 --> 0:09:16.360 ago to not working, where have all the good jobs gone? 0:09:16.800 --> 0:09:19.760 Danny Blanche Flower to the right and the left owns 0:09:19.760 --> 0:09:23.000 a high ground. He joins us now from Dartmouth College, Hanover, 0:09:23.040 --> 0:09:26.640 New Hampshire. Danny, you have a chapter in Not Working 0:09:26.640 --> 0:09:29.040 where you say where is the wage growth or the 0:09:29.120 --> 0:09:33.360 lack of it? With the government induced inflation, we're going 0:09:33.400 --> 0:09:37.200 to see, well that give us a legitimate wage growth 0:09:37.280 --> 0:09:40.720 in the good feeling from it? Well in a while. 0:09:41.559 --> 0:09:44.920 Obviously the big reality was the wage growth was very weak. 0:09:45.000 --> 0:09:48.720 The Fed really didn't interpret it correctly, didn't have an 0:09:48.720 --> 0:09:52.160 explanation for it. A big story going for it will 0:09:52.200 --> 0:09:54.600 be what happens to wage growth. But we have a 0:09:54.640 --> 0:09:59.520 puzzle right now because during the doing two thousand twenty 0:09:59.520 --> 0:10:02.920 and coming in to two one, wage growth has jumped. 0:10:03.040 --> 0:10:05.320 It's jumped to about seven or eight percent, but not 0:10:05.440 --> 0:10:09.920 credible because that's because the dropping of the lower end 0:10:09.960 --> 0:10:11.600 of the labor market to be like so it's just 0:10:11.640 --> 0:10:15.000 a batting average effect. So watching wages is going to 0:10:15.080 --> 0:10:18.000 be really important. Measuring it's going to be very hard, 0:10:18.360 --> 0:10:21.040 but in some sense that I think, yeah, you're right 0:10:21.080 --> 0:10:22.559 you said a minute ago, look at g d P. 0:10:23.200 --> 0:10:25.280 But I think the big deal will be look at 0:10:25.280 --> 0:10:28.559 wage growth, look at what happens um and see if 0:10:28.559 --> 0:10:31.199 it sustains itself in a way that it that it hasn't. 0:10:31.320 --> 0:10:34.920 And and then the major reason in a sense for 0:10:34.960 --> 0:10:37.640 that is the people at the lower end have got 0:10:37.679 --> 0:10:40.199 to be lifted. They've been impacted hard by the pandemic. 0:10:40.520 --> 0:10:43.360 They didn't see really strong wage growth in the last 0:10:43.360 --> 0:10:46.320 decade or so. So I think wages, they're really central 0:10:46.360 --> 0:10:49.880 toward this. Within wages being central to it, it is 0:10:49.920 --> 0:10:53.320 about jump start in the economy. What is the character 0:10:53.480 --> 0:10:56.559 of six or seven percent g d P. What kind 0:10:56.600 --> 0:11:01.040 of economy will that be? Well, it'll be it'll be 0:11:01.080 --> 0:11:04.280 a pretty good economy. I mean, we have we have 0:11:04.360 --> 0:11:08.000 to put all of this in context, Jenny. Is it 0:11:08.080 --> 0:11:14.920 an economy for the elites the bottom line? That's exactly 0:11:14.960 --> 0:11:18.000 the concern. I mean, the K shaped recovery, strong recovery 0:11:18.040 --> 0:11:21.720 for some, no recovery for others. And I think that's 0:11:21.840 --> 0:11:23.680 really the concern. I mean. The great thing in a 0:11:23.760 --> 0:11:26.720 sense of that Biden and stuff is he's focused on it. 0:11:26.800 --> 0:11:29.840 He has two really strong appointees in Treasury and at 0:11:29.840 --> 0:11:32.640 the Council, Janet Yelling and cc Rousse, who said in 0:11:32.679 --> 0:11:35.440 the in their nomination speeches, this is what we're going 0:11:35.480 --> 0:11:39.080 to focus on. But the reality of that is it's 0:11:39.160 --> 0:11:43.360 really hard. It's really hard to bring everybody along together. 0:11:43.400 --> 0:11:45.640 And look at look at the stock market. We've looked, 0:11:45.720 --> 0:11:48.840 we've seen that that's doing pretty well. Wall streets doing fine, 0:11:48.880 --> 0:11:51.000 You've been talking about it. But the issue in some 0:11:51.120 --> 0:11:54.080 sets around the world is what happens to main street? 0:11:54.480 --> 0:11:56.760 And because main street has not done that well, this is, 0:11:56.800 --> 0:11:59.839 in a sense of the explanation of populism. It's the 0:12:00.000 --> 0:12:02.240 explormation in the US of a of a push to 0:12:02.320 --> 0:12:05.559 Trump is an explanation in the UK pushed to Brexit. 0:12:05.800 --> 0:12:08.960 So this is central to what happens in this recovery. 0:12:09.160 --> 0:12:12.120 Do you bring everybody along in the UK? Does the 0:12:12.120 --> 0:12:15.560 British Prime Minister? Is he able to do things for 0:12:15.600 --> 0:12:18.800 the fifty constituencies that used to be labor that went 0:12:18.880 --> 0:12:21.240 to him to vote for Brexit. You've got to deliver 0:12:21.720 --> 0:12:23.440 and the question is are you going to be able to? 0:12:23.720 --> 0:12:25.719 I mean, the question is what is power going to 0:12:25.840 --> 0:12:28.400 say about those people who are who are at the 0:12:28.400 --> 0:12:31.679 lower who've been furloughed and potentially their firms won't what 0:12:31.720 --> 0:12:35.360 won't kick started again? Danny, There's a lot there. Let's 0:12:35.400 --> 0:12:38.040 unpack a little bit of it this idea of you know, 0:12:38.120 --> 0:12:40.360 people come on this show and they say that the 0:12:40.400 --> 0:12:43.040 markets outperformed and did really well even though main Street 0:12:43.080 --> 0:12:45.960 lagged behind for a long time. Now we're entering a 0:12:46.000 --> 0:12:48.960 new paradigm where main Street can perhaps do better and 0:12:49.040 --> 0:12:53.000 the and markets may perhaps underperform a bit. Are you 0:12:53.080 --> 0:12:56.080 saying that's hogwash, that that's not true and that's not 0:12:56.120 --> 0:12:59.120 the trajectory that we're on. Well, I mean, I see that. 0:12:59.720 --> 0:13:02.600 The central part of what we're seeing is that the 0:13:02.640 --> 0:13:04.440 Fed is going to do in the bank of eing them. 0:13:04.480 --> 0:13:06.920 They're going to do quantitative easing. They're going to keep 0:13:06.960 --> 0:13:09.840 doing that. That's going to push our asset prices. The 0:13:09.920 --> 0:13:13.400 question then is how does that quantitative easing, How does 0:13:13.480 --> 0:13:15.839 that help people at the lower end. The answer is 0:13:15.960 --> 0:13:19.520 relatively so, it doesn't. So the focus on the Biden 0:13:19.600 --> 0:13:23.719 package is actually about jobs, helping people at the lower end, 0:13:24.040 --> 0:13:28.360 and restoring employment to those who are furlowed, those who 0:13:28.400 --> 0:13:31.280 have been taking these unemployment betters. I should just go back. 0:13:31.760 --> 0:13:34.480 So when the unemployment rate rises, we have never as 0:13:34.520 --> 0:13:39.319 of last April, we have met to we have never 0:13:39.360 --> 0:13:43.439 seen wage growth rise dramatically. So why is that the 0:13:43.440 --> 0:13:47.560 bottom ten percent or so of the wage distribution dropped out. 0:13:47.840 --> 0:13:51.760 They're not working, they're furloughed. And the question is if 0:13:52.000 --> 0:13:55.199 are the firms that are furloughed actually going to reopen? 0:13:55.440 --> 0:13:58.240 And if they're not, we're in really big trouble. The 0:13:58.240 --> 0:14:01.760 government's going to have to do something about that, um 0:14:01.800 --> 0:14:04.400 and we know that we've never seen anything quite like that. 0:14:05.120 --> 0:14:07.240 The reality is that this is a big problem. I 0:14:07.320 --> 0:14:08.959 gotta jump in, sir, and we've gotta go back to 0:14:08.960 --> 0:14:10.319 your time in the Bank of England. You're at the 0:14:10.320 --> 0:14:12.640 Bank of England at that really crucial time oh six 0:14:12.679 --> 0:14:14.719 o nine, right before the crisis, coming out of the 0:14:14.760 --> 0:14:17.280 crisis as well, when you sat there with Governor King, 0:14:17.280 --> 0:14:18.880 did you tell him you don't like the idea of 0:14:18.960 --> 0:14:21.720 QUI because you thought this would happen. Was it anticipated 0:14:22.000 --> 0:14:24.280 at the time when this grand experiment really got going. 0:14:25.440 --> 0:14:28.720 Absolutely not. I mean, I think the reality was that 0:14:28.760 --> 0:14:34.080 this central banks were basically unprepared, unprepared for having to 0:14:34.280 --> 0:14:36.920 do this. But I think the biggest thing, John was 0:14:37.000 --> 0:14:40.680 that two things. Nobody really had a clue about the 0:14:40.720 --> 0:14:44.160 transmission mechanism and how it was going to work. And 0:14:44.200 --> 0:14:46.880 nobody had a clue how about this thing would ever end? 0:14:47.320 --> 0:14:51.080 And of course it hasn't ended and it continues. So 0:14:51.160 --> 0:14:54.080 I think the answer is no. I mean that's the 0:14:54.120 --> 0:14:55.800 other part of it is think of the debate going 0:14:55.840 --> 0:14:58.120 on at the Bank of England. The committee is now 0:14:58.240 --> 0:15:01.240 arguing in public about whether they think they should go 0:15:01.280 --> 0:15:04.320 to negative rates. I mean I remember being told then 0:15:04.880 --> 0:15:07.160 that half a percent was the lower bound. You couldn't 0:15:07.200 --> 0:15:09.600 go lower than a half. So the answer is this 0:15:09.680 --> 0:15:13.520 is this is an unheard of territory John. You know 0:15:13.800 --> 0:15:17.240 we will see, um what what what assets? Will they 0:15:17.280 --> 0:15:20.280 continue to buy? What will the Bank of England do? 0:15:20.720 --> 0:15:22.680 Will the US go to negative rates? I mean, I 0:15:22.720 --> 0:15:26.120 think pals made all the right noises, but the question 0:15:26.240 --> 0:15:30.640 is do they have any ability really to impact them? 0:15:30.760 --> 0:15:34.440 And does a hundred billion of QUEI today are its 0:15:34.480 --> 0:15:36.760 effects the same as it was in two thousand monements? 0:15:37.200 --> 0:15:39.480 How do we have a proper conversation about this? Because 0:15:39.520 --> 0:15:41.200 I know from sources that when you were at the 0:15:41.200 --> 0:15:43.560 Bank of England, Governor King told you guys not to 0:15:43.560 --> 0:15:45.840 go out there and say quie won't work. Once you 0:15:45.960 --> 0:15:47.640 decided to do it, that was it. You all had 0:15:47.680 --> 0:15:49.080 to get on the same page. You don't have to 0:15:49.080 --> 0:15:50.680 tell me right now on the record whether that was 0:15:50.720 --> 0:15:52.640 true or not, because I know from talking to people 0:15:52.920 --> 0:15:55.000 it happened. So Danny, when are we going to have 0:15:55.000 --> 0:15:57.680 a proper conversation about whether this works or not and 0:15:57.720 --> 0:15:59.720 not be dictated by just a couple of people who 0:15:59.720 --> 0:16:04.560 have made some big decisions. Oh, I think the answer 0:16:04.680 --> 0:16:08.920 was a thing. Eventually, by around November two thousand and eight, 0:16:09.240 --> 0:16:13.080 it was clear that you couldn't cut rates enough and 0:16:13.160 --> 0:16:15.200 that you had You know, you can't cut the price 0:16:15.240 --> 0:16:18.400 that cut the price of money, so you raise the quantity. 0:16:18.760 --> 0:16:20.840 I think it's go back to your earlier question. I 0:16:20.840 --> 0:16:24.240 mean the answer is it's unclear what QUI has done. 0:16:24.320 --> 0:16:26.520 I mean, I think what you just asked me, what 0:16:26.600 --> 0:16:29.320 has QUI done? But it has to be in combination 0:16:29.840 --> 0:16:34.640 with zero or zero or someplaces negative rates, and so 0:16:34.920 --> 0:16:38.240 the attempts to work out what it's done are difficult. 0:16:38.280 --> 0:16:41.040 I mean, I take the view actually is that if 0:16:41.040 --> 0:16:45.880 we haven't done it, unemployment rates would have been That's 0:16:45.920 --> 0:16:49.080 the Blancie line. So I think certainly in two thousand 0:16:49.200 --> 0:16:54.000 eight nine it worked, probably diminishing return set in, but 0:16:54.080 --> 0:16:56.560 it certainly seems to me to have had positive effects 0:16:56.560 --> 0:16:59.320 on stock markets. Why else is the stock market rising 0:16:59.320 --> 0:17:02.920 because there's this buyer of assets that's out there. So 0:17:03.000 --> 0:17:05.760 I agree with you, um, and we're I'm looking back. 0:17:06.520 --> 0:17:09.040 Basically we had no idea what to buy, to think, 0:17:09.080 --> 0:17:12.240 do you buy ten years fifteen five? So the Bank 0:17:12.320 --> 0:17:15.680 of England bought pretty pretty long stuff that didn't mature 0:17:15.760 --> 0:17:19.040 very quickly. Um. So it's not just what it q do, 0:17:19.160 --> 0:17:21.680 but what should you buy? What are its impact? What 0:17:21.760 --> 0:17:24.320 you know? What duration stuff do you buy? So all 0:17:24.359 --> 0:17:26.879 of that's still in the air, and the answer is 0:17:26.920 --> 0:17:29.439 that when you're floundering, you have to do everything. So 0:17:29.520 --> 0:17:31.760 I think and Powell has been cautious, and I I don't 0:17:31.760 --> 0:17:34.920 think sensible, more sensible and cautious than people at the 0:17:34.920 --> 0:17:36.840 Bank of eng and how they instid inflation is going 0:17:36.880 --> 0:17:39.160 to take off based on no evidence. So I think 0:17:39.280 --> 0:17:41.480 you know the story out of the Fed looking back 0:17:41.520 --> 0:17:44.640 saying they've got it. They got got two eighteen rong, 0:17:44.760 --> 0:17:47.200 which I said on your program, I think every month 0:17:47.280 --> 0:17:50.040 for three and a half years. So so I'm hopeful, 0:17:50.200 --> 0:17:52.159 but these are tough time, Danny. Good to see you, 0:17:52.240 --> 0:17:55.760 always good to catch up. Downmouth Carlige, Professor of Economics, 0:18:01.880 --> 0:18:05.119 let's get this back on track, Chrisma Rank your Belly 0:18:05.119 --> 0:18:08.520 Funds co Chief investment of Chris. We're not going to 0:18:08.600 --> 0:18:11.080 do London Derbys and all of that stuff. Let's talk 0:18:11.119 --> 0:18:13.840 about the markets. Do I position for better growth? Do 0:18:13.880 --> 0:18:16.680 I position for higher inflation? And what's the difference between 0:18:16.680 --> 0:18:20.200 the two? Yeah, I think your position for both. Listen, 0:18:20.359 --> 0:18:23.480 Goldilocks died probably a year ago. UM. The era of 0:18:23.760 --> 0:18:27.680 low inflation and low rates UH and good growth is 0:18:27.880 --> 0:18:31.760 probably over, and you know were it might be likely 0:18:31.800 --> 0:18:35.240 to see much higher inflation going forward. The question is 0:18:35.280 --> 0:18:38.760 how much why are we getting inflation? Is a good inflation? 0:18:38.840 --> 0:18:41.080 Meaning is it because everybody wants to go on vacation 0:18:41.119 --> 0:18:43.560 in August? Or is it because OPEC is squeezing us? 0:18:43.800 --> 0:18:45.679 And is it structural? Um? And you know, those are 0:18:45.680 --> 0:18:48.280 all questions we think about. UM. The market obviously is 0:18:48.320 --> 0:18:51.040 it's very focused on the interplay between rates and inflation, 0:18:51.520 --> 0:18:55.200 and that has fed the rotation into value stacks, which 0:18:55.920 --> 0:18:58.320 has started, you know, six months ago and has benefited 0:18:58.359 --> 0:19:01.240 people like us. Chris. We have a conversation with the 0:19:01.320 --> 0:19:03.959 leadership of x on today here at Bloomberg. Give us 0:19:04.000 --> 0:19:07.439 your update on hydro carbon's Gabelle is is ancient for 0:19:07.560 --> 0:19:11.600 a love of industrial companies where Mario was ween your thoughts, 0:19:11.640 --> 0:19:14.959 I'm big oil. Yeah, so listen. One of the one 0:19:14.960 --> 0:19:17.160 of the big themes coming out of this earning season 0:19:17.200 --> 0:19:20.560 has been E s G Environmental social governance. Everybody's talking 0:19:20.600 --> 0:19:22.840 about it, everybody's gonna write about it in their annual 0:19:22.840 --> 0:19:25.719 report um. And the irony, of course is that over 0:19:25.800 --> 0:19:28.480 the last several months it's been these big dirty companies 0:19:28.760 --> 0:19:31.840 like Excellent who who have done much better. Again, longer term, 0:19:31.920 --> 0:19:34.360 we'll see how that plays out. We actually just launched 0:19:34.680 --> 0:19:37.479 a sustainability fund, our first sustainability fund called Love Our 0:19:37.560 --> 0:19:41.040 Planet and People. It's our first ETF, and you know, 0:19:41.080 --> 0:19:43.360 we we think there's a bright future for companies who 0:19:43.359 --> 0:19:47.480 are trying to uh go green, and particularly big industrial 0:19:47.480 --> 0:19:49.680 companies that are trying to pivot to green. And you've 0:19:49.680 --> 0:19:52.720 seen that with GM and data and air products and 0:19:52.760 --> 0:19:56.520 to a certain extent Excen, who's interestingly focused on carbon 0:19:56.600 --> 0:19:58.760 capture and sequestration as opposed to some of the other 0:19:58.800 --> 0:20:01.399 things that the other in gradets are focused on. Chris, 0:20:01.480 --> 0:20:02.800 I want to go back to something that you said, 0:20:03.000 --> 0:20:05.879 Goldilocks died a year ago. And this speaks to the 0:20:06.040 --> 0:20:07.960 it's not too hot, not too cold, not to the 0:20:08.080 --> 0:20:10.960 very character Well, I mean, honestly, see how it could 0:20:10.960 --> 0:20:13.560 get pretty morbid. I am curious though, going forward what 0:20:13.600 --> 0:20:17.120 that means. Who loses? Because in everything is perfect kind 0:20:17.119 --> 0:20:18.880 of world with nothing is too hot and too cold, 0:20:18.920 --> 0:20:21.120 everything can kind of rise. At the same time, who 0:20:21.200 --> 0:20:24.880 suffers when Goldilocks dies? Yeah, well, I think you're seeing 0:20:24.880 --> 0:20:27.000 it in what's happening with the nastac. You know, this 0:20:27.080 --> 0:20:30.359 is a perfect environment for the big growth companies, um, 0:20:30.560 --> 0:20:32.720 big internet companies in particular that I don't have to 0:20:32.720 --> 0:20:37.200 show profits in the near term um and whose profits 0:20:37.200 --> 0:20:39.600 in the future are being discounted at very low rates 0:20:39.640 --> 0:20:41.760 but by the market. So I think there's going to 0:20:41.840 --> 0:20:44.760 be more of an impetus to to be profitable, to 0:20:44.960 --> 0:20:48.600 have rational economic models, and that you know, should favor 0:20:48.680 --> 0:20:52.879 the traditional incumbent companies, which now include probably many of 0:20:52.880 --> 0:20:55.320 the thing which are you know, enormously profitable and have 0:20:55.440 --> 0:20:57.520 very strong market positions. Much a bit of child and 0:20:57.560 --> 0:21:00.480 shooting into this show this morning. See the founder of 0:21:00.480 --> 0:21:02.920 the bomber. That's great. What is this you accidentally put 0:21:02.920 --> 0:21:06.720 on Bloomberg? It's gonna Nurst the children because they're in tears, Like, so, 0:21:06.800 --> 0:21:09.680 what is this Chris las guess serious on So honestly, 0:21:09.720 --> 0:21:11.920 this is something that people have been talking about. Yes, look, 0:21:11.920 --> 0:21:13.920 we don't want to talk about Goldilocks. But at the 0:21:13.960 --> 0:21:16.720 same time, not too hot, not too cold is a question? 0:21:16.880 --> 0:21:18.840 Is at dead? I mean you'd say these are some 0:21:18.880 --> 0:21:21.680 of the key questions and investing all of that good stuff, Chris, 0:21:21.840 --> 0:21:24.320 active management. Now do you think you've got a stronger 0:21:24.400 --> 0:21:27.879 argument for that this year? I think we do. Um. 0:21:27.920 --> 0:21:30.600 You know, I'm reminded we're talking about commodities. The cure 0:21:30.640 --> 0:21:33.119 for high prices is more high prices in the case 0:21:33.280 --> 0:21:35.840 of passive the cure for passive in the eyes of 0:21:35.960 --> 0:21:38.680 active managers is more passive. Um. You know, we've seen 0:21:39.040 --> 0:21:42.480 you know, mindless flows driving the market over the last 0:21:42.800 --> 0:21:45.199 ten years or more. Uh. And to the extent that 0:21:45.840 --> 0:21:49.520 we can do price discovery and add alpha that benefits us, 0:21:50.040 --> 0:21:51.560 I think now is the time to do it, because 0:21:51.640 --> 0:21:54.720 the playing field is changed Goldilocks. If Goldilocks is in 0:21:54.800 --> 0:21:56.919 fact dead, that everybody's gonna go up. We're in the 0:21:57.040 --> 0:22:00.160 three or four accounting statements. Is the alpha general water 0:22:00.240 --> 0:22:02.920 or is it even dies? It distinctions of cash flow. 0:22:03.240 --> 0:22:06.640 What's the line that matters to the Gabelle shop. It's 0:22:06.640 --> 0:22:09.000 clearly the cashalist statement. You know, cash is king. It 0:22:09.040 --> 0:22:12.280 always has been. Um, it's not about a revenue multiple. 0:22:12.720 --> 0:22:17.400 And so that's why we're looking. Chris always got to say, 0:22:17.480 --> 0:22:20.359 Sir christmin Rank, give out a fund Colley, Chief Investment Officer, 0:22:20.440 --> 0:22:28.840 thank you. What we've tried to do now, pushing on 0:22:28.960 --> 0:22:32.919 a year and evermore, is the medicine of this pandemic. 0:22:33.280 --> 0:22:36.840