1 00:00:00,240 --> 00:00:05,000 Speaker 1: This is Bloomberg Wall Street Week. Market shruggle, higher consumer prices. 2 00:00:05,040 --> 00:00:07,400 Speaker 1: The economy is in the process of rebounding. Will the 3 00:00:07,400 --> 00:00:10,479 Speaker 1: futteral reserve have its own digital currency? The financial stories 4 00:00:10,520 --> 00:00:12,879 Speaker 1: that cheap hard work. Many people think the eels are 5 00:00:12,880 --> 00:00:15,080 Speaker 1: just going to keep marching up. We have more spending 6 00:00:15,120 --> 00:00:17,200 Speaker 1: coming out of Congress. One of the big questions I 7 00:00:17,200 --> 00:00:19,880 Speaker 1: think on investor's minds inflations through the eyes of the 8 00:00:19,880 --> 00:00:23,560 Speaker 1: most influential voices. Larry Summer is the former Treasury Secretary 9 00:00:23,640 --> 00:00:27,240 Speaker 1: Bryan Wynahan a backup America, Will Smart, CEO of Charlie Sharp. 10 00:00:27,360 --> 00:00:31,560 Speaker 1: Bloomberg wool Street Week with David Weston from Bloomberg Radio. 11 00:00:32,360 --> 00:00:36,800 Speaker 1: Be careful what you wish for the economy rebounds, earnings beat, 12 00:00:37,120 --> 00:00:39,680 Speaker 1: but now we have to worry about all the pressures 13 00:00:39,680 --> 00:00:42,720 Speaker 1: that come with that. This is Bloomberg Wall Street Week. 14 00:00:42,880 --> 00:00:46,240 Speaker 1: I'm David Weston. This week we got more signals that 15 00:00:46,320 --> 00:00:50,240 Speaker 1: the economy is roaring back from indications of GDP growth 16 00:00:50,320 --> 00:00:53,280 Speaker 1: over ten percent for the quarter and maybe eight percent 17 00:00:53,360 --> 00:00:58,400 Speaker 1: for the year, expecting growth to be at a better 18 00:00:58,520 --> 00:01:03,360 Speaker 1: rate than what we have seen so far, and earnings 19 00:01:03,400 --> 00:01:05,959 Speaker 1: that were so good that they raised questions about the 20 00:01:05,959 --> 00:01:10,240 Speaker 1: analysts who underestimated them, driven in one way or another 21 00:01:10,480 --> 00:01:14,440 Speaker 1: by the authorities opening economy back up. Broadway tickets go 22 00:01:14,480 --> 00:01:18,840 Speaker 1: and sale today at capacity for theaters. The show's open 23 00:01:18,920 --> 00:01:22,880 Speaker 1: September four teeth. But then the jobs numbers for April 24 00:01:22,959 --> 00:01:26,959 Speaker 1: came in way below what anyone was expecting. Under normal 25 00:01:27,000 --> 00:01:29,280 Speaker 1: circumstances that would be a great month. We still have 26 00:01:29,319 --> 00:01:31,400 Speaker 1: a steep, steep clime. We still have ways to go, 27 00:01:31,880 --> 00:01:34,639 Speaker 1: which may be a blip, but there were other storm 28 00:01:34,680 --> 00:01:39,280 Speaker 1: clouds on the horizon with supply chains overwhelmed. We're having 29 00:01:39,319 --> 00:01:42,720 Speaker 1: regular conversations with the administration and members of Congress to 30 00:01:42,800 --> 00:01:47,560 Speaker 1: find the right solution. Growing fear of increased taxes and 31 00:01:47,600 --> 00:01:51,040 Speaker 1: the ever present fear of inflation, made worse by Treasury 32 00:01:51,080 --> 00:01:55,160 Speaker 1: Secretary yelling suggesting we might just see higher interest rates. 33 00:01:55,600 --> 00:01:58,960 Speaker 1: We've been through a year long health and economic crisis, 34 00:01:59,000 --> 00:02:02,520 Speaker 1: putting pressures on our governments like few have ever seen. 35 00:02:03,160 --> 00:02:05,560 Speaker 1: But things appear to be coming back, and now we 36 00:02:05,640 --> 00:02:07,360 Speaker 1: have to think about how we're gonna pay the bills. 37 00:02:07,840 --> 00:02:10,040 Speaker 1: New Jersey is one of the states hit hardest by 38 00:02:10,040 --> 00:02:12,679 Speaker 1: the pandemic and already has one of the highest tax 39 00:02:12,760 --> 00:02:16,080 Speaker 1: rates in the country, So we asked its governor Phil Murphy, 40 00:02:16,400 --> 00:02:20,360 Speaker 1: what paying those bills may mean for taxpayers. Listen, we 41 00:02:20,480 --> 00:02:23,639 Speaker 1: we presented a budget six weeks ago that had zero 42 00:02:23,880 --> 00:02:26,959 Speaker 1: increases in taxes and fees. We want to protect the 43 00:02:27,000 --> 00:02:30,959 Speaker 1: middle class at every turn. We are the quintessential middle 44 00:02:31,040 --> 00:02:34,320 Speaker 1: class state, UH, and we want to regain that mantle. 45 00:02:34,680 --> 00:02:37,640 Speaker 1: We believe we're America's number one state to raise a family, 46 00:02:37,960 --> 00:02:42,040 Speaker 1: and that includes making sure that the value proposition works 47 00:02:42,080 --> 00:02:45,880 Speaker 1: for families, particularly young families who are considering moving here 48 00:02:45,960 --> 00:02:49,280 Speaker 1: or staying here. I was gratified to see the census 49 00:02:49,360 --> 00:02:52,400 Speaker 1: numbers last week. We were the number one state in 50 00:02:52,440 --> 00:02:55,480 Speaker 1: America in terms of the amount by which we exceeded 51 00:02:55,800 --> 00:02:58,600 Speaker 1: the estimate that was put out last year. That's for 52 00:02:58,639 --> 00:03:01,639 Speaker 1: a reason people are coming here to raise their family. 53 00:03:01,680 --> 00:03:04,160 Speaker 1: We've got to make sure that we continue to have 54 00:03:04,160 --> 00:03:07,280 Speaker 1: the number one school's quality of life, great transit, but 55 00:03:07,400 --> 00:03:10,360 Speaker 1: also that the value proposition works in the senses. It 56 00:03:10,400 --> 00:03:14,560 Speaker 1: just came out there was a migration towards Florida, towards Texas, 57 00:03:14,560 --> 00:03:17,600 Speaker 1: towards some lower taxing states. How conscious are you of 58 00:03:17,639 --> 00:03:20,240 Speaker 1: that as you set your budgets? How concerned are you 59 00:03:20,440 --> 00:03:22,840 Speaker 1: that New Jersey could really lose some of the more affluent, 60 00:03:22,840 --> 00:03:26,560 Speaker 1: in particular to places like Florida. Well, listen, New Jersey's 61 00:03:26,600 --> 00:03:31,880 Speaker 1: population grew over five percent over the course of the decade. Again, 62 00:03:32,440 --> 00:03:37,840 Speaker 1: the space we occupy is that that moniker, which we 63 00:03:37,880 --> 00:03:41,160 Speaker 1: don't take lightly. America's number one state to raise a family. 64 00:03:41,240 --> 00:03:44,480 Speaker 1: We have the number one public education system in America, 65 00:03:44,880 --> 00:03:48,760 Speaker 1: top handful of healthcare system, a location second to none. 66 00:03:49,160 --> 00:03:54,440 Speaker 1: We're fixing transit um. The quality of life is exceedingly high. 67 00:03:54,880 --> 00:03:58,000 Speaker 1: That's our value proposition. Some states come at you so listen, 68 00:03:58,200 --> 00:04:00,240 Speaker 1: we want you to move here because we have low 69 00:04:00,280 --> 00:04:04,920 Speaker 1: taxes um. That's that's there. That may be their value proposition. 70 00:04:05,320 --> 00:04:08,560 Speaker 1: Ours is a much more holistic and broader one. Governor. 71 00:04:08,600 --> 00:04:12,280 Speaker 1: You've identified specifically sixteen municipalities in New Jersey of over 72 00:04:12,360 --> 00:04:15,720 Speaker 1: ten thousand people that you're below, led by a New 73 00:04:15,760 --> 00:04:18,520 Speaker 1: Brunswick city. As you look at those, it looks to me, 74 00:04:18,600 --> 00:04:19,960 Speaker 1: you know the states so much better than I do, 75 00:04:20,000 --> 00:04:21,359 Speaker 1: But it looks to me like they tend to be 76 00:04:21,480 --> 00:04:25,039 Speaker 1: lower income and yes, minorities. What are the specific ways 77 00:04:25,080 --> 00:04:28,719 Speaker 1: that you reach those populations. Yeah, you're absolutely right. I 78 00:04:28,760 --> 00:04:30,800 Speaker 1: don't know that every one of the communities are our 79 00:04:30,880 --> 00:04:33,920 Speaker 1: majority communities of color, but they are largely and we 80 00:04:33,960 --> 00:04:37,040 Speaker 1: didn't put that list up to name and shame. This 81 00:04:37,120 --> 00:04:39,400 Speaker 1: is just to give people a sense of what the 82 00:04:39,440 --> 00:04:43,320 Speaker 1: remaining challenges. We have too many people right now declaring victory. 83 00:04:43,320 --> 00:04:45,240 Speaker 1: Our numbers have gotten a lot better, but we're not 84 00:04:45,279 --> 00:04:48,000 Speaker 1: there yet. And so it's a variety of things. It's 85 00:04:48,120 --> 00:04:53,760 Speaker 1: role models getting vaccinated, it's mobile vans, it's houses of worship. UH, 86 00:04:53,800 --> 00:04:59,280 Speaker 1: it's it's getting to homebound individuals, homeless folks. UH, it's 87 00:04:59,320 --> 00:05:05,240 Speaker 1: a whole of initiatives, federally qualified centers. There's no one 88 00:05:05,320 --> 00:05:09,520 Speaker 1: magic wand UH. As it relates to equity, we are 89 00:05:09,560 --> 00:05:11,919 Speaker 1: still on a journey. As we say often, the pandemic 90 00:05:12,000 --> 00:05:15,480 Speaker 1: didn't create the inequities, it's laid them there in Our 91 00:05:15,560 --> 00:05:18,520 Speaker 1: vaccine program is a good example. Uh. It is a 92 00:05:18,600 --> 00:05:22,000 Speaker 1: work in progress. Governors, you know, well, there's a push 93 00:05:22,080 --> 00:05:23,920 Speaker 1: on to get people to go back into their offices. 94 00:05:23,960 --> 00:05:26,279 Speaker 1: We had golden sacks just say we want people back 95 00:05:26,720 --> 00:05:29,840 Speaker 1: by a date. Certain as that happens, that's gonna put 96 00:05:29,880 --> 00:05:32,600 Speaker 1: pressure on some of the transportation systems from New Jersey's 97 00:05:32,600 --> 00:05:36,120 Speaker 1: people commute into Manhattan right now, as I understand it, 98 00:05:36,240 --> 00:05:39,680 Speaker 1: the public transit is really being avoided. Your down something 99 00:05:39,720 --> 00:05:43,280 Speaker 1: like sevent in your capacity. How do you respond to that? 100 00:05:43,360 --> 00:05:46,880 Speaker 1: First of all, financially, you can't run those transit authorities 101 00:05:46,960 --> 00:05:50,880 Speaker 1: very long down capacity, can you? Financially? There's a number 102 00:05:50,880 --> 00:05:54,200 Speaker 1: of questions that are Number one, the federal help, whether 103 00:05:54,240 --> 00:05:59,360 Speaker 1: it's prior coronavirus relief funds or American Rescue Plan money, 104 00:05:59,720 --> 00:06:03,880 Speaker 1: or or perhaps in this debated right now infrastructure plan. 105 00:06:04,360 --> 00:06:08,600 Speaker 1: We desperately need that help. Secondly, and J transit UH, 106 00:06:08,839 --> 00:06:11,240 Speaker 1: when we got into office, it was broken. It's fixed, 107 00:06:11,320 --> 00:06:14,240 Speaker 1: and we've used the pandemic to fix it even faster. 108 00:06:14,440 --> 00:06:17,320 Speaker 1: So I think folks are going to find a clean, safe, 109 00:06:17,360 --> 00:06:21,520 Speaker 1: reliable system. Thirdly, you didn't ask it, but one of 110 00:06:21,520 --> 00:06:24,840 Speaker 1: the ways we're gonna get to vaccination is to get 111 00:06:24,839 --> 00:06:28,159 Speaker 1: our business community UH to be proactive, just as we 112 00:06:28,200 --> 00:06:29,680 Speaker 1: are at the state level. In fact, we had a 113 00:06:29,720 --> 00:06:32,760 Speaker 1: good call with the Chamber of Commerce on this topic 114 00:06:32,800 --> 00:06:37,040 Speaker 1: this morning, getting businesses to be just as forward leaning 115 00:06:37,080 --> 00:06:40,039 Speaker 1: into this as we are being as at the state level. 116 00:06:40,240 --> 00:06:43,800 Speaker 1: I think the transit commuting reality will be slow to recover, 117 00:06:44,640 --> 00:06:47,680 Speaker 1: but I think when folks come back and actually participate, 118 00:06:48,360 --> 00:06:51,039 Speaker 1: it will be a positive experience. That was New Jersey 119 00:06:51,080 --> 00:06:54,719 Speaker 1: Governor Phil Murphy coming up, Big tech has more to 120 00:06:54,760 --> 00:06:58,240 Speaker 1: worry about than just inflation and supply chains, as the 121 00:06:58,279 --> 00:07:02,479 Speaker 1: antitrust challenges just keep fond coming this time for Apple. 122 00:07:03,000 --> 00:07:09,600 Speaker 1: That's next on Wall Street Week on Boombo. This is 123 00:07:09,640 --> 00:07:14,040 Speaker 1: Bloomberg Wall Street Week with David Weston from Bloomberg Radio. 124 00:07:16,960 --> 00:07:20,400 Speaker 1: Apple's ten year relationship with Epic Games is unraveling in 125 00:07:20,520 --> 00:07:23,320 Speaker 1: court this week. It's all about Epics claim that Apple 126 00:07:23,480 --> 00:07:25,920 Speaker 1: is using its market power to charge it too much 127 00:07:26,040 --> 00:07:29,040 Speaker 1: for selling its games and Apple's claim that Epic just 128 00:07:29,080 --> 00:07:32,520 Speaker 1: doesn't want to play by the rules. Apple says, if 129 00:07:32,560 --> 00:07:34,720 Speaker 1: you build an app for our platform, first of all, 130 00:07:34,800 --> 00:07:37,480 Speaker 1: you can only distribute it through their store. They don't 131 00:07:37,480 --> 00:07:41,440 Speaker 1: allow all competing stores, and that's totally un American and uncompetitive. 132 00:07:41,760 --> 00:07:45,360 Speaker 1: In two thousand eleven, Tim Cook used Epics game Infinity 133 00:07:45,400 --> 00:07:49,160 Speaker 1: Blade two to show off Apple's new and powerful iPhone 134 00:07:49,240 --> 00:07:53,480 Speaker 1: for s, but Apple's relationship with the GameMaker went even deeper. 135 00:07:53,840 --> 00:07:56,560 Speaker 1: In legal documents, Apple said it's spent more than one 136 00:07:56,760 --> 00:08:00,640 Speaker 1: million dollars marketing games for Epic and even added round 137 00:08:00,720 --> 00:08:03,960 Speaker 1: the clock tech support for the GameMaker. The app store 138 00:08:04,160 --> 00:08:08,280 Speaker 1: isn't just a store. It's like a studio, stock with canvases, brushes, 139 00:08:08,320 --> 00:08:11,760 Speaker 1: and paint the tools that artists need to create their works, 140 00:08:12,240 --> 00:08:14,600 Speaker 1: and it's a gallery where they can display and sell 141 00:08:14,680 --> 00:08:19,200 Speaker 1: their creations. The relationship began souring in two seventeen with 142 00:08:19,280 --> 00:08:23,320 Speaker 1: the release of epics blockbuster hit Fortnite. After that, Epics 143 00:08:23,360 --> 00:08:27,600 Speaker 1: CEO and founder Tim Sweeney began publicly criticizing Apple's payment system, 144 00:08:27,880 --> 00:08:30,240 Speaker 1: in which the company took as much as thirty of 145 00:08:30,240 --> 00:08:33,760 Speaker 1: sales and blocked many developers from using other payment methods 146 00:08:33,960 --> 00:08:37,559 Speaker 1: to avoid the fee. You can't have a tech monopoly 147 00:08:38,480 --> 00:08:43,600 Speaker 1: dominating all all interactions between consumers and businesses on a 148 00:08:43,640 --> 00:08:46,520 Speaker 1: scale of billions of users. The final blow to the 149 00:08:46,600 --> 00:08:49,640 Speaker 1: relationship came when Apple removed Fortnite from its app store 150 00:08:49,720 --> 00:08:53,680 Speaker 1: last year after Epic activated its own payment system. Analytics 151 00:08:53,720 --> 00:08:57,000 Speaker 1: firm Censored Tower estimates the app store generated twenty two 152 00:08:57,080 --> 00:08:59,640 Speaker 1: billion dollars in commissions last year for Apple from the 153 00:08:59,679 --> 00:09:03,480 Speaker 1: seven two billion dollars users spent on their devices. Who 154 00:09:03,480 --> 00:09:06,280 Speaker 1: are absolutely going to see some form of legislation or 155 00:09:06,360 --> 00:09:09,160 Speaker 1: additional scrutinary, So in the case of Apple, it'll be 156 00:09:09,280 --> 00:09:12,800 Speaker 1: probably regulating the App store Apples and trust problems aren't 157 00:09:12,920 --> 00:09:15,959 Speaker 1: just in the United States. EU regulators have accused Apple 158 00:09:16,000 --> 00:09:19,640 Speaker 1: of violating competition laws by imposing unfair rules and fees 159 00:09:19,720 --> 00:09:22,480 Speaker 1: on music streaming services that are on the App Store. 160 00:09:23,120 --> 00:09:26,960 Speaker 1: We need any trust regulation to return to what it 161 00:09:27,080 --> 00:09:30,559 Speaker 1: used to be when we protected markets so that no 162 00:09:30,640 --> 00:09:34,679 Speaker 1: one could dominate and block new entrants, no one could 163 00:09:34,720 --> 00:09:39,920 Speaker 1: compete against people operating a marketplace. And so this week 164 00:09:40,040 --> 00:09:42,920 Speaker 1: we saw the start of a three week courtroom battle, 165 00:09:43,240 --> 00:09:46,760 Speaker 1: complete with the Apple and Epic CEOs themselves taking the stand, 166 00:09:46,840 --> 00:09:49,920 Speaker 1: along with a whole lot of experts and no less 167 00:09:49,920 --> 00:09:52,600 Speaker 1: than the fate at the app store hanging in the balance. 168 00:09:53,080 --> 00:09:56,240 Speaker 1: But former Antitrust Division had Bill Bear and blue Berg 169 00:09:56,280 --> 00:10:00,320 Speaker 1: intelligence senior and a trust litigation analyst, Jennifer Ree. It's 170 00:10:00,320 --> 00:10:04,520 Speaker 1: an uphill battle for Epics David to beat Apple's goliath. 171 00:10:05,280 --> 00:10:10,280 Speaker 1: They need to prove first that Apple is a monopolist 172 00:10:10,920 --> 00:10:14,600 Speaker 1: in connection with its App store and its requirement that 173 00:10:15,760 --> 00:10:20,280 Speaker 1: you download through the app store for the iOS devices. 174 00:10:20,400 --> 00:10:23,040 Speaker 1: And then they need to prove that the requirement that 175 00:10:23,240 --> 00:10:26,280 Speaker 1: you go through the app store actually is an anti 176 00:10:26,360 --> 00:10:30,520 Speaker 1: competitive requirement as opposed to what Apple says, which is 177 00:10:30,559 --> 00:10:34,960 Speaker 1: something that is necessary to protect security and privacy of 178 00:10:35,160 --> 00:10:40,480 Speaker 1: its ioas usage. Jen, can you ever monopolize your own product? 179 00:10:40,679 --> 00:10:42,959 Speaker 1: I mean that's in a sense what the claim is here, right, Yeah, 180 00:10:42,960 --> 00:10:45,440 Speaker 1: it's iOS, we invented it, we have it, so yes, 181 00:10:45,440 --> 00:10:47,360 Speaker 1: we have all of it, you know, and this is 182 00:10:47,400 --> 00:10:49,800 Speaker 1: part of their uphill battle. I mean, you can, but 183 00:10:49,880 --> 00:10:52,800 Speaker 1: there are very very few court cases where that actually 184 00:10:52,880 --> 00:10:55,760 Speaker 1: was considered the an appropriate relevant market. It just it 185 00:10:56,000 --> 00:10:58,520 Speaker 1: rarely is, and that's going to be very difficult for them. 186 00:10:58,679 --> 00:11:00,800 Speaker 1: And you can see that because in the again beginning 187 00:11:00,800 --> 00:11:04,080 Speaker 1: of the trial, epic is really hammered on competition, uh, 188 00:11:04,559 --> 00:11:07,000 Speaker 1: and the lack of competition and the reason that all 189 00:11:07,000 --> 00:11:10,880 Speaker 1: the other substitutes are different in our true substitutes. Bill, 190 00:11:10,920 --> 00:11:12,560 Speaker 1: how much of this you think might turn in the 191 00:11:12,760 --> 00:11:15,240 Speaker 1: end on Apple's claim as I understand that we need 192 00:11:15,280 --> 00:11:17,480 Speaker 1: to do it this way for security purposes, there's a 193 00:11:17,520 --> 00:11:20,280 Speaker 1: really legitimate business justification even if you find we have 194 00:11:20,320 --> 00:11:23,520 Speaker 1: an apply power within our system. I think that says 195 00:11:23,559 --> 00:11:28,160 Speaker 1: that exactly right, because being a monopolist is only one 196 00:11:28,280 --> 00:11:32,040 Speaker 1: step in the process of finding in any trust violations, 197 00:11:32,679 --> 00:11:37,880 Speaker 1: you need to show to show that requirements that that 198 00:11:38,440 --> 00:11:44,360 Speaker 1: Apple is imposing on on app developments are unreasonable for 199 00:11:44,480 --> 00:11:51,160 Speaker 1: any competitor. Really served no legitimate um justification. It does 200 00:11:51,200 --> 00:11:53,640 Speaker 1: strike me, jen that quite a few what we would 201 00:11:53,640 --> 00:11:56,000 Speaker 1: think of a tech companies have weighed in on the 202 00:11:56,120 --> 00:11:59,720 Speaker 1: side actually of Epic Games. Maybe the David in this battle, uh, 203 00:12:00,040 --> 00:12:03,120 Speaker 1: including Facebook and Microsoft is saying, we find it really 204 00:12:03,120 --> 00:12:06,800 Speaker 1: difficult as well. We've tried to get in Spotify. Would 205 00:12:06,840 --> 00:12:09,360 Speaker 1: that have any effect on the judge as a practical matter? 206 00:12:10,520 --> 00:12:12,840 Speaker 1: You know, I think first of all, you know, in 207 00:12:12,880 --> 00:12:14,560 Speaker 1: my mind, you have to think about the fact that 208 00:12:14,600 --> 00:12:17,000 Speaker 1: Microsoft is a big competitor to Apple. You know, in 209 00:12:17,040 --> 00:12:19,560 Speaker 1: many ways they're they both they compete in the sale 210 00:12:19,559 --> 00:12:22,880 Speaker 1: of computers and they have opposing you know, operating systems. 211 00:12:22,920 --> 00:12:26,120 Speaker 1: So you know, Microsoft has something to benefit if Epic 212 00:12:26,160 --> 00:12:29,280 Speaker 1: wins this trial. And what Microsoft and some of these 213 00:12:29,280 --> 00:12:33,640 Speaker 1: other tech companies are providing is really anecdotal evidence where 214 00:12:33,679 --> 00:12:36,440 Speaker 1: they do or don't compete, and the difficulties that they've 215 00:12:36,480 --> 00:12:39,440 Speaker 1: also had in negotiating with Apple to get their own 216 00:12:39,480 --> 00:12:42,000 Speaker 1: game stores or their own game streaming into the Apple 217 00:12:42,240 --> 00:12:45,440 Speaker 1: App Store. So it's anecdotal evidence. You know, at the 218 00:12:45,520 --> 00:12:48,120 Speaker 1: end of the day, I think it has some influence, 219 00:12:48,200 --> 00:12:51,840 Speaker 1: but but not significant. Bill, give us a sense of 220 00:12:51,840 --> 00:12:54,040 Speaker 1: what the expert witnesses are gonna be testifying to, because, 221 00:12:54,040 --> 00:12:57,480 Speaker 1: as I understand, in most antitrust cases, really the economics 222 00:12:57,600 --> 00:12:59,560 Speaker 1: driving off a lot of it. The expert witnesses on 223 00:12:59,600 --> 00:13:02,240 Speaker 1: either side and the judge is really gonna put a 224 00:13:02,240 --> 00:13:04,000 Speaker 1: lot of emphasis on that. What are they gonna be 225 00:13:04,000 --> 00:13:08,680 Speaker 1: testifying to. Why they're going to have this uh disputed 226 00:13:08,840 --> 00:13:13,360 Speaker 1: visions of what the market looks like? UM is UH 227 00:13:13,720 --> 00:13:19,560 Speaker 1: is Apple by virtue of UH controlling what apps are 228 00:13:19,720 --> 00:13:26,240 Speaker 1: downloaded to iOS users, iPad iPhones? Uh? Is that actually 229 00:13:26,320 --> 00:13:29,840 Speaker 1: just one way of competing in US broader market where 230 00:13:29,880 --> 00:13:33,400 Speaker 1: there are lots of ways of getting apps to other devices, 231 00:13:33,400 --> 00:13:36,359 Speaker 1: there are lots of way for gamers to play games. 232 00:13:36,800 --> 00:13:39,440 Speaker 1: Whereas the epic view is going to be no, no, 233 00:13:39,559 --> 00:13:46,000 Speaker 1: this is a restrictive, narrow market, UH, where Apple is 234 00:13:46,080 --> 00:13:49,480 Speaker 1: able to control the environment for anybody who uses this 235 00:13:49,600 --> 00:13:54,479 Speaker 1: DIOS system and basically ties the iPad and the iPhone 236 00:13:55,000 --> 00:13:59,959 Speaker 1: two downloading software at at commission rate. So they saw 237 00:14:00,080 --> 00:14:07,319 Speaker 1: for developers only through only through Apple's platforms, So they 238 00:14:07,360 --> 00:14:12,880 Speaker 1: will present economic governance that will suggest Apple has pricing 239 00:14:12,920 --> 00:14:16,880 Speaker 1: power that is suggested from an appoly power. Apple's econosts 240 00:14:16,880 --> 00:14:18,880 Speaker 1: will talk about all the other ways in which people 241 00:14:18,880 --> 00:14:23,160 Speaker 1: can play games, or download other apps, or use your 242 00:14:23,280 --> 00:14:28,040 Speaker 1: PC or your your map to to compete, thanks to 243 00:14:28,080 --> 00:14:30,960 Speaker 1: Bill Bear of the Brookings Institution and Jennifer Ree of 244 00:14:31,040 --> 00:14:34,720 Speaker 1: Bloomberg Intelligence. Coming up, just when the auto market wants 245 00:14:34,760 --> 00:14:38,200 Speaker 1: to come roaring back, the lack of microchips reins it in. 246 00:14:38,920 --> 00:14:41,800 Speaker 1: We hear from GM CEO Mary bar On what she 247 00:14:42,000 --> 00:14:45,520 Speaker 1: and her team are doing to manage the problem. That's 248 00:14:45,560 --> 00:14:59,920 Speaker 1: next on Wall Street Week on Bloomberg. This is bloom 249 00:15:00,280 --> 00:15:05,000 Speaker 1: Wall Street Week with David Weston from Bloomberg Radio. GM 250 00:15:05,040 --> 00:15:08,600 Speaker 1: announced its earnings this week and they were strong, very strong, 251 00:15:08,920 --> 00:15:12,240 Speaker 1: as the company sees demand for new cars come back 252 00:15:12,320 --> 00:15:16,280 Speaker 1: stronger and faster than anyone anticipated a year ago. But 253 00:15:16,440 --> 00:15:19,840 Speaker 1: there was a catch. A combination of a surging economy 254 00:15:19,840 --> 00:15:22,920 Speaker 1: and a huge uptick in demand for consumer electronics has 255 00:15:23,000 --> 00:15:26,440 Speaker 1: led to a dire shortage of microchips. And it turns 256 00:15:26,440 --> 00:15:28,720 Speaker 1: out you can't make a car these days without some 257 00:15:28,760 --> 00:15:32,640 Speaker 1: pretty sophisticated computers built right into those cars. We asked 258 00:15:32,640 --> 00:15:36,000 Speaker 1: GM Chairman CEO Mary Barra, how she's managing a problem 259 00:15:36,040 --> 00:15:39,400 Speaker 1: that will caused her up to two billion dollars this year. 260 00:15:39,600 --> 00:15:42,560 Speaker 1: There's not a lot of transparency between the different automakers 261 00:15:42,600 --> 00:15:45,120 Speaker 1: of what's happening. We're focused on GM and I think 262 00:15:45,440 --> 00:15:48,000 Speaker 1: what's been incredible is the work that we're doing with 263 00:15:48,040 --> 00:15:51,520 Speaker 1: our purchasing group, our engineering group, are manufacturing group in 264 00:15:51,560 --> 00:15:54,520 Speaker 1: sales and marketing and working with suppliers. You know, we've 265 00:15:54,520 --> 00:15:57,480 Speaker 1: been working to build strong relationship with our suppliers for many, 266 00:15:57,480 --> 00:16:00,400 Speaker 1: many years now, and there's just a t that is 267 00:16:00,440 --> 00:16:02,800 Speaker 1: looking understanding what chips are we going to have access to, 268 00:16:03,200 --> 00:16:05,800 Speaker 1: how do we allocate those to our highest demand and 269 00:16:06,000 --> 00:16:09,160 Speaker 1: and products that we have limited or no ability to 270 00:16:09,240 --> 00:16:12,400 Speaker 1: recover because there's just such strong demand. We run those 271 00:16:12,760 --> 00:16:17,400 Speaker 1: manufacturing operations around the clock and they're they're just being 272 00:16:17,680 --> 00:16:21,120 Speaker 1: creative and doing what engineers do of problem solving and 273 00:16:21,120 --> 00:16:24,400 Speaker 1: and in some cases re engineering to get the chips 274 00:16:24,440 --> 00:16:28,360 Speaker 1: to the right products and to just um find every 275 00:16:28,360 --> 00:16:30,960 Speaker 1: opportunity we can to build a car, trucker crossover and 276 00:16:31,000 --> 00:16:33,040 Speaker 1: get it to the customer. So it's a mixed question 277 00:16:33,080 --> 00:16:35,240 Speaker 1: not just of the vehicles you sell, but also where 278 00:16:35,280 --> 00:16:37,160 Speaker 1: you direct your chips. It sounds like you want to 279 00:16:37,200 --> 00:16:39,600 Speaker 1: direct it to the ones that really are the most important. 280 00:16:40,040 --> 00:16:42,040 Speaker 1: Are you getting more chips? Do you think than you 281 00:16:42,080 --> 00:16:45,200 Speaker 1: would have expected, because if you're purchasing department, well, again, 282 00:16:45,280 --> 00:16:47,360 Speaker 1: there's not a lot of transparent to say more than 283 00:16:47,880 --> 00:16:51,160 Speaker 1: you know, we were very clear last year of what 284 00:16:51,200 --> 00:16:53,080 Speaker 1: we thought the demand was going to be this year 285 00:16:53,120 --> 00:16:56,280 Speaker 1: and the chips that we had ordered, and so you know, 286 00:16:56,280 --> 00:16:58,440 Speaker 1: we're continuing to work with the supply base on that 287 00:16:58,720 --> 00:17:01,280 Speaker 1: and UH again, but it's I think it's looking for 288 00:17:01,280 --> 00:17:06,080 Speaker 1: every opportunity and managing it centrally and also working hand 289 00:17:06,119 --> 00:17:09,000 Speaker 1: in hand with our j V and China, so across 290 00:17:09,040 --> 00:17:12,199 Speaker 1: the board, we are just really being I think the 291 00:17:12,200 --> 00:17:14,639 Speaker 1: team is being really scrappy and finding ways that we 292 00:17:14,680 --> 00:17:17,560 Speaker 1: can build the vehicles, not only full size trucks and SUVs, 293 00:17:17,600 --> 00:17:20,239 Speaker 1: but also our electric vehicle programs. And I think it's 294 00:17:20,280 --> 00:17:22,520 Speaker 1: important to note that even with the challenges of the 295 00:17:22,520 --> 00:17:27,280 Speaker 1: semiconductors UH shortage, there is no impact on our electric vehicles, 296 00:17:27,359 --> 00:17:30,040 Speaker 1: on our autonomous vehicles and the growth initiatives that we've 297 00:17:30,080 --> 00:17:32,040 Speaker 1: been talking about this first quarter. That was one of 298 00:17:32,080 --> 00:17:34,280 Speaker 1: the questions I had, both for the Hummer that's coming 299 00:17:34,280 --> 00:17:36,320 Speaker 1: out later this year and then the lyric which is 300 00:17:36,320 --> 00:17:38,800 Speaker 1: coming at sometimes the first happened next year. Is there 301 00:17:38,800 --> 00:17:41,760 Speaker 1: going to be any delay because of the chip problem? 302 00:17:41,800 --> 00:17:44,320 Speaker 1: Absolutely not, And I can tell you those vehicle programs 303 00:17:44,320 --> 00:17:47,479 Speaker 1: are on track, and uh, I'm really excited to have 304 00:17:47,880 --> 00:17:50,119 Speaker 1: customers get in those vehicles and drive them because I 305 00:17:50,160 --> 00:17:52,680 Speaker 1: think they're going to be amazed. This problem isn't going 306 00:17:52,680 --> 00:17:55,160 Speaker 1: away in the sense that as you go forward, you're 307 00:17:55,160 --> 00:17:56,480 Speaker 1: gonna make more and more cars, they are going to 308 00:17:56,520 --> 00:17:59,240 Speaker 1: require more and more chips. What is the longer term 309 00:17:59,280 --> 00:18:01,600 Speaker 1: solution to this so we don't have this sort of 310 00:18:01,600 --> 00:18:03,480 Speaker 1: problem you have this year? Well, I think we are 311 00:18:03,480 --> 00:18:05,760 Speaker 1: going to see recovery. We think Q two will be 312 00:18:06,160 --> 00:18:08,760 Speaker 1: the weakest for the year. We'll see some recovery, recovery 313 00:18:08,800 --> 00:18:11,440 Speaker 1: in Q three, Q four. Uh, And we're working on 314 00:18:11,560 --> 00:18:13,600 Speaker 1: a lot of long term strategies. I don't have anything 315 00:18:13,640 --> 00:18:16,240 Speaker 1: to share right now, but there's a a you know, 316 00:18:16,280 --> 00:18:19,239 Speaker 1: a whole um menu of things that we're working on, 317 00:18:19,440 --> 00:18:23,040 Speaker 1: processes that we're changing. Um. So more to come later 318 00:18:23,040 --> 00:18:24,640 Speaker 1: in the year of how we'll make sure we're never 319 00:18:24,680 --> 00:18:26,800 Speaker 1: in this situation again. But believe me, we have a 320 00:18:26,840 --> 00:18:29,920 Speaker 1: dedicated team working on that as well. When it comes 321 00:18:29,920 --> 00:18:32,600 Speaker 1: to batteries, you've sort of vertically integrated, as it were, 322 00:18:32,640 --> 00:18:34,879 Speaker 1: where the joint venture where you're making your own batteries. 323 00:18:35,080 --> 00:18:37,200 Speaker 1: Is there something like that perhaps that would make sense 324 00:18:37,200 --> 00:18:40,119 Speaker 1: for GM. You know, I'm not going to take anything 325 00:18:40,160 --> 00:18:42,400 Speaker 1: off the table. We're going to look at what what 326 00:18:42,440 --> 00:18:44,320 Speaker 1: we can do to make sure that we have the 327 00:18:44,440 --> 00:18:47,480 Speaker 1: right number of automotive grade chips UH and that we 328 00:18:47,640 --> 00:18:50,200 Speaker 1: it it doesn't constrain our growth because we see huge 329 00:18:50,200 --> 00:18:53,000 Speaker 1: opportunity not only with the product portfolio we have today, 330 00:18:53,280 --> 00:18:56,119 Speaker 1: but with the strong electric vehicle products that we have coming. 331 00:18:56,640 --> 00:18:59,040 Speaker 1: We hear some in Washington, both the Commerce Secretary and 332 00:18:59,080 --> 00:19:01,960 Speaker 1: also I talked to one of your Michigan representatives, Haley Stevens, 333 00:19:02,000 --> 00:19:04,400 Speaker 1: who suggested perhaps there needs to be some co investment 334 00:19:04,440 --> 00:19:06,760 Speaker 1: from the government as well as the private sector in 335 00:19:06,920 --> 00:19:09,520 Speaker 1: chip production. Does that make sense from your point of view? 336 00:19:10,720 --> 00:19:14,840 Speaker 1: I think making sure we have a secure supply chain 337 00:19:15,119 --> 00:19:17,399 Speaker 1: um for the growth that I think we're going to 338 00:19:17,400 --> 00:19:18,840 Speaker 1: see it. I think it's something that we all have 339 00:19:18,880 --> 00:19:21,879 Speaker 1: to work together on, and we're having regular conversations with 340 00:19:21,920 --> 00:19:24,760 Speaker 1: the administration and members of Congress to find the right 341 00:19:24,840 --> 00:19:28,440 Speaker 1: solution and we'll continue to do that. In your presentation today, 342 00:19:28,480 --> 00:19:32,040 Speaker 1: General Motors really lays out a fairly robust program to 343 00:19:32,119 --> 00:19:34,199 Speaker 1: really go to electric vehicles and to really deal with 344 00:19:34,200 --> 00:19:37,160 Speaker 1: greenhouse gases over the longer term. You have very specific 345 00:19:37,200 --> 00:19:39,560 Speaker 1: targets you're setting out there. How do you hope to 346 00:19:39,600 --> 00:19:43,119 Speaker 1: achieve those? Well, I think it's making sure there's a 347 00:19:43,200 --> 00:19:46,240 Speaker 1: whole ecosystem that when a customer looks at can I 348 00:19:46,280 --> 00:19:48,320 Speaker 1: buy an electric vehicle, they say, I'm going to have 349 00:19:48,359 --> 00:19:50,960 Speaker 1: a better experience when I buy an electric vehicle. It's 350 00:19:50,960 --> 00:19:52,720 Speaker 1: going to be a beautiful vehicle. It's going to be 351 00:19:52,720 --> 00:19:54,600 Speaker 1: in this segment that I want to purchase because we 352 00:19:54,640 --> 00:19:57,520 Speaker 1: can't you know, person if they want an suv or 353 00:19:57,560 --> 00:19:59,840 Speaker 1: a crossover, they're not going to buy a sedan. It's 354 00:20:00,040 --> 00:20:02,439 Speaker 1: to meet them in the market where they want. But 355 00:20:02,480 --> 00:20:05,360 Speaker 1: then it's also making sure there's a robust charging infrastructure, 356 00:20:05,400 --> 00:20:07,240 Speaker 1: and we're working on that as well, and that will 357 00:20:07,280 --> 00:20:09,840 Speaker 1: be not only what we're doing. For instance, we're putting 358 00:20:10,760 --> 00:20:15,400 Speaker 1: charging in our workplaces, but also working with communities and 359 00:20:15,440 --> 00:20:17,320 Speaker 1: then working with all the startups that are in this 360 00:20:17,359 --> 00:20:20,800 Speaker 1: business connecting those We just made an announcement that we 361 00:20:20,920 --> 00:20:23,919 Speaker 1: have now We're going to provide access to sixty chargers 362 00:20:23,960 --> 00:20:29,120 Speaker 1: across across the country to really give confidence to customers 363 00:20:29,160 --> 00:20:30,760 Speaker 1: as they buy an e V and if even if 364 00:20:30,760 --> 00:20:33,440 Speaker 1: it's their only vehicle, that they're going to have a 365 00:20:33,640 --> 00:20:36,720 Speaker 1: robust charging infrastructure. And I think all those things combine, 366 00:20:37,040 --> 00:20:40,399 Speaker 1: you know, beautiful vehicles, meets their needs, the right range, 367 00:20:40,440 --> 00:20:43,199 Speaker 1: and then charging available, customers are going to move to 368 00:20:43,240 --> 00:20:46,639 Speaker 1: e vs. That was GM chairman and CEO Mary Borrow. 369 00:20:47,440 --> 00:20:49,479 Speaker 1: Coming up, we wrap up the week with our special 370 00:20:49,520 --> 00:20:53,120 Speaker 1: contributor Larry Summers of Harvard. This is Wall Street Week 371 00:20:53,440 --> 00:21:02,320 Speaker 1: on Bloomberg. This is Bloomberg Wall Street Week with David 372 00:21:02,359 --> 00:21:06,320 Speaker 1: Weston from Bloomberg Radio. We welcome now our special Wall 373 00:21:06,359 --> 00:21:09,320 Speaker 1: Street Week contributor, Larry Summers of Harvard. Larry, welcome, is 374 00:21:09,359 --> 00:21:11,240 Speaker 1: great to see you. So, first of all, start with 375 00:21:11,240 --> 00:21:13,800 Speaker 1: these jobs numbers. They were so surprising to so many people. 376 00:21:14,040 --> 00:21:16,800 Speaker 1: Two sixty six thousand instead of one million. Some people 377 00:21:16,840 --> 00:21:19,399 Speaker 1: are we two million? Did they tell us anything beyond 378 00:21:19,480 --> 00:21:22,520 Speaker 1: this one data point? I think it's hard to interpret. 379 00:21:22,800 --> 00:21:24,879 Speaker 1: My senses that it's got a lot to do with 380 00:21:24,920 --> 00:21:29,440 Speaker 1: the emerging labor shortages that we're hearing about almost everywhere 381 00:21:29,880 --> 00:21:35,160 Speaker 1: that managers in many different places are talking about and 382 00:21:35,240 --> 00:21:39,000 Speaker 1: worrying about it, and if people can't find workers, employment 383 00:21:39,280 --> 00:21:43,719 Speaker 1: can employment's got to go up. Evidence for that is 384 00:21:43,840 --> 00:21:47,880 Speaker 1: that we really had an extremely strong average hourly earnings 385 00:21:47,920 --> 00:21:50,880 Speaker 1: print this month. Now it's only one month, and they 386 00:21:50,880 --> 00:21:54,119 Speaker 1: were down UH last month, but they were up at 387 00:21:54,119 --> 00:21:59,240 Speaker 1: a nine annual rate UH this month. And probably the 388 00:21:59,280 --> 00:22:02,639 Speaker 1: figure was our officially held down by the fact that 389 00:22:02,720 --> 00:22:05,720 Speaker 1: most of the new jobs were in low wage sectors 390 00:22:05,760 --> 00:22:10,359 Speaker 1: like restaurants. So I think what we're seeing is more 391 00:22:10,440 --> 00:22:15,360 Speaker 1: and more evidence of labor shortage, and maybe that will 392 00:22:15,400 --> 00:22:18,200 Speaker 1: prove to be transitory. Maybe it will turn out that 393 00:22:18,640 --> 00:22:22,360 Speaker 1: as people go back to school um more and more 394 00:22:22,400 --> 00:22:25,879 Speaker 1: people come into the workforce and will lose that sense 395 00:22:25,920 --> 00:22:29,240 Speaker 1: of labor shortage. But as I look at the data, 396 00:22:29,720 --> 00:22:33,800 Speaker 1: I see much stronger evidence that people who retired over 397 00:22:33,840 --> 00:22:37,280 Speaker 1: the last year aren't coming back. I see more and 398 00:22:37,320 --> 00:22:39,679 Speaker 1: more evidence that people who in one way or another 399 00:22:39,720 --> 00:22:44,119 Speaker 1: have changed around their lives aren't coming back for a while. 400 00:22:44,600 --> 00:22:48,320 Speaker 1: So I expect that as the economy grows rapidly, as 401 00:22:48,400 --> 00:22:51,320 Speaker 1: everybody thinks it's going to over the next few months, 402 00:22:51,760 --> 00:22:55,240 Speaker 1: that that labor shortage problem is going to grow. That 403 00:22:55,240 --> 00:22:58,240 Speaker 1: that's gonna be putting more and more pressure on wages, 404 00:22:58,840 --> 00:23:03,280 Speaker 1: and that's ultimately going to move into UH prices. So 405 00:23:03,680 --> 00:23:08,160 Speaker 1: I actually think there's reason to think that inflation might 406 00:23:08,200 --> 00:23:12,120 Speaker 1: even accelerate from where it is this summer, rather than 407 00:23:12,160 --> 00:23:16,439 Speaker 1: the deceleration that the Fed and the Treasury are so 408 00:23:16,600 --> 00:23:20,840 Speaker 1: confidently predicting. You know, it's further evidence for that view 409 00:23:21,359 --> 00:23:24,240 Speaker 1: to look at the housing market. You see the prices 410 00:23:24,280 --> 00:23:28,960 Speaker 1: of housing UH rising at incredible mid you know, double 411 00:23:29,000 --> 00:23:32,439 Speaker 1: digit rates in the teens. That probably is telling you 412 00:23:32,480 --> 00:23:34,560 Speaker 1: that rents are going to be going up before long. 413 00:23:35,240 --> 00:23:37,680 Speaker 1: That's why people are buying these houses in part. That's 414 00:23:37,760 --> 00:23:42,240 Speaker 1: certainly why private equities buying up a large amount of houses. 415 00:23:42,280 --> 00:23:46,919 Speaker 1: And right so far rental factor has been holding down 416 00:23:47,400 --> 00:23:51,520 Speaker 1: the inflation in this season. That's about to change. So 417 00:23:51,600 --> 00:23:57,520 Speaker 1: between the inventory issues, the labor shortage issues, the rental 418 00:23:58,080 --> 00:24:01,879 Speaker 1: UH issues is UH. I have to say that my 419 00:24:02,040 --> 00:24:07,000 Speaker 1: concerns about inflation are increasing. Are we contributing to it 420 00:24:07,040 --> 00:24:09,879 Speaker 1: in part by keeping people on the sidelines because of 421 00:24:09,920 --> 00:24:13,359 Speaker 1: how much we're reimbursing them for being unemployed. That's something 422 00:24:13,400 --> 00:24:16,240 Speaker 1: that both President Buying addressed this week and Secretary the 423 00:24:16,240 --> 00:24:19,560 Speaker 1: Treasury yelling did They were both asked pointedly, you're paying 424 00:24:19,600 --> 00:24:21,640 Speaker 1: people a lot of not to work. Is that making 425 00:24:21,640 --> 00:24:24,040 Speaker 1: the situation worth Both of them thought, that's not the problem. 426 00:24:24,080 --> 00:24:25,800 Speaker 1: I think it's more a matter of having to stay 427 00:24:25,800 --> 00:24:28,679 Speaker 1: home to take care of kids or elderly relatives. What 428 00:24:28,720 --> 00:24:32,520 Speaker 1: do you make of that, respectfully, uh, I think it 429 00:24:32,720 --> 00:24:37,399 Speaker 1: is close to self evident that the fact that people 430 00:24:37,440 --> 00:24:41,000 Speaker 1: are being paid more to stay at home than they 431 00:24:41,040 --> 00:24:46,480 Speaker 1: would be to work, in millions of cases is reducing 432 00:24:46,520 --> 00:24:51,120 Speaker 1: the available supply of labor. I think the fact that 433 00:24:51,520 --> 00:24:57,520 Speaker 1: the fraction of the unemployed who are getting unemployment insurance 434 00:24:58,200 --> 00:25:02,480 Speaker 1: is it record highs is contributing to people being more 435 00:25:02,520 --> 00:25:08,440 Speaker 1: picky about jobs. You can argue that it's really important relief. 436 00:25:08,480 --> 00:25:14,160 Speaker 1: You can argue that it's really important insurance that we're providing. 437 00:25:14,800 --> 00:25:20,800 Speaker 1: But I don't see how one can plausibly say that 438 00:25:21,000 --> 00:25:25,000 Speaker 1: paying people more to not work than to work is 439 00:25:25,040 --> 00:25:31,840 Speaker 1: having no effect on the availability of UH workers. And 440 00:25:32,080 --> 00:25:35,000 Speaker 1: I think we just need to recognize that it probably 441 00:25:35,119 --> 00:25:38,240 Speaker 1: was the right thing to do when we really wanted 442 00:25:38,280 --> 00:25:41,439 Speaker 1: people to be very careful to stay home and not 443 00:25:41,640 --> 00:25:46,600 Speaker 1: spread COVID. But I think it's very hard to justify 444 00:25:46,800 --> 00:25:53,399 Speaker 1: and rationalize them. Uh, right now, Larry, as a macro economist, 445 00:25:53,600 --> 00:25:55,800 Speaker 1: are you concerned at all that our models might not 446 00:25:56,080 --> 00:25:57,960 Speaker 1: really let us know where we are if we're driving 447 00:25:57,960 --> 00:26:00,480 Speaker 1: the car too fast? Is the sphenometer working? Because we 448 00:26:00,520 --> 00:26:03,040 Speaker 1: haven't seen this sort of phenomenon perhaps ever in the 449 00:26:03,119 --> 00:26:06,840 Speaker 1: history of our economy. And let's be frank, the jobs 450 00:26:06,880 --> 00:26:09,040 Speaker 1: numbers came in very different from what econdoms thought there 451 00:26:09,080 --> 00:26:10,560 Speaker 1: were gonna be. At the same time, we never saw 452 00:26:10,560 --> 00:26:12,600 Speaker 1: the kind of go down that fast come back that fast. 453 00:26:12,640 --> 00:26:15,000 Speaker 1: And goodness knows, with all the monetary and fiscal stimulus, 454 00:26:15,200 --> 00:26:17,160 Speaker 1: do we really have a model that tells us where 455 00:26:17,200 --> 00:26:20,280 Speaker 1: we are and where we're going? Look, I don't. I 456 00:26:20,280 --> 00:26:23,879 Speaker 1: don't think any of us can predict with great precision, 457 00:26:23,960 --> 00:26:29,119 Speaker 1: and I think over confidence is a real Uh is 458 00:26:29,160 --> 00:26:34,480 Speaker 1: a real problem. That's why I've always framed my prediction probabilistically. 459 00:26:34,520 --> 00:26:37,040 Speaker 1: There's a one third chance this will all work out well. 460 00:26:37,560 --> 00:26:40,520 Speaker 1: There's a one third chance that we're really gonna push 461 00:26:40,600 --> 00:26:44,400 Speaker 1: the inflation rate up in the way we did after Vietnam, 462 00:26:44,480 --> 00:26:47,879 Speaker 1: during Vietnam and into the nineties seventies, And there's a 463 00:26:47,920 --> 00:26:50,480 Speaker 1: one third chance that we're gonna have some kind of 464 00:26:50,800 --> 00:26:56,679 Speaker 1: fiscal monetary collision. So I think you gotta recognize that 465 00:26:57,480 --> 00:27:04,320 Speaker 1: there's uncertainty. I think you can discern sort of broad 466 00:27:04,520 --> 00:27:08,919 Speaker 1: structure and trend of the way things are moving. And 467 00:27:08,960 --> 00:27:11,760 Speaker 1: I think the law of supply and demand is more 468 00:27:11,800 --> 00:27:15,560 Speaker 1: reliable than most other economic laws. And it sure does 469 00:27:15,680 --> 00:27:20,159 Speaker 1: seem like demand is rising relative to supply, and that 470 00:27:20,359 --> 00:27:27,520 Speaker 1: certainly points towards UH rising prices and some acceleration of inflation. 471 00:27:27,680 --> 00:27:31,919 Speaker 1: So I think that's the tendency. But you're absolutely right, David, 472 00:27:31,960 --> 00:27:35,280 Speaker 1: that there are both wild cards that come from the 473 00:27:35,359 --> 00:27:42,359 Speaker 1: outside and there are doubts about UH internal dynamics, and 474 00:27:42,760 --> 00:27:48,719 Speaker 1: those are things that absolutely have to be UH factored 475 00:27:48,840 --> 00:27:55,200 Speaker 1: into UH the analysis UM in a in a clear way. 476 00:27:55,640 --> 00:27:59,400 Speaker 1: You know, another thing to look at, just because they 477 00:27:59,560 --> 00:28:04,280 Speaker 1: reflect act a large number of views, and certainly one 478 00:28:04,320 --> 00:28:08,080 Speaker 1: shouldn't always assume they're right, because they're often wrong. Is 479 00:28:08,119 --> 00:28:11,879 Speaker 1: what's happening in markets? And what we're seeing in markets 480 00:28:12,359 --> 00:28:16,920 Speaker 1: is that because the FED is so clear about its 481 00:28:16,960 --> 00:28:22,320 Speaker 1: reluctance to raise rates, UM, you're seeing very little movement 482 00:28:22,400 --> 00:28:27,199 Speaker 1: in nominal rates, but under the surface, you're seeing a 483 00:28:27,320 --> 00:28:32,159 Speaker 1: reduction in real interest rates and an increase in the 484 00:28:32,200 --> 00:28:37,400 Speaker 1: inflation premium that's priced into the difference between nominal bonds 485 00:28:37,720 --> 00:28:42,120 Speaker 1: and uh real bonds. And we haven't seen a three 486 00:28:42,200 --> 00:28:46,440 Speaker 1: or four month movement in inflation break evens that was 487 00:28:46,520 --> 00:28:50,680 Speaker 1: as large since these markets got invented, since these index 488 00:28:50,720 --> 00:28:53,760 Speaker 1: bonds got invented many years ago. The FED made me 489 00:28:53,840 --> 00:28:56,480 Speaker 1: very clear about that, but the former FED chair who 490 00:28:56,520 --> 00:28:59,440 Speaker 1: is now the Secretary Treasury, Janet Yellen, wasn't quite clear. 491 00:28:59,480 --> 00:29:01,800 Speaker 1: This week. One of the big issues for investors was 492 00:29:01,880 --> 00:29:04,200 Speaker 1: when she came out and said in response to a question, 493 00:29:04,600 --> 00:29:06,920 Speaker 1: she said, well, look at and then we may get 494 00:29:06,920 --> 00:29:08,760 Speaker 1: to a point where the market's heating up enough so 495 00:29:08,800 --> 00:29:10,880 Speaker 1: that we actually have to increase rates. She came back 496 00:29:10,880 --> 00:29:13,160 Speaker 1: out afterwards. I said, well, I really wasn't trying to predict. 497 00:29:13,320 --> 00:29:14,760 Speaker 1: At the same time, would you make of what she 498 00:29:14,800 --> 00:29:20,320 Speaker 1: had to say? I felt for Janet. I've I've been there. 499 00:29:20,320 --> 00:29:23,840 Speaker 1: People make comments, they get interpreted in a certain way, 500 00:29:23,880 --> 00:29:28,480 Speaker 1: and the markets get very excited and see strategy where 501 00:29:28,520 --> 00:29:34,760 Speaker 1: there's only um innocent economic commentary. I don't think that 502 00:29:35,000 --> 00:29:38,400 Speaker 1: is a big deal. On the other hand, what she 503 00:29:38,560 --> 00:29:45,160 Speaker 1: said was self evidently true that if the economy gets 504 00:29:45,200 --> 00:29:49,560 Speaker 1: going sufficiently strong, and there starts to be inflationary pressures. 505 00:29:50,080 --> 00:29:54,560 Speaker 1: As part of containing those pressures, interest rates will be raised. 506 00:29:55,080 --> 00:29:58,360 Speaker 1: I don't see how a reasonable person could disagree with 507 00:29:58,440 --> 00:30:03,880 Speaker 1: that statement, and the fact that that was so alarming 508 00:30:04,520 --> 00:30:08,560 Speaker 1: in markets to the point where she felt it necessary 509 00:30:08,680 --> 00:30:13,360 Speaker 1: to provide further clarification of that. I think points up 510 00:30:13,400 --> 00:30:20,080 Speaker 1: what is really quite dangerous in our macroeconomic strategy. Between 511 00:30:20,160 --> 00:30:25,640 Speaker 1: monetary and fiscal policy, we're creating a sense for markets 512 00:30:25,680 --> 00:30:28,480 Speaker 1: that it's always going to be let the good times roll. 513 00:30:29,240 --> 00:30:32,600 Speaker 1: And I think when people get the idea that the 514 00:30:32,640 --> 00:30:37,760 Speaker 1: punch bowls never going to be removed until they're actually 515 00:30:37,840 --> 00:30:42,280 Speaker 1: people staggering around drunk at the party, it makes it 516 00:30:42,320 --> 00:30:44,200 Speaker 1: more likely that the party is going to get out 517 00:30:44,200 --> 00:30:47,440 Speaker 1: of control. Okay, thanks so very much to our special 518 00:30:47,480 --> 00:30:51,560 Speaker 1: Wall Street Week contributor Larry Summers of Harvard. Finally, one 519 00:30:51,560 --> 00:30:54,719 Speaker 1: more thought, adding a new letter to the C suite. 520 00:30:55,280 --> 00:30:58,880 Speaker 1: First it was CEO, then CFO, and c I O 521 00:30:59,240 --> 00:31:01,880 Speaker 1: and CTO, oh and c d O, but what about 522 00:31:02,000 --> 00:31:05,360 Speaker 1: c h O. It's all about climate these days from 523 00:31:05,360 --> 00:31:08,160 Speaker 1: President Biden, putting climate at the very top of his agenda. 524 00:31:08,960 --> 00:31:11,520 Speaker 1: Two companies like a b in BEV, linking how much 525 00:31:11,640 --> 00:31:15,600 Speaker 1: interest they pay to whether they accomplished greenhouse gas emissions 526 00:31:15,640 --> 00:31:18,520 Speaker 1: goals to investors like Sam Zell just not investing in 527 00:31:18,560 --> 00:31:21,320 Speaker 1: oil and gas anymore at all, because the risk reward 528 00:31:21,360 --> 00:31:24,880 Speaker 1: has shifted in the wrong direction. Pretty much everyone agrees 529 00:31:25,000 --> 00:31:27,800 Speaker 1: that we're seeing and feeling the effects of climate change 530 00:31:27,800 --> 00:31:30,400 Speaker 1: in the weather, and it turns out that the biggest 531 00:31:30,400 --> 00:31:32,960 Speaker 1: source of death from weather in the United States isn't 532 00:31:33,040 --> 00:31:36,880 Speaker 1: hurricanes or tornadoes, it is heat, which takes us to 533 00:31:36,960 --> 00:31:40,640 Speaker 1: that new member of the C suite, the Chief Heat Officer. 534 00:31:41,240 --> 00:31:43,880 Speaker 1: Miami Dade County has just appointed its first ever c 535 00:31:44,160 --> 00:31:47,440 Speaker 1: h O, and Athens in Freetown, Sierra Leone are soon 536 00:31:47,520 --> 00:31:51,280 Speaker 1: to follow. Jane Gilbert is Miami Dade's interim c CHO, 537 00:31:51,600 --> 00:31:54,840 Speaker 1: working on ways to protect the most vulnerable populations from heat, 538 00:31:55,120 --> 00:31:57,840 Speaker 1: creating things like resilience hubs where people can go to 539 00:31:57,880 --> 00:31:59,920 Speaker 1: cool off when they need to, and working with the 540 00:32:00,000 --> 00:32:03,080 Speaker 1: employers to protect workers out in the noonday sun and 541 00:32:03,240 --> 00:32:06,840 Speaker 1: fields or in construction sites. She even wants to start 542 00:32:07,040 --> 00:32:10,160 Speaker 1: naming and ranking heat waves the way we do storms, 543 00:32:10,400 --> 00:32:14,600 Speaker 1: complete with early warning systems. So maybe coming soon to 544 00:32:14,640 --> 00:32:17,600 Speaker 1: an eyewitness news near you. We may well have the 545 00:32:17,680 --> 00:32:21,560 Speaker 1: Doppler three thousand heat map that does it. For this 546 00:32:21,600 --> 00:32:25,000 Speaker 1: episode of Wall Street Week, I'm David Weston. This is Bloomberg. 547 00:32:25,240 --> 00:32:27,280 Speaker 1: See you next week.