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Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene Jailey.

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Speaker 1: We bring you insight from the best in economics, finance, investment,

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Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,

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Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. This

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Speaker 1: is gonna be a themUS Morning. John jump in here.

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Speaker 1: This is really really important. We have seen this, John,

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Speaker 1: for over a decade of people modeling out a higher

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Speaker 1: interest rate environment time after time after time. It hasn't happened.

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Speaker 1: Dominic Constant and Credit Sweet years ago had the mother

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Speaker 1: of all charts on this. It's been the great missed

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Speaker 1: call of I'm gonna say fifteen years. I think when

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Speaker 1: after the CEO of a bank stops making codes about

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Speaker 1: markets and makes it very awkward for every one who

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Speaker 1: works at the bank when that issue comes out a

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Speaker 1: little bit later telling me JP more than have nothing

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Speaker 1: to do with ten year troceries. Now Mr Mr Diamond

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Speaker 1: listens and watches every morning. You guys, you know, let's

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Speaker 1: let's be clear. Joyce Chang, John Norman, Young Lloyds and

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Speaker 1: the rest of them. They don't agree with their CEOs

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Speaker 1: call on debt, well, they didn't back in ten either,

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Speaker 1: when Jamie Diamond said you'd better be prepared to deal

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Speaker 1: with rates five percent or higher. That never came around

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Speaker 1: Jamie Diamond on the equity side of things when it

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Speaker 1: comes to his own stock has been remember in February

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Speaker 1: when we had that huge growth shock around China and

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Speaker 1: he stepped back in and basically ticked the bottom of

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Speaker 1: the market when he started buying JP Morgan stock. But

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Speaker 1: on the Bontom market, Tom, we've seen it time and

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Speaker 1: time again, the people who are expecting yields to climb

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Speaker 1: and yields keep going lower. I know you're called up

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Speaker 1: with Steve Major of HSBC a little bit earlier this morning,

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Speaker 1: and he's out there saying seventy five basis points into

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Speaker 1: year end twenty one. Then we've got the perfect guests

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Speaker 1: to carry this forward. Let's get to it. Jim carn

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Speaker 1: and Morgan Stanley joining us right now, Jim way in.

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Speaker 1: And now it gets so quid when the CEO of

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Speaker 1: a bank starts to make a cod but it's not

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Speaker 1: your CEO. And I haven't heard Goldman saying it's been

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Speaker 1: about ten yea year. It's recently, So what are you

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Speaker 1: looking to happen in twenty one, So so we are

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Speaker 1: looking for yield to drift a little bit higher um.

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Speaker 1: But you know, I think a lot of these calls

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Speaker 1: for inflation and significantly higher yields are ver very premature.

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Speaker 1: I don't see this really until maybe and then let

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Speaker 1: me go through the reasoning and rationale for this. The

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Speaker 1: point here is that we have a pretty significant output gap.

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Speaker 1: So trend growth in the US is just under two percent.

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Speaker 1: Sorry it's it's just about two percent UM, and we

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Speaker 1: grew this year at about minus three so therefore we're

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Speaker 1: below trend growth by five percent. Now, that missing trend

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Speaker 1: growth is what we call an output gap. And the

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Speaker 1: question that everybody asked themselves is when are you going

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Speaker 1: to close that output gap? Because that's when aggregate demand

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Speaker 1: comes back into the economy, and that's when you have

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Speaker 1: more demand that pushes prices higher. So until the output

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Speaker 1: gap closes, you don't really get higher inflation. Now, by

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Speaker 1: my calculations, we would have to grow at five percent

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Speaker 1: in GDP in the US and five percent again in

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Speaker 1: and and that's beyond most forecasters. In other words, for

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Speaker 1: next year, many forecasters have five or even six percent growth.

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Speaker 1: But then the following year in most forecasters have somewhere

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Speaker 1: between two and a half and three percent growth. So

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Speaker 1: we're gonna fall short. So what do we need. We

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Speaker 1: need a significant amount of whether it's fiscal stimulus, continued

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Speaker 1: monetary support, in order to get these animal spirits moving higher,

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Speaker 1: to get prices moving higher. But right now it looks

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Speaker 1: like we're falling short of that. So it's not that

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Speaker 1: yields can't start to rise. We're seeing that with break evens.

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Speaker 1: Tenure break evens are around a hundred and ninety basis points.

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Speaker 1: Real yields are falling. All of this is a reflection

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Speaker 1: of expected stimulus, whether monetary or or fiscal, but we're

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Speaker 1: not actually seeing the delivered inflation really coming into the

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Speaker 1: into goods prices. And that's really the key. And unless

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Speaker 1: we get that, it's going to be hard to have

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Speaker 1: a sustainable rise conten your treasury yields beyond say one

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Speaker 1: point to five percent or one point four percent next year,

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Speaker 1: you know, for a moment, but that would just be

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Speaker 1: a natural adjustment, not in inflation scare on a ten

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Speaker 1: year The idea that inflation in this reflationary narrative doesn't evolve,

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Speaker 1: doesn't materialize. That's your position, Jim, going against the consensus

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Speaker 1: on that point. But when it comes to risk assets,

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Speaker 1: you're perfectly aligned still with the crowd gym. Why yeah, Well,

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Speaker 1: because you know, I think that there's a shortaship of securities.

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Speaker 1: For one UM, there's a lot of liquidity in the

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Speaker 1: marketplace and not enough securities. Corporate supply next year is

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Speaker 1: going to probably be lower by in terms of net

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Speaker 1: issue once it's going to be about negative five billions.

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Speaker 1: So we have about one point a trillion in investment

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Speaker 1: grade next year. Week we may expect around one point

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Speaker 1: three trillion UM. So sorry sorry, one point eight trillion

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Speaker 1: yes this year and one point three trillion prior for

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Speaker 1: next year. UM. The FED is you and kwei, and

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Speaker 1: the FED continues to buy you know, eighty billion per month.

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Speaker 1: They may even extend their maturities UM next week. So

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Speaker 1: the point here is that there's a lot of money

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Speaker 1: which is by design, is out there to flood the markets,

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Speaker 1: and it's just not enough security. So there is going

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Speaker 1: to be demand for yield. So yes, it is a

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Speaker 1: little bit counter consensus. But but the point here is

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Speaker 1: that fiscal policy and monetary policy together will actually stabilize

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Speaker 1: the markets quite a bit and keep interest rates relatively below.

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Speaker 1: I mean, I think rates rise a little bit, but

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Speaker 1: I don't think they rise as much as what you know.

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Speaker 1: Some may be thinking that they might, just because there's

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Speaker 1: just so much cash on the sidelines that is looking

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Speaker 1: for places, looking for yield, and it will come into

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Speaker 1: the it will come into these markets. Jim, we've gotten

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Speaker 1: a little bit philosophical in the mornings on Bloomberg Surveillance,

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Speaker 1: and your note had a very philosophical undertone, and the

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Speaker 1: idea that there is this incredible divergence and tension between

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Speaker 1: asset prices that continue to rise due to some of

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Speaker 1: these interventions from policymakers, and that namentals really are not

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Speaker 1: catching up. What's the breaking point for that? Yeah, well, eventually,

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Speaker 1: eventually it does break down. So so look, I mean,

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Speaker 1: essentially what we need to have is aggregate demand come

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Speaker 1: back into the marketplace. Right. If that doesn't happen, then

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Speaker 1: all we're gonna do is stretch valuations more and more. Here,

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Speaker 1: let's let's take this as an example. Investment grade credit

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Speaker 1: spreads in the US is trading at about a hundred

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Speaker 1: basis points high yield o A spreads is under four

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Speaker 1: hundred basis points right now. So we've brought forward a

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Speaker 1: lot of the performance in the market at this point.

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Speaker 1: For one, so, in other words, was about a promise

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Speaker 1: fiscal stimulus, monetary stimulus, and we hope that things are

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Speaker 1: going to get better in so all that performance has

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Speaker 1: been brought forward. If we don't deliver on this growth

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Speaker 1: in one so is about the delivery of the promise

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Speaker 1: versus the actual promise that was made in If we

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Speaker 1: don't deliver on this promise in terms of growth, then

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Speaker 1: these asset prices are are going to look a little

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Speaker 1: bit expensive and there could be an adjustment downward in

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Speaker 1: price to reflect the fact that we're not growing fast enough.

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Speaker 1: And so I think we're not going to grow in

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Speaker 1: is will it be enough? And if its prices will

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Speaker 1: address down I'll tell you a great story about just

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Speaker 1: you white Jim carrotyping Stanley Global fixed Income right now

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Speaker 1: an adult conversation on the moment in initial public offerings.

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Speaker 1: Kathleen Smith has provided terrific leadership at Renaissance Capital on

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Speaker 1: clarity of thought, on the frenzy of the moment and

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Speaker 1: I p O S. We cleared the air with her

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Speaker 1: uh this morning, Kathleen, thrilled to have you with us.

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Speaker 1: You know where I am on this. I'm hugely skeptical.

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Speaker 1: Is this a manufactured boom? Is technology companies keep private

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Speaker 1: ownership and and release an ever so slight public amount,

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Speaker 1: thus creating a bidding lore for that ever slight public

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Speaker 1: amount of shares? Sure well, you can look at it.

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Speaker 1: Let me just back up by saying that is not

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Speaker 1: only going to be in the record books regarding COVID,

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Speaker 1: but it's going to be in the record books regarding

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Speaker 1: and this year seemed really dollars I p o s

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Speaker 1: than any year on record. When you talk about the

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Speaker 1: squeeze of a small amount of float to the larger

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Speaker 1: value of the company, we're seeing very large deals. These

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Speaker 1: aren't little deals like we all in n so they're there.

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Speaker 1: And the case of door Dash, which is going to

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Speaker 1: open for trading today, that was the largest ideo so

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Speaker 1: for this year. They do have very big market caps

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Speaker 1: and they're going to have to they'll expand their tradeable

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Speaker 1: float eventually. But your point on is it a squeeze,

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Speaker 1: I think there's always a challenge of pricing right in

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Speaker 1: the supply and demand, but eventually they settle in, and

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Speaker 1: they have to be connected with the overall market, which

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Speaker 1: itself is pretty frothy these days. Yeah. Well, Kathleen, I

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Speaker 1: want to talk about the frost, and I want to

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Speaker 1: just sort of zoom out, if you will, at the

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Speaker 1: hundred and sixty billion dollars raised in US I p

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Speaker 1: O is so far this year, breaking records at a

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Speaker 1: time of incredible economic distress, with companies that were left

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Speaker 1: for dead earlier in the year cuttn't coming out as

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Speaker 1: darlings with much higher valuations than expected. Do you see

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Speaker 1: signs of froth in the latest valuations of Airbnb, which

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Speaker 1: is expected, in door Dash, which is going to trade today. Sure,

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Speaker 1: we have specific opinions about each of those companies. We

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Speaker 1: think door Dash looks price with us. We think Airbnb

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Speaker 1: maybe not so much. So I think you have to

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Speaker 1: look at the company and it's trajectory. But if we

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Speaker 1: step back a little bit and look at overall, what

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Speaker 1: is making the market so uh open right now for issuance?

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Speaker 1: One does that investors have earned positive alpha returns on

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Speaker 1: the existing set of IPOs that have come to market.

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Speaker 1: And we have an index, the Renaissance IPO Index, that

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Speaker 1: has shown very strong returns. Now, the reason that the

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Speaker 1: returns have been strong, which will actually begets more issuance.

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Speaker 1: But the returns have been strong because interest rates are low,

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Speaker 1: as we all all know. And then post COVID, the

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Speaker 1: digital economy has really accelerated in its um integration and

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Speaker 1: our and our lives and also the biotech and vaccines.

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Speaker 1: So the digital stocks, the biotechs are a very common

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Speaker 1: constituent of the U S I p O market. That

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Speaker 1: is why these companies have done so well. Their growth

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Speaker 1: has accelerated based upon current current economic conditions. Yeah, although

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Speaker 1: you're looking at the renaissance I p O E t F,

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Speaker 1: which you said has performed very well understatement, it's returned

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Speaker 1: about a hundred and twenty year to date. And you

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Speaker 1: said that that basically people chasing returns. You've got Jamie

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Speaker 1: Diamond looking for one eight hundred call me to get

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Speaker 1: any deal done of any sword. At what point they

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Speaker 1: have to prove that they're worth this at a time

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Speaker 1: of really economic uncertainty despite all the liquidity pumped into

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Speaker 1: the market. Well, that's the challenge for door Dash. For example,

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Speaker 1: with door Dash, you have a company that's growth has

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Speaker 1: sword due to the pandemic everyone wants food delivery. But

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Speaker 1: what's going to happen once we got stop gets back

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Speaker 1: to normal life. That growth trajectory has to drop, and

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Speaker 1: that's the key challenge and an analyzing door dash. In

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Speaker 1: the case of Airbnb, that company's business has totally fallen

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Speaker 1: apart with COVID and they're now digging themselves out. I

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Speaker 1: think in an interesting way, they've had a restructuring that's

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Speaker 1: gone on with the company. So we're looking at Airbnb

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Speaker 1: as a company that's going to be forward looking on

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Speaker 1: a positive note, svtuation's gonna matter, Kathleen. When I read

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Speaker 1: and this is ancient history, folks, there was a thing

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Speaker 1: called a red herring and you read them and the

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Speaker 1: first thing you did is go to the capitalization. I'm

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Speaker 1: seeing on the Bloomberg a preferred equity tranche of door

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Speaker 1: dash that would choke a horse. I mean again, I

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Speaker 1: look at these as manufactured transactions to create scarcity. What

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Speaker 1: about the so called preferred equity in door dash? Is

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Speaker 1: that a tangible private investment controlled by private shareholders. I

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Speaker 1: think you have to look at some of these are

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Speaker 1: convertible preferred so they become equity at the time of

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Speaker 1: the I p oh. But I would point to you

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Speaker 1: when we think these companies are and they may be expensive,

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Speaker 1: it will prove itself out in the market. But when

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Speaker 1: when you look at companies like Zoom, that company has

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Speaker 1: been public for less than two years, do you question

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Speaker 1: the value of Zoom or Moderna that created a vaccine.

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Speaker 1: It's hard. These companies are new. They take time to

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Speaker 1: be analyzed and figured out in the context of the

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Speaker 1: overall market. Kathleen, wonderful to catch out with you. Thanks

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Speaker 1: for your time this morning, Kathy Smith a nice Lon's Capital.

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Speaker 1: Thank you very much. This is the interview of the

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Speaker 1: day on the equity markets. Douglas Cast with his Seabreees

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Speaker 1: partners and what cast us folks. As he gets up,

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Speaker 1: you know, he rolls out about nine am and he

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Speaker 1: writes a quick memo, and you know, usually it's perfunctory,

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Speaker 1: go along, go short in that, and then every once

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Speaker 1: in a while there's a shut up. This is the

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Speaker 1: real world memo. Cast wrote one of those this morning,

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Speaker 1: and he joins us on shorting stocks. How bad have

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Speaker 1: the shorts been hammered? Doug in this great bull market.

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Speaker 1: First of all, I want to wish you a happy birthday.

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Speaker 1: Thank you. Uh Emerson said, we don't grow old. When

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Speaker 1: we ceased to grow, we become old. Oh, listen to you, Doug.

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Speaker 1: Doug is more appropriate. I don't want to achieve immortality

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Speaker 1: through my work. I want to achieve it. We're not dying, Doug.

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Speaker 1: I've come full circle. Okay. The Red Sox sucked when

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Speaker 1: I was a kid, and now they suck now. So

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Speaker 1: you know it's it's been. You know, it's full circle.

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Speaker 1: What a shorting stocks? You're wrote a beautiful essay? What

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Speaker 1: how bad has it been for the short crew? It's

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Speaker 1: been horrible? And Um I wrote n s A this

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Speaker 1: morning mentioned um that shorting speculative stocks it's not fun,

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Speaker 1: it's not easy, and most shouldn't bother. But if you

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Speaker 1: ursh yourself in the more dangerous waters of short selling,

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Speaker 1: there are some techniques or basics to employ. So much

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Speaker 1: of shorting, Douglas Cass is not what to do, but

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Speaker 1: what not to do? What's the biggest mistake? Paul? In time?

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Speaker 1: If you think about it, um, and I've written and

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Speaker 1: I in fact, I remember a three hour lecture on

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Speaker 1: short selling in Bob Schiller's course at Yale School Management

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Speaker 1: back in two thousand and thirteen that I gave so,

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Speaker 1: but i'll I will give you the cliff notes. White

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Speaker 1: people shouldn't show its stocks, but most people shouldn't. Stood

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Speaker 1: is that stocks typically move over, move higher over time

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Speaker 1: and um depending upon your time frame that you're analyzing,

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Speaker 1: and major indices usually increased by seven or eight percent

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Speaker 1: the year. So there's this gravitational pull of stocks higher,

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Speaker 1: and that's a formidable head winter short sailing. Secondly, when

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Speaker 1: long is going against an investor, their portfolio waitings are reduced,

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Speaker 1: but if shorts go against you, waiting increases. Three. Many

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Speaker 1: shorts are crowded in short interest terms. You and I

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Speaker 1: lived through a Bob Wilson's squeeze on Resorts International manys

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Speaker 1: uh so short squeeze is a commonplace, and especially in

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Speaker 1: some of the popular short names like Tesla. Finally, finally,

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Speaker 1: above all, the reward versus risk is asymmetric between long

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Speaker 1: and short Greek and theoretically rise an infinite percentage and

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Speaker 1: lose an infinite percentage on the short side. But you

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Speaker 1: can only make up scent if the company that's called

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Speaker 1: buying Amazona two, which is a cast in exactly right.

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Speaker 1: So Doug, I know you started your career bad as

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Speaker 1: a housing analytic kid Er Peabody, one of the all

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Speaker 1: time great firms on Wall Street. Down on, however, Square,

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Speaker 1: I know you've got some thoughts about the housing sector

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Speaker 1: right now. I mean it's been one of the strong

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Speaker 1: parts of this you know, pandemic wrecked economy. What do

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Speaker 1: you think about the sector right here? Well, I began

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Speaker 1: to take a large short um position and wrote a

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Speaker 1: bunch of negative commentary about a month ago. UM. And

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Speaker 1: it's it's a real non consensus view because if you

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Speaker 1: look at the numbers, UM, all you do is see

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Speaker 1: record record releases in terms of backlogs, home price realizations

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Speaker 1: and units. Soul Told Brothers was a very good example

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Speaker 1: the night before last. But my notion, and after following

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Speaker 1: this industry for so long, is it precisely the time

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Speaker 1: you want to be show at the stocks. UM. Basically,

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Speaker 1: the large gain in home prices is a portability and

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Speaker 1: it's sowing to see for an industry down turn. And

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Speaker 1: this has been accompanied by a sharp move in the

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Speaker 1: stocks to new highs until recently UM. And I think

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Speaker 1: it's important to note that today's stretch affordability has as

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Speaker 1: its source something that's really different, palled than the problems

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Speaker 1: that developed back in two thousand seven, which Tom and

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Speaker 1: I used to discussed back then when I was giving

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Speaker 1: out some warnings, and we're manifested over the next two

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Speaker 1: years when for the first time in history, home prices

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Speaker 1: fell back then, yet speculation running a monkey yet day

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Speaker 1: trading in homes. Um you had no document mortgage loan,

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Speaker 1: you had high loan to value lending prices policies Today,

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Speaker 1: other factors are contributing to large price increases. UM COVID

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Speaker 1: nineteen obviously is serving as an accelerant of this uptrend. Yeah,

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Speaker 1: it's kind of where I want to go, Doug. I mean,

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Speaker 1: you know again, it just kind of amazed me as

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Speaker 1: we look at all the economic data, whether it's the consumer,

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Speaker 1: whether it's manufacturing. Obviously just been really rocked hard by

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Speaker 1: the pandemic induced uh, you know, disruption to the economy,

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Speaker 1: but the housing market has remained extraordinary resilient, and I

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Speaker 1: think people are just trying to get a sense of

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Speaker 1: how much of that is record low mortgage rates versus

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Speaker 1: this COVID phenomena of perhaps getting out of urban centers,

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Speaker 1: getting more space, buying homes out in suburbia. Yeah, that's

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Speaker 1: that's occurring. But again, it's really important when you invest

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Speaker 1: long or short sell um stocks to recognize that investment

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Speaker 1: knowledge is, to quote Warren Buffett, is always one viewed

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Speaker 1: in the rear view view mirror of the idea is

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Speaker 1: to analyze what's going to happen. And as I said this,

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Speaker 1: this really quantum increase in home prices over the last

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Speaker 1: two years, especially accelerating in the last six months. I

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Speaker 1: see where I am in Palm Beach, Florida. UH is

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Speaker 1: sowing the seeds for a downturn. And you saw look

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Speaker 1: at the reaction. You had two Toll brothers. Everything was

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Speaker 1: record can census beat heck out of consented expectations. Stock

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Speaker 1: was down nine percent or over four dollars yesterday, doug

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Speaker 1: On alongside, you've been long Amazon right now. The two

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Speaker 1: outlook is either I'm still in tech or I'm not

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Speaker 1: in tech. Are you still in tech? And critically, are

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Speaker 1: you still in Amazon? Um? I'm I recently reduced from

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Speaker 1: a very very large position that have had for a

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Speaker 1: long period of time to a small sized position. UM.

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Speaker 1: About this time of every year, Amazon routinely puts out

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Speaker 1: a non numerical piece of fluff about their holiday business activity.

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Speaker 1: They have not done it this year, Tom, And perhaps

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Speaker 1: it's that the company is simply scared of anti trust

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Speaker 1: issues and simply deferring the announcement until next year. However,

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Speaker 1: our work, our channel work indicates that Amazon shipping backlogs

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Speaker 1: maybe shrinking and that some deliveries of speeding up. I

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Speaker 1: used to follow the paper industry closely, and if you

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Speaker 1: look at backlogs, especially if containing board, that's all you

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Speaker 1: needed to make money. And my paper industry trade sources

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Speaker 1: suggests some backlog shrink and shrinkage relative expectations in packaging

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Speaker 1: and contain aboard products. And we have spoken to five

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Speaker 1: or seven of our local UPS stores in South Florida

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Speaker 1: and they're confirming our suspicion and research conclusions. So this

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Speaker 1: is really a non consensus view on Amazon. I have

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Speaker 1: a non consensus view when I bought the stock um

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Speaker 1: and we'll see what happens. This is a big call, potentially, Doug.

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Speaker 1: One final question, and it's simple, everybody's moving to Florida.

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Speaker 1: You are a path breaker on that, and you know,

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Speaker 1: don you went, do the people in Florida stay in

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Speaker 1: Florida or it when the Pandemics over do they come

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Speaker 1: back to the Northern Climb? I think that people it's

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Speaker 1: a great question. The people that I have spoken to,

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Speaker 1: my friends that have moved here either renting or in

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Speaker 1: many cases buying um properties uh and converting their residents

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Speaker 1: for New York State, New Jersey, Connecticut just to Florida,

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Speaker 1: um are, I would say, then, intend to stay in Florida.

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Speaker 1: It's just a great quality of life. Um. It's a

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Speaker 1: lot less expensive and a lot more manageable. What do

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Speaker 1: you think, Paul, that's a pretty good sound, Pharaoh. Can

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Speaker 1: you imagine John Faro in Florida? That's a friend? Southeas

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Speaker 1: I know. I can go watch the Socks lose to

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Speaker 1: the Yankees. I went, I visited the Yankees place near

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Speaker 1: in Tampa. I say, Soriano pitch? He was? He blew

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Speaker 1: me away? He was, yeah, absolutely not Soriano. Yeah, Marianna, No,

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Speaker 1: not Mariano. He's hurt right now. I can't remember. Brain Freeze.

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Speaker 1: Doug Cass, thank you so much for joining us with

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Speaker 1: Sea Breeze here. This is an important discussion him any

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Speaker 1: of you. You know, it's an important essay from Mr Cass,

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Speaker 1: and you have to get that through sea breeze only.

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Speaker 1: But I can't say enough about his essay this morning

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Speaker 1: on shorting Douglas cass Sebres Partners. Right now, David Rubenstein

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Speaker 1: joins us pure to pure conversations. And this conversation is

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Speaker 1: important because Mr ruben Spine signed speaks to the gentleman

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Speaker 1: who invented conversation and the modern zeiteguys. He has Klaus

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Speaker 1: Schwab of Davos, and of course he has added so

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Speaker 1: much to what I have done. With his initiative to

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Speaker 1: get people together to converse. They will shift from Davos

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Speaker 1: to Singapore. Of course, Mr Rubinstein speaking to Dr Schwab

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Speaker 1: before the announcement of Singapore. David Rubinstein, many people know

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Speaker 1: who Klaus Schwab is. What is the distinction for those

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Speaker 1: that do not know him? About Dr Schwab, he was

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Speaker 1: a He's a German citizen by birth, was a professor

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Speaker 1: at the University of Geneva, and fifty years ago came

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Speaker 1: up with the idea of bringing people together talk about

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Speaker 1: global issues. It was about the UEO in one it's

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Speaker 1: now thousands of people who go. It is seen as

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Speaker 1: an overly elite gathering, but he has many young people,

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Speaker 1: people are not yet quote elite, and it really does

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Speaker 1: a good social purpose. I should disclosed. I'm on the

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Speaker 1: board of the World Economic Forum, and I do think

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Speaker 1: it's a good uh operation. It does serve useful purposes.

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Speaker 1: But I recognize it has been criticized by some as

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Speaker 1: overly elite. I don't really think that's fair, but that's

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Speaker 1: the criticism. David. I strongly agree with you, and everybody

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Speaker 1: that knows me knows I'm a huge defender of what

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Speaker 1: Klaus Schwab defended, and a lot of it Folcus is

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Speaker 1: jealousy to go up Happy Valley. David and I have

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Speaker 1: done panels there to great success. Is well, what does

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Speaker 1: devils look like in Singapore this year for Dr Schwab, Well,

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Speaker 1: normally we are trooping around trying to dodge some of

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Speaker 1: the snow and other ice kinds of things. This point,

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Speaker 1: we won't have that in Singapore. But I think what

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Speaker 1: Klaus wanted to do was to have the first gathering

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Speaker 1: global gathering in person. After the virus is sort of

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Speaker 1: it behind us a bit, and it wasn't possible to

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Speaker 1: do it in Switzerland off because of some health reasons.

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Speaker 1: Singapore seemed like a better place, so everybody will troop there.

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Speaker 1: Someone will be virtual, though, and I'll think they'll have

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Speaker 1: a fair number of people in personnel. It's an interesting

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Speaker 1: time to be discussing the World Economic Forum and just

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Speaker 1: at large confabs that have traditionally been the birthplace of

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Speaker 1: a lot of interesting ideas, often that are created behind

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Speaker 1: closed doors, not necessarily in the discussions on stage, David.

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Speaker 1: It puts a highlight on how different has been. Do

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Speaker 1: you think that the experience of the pandemic has put

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Speaker 1: into cold relief the importance of these in person meetings

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Speaker 1: or do you think that it's shown how things can

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Speaker 1: migrate to a virtual type of platform. The world has

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Speaker 1: changed forever, and there's no doubt that people don't want

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Speaker 1: to travel quite as much, and they can do virtual meetings,

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Speaker 1: and everybody realizes there's a lot more simplicity for doing it,

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Speaker 1: a lot more ease. On the other hand, for thousands

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Speaker 1: of years humans have liked human contact, and I do

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Speaker 1: think that that will revert to the mean, and that

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Speaker 1: therefore you will have more people gathering in person, but

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Speaker 1: there will be a hybrid. Some people will come and

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Speaker 1: person some will do but virtually, and that's probably what

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Speaker 1: the norm is going to be in the future. So

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Speaker 1: sort of emerging some of these ideas here. David, you're

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Speaker 1: talking about the criticism that the World Economic Forum has

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Speaker 1: had as being elitist. Do you think that this new

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Speaker 1: virtual era will democratize the concept of some of these

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Speaker 1: large meetings by bringing more people in and allowing them

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Speaker 1: to join, if not perhaps by private jet, virtually sure

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Speaker 1: people who can't afford to go to Davos or Singapore

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Speaker 1: will be able to do it virtually with virtually no cost.

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Speaker 1: And so I think that will help. And I think

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Speaker 1: it will also attract younger people who may not be

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Speaker 1: able to afford to go to places like Davos from

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Speaker 1: time to time. So I think it will be helpful. Yes,

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Speaker 1: I do think so, and I think Klaus has been

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Speaker 1: a genius of putting it all together. You know, think

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Speaker 1: about this, how many things are are still working pretty

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Speaker 1: well fifty years after they were invented. David. What this

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Speaker 1: is about is capitalism in the arch reality that Dr

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Speaker 1: Squab is noted, and I'm sure David Rubinstein is noted.

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Speaker 1: We're not clearing markets like we used to years ago.

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Speaker 1: The zombi nous that is out there is tangible. When

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Speaker 1: are we going to start clearing markets so we can

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Speaker 1: get back to financial normality. Well, I don't know, because

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Speaker 1: obviously there's a lot of frothiness in the markets right now,

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Speaker 1: and I suspect at some point some of that will

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Speaker 1: will will come down and deflate a bit. There's no

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Speaker 1: doubt that the world has changed and people are looking

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Speaker 1: at different kinds of companies, and people see it as

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Speaker 1: a land rush. They want to be on the ground

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Speaker 1: floor of the next zoom in technology. And I think

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Speaker 1: a lot of people feel the world has changing and

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Speaker 1: if you're not on the ground floor, you're gonna miss

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Speaker 1: out on great profits. That's why the frothiness is there.

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Speaker 1: Some of these bets will be great, some won't be great.

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Speaker 1: David Rubinstein, thank you so much, of course, with Carl Carlyle,

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Speaker 1: and of course look for peer to peer with Klaus

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Speaker 1: Schwab nine pm on Wednesday. Looking forward to that to

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Speaker 1: say the least. Thanks for listening to the Bloomberg Surveillance podcast.

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Speaker 1: Subscribe and listen to interviews on Apple Podcasts, SoundCloud, or

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Speaker 1: whichever podcast platform you prefer. I'm on Twitter at Tom

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Speaker 1: Keene before the podcast. You can always catch us worldwide.

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Speaker 1: I'm Bloomberg Radio