Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene Jailey.
Speaker 1: We bring you insight from the best in economics, finance, investment,
Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,
Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. This
Speaker 1: is gonna be a themUS Morning. John jump in here.
Speaker 1: This is really really important. We have seen this, John,
Speaker 1: for over a decade of people modeling out a higher
Speaker 1: interest rate environment time after time after time. It hasn't happened.
Speaker 1: Dominic Constant and Credit Sweet years ago had the mother
Speaker 1: of all charts on this. It's been the great missed
Speaker 1: call of I'm gonna say fifteen years. I think when
Speaker 1: after the CEO of a bank stops making codes about
Speaker 1: markets and makes it very awkward for every one who
Speaker 1: works at the bank when that issue comes out a
Speaker 1: little bit later telling me JP more than have nothing
Speaker 1: to do with ten year troceries. Now Mr Mr Diamond
Speaker 1: listens and watches every morning. You guys, you know, let's
Speaker 1: let's be clear. Joyce Chang, John Norman, Young Lloyds and
Speaker 1: the rest of them. They don't agree with their CEOs
Speaker 1: call on debt, well, they didn't back in ten either,
Speaker 1: when Jamie Diamond said you'd better be prepared to deal
Speaker 1: with rates five percent or higher. That never came around
Speaker 1: Jamie Diamond on the equity side of things when it
Speaker 1: comes to his own stock has been remember in February
Speaker 1: when we had that huge growth shock around China and
Speaker 1: he stepped back in and basically ticked the bottom of
Speaker 1: the market when he started buying JP Morgan stock. But
Speaker 1: on the Bontom market, Tom, we've seen it time and
Speaker 1: time again, the people who are expecting yields to climb
Speaker 1: and yields keep going lower. I know you're called up
Speaker 1: with Steve Major of HSBC a little bit earlier this morning,
Speaker 1: and he's out there saying seventy five basis points into
Speaker 1: year end twenty one. Then we've got the perfect guests
Speaker 1: to carry this forward. Let's get to it. Jim carn
Speaker 1: and Morgan Stanley joining us right now, Jim way in.
Speaker 1: And now it gets so quid when the CEO of
Speaker 1: a bank starts to make a cod but it's not
Speaker 1: your CEO. And I haven't heard Goldman saying it's been
Speaker 1: about ten yea year. It's recently, So what are you
Speaker 1: looking to happen in twenty one, So so we are
Speaker 1: looking for yield to drift a little bit higher um.
Speaker 1: But you know, I think a lot of these calls
Speaker 1: for inflation and significantly higher yields are ver very premature.
Speaker 1: I don't see this really until maybe and then let
Speaker 1: me go through the reasoning and rationale for this. The
Speaker 1: point here is that we have a pretty significant output gap.
Speaker 1: So trend growth in the US is just under two percent.
Speaker 1: Sorry it's it's just about two percent UM, and we
Speaker 1: grew this year at about minus three so therefore we're
Speaker 1: below trend growth by five percent. Now, that missing trend
Speaker 1: growth is what we call an output gap. And the
Speaker 1: question that everybody asked themselves is when are you going
Speaker 1: to close that output gap? Because that's when aggregate demand
Speaker 1: comes back into the economy, and that's when you have
Speaker 1: more demand that pushes prices higher. So until the output
Speaker 1: gap closes, you don't really get higher inflation. Now, by
Speaker 1: my calculations, we would have to grow at five percent
Speaker 1: in GDP in the US and five percent again in
Speaker 1: and and that's beyond most forecasters. In other words, for
Speaker 1: next year, many forecasters have five or even six percent growth.
Speaker 1: But then the following year in most forecasters have somewhere
Speaker 1: between two and a half and three percent growth. So
Speaker 1: we're gonna fall short. So what do we need. We
Speaker 1: need a significant amount of whether it's fiscal stimulus, continued
Speaker 1: monetary support, in order to get these animal spirits moving higher,
Speaker 1: to get prices moving higher. But right now it looks
Speaker 1: like we're falling short of that. So it's not that
Speaker 1: yields can't start to rise. We're seeing that with break evens.
Speaker 1: Tenure break evens are around a hundred and ninety basis points.
Speaker 1: Real yields are falling. All of this is a reflection
Speaker 1: of expected stimulus, whether monetary or or fiscal, but we're
Speaker 1: not actually seeing the delivered inflation really coming into the
Speaker 1: into goods prices. And that's really the key. And unless
Speaker 1: we get that, it's going to be hard to have
Speaker 1: a sustainable rise conten your treasury yields beyond say one
Speaker 1: point to five percent or one point four percent next year,
Speaker 1: you know, for a moment, but that would just be
Speaker 1: a natural adjustment, not in inflation scare on a ten
Speaker 1: year The idea that inflation in this reflationary narrative doesn't evolve,
Speaker 1: doesn't materialize. That's your position, Jim, going against the consensus
Speaker 1: on that point. But when it comes to risk assets,
Speaker 1: you're perfectly aligned still with the crowd gym. Why yeah, Well,
Speaker 1: because you know, I think that there's a shortaship of securities.
Speaker 1: For one UM, there's a lot of liquidity in the
Speaker 1: marketplace and not enough securities. Corporate supply next year is
Speaker 1: going to probably be lower by in terms of net
Speaker 1: issue once it's going to be about negative five billions.
Speaker 1: So we have about one point a trillion in investment
Speaker 1: grade next year. Week we may expect around one point
Speaker 1: three trillion UM. So sorry sorry, one point eight trillion
Speaker 1: yes this year and one point three trillion prior for
Speaker 1: next year. UM. The FED is you and kwei, and
Speaker 1: the FED continues to buy you know, eighty billion per month.
Speaker 1: They may even extend their maturities UM next week. So
Speaker 1: the point here is that there's a lot of money
Speaker 1: which is by design, is out there to flood the markets,
Speaker 1: and it's just not enough security. So there is going
Speaker 1: to be demand for yield. So yes, it is a
Speaker 1: little bit counter consensus. But but the point here is
Speaker 1: that fiscal policy and monetary policy together will actually stabilize
Speaker 1: the markets quite a bit and keep interest rates relatively below.
Speaker 1: I mean, I think rates rise a little bit, but
Speaker 1: I don't think they rise as much as what you know.
Speaker 1: Some may be thinking that they might, just because there's
Speaker 1: just so much cash on the sidelines that is looking
Speaker 1: for places, looking for yield, and it will come into
Speaker 1: the it will come into these markets. Jim, we've gotten
Speaker 1: a little bit philosophical in the mornings on Bloomberg Surveillance,
Speaker 1: and your note had a very philosophical undertone, and the
Speaker 1: idea that there is this incredible divergence and tension between
Speaker 1: asset prices that continue to rise due to some of
Speaker 1: these interventions from policymakers, and that namentals really are not
Speaker 1: catching up. What's the breaking point for that? Yeah, well, eventually,
Speaker 1: eventually it does break down. So so look, I mean,
Speaker 1: essentially what we need to have is aggregate demand come
Speaker 1: back into the marketplace. Right. If that doesn't happen, then
Speaker 1: all we're gonna do is stretch valuations more and more. Here,
Speaker 1: let's let's take this as an example. Investment grade credit
Speaker 1: spreads in the US is trading at about a hundred
Speaker 1: basis points high yield o A spreads is under four
Speaker 1: hundred basis points right now. So we've brought forward a
Speaker 1: lot of the performance in the market at this point.
Speaker 1: For one, so, in other words, was about a promise
Speaker 1: fiscal stimulus, monetary stimulus, and we hope that things are
Speaker 1: going to get better in so all that performance has
Speaker 1: been brought forward. If we don't deliver on this growth
Speaker 1: in one so is about the delivery of the promise
Speaker 1: versus the actual promise that was made in If we
Speaker 1: don't deliver on this promise in terms of growth, then
Speaker 1: these asset prices are are going to look a little
Speaker 1: bit expensive and there could be an adjustment downward in
Speaker 1: price to reflect the fact that we're not growing fast enough.
Speaker 1: And so I think we're not going to grow in
Speaker 1: is will it be enough? And if its prices will
Speaker 1: address down I'll tell you a great story about just
Speaker 1: you white Jim carrotyping Stanley Global fixed Income right now
Speaker 1: an adult conversation on the moment in initial public offerings.
Speaker 1: Kathleen Smith has provided terrific leadership at Renaissance Capital on
Speaker 1: clarity of thought, on the frenzy of the moment and
Speaker 1: I p O S. We cleared the air with her
Speaker 1: uh this morning, Kathleen, thrilled to have you with us.
Speaker 1: You know where I am on this. I'm hugely skeptical.
Speaker 1: Is this a manufactured boom? Is technology companies keep private
Speaker 1: ownership and and release an ever so slight public amount,
Speaker 1: thus creating a bidding lore for that ever slight public
Speaker 1: amount of shares? Sure well, you can look at it.
Speaker 1: Let me just back up by saying that is not
Speaker 1: only going to be in the record books regarding COVID,
Speaker 1: but it's going to be in the record books regarding
Speaker 1: and this year seemed really dollars I p o s
Speaker 1: than any year on record. When you talk about the
Speaker 1: squeeze of a small amount of float to the larger
Speaker 1: value of the company, we're seeing very large deals. These
Speaker 1: aren't little deals like we all in n so they're there.
Speaker 1: And the case of door Dash, which is going to
Speaker 1: open for trading today, that was the largest ideo so
Speaker 1: for this year. They do have very big market caps
Speaker 1: and they're going to have to they'll expand their tradeable
Speaker 1: float eventually. But your point on is it a squeeze,
Speaker 1: I think there's always a challenge of pricing right in
Speaker 1: the supply and demand, but eventually they settle in, and
Speaker 1: they have to be connected with the overall market, which
Speaker 1: itself is pretty frothy these days. Yeah. Well, Kathleen, I
Speaker 1: want to talk about the frost, and I want to
Speaker 1: just sort of zoom out, if you will, at the
Speaker 1: hundred and sixty billion dollars raised in US I p
Speaker 1: O is so far this year, breaking records at a
Speaker 1: time of incredible economic distress, with companies that were left
Speaker 1: for dead earlier in the year cuttn't coming out as
Speaker 1: darlings with much higher valuations than expected. Do you see
Speaker 1: signs of froth in the latest valuations of Airbnb, which
Speaker 1: is expected, in door Dash, which is going to trade today. Sure,
Speaker 1: we have specific opinions about each of those companies. We
Speaker 1: think door Dash looks price with us. We think Airbnb
Speaker 1: maybe not so much. So I think you have to
Speaker 1: look at the company and it's trajectory. But if we
Speaker 1: step back a little bit and look at overall, what
Speaker 1: is making the market so uh open right now for issuance?
Speaker 1: One does that investors have earned positive alpha returns on
Speaker 1: the existing set of IPOs that have come to market.
Speaker 1: And we have an index, the Renaissance IPO Index, that
Speaker 1: has shown very strong returns. Now, the reason that the
Speaker 1: returns have been strong, which will actually begets more issuance.
Speaker 1: But the returns have been strong because interest rates are low,
Speaker 1: as we all all know. And then post COVID, the
Speaker 1: digital economy has really accelerated in its um integration and
Speaker 1: our and our lives and also the biotech and vaccines.
Speaker 1: So the digital stocks, the biotechs are a very common
Speaker 1: constituent of the U S I p O market. That
Speaker 1: is why these companies have done so well. Their growth
Speaker 1: has accelerated based upon current current economic conditions. Yeah, although
Speaker 1: you're looking at the renaissance I p O E t F,
Speaker 1: which you said has performed very well understatement, it's returned
Speaker 1: about a hundred and twenty year to date. And you
Speaker 1: said that that basically people chasing returns. You've got Jamie
Speaker 1: Diamond looking for one eight hundred call me to get
Speaker 1: any deal done of any sword. At what point they
Speaker 1: have to prove that they're worth this at a time
Speaker 1: of really economic uncertainty despite all the liquidity pumped into
Speaker 1: the market. Well, that's the challenge for door Dash. For example,
Speaker 1: with door Dash, you have a company that's growth has
Speaker 1: sword due to the pandemic everyone wants food delivery. But
Speaker 1: what's going to happen once we got stop gets back
Speaker 1: to normal life. That growth trajectory has to drop, and
Speaker 1: that's the key challenge and an analyzing door dash. In
Speaker 1: the case of Airbnb, that company's business has totally fallen
Speaker 1: apart with COVID and they're now digging themselves out. I
Speaker 1: think in an interesting way, they've had a restructuring that's
Speaker 1: gone on with the company. So we're looking at Airbnb
Speaker 1: as a company that's going to be forward looking on
Speaker 1: a positive note, svtuation's gonna matter, Kathleen. When I read
Speaker 1: and this is ancient history, folks, there was a thing
Speaker 1: called a red herring and you read them and the
Speaker 1: first thing you did is go to the capitalization. I'm
Speaker 1: seeing on the Bloomberg a preferred equity tranche of door
Speaker 1: dash that would choke a horse. I mean again, I
Speaker 1: look at these as manufactured transactions to create scarcity. What
Speaker 1: about the so called preferred equity in door dash? Is
Speaker 1: that a tangible private investment controlled by private shareholders. I
Speaker 1: think you have to look at some of these are
Speaker 1: convertible preferred so they become equity at the time of
Speaker 1: the I p oh. But I would point to you
Speaker 1: when we think these companies are and they may be expensive,
Speaker 1: it will prove itself out in the market. But when
Speaker 1: when you look at companies like Zoom, that company has
Speaker 1: been public for less than two years, do you question
Speaker 1: the value of Zoom or Moderna that created a vaccine.
Speaker 1: It's hard. These companies are new. They take time to
Speaker 1: be analyzed and figured out in the context of the
Speaker 1: overall market. Kathleen, wonderful to catch out with you. Thanks
Speaker 1: for your time this morning, Kathy Smith a nice Lon's Capital.
Speaker 1: Thank you very much. This is the interview of the
Speaker 1: day on the equity markets. Douglas Cast with his Seabreees
Speaker 1: partners and what cast us folks. As he gets up,
Speaker 1: you know, he rolls out about nine am and he
Speaker 1: writes a quick memo, and you know, usually it's perfunctory,
Speaker 1: go along, go short in that, and then every once
Speaker 1: in a while there's a shut up. This is the
Speaker 1: real world memo. Cast wrote one of those this morning,
Speaker 1: and he joins us on shorting stocks. How bad have
Speaker 1: the shorts been hammered? Doug in this great bull market.
Speaker 1: First of all, I want to wish you a happy birthday.
Speaker 1: Thank you. Uh Emerson said, we don't grow old. When
Speaker 1: we ceased to grow, we become old. Oh, listen to you, Doug.
Speaker 1: Doug is more appropriate. I don't want to achieve immortality
Speaker 1: through my work. I want to achieve it. We're not dying, Doug.
Speaker 1: I've come full circle. Okay. The Red Sox sucked when
Speaker 1: I was a kid, and now they suck now. So
Speaker 1: you know it's it's been. You know, it's full circle.
Speaker 1: What a shorting stocks? You're wrote a beautiful essay? What
Speaker 1: how bad has it been for the short crew? It's
Speaker 1: been horrible? And Um I wrote n s A this
Speaker 1: morning mentioned um that shorting speculative stocks it's not fun,
Speaker 1: it's not easy, and most shouldn't bother. But if you
Speaker 1: ursh yourself in the more dangerous waters of short selling,
Speaker 1: there are some techniques or basics to employ. So much
Speaker 1: of shorting, Douglas Cass is not what to do, but
Speaker 1: what not to do? What's the biggest mistake? Paul? In time?
Speaker 1: If you think about it, um, and I've written and
Speaker 1: I in fact, I remember a three hour lecture on
Speaker 1: short selling in Bob Schiller's course at Yale School Management
Speaker 1: back in two thousand and thirteen that I gave so,
Speaker 1: but i'll I will give you the cliff notes. White
Speaker 1: people shouldn't show its stocks, but most people shouldn't. Stood
Speaker 1: is that stocks typically move over, move higher over time
Speaker 1: and um depending upon your time frame that you're analyzing,
Speaker 1: and major indices usually increased by seven or eight percent
Speaker 1: the year. So there's this gravitational pull of stocks higher,
Speaker 1: and that's a formidable head winter short sailing. Secondly, when
Speaker 1: long is going against an investor, their portfolio waitings are reduced,
Speaker 1: but if shorts go against you, waiting increases. Three. Many
Speaker 1: shorts are crowded in short interest terms. You and I
Speaker 1: lived through a Bob Wilson's squeeze on Resorts International manys
Speaker 1: uh so short squeeze is a commonplace, and especially in
Speaker 1: some of the popular short names like Tesla. Finally, finally,
Speaker 1: above all, the reward versus risk is asymmetric between long
Speaker 1: and short Greek and theoretically rise an infinite percentage and
Speaker 1: lose an infinite percentage on the short side. But you
Speaker 1: can only make up scent if the company that's called
Speaker 1: buying Amazona two, which is a cast in exactly right.
Speaker 1: So Doug, I know you started your career bad as
Speaker 1: a housing analytic kid Er Peabody, one of the all
Speaker 1: time great firms on Wall Street. Down on, however, Square,
Speaker 1: I know you've got some thoughts about the housing sector
Speaker 1: right now. I mean it's been one of the strong
Speaker 1: parts of this you know, pandemic wrecked economy. What do
Speaker 1: you think about the sector right here? Well, I began
Speaker 1: to take a large short um position and wrote a
Speaker 1: bunch of negative commentary about a month ago. UM. And
Speaker 1: it's it's a real non consensus view because if you
Speaker 1: look at the numbers, UM, all you do is see
Speaker 1: record record releases in terms of backlogs, home price realizations
Speaker 1: and units. Soul Told Brothers was a very good example
Speaker 1: the night before last. But my notion, and after following
Speaker 1: this industry for so long, is it precisely the time
Speaker 1: you want to be show at the stocks. UM. Basically,
Speaker 1: the large gain in home prices is a portability and
Speaker 1: it's sowing to see for an industry down turn. And
Speaker 1: this has been accompanied by a sharp move in the
Speaker 1: stocks to new highs until recently UM. And I think
Speaker 1: it's important to note that today's stretch affordability has as
Speaker 1: its source something that's really different, palled than the problems
Speaker 1: that developed back in two thousand seven, which Tom and
Speaker 1: I used to discussed back then when I was giving
Speaker 1: out some warnings, and we're manifested over the next two
Speaker 1: years when for the first time in history, home prices
Speaker 1: fell back then, yet speculation running a monkey yet day
Speaker 1: trading in homes. Um you had no document mortgage loan,
Speaker 1: you had high loan to value lending prices policies Today,
Speaker 1: other factors are contributing to large price increases. UM COVID
Speaker 1: nineteen obviously is serving as an accelerant of this uptrend. Yeah,
Speaker 1: it's kind of where I want to go, Doug. I mean,
Speaker 1: you know again, it just kind of amazed me as
Speaker 1: we look at all the economic data, whether it's the consumer,
Speaker 1: whether it's manufacturing. Obviously just been really rocked hard by
Speaker 1: the pandemic induced uh, you know, disruption to the economy,
Speaker 1: but the housing market has remained extraordinary resilient, and I
Speaker 1: think people are just trying to get a sense of
Speaker 1: how much of that is record low mortgage rates versus
Speaker 1: this COVID phenomena of perhaps getting out of urban centers,
Speaker 1: getting more space, buying homes out in suburbia. Yeah, that's
Speaker 1: that's occurring. But again, it's really important when you invest
Speaker 1: long or short sell um stocks to recognize that investment
Speaker 1: knowledge is, to quote Warren Buffett, is always one viewed
Speaker 1: in the rear view view mirror of the idea is
Speaker 1: to analyze what's going to happen. And as I said this,
Speaker 1: this really quantum increase in home prices over the last
Speaker 1: two years, especially accelerating in the last six months. I
Speaker 1: see where I am in Palm Beach, Florida. UH is
Speaker 1: sowing the seeds for a downturn. And you saw look
Speaker 1: at the reaction. You had two Toll brothers. Everything was
Speaker 1: record can census beat heck out of consented expectations. Stock
Speaker 1: was down nine percent or over four dollars yesterday, doug
Speaker 1: On alongside, you've been long Amazon right now. The two
Speaker 1: outlook is either I'm still in tech or I'm not
Speaker 1: in tech. Are you still in tech? And critically, are
Speaker 1: you still in Amazon? Um? I'm I recently reduced from
Speaker 1: a very very large position that have had for a
Speaker 1: long period of time to a small sized position. UM.
Speaker 1: About this time of every year, Amazon routinely puts out
Speaker 1: a non numerical piece of fluff about their holiday business activity.
Speaker 1: They have not done it this year, Tom, And perhaps
Speaker 1: it's that the company is simply scared of anti trust
Speaker 1: issues and simply deferring the announcement until next year. However,
Speaker 1: our work, our channel work indicates that Amazon shipping backlogs
Speaker 1: maybe shrinking and that some deliveries of speeding up. I
Speaker 1: used to follow the paper industry closely, and if you
Speaker 1: look at backlogs, especially if containing board, that's all you
Speaker 1: needed to make money. And my paper industry trade sources
Speaker 1: suggests some backlog shrink and shrinkage relative expectations in packaging
Speaker 1: and contain aboard products. And we have spoken to five
Speaker 1: or seven of our local UPS stores in South Florida
Speaker 1: and they're confirming our suspicion and research conclusions. So this
Speaker 1: is really a non consensus view on Amazon. I have
Speaker 1: a non consensus view when I bought the stock um
Speaker 1: and we'll see what happens. This is a big call, potentially, Doug.
Speaker 1: One final question, and it's simple, everybody's moving to Florida.
Speaker 1: You are a path breaker on that, and you know,
Speaker 1: don you went, do the people in Florida stay in
Speaker 1: Florida or it when the Pandemics over do they come
Speaker 1: back to the Northern Climb? I think that people it's
Speaker 1: a great question. The people that I have spoken to,
Speaker 1: my friends that have moved here either renting or in
Speaker 1: many cases buying um properties uh and converting their residents
Speaker 1: for New York State, New Jersey, Connecticut just to Florida,
Speaker 1: um are, I would say, then, intend to stay in Florida.
Speaker 1: It's just a great quality of life. Um. It's a
Speaker 1: lot less expensive and a lot more manageable. What do
Speaker 1: you think, Paul, that's a pretty good sound, Pharaoh. Can
Speaker 1: you imagine John Faro in Florida? That's a friend? Southeas
Speaker 1: I know. I can go watch the Socks lose to
Speaker 1: the Yankees. I went, I visited the Yankees place near
Speaker 1: in Tampa. I say, Soriano pitch? He was? He blew
Speaker 1: me away? He was, yeah, absolutely not Soriano. Yeah, Marianna, No,
Speaker 1: not Mariano. He's hurt right now. I can't remember. Brain Freeze.
Speaker 1: Doug Cass, thank you so much for joining us with
Speaker 1: Sea Breeze here. This is an important discussion him any
Speaker 1: of you. You know, it's an important essay from Mr Cass,
Speaker 1: and you have to get that through sea breeze only.
Speaker 1: But I can't say enough about his essay this morning
Speaker 1: on shorting Douglas cass Sebres Partners. Right now, David Rubenstein
Speaker 1: joins us pure to pure conversations. And this conversation is
Speaker 1: important because Mr ruben Spine signed speaks to the gentleman
Speaker 1: who invented conversation and the modern zeiteguys. He has Klaus
Speaker 1: Schwab of Davos, and of course he has added so
Speaker 1: much to what I have done. With his initiative to
Speaker 1: get people together to converse. They will shift from Davos
Speaker 1: to Singapore. Of course, Mr Rubinstein speaking to Dr Schwab
Speaker 1: before the announcement of Singapore. David Rubinstein, many people know
Speaker 1: who Klaus Schwab is. What is the distinction for those
Speaker 1: that do not know him? About Dr Schwab, he was
Speaker 1: a He's a German citizen by birth, was a professor
Speaker 1: at the University of Geneva, and fifty years ago came
Speaker 1: up with the idea of bringing people together talk about
Speaker 1: global issues. It was about the UEO in one it's
Speaker 1: now thousands of people who go. It is seen as
Speaker 1: an overly elite gathering, but he has many young people,
Speaker 1: people are not yet quote elite, and it really does
Speaker 1: a good social purpose. I should disclosed. I'm on the
Speaker 1: board of the World Economic Forum, and I do think
Speaker 1: it's a good uh operation. It does serve useful purposes.
Speaker 1: But I recognize it has been criticized by some as
Speaker 1: overly elite. I don't really think that's fair, but that's
Speaker 1: the criticism. David. I strongly agree with you, and everybody
Speaker 1: that knows me knows I'm a huge defender of what
Speaker 1: Klaus Schwab defended, and a lot of it Folcus is
Speaker 1: jealousy to go up Happy Valley. David and I have
Speaker 1: done panels there to great success. Is well, what does
Speaker 1: devils look like in Singapore this year for Dr Schwab, Well,
Speaker 1: normally we are trooping around trying to dodge some of
Speaker 1: the snow and other ice kinds of things. This point,
Speaker 1: we won't have that in Singapore. But I think what
Speaker 1: Klaus wanted to do was to have the first gathering
Speaker 1: global gathering in person. After the virus is sort of
Speaker 1: it behind us a bit, and it wasn't possible to
Speaker 1: do it in Switzerland off because of some health reasons.
Speaker 1: Singapore seemed like a better place, so everybody will troop there.
Speaker 1: Someone will be virtual, though, and I'll think they'll have
Speaker 1: a fair number of people in personnel. It's an interesting
Speaker 1: time to be discussing the World Economic Forum and just
Speaker 1: at large confabs that have traditionally been the birthplace of
Speaker 1: a lot of interesting ideas, often that are created behind
Speaker 1: closed doors, not necessarily in the discussions on stage, David.
Speaker 1: It puts a highlight on how different has been. Do
Speaker 1: you think that the experience of the pandemic has put
Speaker 1: into cold relief the importance of these in person meetings
Speaker 1: or do you think that it's shown how things can
Speaker 1: migrate to a virtual type of platform. The world has
Speaker 1: changed forever, and there's no doubt that people don't want
Speaker 1: to travel quite as much, and they can do virtual meetings,
Speaker 1: and everybody realizes there's a lot more simplicity for doing it,
Speaker 1: a lot more ease. On the other hand, for thousands
Speaker 1: of years humans have liked human contact, and I do
Speaker 1: think that that will revert to the mean, and that
Speaker 1: therefore you will have more people gathering in person, but
Speaker 1: there will be a hybrid. Some people will come and
Speaker 1: person some will do but virtually, and that's probably what
Speaker 1: the norm is going to be in the future. So
Speaker 1: sort of emerging some of these ideas here. David, you're
Speaker 1: talking about the criticism that the World Economic Forum has
Speaker 1: had as being elitist. Do you think that this new
Speaker 1: virtual era will democratize the concept of some of these
Speaker 1: large meetings by bringing more people in and allowing them
Speaker 1: to join, if not perhaps by private jet, virtually sure
Speaker 1: people who can't afford to go to Davos or Singapore
Speaker 1: will be able to do it virtually with virtually no cost.
Speaker 1: And so I think that will help. And I think
Speaker 1: it will also attract younger people who may not be
Speaker 1: able to afford to go to places like Davos from
Speaker 1: time to time. So I think it will be helpful. Yes,
Speaker 1: I do think so, and I think Klaus has been
Speaker 1: a genius of putting it all together. You know, think
Speaker 1: about this, how many things are are still working pretty
Speaker 1: well fifty years after they were invented. David. What this
Speaker 1: is about is capitalism in the arch reality that Dr
Speaker 1: Squab is noted, and I'm sure David Rubinstein is noted.
Speaker 1: We're not clearing markets like we used to years ago.
Speaker 1: The zombi nous that is out there is tangible. When
Speaker 1: are we going to start clearing markets so we can
Speaker 1: get back to financial normality. Well, I don't know, because
Speaker 1: obviously there's a lot of frothiness in the markets right now,
Speaker 1: and I suspect at some point some of that will
Speaker 1: will will come down and deflate a bit. There's no
Speaker 1: doubt that the world has changed and people are looking
Speaker 1: at different kinds of companies, and people see it as
Speaker 1: a land rush. They want to be on the ground
Speaker 1: floor of the next zoom in technology. And I think
Speaker 1: a lot of people feel the world has changing and
Speaker 1: if you're not on the ground floor, you're gonna miss
Speaker 1: out on great profits. That's why the frothiness is there.
Speaker 1: Some of these bets will be great, some won't be great.
Speaker 1: David Rubinstein, thank you so much, of course, with Carl Carlyle,
Speaker 1: and of course look for peer to peer with Klaus
Speaker 1: Schwab nine pm on Wednesday. Looking forward to that to
Speaker 1: say the least. Thanks for listening to the Bloomberg Surveillance podcast.
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Speaker 1: Keene before the podcast. You can always catch us worldwide.
Speaker 1: I'm Bloomberg Radio