1 00:00:00,240 --> 00:00:04,160 Speaker 1: This is Bloomberg Wall Street Week. Market shrug off higher 2 00:00:04,160 --> 00:00:07,080 Speaker 1: consumer prizes. The economy is in the process of rebounding. 3 00:00:07,120 --> 00:00:09,440 Speaker 1: Will the utter reserve have its own digital currency? The 4 00:00:09,440 --> 00:00:12,440 Speaker 1: financial stories that cheap hard work. Many people think the 5 00:00:12,480 --> 00:00:14,320 Speaker 1: yields are just going to keep marching up. We have 6 00:00:14,440 --> 00:00:16,640 Speaker 1: more spending coming out of Congress. One of the big 7 00:00:16,760 --> 00:00:19,600 Speaker 1: questions I think on investor's mind inflations through the eyes 8 00:00:19,640 --> 00:00:22,720 Speaker 1: of the most influential voices. Larry Summer is the former 9 00:00:22,760 --> 00:00:26,239 Speaker 1: Treasury Secretary, Bryan Wynahan Back of America, Will CEO of 10 00:00:26,360 --> 00:00:30,479 Speaker 1: Charlie Sharp. Bloomberg wool Street Week with David Weston from 11 00:00:30,560 --> 00:00:35,240 Speaker 1: Bloomberg Radio. Cross currents in the economic data, in the virus, 12 00:00:35,400 --> 00:00:38,440 Speaker 1: and in the markets as we look for direction. This 13 00:00:38,560 --> 00:00:42,280 Speaker 1: is Bloomberg Wall Street Week. I'm David Weston. All in all, 14 00:00:42,360 --> 00:00:44,760 Speaker 1: the markets didn't much like all those cross currents that 15 00:00:44,800 --> 00:00:47,640 Speaker 1: they saw this week, with the SMP five having another 16 00:00:47,760 --> 00:00:50,720 Speaker 1: down week and flirting with its fifty day moving average, 17 00:00:50,920 --> 00:00:53,599 Speaker 1: while the yield on the ten year Treasury moved up 18 00:00:53,640 --> 00:00:55,760 Speaker 1: above one point three five. All in all, sort of 19 00:00:55,880 --> 00:00:58,120 Speaker 1: a risk off sort of week. To take us through 20 00:00:58,160 --> 00:01:00,320 Speaker 1: what she's seeing in the markets. These days Welcome act Now. 21 00:01:00,400 --> 00:01:04,160 Speaker 1: Sarah Kettter, CEO of Causeway Capital, is named the Waringstar 22 00:01:04,240 --> 00:01:07,119 Speaker 1: International Manager of the Year for two thousand seventeen. Sarah, 23 00:01:07,120 --> 00:01:08,760 Speaker 1: thank you so much for being back with us. So 24 00:01:08,880 --> 00:01:10,840 Speaker 1: give us your sense of these markets. What are they 25 00:01:10,840 --> 00:01:14,160 Speaker 1: telling us? Markets are driven by liquidity, They always have 26 00:01:14,319 --> 00:01:17,040 Speaker 1: been and they always will be. Liquidity is incredibly important 27 00:01:17,080 --> 00:01:19,440 Speaker 1: for asset prices and we've had so much of it. 28 00:01:19,480 --> 00:01:23,320 Speaker 1: We've had an extraordinary amount of quantitative ease and globally 29 00:01:23,720 --> 00:01:27,360 Speaker 1: and out of necessity due to the pandemic. But tapering 30 00:01:27,480 --> 00:01:30,000 Speaker 1: is now in sight. We don't know precisely when, and 31 00:01:30,120 --> 00:01:32,960 Speaker 1: we know it's coming, and the FED will engage in tapering, 32 00:01:33,560 --> 00:01:37,320 Speaker 1: buying less bonds, and so likely will the European Central Bank. 33 00:01:37,800 --> 00:01:42,039 Speaker 1: That's less money created, that's less rocket fuel for equities. 34 00:01:42,080 --> 00:01:46,440 Speaker 1: And my I think the Causeway team we recognize that 35 00:01:46,480 --> 00:01:48,760 Speaker 1: we've been through a very bulliant period and investor has 36 00:01:48,800 --> 00:01:51,600 Speaker 1: been willing to pay almost anything to get growth. But 37 00:01:51,760 --> 00:01:54,760 Speaker 1: now sobriety is setting in and that's some of what 38 00:01:54,880 --> 00:01:57,240 Speaker 1: we think is happening in markets, and we've seen this week. 39 00:01:57,720 --> 00:02:00,000 Speaker 1: So does that mean Sarah, that a lot of equity 40 00:02:00,080 --> 00:02:03,800 Speaker 1: is are overpriced in your judgment, given all that liquidity 41 00:02:04,440 --> 00:02:06,920 Speaker 1: at equities are all, it's just a question where the 42 00:02:06,960 --> 00:02:11,200 Speaker 1: alternative is. And with bond yields it at intestinally low 43 00:02:11,320 --> 00:02:15,120 Speaker 1: levels that makes equities very attractive. But as yields rise, 44 00:02:15,320 --> 00:02:18,040 Speaker 1: and they likely will, we don't know about how much, 45 00:02:18,520 --> 00:02:20,919 Speaker 1: but if any of the inflation signals we have become 46 00:02:20,960 --> 00:02:25,200 Speaker 1: more persistent and or as the money supplies reined in, 47 00:02:25,800 --> 00:02:28,160 Speaker 1: that's likely to put some upward pressure on bond yields, 48 00:02:28,480 --> 00:02:31,040 Speaker 1: and that in turn makes the discount rate on stocks, 49 00:02:31,080 --> 00:02:33,360 Speaker 1: which are just the present value of all the cash 50 00:02:33,400 --> 00:02:36,160 Speaker 1: they can generate into perpetuity. It makes that that just 51 00:02:36,240 --> 00:02:39,560 Speaker 1: got rate higher, and as a result, valuations tend to 52 00:02:39,600 --> 00:02:42,119 Speaker 1: come down. Stocks tend to d rate, and the more 53 00:02:42,840 --> 00:02:45,680 Speaker 1: long duration the stock, the more of the cash flows 54 00:02:45,680 --> 00:02:47,919 Speaker 1: that are promised far under the future, those stocks will 55 00:02:47,960 --> 00:02:50,959 Speaker 1: d rate more. Just the absolute opposite of what we've 56 00:02:51,000 --> 00:02:54,880 Speaker 1: seen in a tremendously exciting bull market. So sir, there's 57 00:02:54,880 --> 00:02:57,120 Speaker 1: a lot of talk about tapering, so called tapering, both 58 00:02:57,240 --> 00:02:58,840 Speaker 1: in the United States with the FED, but also over 59 00:02:58,880 --> 00:03:01,359 Speaker 1: in Europe as well. Sooner or later they're going to 60 00:03:01,440 --> 00:03:03,040 Speaker 1: have to take some of those to quit of the market. 61 00:03:03,080 --> 00:03:06,040 Speaker 1: I'm assuming right, trees don't go to the sky. Doesn't 62 00:03:06,080 --> 00:03:08,320 Speaker 1: matter to investor when they do that, or is the 63 00:03:08,360 --> 00:03:10,880 Speaker 1: more important thing that they will have to do it well. 64 00:03:10,919 --> 00:03:14,000 Speaker 1: If we know precisely when, we could be market timers 65 00:03:14,000 --> 00:03:16,040 Speaker 1: and get all kinds of accolades. But we don't know, 66 00:03:16,120 --> 00:03:19,240 Speaker 1: and nobody knows. And for that reason, it's very important 67 00:03:19,240 --> 00:03:23,600 Speaker 1: to be very diversified. We a causeway in our fundamental 68 00:03:23,639 --> 00:03:27,760 Speaker 1: portfolios in international and global equity. We've taken risk off 69 00:03:27,840 --> 00:03:30,959 Speaker 1: this year. We've seen a huge rally in cyclicals. In fact, 70 00:03:31,000 --> 00:03:34,160 Speaker 1: equity markets just about everywhere have been led by cyclical 71 00:03:34,200 --> 00:03:39,240 Speaker 1: stocks financials, materials, industrials with just a few exceptions, and 72 00:03:39,280 --> 00:03:42,720 Speaker 1: those stocks have done really well in anticipation of economic recovery. 73 00:03:42,760 --> 00:03:44,840 Speaker 1: So it's it's time to bank some of that and 74 00:03:45,200 --> 00:03:47,240 Speaker 1: and go to more defensive areas. So so, one of 75 00:03:47,280 --> 00:03:49,240 Speaker 1: the things I find fascinating is your idea that you 76 00:03:49,240 --> 00:03:52,240 Speaker 1: want to invest in the least popular segments of equity 77 00:03:52,760 --> 00:03:55,680 Speaker 1: and one of them, for example, let's pick on Chinese equities. 78 00:03:55,760 --> 00:03:57,280 Speaker 1: Right now, there's a whole lot of reasons not to 79 00:03:57,360 --> 00:04:00,760 Speaker 1: invest in Chinese equities. What makes you and tweagued at 80 00:04:00,800 --> 00:04:04,000 Speaker 1: least have not attracted to Chinese equities. Now that's why 81 00:04:04,040 --> 00:04:08,080 Speaker 1: we're read I am, I think it might help like 82 00:04:08,320 --> 00:04:12,640 Speaker 1: Chinese equities are. China has been under so much regulatory 83 00:04:12,680 --> 00:04:15,400 Speaker 1: pressure Chinese companies in the private sector that they hadn't 84 00:04:15,400 --> 00:04:19,160 Speaker 1: seen here before, and it's been happening all of it 85 00:04:19,200 --> 00:04:22,200 Speaker 1: seems that one announcement follows another, and this has been 86 00:04:22,360 --> 00:04:26,440 Speaker 1: very difficult for companies that had been lightly regulated. Some 87 00:04:26,560 --> 00:04:28,640 Speaker 1: of this regulation, as we wrote to our clients and 88 00:04:28,640 --> 00:04:31,599 Speaker 1: put on our website, is very appropriate. We think it's 89 00:04:31,680 --> 00:04:36,200 Speaker 1: more consistent to have have safeguards for consumers and for 90 00:04:36,320 --> 00:04:39,840 Speaker 1: workers and so on in industries than what China had 91 00:04:39,880 --> 00:04:43,080 Speaker 1: here before. It's just the capricious side and the unexpected 92 00:04:43,120 --> 00:04:47,599 Speaker 1: that unnerves investors. So assuming that China doesn't make the 93 00:04:47,680 --> 00:04:52,720 Speaker 1: Chinese government doesn't make miscalculations have become inconsistent and how 94 00:04:52,760 --> 00:04:55,720 Speaker 1: they levy regulation and they make it very transparent, this 95 00:04:55,880 --> 00:04:58,599 Speaker 1: could I know this sounds a little bit controversial, but 96 00:04:58,640 --> 00:05:00,080 Speaker 1: we think it could end up being quite good for 97 00:05:00,160 --> 00:05:03,839 Speaker 1: the market because it lowers the risk, increases transparency, and 98 00:05:03,839 --> 00:05:07,440 Speaker 1: you can see understand and then invest around what the 99 00:05:07,800 --> 00:05:10,600 Speaker 1: what the constraints are for a business once the regulation 100 00:05:10,680 --> 00:05:13,680 Speaker 1: is very clear, But what about that capriciousness, because I 101 00:05:13,680 --> 00:05:15,159 Speaker 1: mean you don't know, I mean I I don't know 102 00:05:15,160 --> 00:05:17,479 Speaker 1: at least where they might wake up them tomorrow morning 103 00:05:17,480 --> 00:05:19,919 Speaker 1: and decide where we want to go after that industry. Yes, 104 00:05:20,080 --> 00:05:22,920 Speaker 1: and then, and that's quite unnerving. The one that makes 105 00:05:23,000 --> 00:05:25,680 Speaker 1: us most concerned with what happened in education, in the 106 00:05:25,760 --> 00:05:29,320 Speaker 1: for profit education sector. The government after many announcements, there 107 00:05:29,360 --> 00:05:33,720 Speaker 1: was plenty of harbingers that indicated the government wasn't satisfied 108 00:05:33,760 --> 00:05:35,919 Speaker 1: with it, but they made them non for profit. That 109 00:05:36,040 --> 00:05:39,440 Speaker 1: is that is severe and jarring, and we understand the 110 00:05:39,520 --> 00:05:43,200 Speaker 1: investor response. But there are some great companies in China 111 00:05:43,600 --> 00:05:47,320 Speaker 1: that have such extraordinary balance sheets that they can pay 112 00:05:47,440 --> 00:05:50,040 Speaker 1: fines in the regulator, they can make acquisitions, they can 113 00:05:50,120 --> 00:05:52,960 Speaker 1: ultimately return a lot of capital to shareholders. Companies like 114 00:05:53,040 --> 00:05:56,640 Speaker 1: gd dot Com or buy Do in search as well 115 00:05:56,680 --> 00:06:00,520 Speaker 1: as in AI and cloud that that you can just 116 00:06:00,600 --> 00:06:03,440 Speaker 1: get through this period for investors, just don't don't look. 117 00:06:03,520 --> 00:06:06,919 Speaker 1: Just own these companies because they will be great in 118 00:06:07,000 --> 00:06:10,800 Speaker 1: the future. It's just very hard when there's so much negativity, 119 00:06:10,960 --> 00:06:13,640 Speaker 1: especially in the press, and that's part of what we do. 120 00:06:13,680 --> 00:06:16,520 Speaker 1: We take a much longer time frame and how we invest. 121 00:06:17,360 --> 00:06:19,600 Speaker 1: But that is one area of China. And another area 122 00:06:19,640 --> 00:06:22,080 Speaker 1: that's really interesting you didn't ask me about was was 123 00:06:22,120 --> 00:06:25,640 Speaker 1: what in the cyclicals hasn't hasn't rallied, and that is 124 00:06:25,839 --> 00:06:29,479 Speaker 1: memory semiconductors. Those stocks have been a real drag for 125 00:06:29,520 --> 00:06:33,560 Speaker 1: our clients here today and yet they're phenomenal consolidate industry, 126 00:06:33,800 --> 00:06:37,880 Speaker 1: high barriers entry. It's incredibly capital intensive industry and the 127 00:06:37,920 --> 00:06:41,120 Speaker 1: amount of memory chips that are used in our very 128 00:06:41,200 --> 00:06:45,159 Speaker 1: data intensive economy is skyrocketing. The demand is going to 129 00:06:45,240 --> 00:06:48,120 Speaker 1: be higher than we've ever seen it. That's Sarah Headerer, 130 00:06:48,400 --> 00:06:51,800 Speaker 1: CEO of Causeway Capital. Coming up, we hear from the 131 00:06:51,880 --> 00:06:54,320 Speaker 1: DNA the Tuch School of Business, the number two b 132 00:06:54,520 --> 00:06:57,880 Speaker 1: school in the nation according to Bloomberg Business Week. That's 133 00:06:57,960 --> 00:07:06,520 Speaker 1: next on Wall Street Week on bloomber This is Bloomberg 134 00:07:06,560 --> 00:07:10,960 Speaker 1: Wall Street Week with David Weston from Bloomberg Radio. Bloomberg 135 00:07:11,000 --> 00:07:13,720 Speaker 1: Business Week released its annual ranking of the nation's business 136 00:07:13,760 --> 00:07:16,440 Speaker 1: schools this week and number one once again with Stanford, 137 00:07:16,440 --> 00:07:19,960 Speaker 1: followed closely by dartmous Tuck School of Business. Welcome Now, 138 00:07:20,040 --> 00:07:23,880 Speaker 1: it's Dean Matthew slaughter. So Dean, thank you for coming in. Congratulations, 139 00:07:23,880 --> 00:07:26,480 Speaker 1: that's a pretty pretty good performance. There give us a 140 00:07:26,520 --> 00:07:28,760 Speaker 1: sense of where the business schools in America are today 141 00:07:28,760 --> 00:07:30,760 Speaker 1: and how have they changed over the last ten years. 142 00:07:31,080 --> 00:07:33,360 Speaker 1: Thanks David. No. Total team effort for TUCK is always 143 00:07:33,960 --> 00:07:36,160 Speaker 1: look the demand when we see talk the interest in 144 00:07:36,200 --> 00:07:38,920 Speaker 1: business education remains quite high. You know. This past cycle 145 00:07:38,960 --> 00:07:41,920 Speaker 1: or applications through up eleven percent. Last school year they 146 00:07:41,920 --> 00:07:44,080 Speaker 1: were up almost ten percent, even amidst the tumin of 147 00:07:44,080 --> 00:07:46,200 Speaker 1: the pandemic. And I think what we hear from business 148 00:07:46,280 --> 00:07:49,760 Speaker 1: organizations is they are seeking, as they have for quite 149 00:07:49,760 --> 00:07:53,480 Speaker 1: some time, individuals who can harness information um to articulate 150 00:07:53,520 --> 00:07:56,480 Speaker 1: and defend points of view and environments of disruptive ambiguity, 151 00:07:56,520 --> 00:07:58,880 Speaker 1: and really motivate high performing teams to bring those visions 152 00:07:58,920 --> 00:08:02,880 Speaker 1: to life. What's changed, I think, uh is actually I 153 00:08:02,920 --> 00:08:06,120 Speaker 1: think both the organizations that hire students and the students themselves, 154 00:08:06,480 --> 00:08:09,120 Speaker 1: they recognize the complexity of our world in the twenty 155 00:08:09,160 --> 00:08:13,120 Speaker 1: one century. Yes, you need analytical skills and functional expertise 156 00:08:13,160 --> 00:08:17,520 Speaker 1: in finance and accountancy, and yet that probably was never sufficient, 157 00:08:17,640 --> 00:08:20,080 Speaker 1: but it's definitely not sufficient in our complex world of 158 00:08:20,160 --> 00:08:23,600 Speaker 1: the twenty one century. I think the interconnected issues around 159 00:08:23,600 --> 00:08:28,360 Speaker 1: wealth and health and sustainability. Organizations and students alike are 160 00:08:28,400 --> 00:08:31,400 Speaker 1: seeking developing those integrated skills that are going to allow 161 00:08:31,440 --> 00:08:34,120 Speaker 1: them to navigate through what I think greatly is including 162 00:08:34,200 --> 00:08:37,840 Speaker 1: called uch not to sharehold of his stakeholder capitalism. So 163 00:08:37,920 --> 00:08:39,720 Speaker 1: do so, I want to unpack a little bit what 164 00:08:39,800 --> 00:08:41,360 Speaker 1: you do while they were in business school and then 165 00:08:41,360 --> 00:08:42,880 Speaker 1: where they go afterwards. But before you get do that, 166 00:08:43,040 --> 00:08:45,160 Speaker 1: just give me a little bit of the numbers where 167 00:08:45,080 --> 00:08:48,079 Speaker 1: applications from business schools, and particularly for for the Touch 168 00:08:48,120 --> 00:08:50,000 Speaker 1: School of Business. Where are you are they up? You're down? 169 00:08:50,040 --> 00:08:52,600 Speaker 1: Where are you're compared to history? Yeah, so compared to history. 170 00:08:52,640 --> 00:08:55,120 Speaker 1: You know, a lot of business goes. There's always some cyclicality, 171 00:08:55,240 --> 00:08:58,200 Speaker 1: so applications are slightly countercyclical with the strength of the 172 00:08:58,280 --> 00:09:01,400 Speaker 1: labor market. Economists mayill say that because the opportunity costs 173 00:09:01,480 --> 00:09:04,240 Speaker 1: varying through time of leading the labor market to earn 174 00:09:04,240 --> 00:09:06,920 Speaker 1: a degree of any kind. Um, many schools go back 175 00:09:06,920 --> 00:09:09,160 Speaker 1: and for years saw it drop and demand. Actually that 176 00:09:09,280 --> 00:09:11,560 Speaker 1: came a lot from international students that had a lot 177 00:09:11,600 --> 00:09:14,000 Speaker 1: to do with rising supply side competition and the rest 178 00:09:14,040 --> 00:09:16,360 Speaker 1: of the world is good business schools come online more 179 00:09:16,360 --> 00:09:18,520 Speaker 1: and the rest of the world. But we had talked 180 00:09:18,520 --> 00:09:20,920 Speaker 1: in the past two years, they've seen strong growth and applications. 181 00:09:20,960 --> 00:09:23,200 Speaker 1: They were up again over eleven percent this past cycle 182 00:09:23,280 --> 00:09:25,800 Speaker 1: ten almost ten percent the previous cycle. Part of what 183 00:09:25,800 --> 00:09:28,559 Speaker 1: we're also seeing as an increased breadth and interest. I 184 00:09:28,559 --> 00:09:30,439 Speaker 1: think if you go back to an earlier period, the 185 00:09:30,520 --> 00:09:32,880 Speaker 1: NBA degree was thought to be sort of a finishing 186 00:09:32,880 --> 00:09:36,199 Speaker 1: degree for people who had already been in certain firms 187 00:09:36,280 --> 00:09:39,880 Speaker 1: or certain occupations and capital markets and then consulting um. 188 00:09:40,000 --> 00:09:42,560 Speaker 1: But we see an increased breadth in recent years among 189 00:09:42,640 --> 00:09:45,839 Speaker 1: the perspective applicants for what they were doing in their 190 00:09:45,880 --> 00:09:48,320 Speaker 1: post college years before thinking about an m b A. 191 00:09:48,800 --> 00:09:50,880 Speaker 1: So the class of our first year class and talk 192 00:09:50,960 --> 00:09:53,480 Speaker 1: now is a little und three hundred students two d 193 00:09:53,559 --> 00:09:56,760 Speaker 1: nine students. They came from two hundred and twenty seven 194 00:09:56,840 --> 00:09:59,480 Speaker 1: distinct employers, and what they were doing before coming here 195 00:09:59,480 --> 00:10:01,880 Speaker 1: to the touch cool. So I think the recognition of 196 00:10:01,920 --> 00:10:05,240 Speaker 1: the enduring value of an m b A, the communication skills, 197 00:10:05,640 --> 00:10:08,680 Speaker 1: the analytical thinking, the self awareness that are the heart 198 00:10:08,679 --> 00:10:11,440 Speaker 1: of management leadership in our world today. I think the 199 00:10:11,520 --> 00:10:14,959 Speaker 1: breadth of interest that we see continues to grow. So 200 00:10:15,080 --> 00:10:17,040 Speaker 1: so I have reception which is not based on fact, 201 00:10:17,120 --> 00:10:20,160 Speaker 1: just an impression now that that business schools changed over time, 202 00:10:20,160 --> 00:10:22,559 Speaker 1: that I used to think the graduates, the best graduates 203 00:10:22,600 --> 00:10:25,520 Speaker 1: went to mackenzy sort of consulting firm, or to a 204 00:10:25,559 --> 00:10:28,680 Speaker 1: Goldman Sachs on Wall Street. Then that evolved towards silicon 205 00:10:28,760 --> 00:10:31,160 Speaker 1: value value a bit more on the tech side. Has 206 00:10:31,200 --> 00:10:33,959 Speaker 1: the pandemic change things at all? Because, for example, I've 207 00:10:33,960 --> 00:10:36,839 Speaker 1: talked to Albert Bowler, who's the CEO of Fightser. He said, boy, 208 00:10:36,520 --> 00:10:39,679 Speaker 1: they just have so many people now wanting to go 209 00:10:39,800 --> 00:10:42,840 Speaker 1: into into Fightser. Yeah. So I think this one thing 210 00:10:42,960 --> 00:10:45,800 Speaker 1: that's terrific is the strength of demand for a graduates 211 00:10:45,840 --> 00:10:48,440 Speaker 1: across a lot of industries. It is still the case 212 00:10:48,480 --> 00:10:50,240 Speaker 1: if I look at the recent years at talk, we've 213 00:10:50,280 --> 00:10:52,840 Speaker 1: had very strong labor market performance for our graduates in 214 00:10:52,920 --> 00:10:56,800 Speaker 1: terms of compensation and other measures. Um consulting and finance 215 00:10:56,840 --> 00:10:59,400 Speaker 1: are still very strong industries. So go you know, recent years, 216 00:10:59,440 --> 00:11:02,480 Speaker 1: I'd say about our graduates, their first step back into 217 00:11:02,480 --> 00:11:04,840 Speaker 1: the labor market is consulting. As you said, the Mackenzie's, 218 00:11:04,840 --> 00:11:07,280 Speaker 1: the bands, the BCGS, the E wise, a lot of 219 00:11:07,280 --> 00:11:11,920 Speaker 1: great firms about going to capital markets. I think investment 220 00:11:11,960 --> 00:11:13,920 Speaker 1: banking is still a foundational next step for a lot 221 00:11:13,960 --> 00:11:18,079 Speaker 1: of people. Technology relative to ten twenty years ago has 222 00:11:18,120 --> 00:11:20,719 Speaker 1: surged in terms of their demand for NBA graduates as well. 223 00:11:21,000 --> 00:11:24,640 Speaker 1: That's about tuck as well. I think the other trend 224 00:11:24,679 --> 00:11:27,800 Speaker 1: that we see is whatever that first step is back 225 00:11:27,840 --> 00:11:30,760 Speaker 1: into the labor market for a students post graduation, I 226 00:11:30,760 --> 00:11:33,760 Speaker 1: think they are even more likely a few years beyond 227 00:11:33,800 --> 00:11:37,600 Speaker 1: to think about a transition into some particular industry vertical 228 00:11:37,760 --> 00:11:39,960 Speaker 1: that might be clean tech, that might be in health tech, 229 00:11:40,280 --> 00:11:42,640 Speaker 1: or to take a step into entrepreneurship. So many of 230 00:11:42,679 --> 00:11:45,640 Speaker 1: our tuck A lums are very successful entrepreneurs. Some do 231 00:11:45,720 --> 00:11:48,120 Speaker 1: that at first step right beyond graduation, but many, like 232 00:11:48,160 --> 00:11:50,320 Speaker 1: Sarah Kenner's with You Before Sarah is a great member 233 00:11:50,320 --> 00:11:52,760 Speaker 1: of the Touch Class of eight seven. We have entrepreneurs 234 00:11:52,760 --> 00:11:57,040 Speaker 1: who step into that new role of founding or joining 235 00:11:57,080 --> 00:11:59,480 Speaker 1: some new business venture after they've done something in a 236 00:11:59,559 --> 00:12:02,160 Speaker 1: post situation. One of the things that we've covered af 237 00:12:02,160 --> 00:12:04,520 Speaker 1: a lot here at Bloomberg is some of the pressures 238 00:12:04,559 --> 00:12:06,840 Speaker 1: being put on some of the younger bankers on Wall Street, 239 00:12:07,120 --> 00:12:10,079 Speaker 1: and by the way, perhaps corresponding to that, the rapid 240 00:12:10,160 --> 00:12:12,720 Speaker 1: increase in salary levels, we have to pay them more money. 241 00:12:13,120 --> 00:12:15,760 Speaker 1: Are people more reluctant to go to banks or having 242 00:12:15,800 --> 00:12:18,120 Speaker 1: getting paid much more money, are they more eager to 243 00:12:18,160 --> 00:12:20,560 Speaker 1: go to banks? Uh, great question. I don't think they're 244 00:12:20,559 --> 00:12:22,040 Speaker 1: more reluctant to go to banking. I think it's a 245 00:12:22,080 --> 00:12:24,880 Speaker 1: couple of things. One is graduates, whether their undergraduates going 246 00:12:24,880 --> 00:12:27,839 Speaker 1: into those analyst programs are are NBA graduates they want 247 00:12:27,880 --> 00:12:30,640 Speaker 1: to receive a fair kind of market compensation for the 248 00:12:30,679 --> 00:12:33,320 Speaker 1: skills they're bringing to their organization. And again, the demand 249 00:12:33,360 --> 00:12:36,120 Speaker 1: for those skills globally continues to rise quite sharply, so 250 00:12:36,120 --> 00:12:38,880 Speaker 1: they care about compensation. I think one of the changes 251 00:12:38,920 --> 00:12:41,160 Speaker 1: to echo on your earlier question, I think there's a 252 00:12:41,200 --> 00:12:43,719 Speaker 1: bit more sense of our NBA graduate's definitely talking in 253 00:12:43,840 --> 00:12:46,920 Speaker 1: other industries. They're devoted to their careers, and yet they 254 00:12:46,960 --> 00:12:49,280 Speaker 1: want to have work that helps them live their lives 255 00:12:49,360 --> 00:12:51,800 Speaker 1: as opposed to sort of living to work. And so 256 00:12:51,880 --> 00:12:54,440 Speaker 1: I think individuals are more seeking a match with an 257 00:12:54,520 --> 00:12:58,480 Speaker 1: organization that thinks about the stakeholders that the global organization 258 00:12:58,520 --> 00:13:01,800 Speaker 1: connects with, and they see of leaders in those organizations 259 00:13:02,000 --> 00:13:05,880 Speaker 1: articulating values and taking stands on issues that um are 260 00:13:06,200 --> 00:13:09,320 Speaker 1: broad definitions of who are the stakeholders for these companies, 261 00:13:09,360 --> 00:13:11,079 Speaker 1: and so I think that's a change compared to an 262 00:13:11,080 --> 00:13:13,520 Speaker 1: earlier time. Our students than what they want to learn 263 00:13:13,559 --> 00:13:15,439 Speaker 1: in out of the classroom reflects that, and I think 264 00:13:15,480 --> 00:13:17,880 Speaker 1: the organizations that are recruiting our students they need to 265 00:13:17,920 --> 00:13:20,040 Speaker 1: present a value proposition for that. And I think that's 266 00:13:20,040 --> 00:13:22,240 Speaker 1: really exciting. I think it's going to help our world, 267 00:13:22,640 --> 00:13:24,480 Speaker 1: you know, better the world through business as we echo 268 00:13:24,520 --> 00:13:27,000 Speaker 1: our mission statement and talk. So I have no doubt 269 00:13:27,080 --> 00:13:29,360 Speaker 1: that you don't have any shortage of applicants to dart 270 00:13:29,360 --> 00:13:30,880 Speaker 1: with talk and by the way, that they go on 271 00:13:30,960 --> 00:13:34,280 Speaker 1: to really successful careers. But is that equally true throughout 272 00:13:34,360 --> 00:13:36,800 Speaker 1: the range of business schools? Is there increasingly sort of 273 00:13:36,840 --> 00:13:40,600 Speaker 1: assorting of the top schools really doing extremely well and 274 00:13:40,679 --> 00:13:42,840 Speaker 1: maybe in the middle range, maybe it's not such a 275 00:13:42,840 --> 00:13:46,240 Speaker 1: good investment frankly to go to business school. Yeah, boy, 276 00:13:46,280 --> 00:13:49,600 Speaker 1: great question. UM. Like a lot of other industries we see, 277 00:13:49,720 --> 00:13:51,400 Speaker 1: I think there is a sense where some of the 278 00:13:51,440 --> 00:13:56,720 Speaker 1: more successful organizations they're seeing strong demand for us. Again, 279 00:13:56,760 --> 00:13:59,000 Speaker 1: the demand is joined between the prospective students and the 280 00:13:59,160 --> 00:14:02,199 Speaker 1: organizations that you're them, and I think some of the 281 00:14:02,320 --> 00:14:05,559 Speaker 1: organization the past, we're quite good and yet and sort 282 00:14:05,600 --> 00:14:08,680 Speaker 1: of a general growth market, which was business education in 283 00:14:08,720 --> 00:14:10,840 Speaker 1: the last part of the twenties century. In the first 284 00:14:10,880 --> 00:14:14,600 Speaker 1: maybe decade of the century, they were able to build 285 00:14:14,640 --> 00:14:17,080 Speaker 1: programs and have them scale, especially as the rest of 286 00:14:17,120 --> 00:14:19,640 Speaker 1: the world was recognized in the value of an m 287 00:14:19,760 --> 00:14:22,400 Speaker 1: B A. But you're definitely right that in recent years 288 00:14:22,440 --> 00:14:25,240 Speaker 1: there's been more of a quality sorting, and every organization 289 00:14:25,280 --> 00:14:27,440 Speaker 1: talk no difference, has had to be very clear about 290 00:14:27,760 --> 00:14:30,560 Speaker 1: what is its particular value proposition to the market and 291 00:14:30,600 --> 00:14:32,880 Speaker 1: what what it thinks it's delivering on. So we speak 292 00:14:32,920 --> 00:14:36,480 Speaker 1: of a personal and connected and therefore transformative experience here 293 00:14:36,480 --> 00:14:39,080 Speaker 1: at talk UM making sure that we are delivering on 294 00:14:39,120 --> 00:14:41,200 Speaker 1: that is why we wake up every day. I think 295 00:14:41,920 --> 00:14:45,160 Speaker 1: NBA education, like a lot of other industries, there's been 296 00:14:45,200 --> 00:14:48,120 Speaker 1: this competitive dynamic that you point to, So it keeps 297 00:14:48,160 --> 00:14:50,640 Speaker 1: us UM waking up every day and listening even more 298 00:14:50,680 --> 00:14:53,720 Speaker 1: intentionally to our students, to our great faculty, to the 299 00:14:53,800 --> 00:14:56,840 Speaker 1: organizations that are part of our ecosystem. That's Dean Matthew 300 00:14:56,880 --> 00:15:01,000 Speaker 1: Slaughter of the Dartmouth Talk School of Business coming up. 301 00:15:01,080 --> 00:15:03,640 Speaker 1: Blair Efron of Center View Partners on what the c 302 00:15:03,800 --> 00:15:07,200 Speaker 1: suite thinks about the tax debate that's going on in Washington. 303 00:15:07,680 --> 00:15:15,840 Speaker 1: That's next on Wall Street Week on Bloomberg. This is 304 00:15:15,880 --> 00:15:20,240 Speaker 1: Bloomberg Wall Street Week with David Weston from Bloomberg Radio. 305 00:15:20,760 --> 00:15:24,720 Speaker 1: Build back Better. That's the promise presidential candidate Joe Biden 306 00:15:24,760 --> 00:15:27,360 Speaker 1: made the voters over a year ago. It's time to 307 00:15:27,440 --> 00:15:31,520 Speaker 1: reverse the priorities in this country. When the federal government 308 00:15:31,520 --> 00:15:35,600 Speaker 1: spends taxpayers money, we should use it to buy American 309 00:15:35,720 --> 00:15:40,160 Speaker 1: products and support American jobs. And that's the plan President 310 00:15:40,280 --> 00:15:43,320 Speaker 1: Joe Biden laid out to Congress starting last March. But 311 00:15:43,440 --> 00:15:46,360 Speaker 1: from the beginning he insisted he would not just borrow 312 00:15:46,480 --> 00:15:48,760 Speaker 1: to get it done, that we had to figure out 313 00:15:48,840 --> 00:15:51,280 Speaker 1: how to pay for it. The investments I'm proposed and 314 00:15:51,360 --> 00:15:54,920 Speaker 1: would be fully paid for over the long term by 315 00:15:55,120 --> 00:16:00,000 Speaker 1: having the largest corporations, including the corporations have paid zero 316 00:16:00,040 --> 00:16:04,800 Speaker 1: of federal tax last year, and the super wealthy began 317 00:16:04,840 --> 00:16:07,280 Speaker 1: to pay their fair share. And this week we got 318 00:16:07,320 --> 00:16:10,000 Speaker 1: some specifics on just what it will take to pay 319 00:16:10,040 --> 00:16:12,160 Speaker 1: for what the president wants. It may not be as 320 00:16:12,200 --> 00:16:16,080 Speaker 1: dramatic as the fashion statement made by Representative Alexandria Ocasio 321 00:16:16,200 --> 00:16:18,800 Speaker 1: Cortez at the met Gala this week, but it still 322 00:16:18,800 --> 00:16:21,800 Speaker 1: would be the most sweeping set of tax increases in 323 00:16:21,840 --> 00:16:26,280 Speaker 1: nearly thirty years, including raising the top rate on personal taxes, 324 00:16:26,600 --> 00:16:30,120 Speaker 1: increasing taxes on capital gains, and imposing a three percent 325 00:16:30,280 --> 00:16:33,880 Speaker 1: surcharge on anyone making more than five million dollars a year. 326 00:16:34,560 --> 00:16:37,280 Speaker 1: And it's not just individuals who would get hit. The 327 00:16:37,320 --> 00:16:40,120 Speaker 1: top corporate rate would go up to twenty six point five, 328 00:16:40,960 --> 00:16:44,200 Speaker 1: there'd be new levies on overseas corporate income, and the 329 00:16:44,280 --> 00:16:47,920 Speaker 1: carried interest breaks so beloved by private equity would get 330 00:16:47,920 --> 00:16:50,840 Speaker 1: cut back further, applying only if you hold the asset 331 00:16:51,080 --> 00:16:54,280 Speaker 1: for at least five years before you sell it. Not surprisingly, 332 00:16:54,480 --> 00:16:59,000 Speaker 1: Democrats and Republicans see these proposals vary differently, with Brian 333 00:16:59,080 --> 00:17:02,560 Speaker 1: D's president and chief economists claiming the corporate tax changes 334 00:17:02,600 --> 00:17:05,600 Speaker 1: would bring more investment on shore. So I think that 335 00:17:05,720 --> 00:17:08,920 Speaker 1: the core values the presidents put forward is reverse the 336 00:17:08,920 --> 00:17:11,320 Speaker 1: most negative impact of the Trump tax cuts and get 337 00:17:11,359 --> 00:17:14,919 Speaker 1: this corporate tax reform right so that we are encouraging 338 00:17:14,920 --> 00:17:18,600 Speaker 1: more incentives to invest here domestically. While Republicans warned these 339 00:17:18,680 --> 00:17:23,000 Speaker 1: hikes would make American industry less competitive. Here's Kevin Brady, 340 00:17:23,160 --> 00:17:26,400 Speaker 1: the ranking chair of the House Ways and Means Committee. 341 00:17:26,520 --> 00:17:30,399 Speaker 1: They'll be crippling for main street businesses. Certainly they'll land 342 00:17:30,480 --> 00:17:33,960 Speaker 1: on working families. But as importantly, we're going to drive 343 00:17:34,000 --> 00:17:37,560 Speaker 1: you as jobs overseas. Uh And and this is trying 344 00:17:37,560 --> 00:17:39,960 Speaker 1: to find our way out of the pandemic. It is 345 00:17:40,080 --> 00:17:44,520 Speaker 1: the biggest economic blunder I've ever seen a country make. Well, 346 00:17:44,520 --> 00:17:47,439 Speaker 1: whatever the politicians think about tax hikes, what do the 347 00:17:47,440 --> 00:17:49,720 Speaker 1: people who will have to pay them things? Will they 348 00:17:49,800 --> 00:17:52,680 Speaker 1: affect the way they do business? Welcome now, someone who 349 00:17:52,720 --> 00:17:55,639 Speaker 1: deals in the real world with real CEOs who make 350 00:17:55,640 --> 00:17:58,440 Speaker 1: the decisions to drive the real economy. Blair efron is 351 00:17:58,520 --> 00:18:00,560 Speaker 1: co founder and partner of Center Fing Partners. But are 352 00:18:00,600 --> 00:18:02,399 Speaker 1: great to have you back with us. You talk with 353 00:18:02,480 --> 00:18:04,919 Speaker 1: CEOs all the time. You can understand why they might 354 00:18:04,920 --> 00:18:06,840 Speaker 1: be nervous given what we just heard from President Biden 355 00:18:06,880 --> 00:18:08,720 Speaker 1: saying we're gonna pay for this by making sure the 356 00:18:08,800 --> 00:18:11,679 Speaker 1: largest corporations pay their fair share. Our CEO is concerned 357 00:18:11,680 --> 00:18:13,639 Speaker 1: about this. So what I would say is this, I 358 00:18:13,680 --> 00:18:17,320 Speaker 1: think there is enough telling an economy that we'll be 359 00:18:17,359 --> 00:18:19,399 Speaker 1: able to do this comfortably. Let's have a little bit 360 00:18:19,400 --> 00:18:24,320 Speaker 1: of a historical perspective, uh. Donald Trump cut taxes two 361 00:18:24,400 --> 00:18:28,080 Speaker 1: trillion dollars UH. If you look at the impact of 362 00:18:28,119 --> 00:18:31,840 Speaker 1: that also neglative bold. In fact, you go back to 363 00:18:32,000 --> 00:18:35,280 Speaker 1: the second term of President Obama, compare that to the 364 00:18:36,320 --> 00:18:40,680 Speaker 1: Trump three and a half years before COVID. Fundamentally, UH 365 00:18:40,840 --> 00:18:45,680 Speaker 1: under Obama the market was up nine more UH growth 366 00:18:45,800 --> 00:18:48,520 Speaker 1: during both parioses around two and a half. The point is, 367 00:18:48,560 --> 00:18:52,040 Speaker 1: I just don't think it's going to have a meaningful impact. Also, 368 00:18:52,119 --> 00:18:57,600 Speaker 1: let's keep in mind that during COVID UH tremendous wealth 369 00:18:57,680 --> 00:19:02,320 Speaker 1: has been created. The top UH ten percent have created 370 00:19:02,680 --> 00:19:07,520 Speaker 1: ten trillion dollars wealth. I think the idea of a 371 00:19:07,640 --> 00:19:11,400 Speaker 1: tax UH increase, particularly where half of it is corporate 372 00:19:11,560 --> 00:19:14,640 Speaker 1: and only as personal, is something we can handle. Now. 373 00:19:14,680 --> 00:19:17,880 Speaker 1: Of course, the key, very importantly, the key is that 374 00:19:18,440 --> 00:19:22,360 Speaker 1: it is done for investment. And when we talked about infrastructure, 375 00:19:22,440 --> 00:19:25,960 Speaker 1: be a physical or a human where the money gets applied, 376 00:19:26,000 --> 00:19:28,680 Speaker 1: I think is going to really be the most important 377 00:19:28,960 --> 00:19:32,120 Speaker 1: question we have. And to the extent um we really 378 00:19:32,160 --> 00:19:37,920 Speaker 1: are focused on the physical side, water, airports, railroads, electric grid, 379 00:19:38,280 --> 00:19:40,240 Speaker 1: that's a good thing. On the human side, to the 380 00:19:40,280 --> 00:19:43,680 Speaker 1: extent it really goes to caregivers who can get back 381 00:19:43,840 --> 00:19:47,280 Speaker 1: to work to the extent it goes to education, therefore 382 00:19:47,280 --> 00:19:51,240 Speaker 1: getting more skills for UH future employment also a good thing. 383 00:19:51,280 --> 00:19:53,080 Speaker 1: And we have a lot of as I said, a 384 00:19:53,119 --> 00:19:56,440 Speaker 1: lot of telement economy done right, this hopefully will keep 385 00:19:56,960 --> 00:19:59,439 Speaker 1: that tail went on a much more sustainable trajectory. So 386 00:19:59,480 --> 00:20:00,800 Speaker 1: it was a lot. I don't want to be too 387 00:20:00,840 --> 00:20:02,720 Speaker 1: cute here, but I noticed a couple of things you 388 00:20:02,760 --> 00:20:06,640 Speaker 1: didn't mention in there, things like medicare for the elderly, 389 00:20:06,720 --> 00:20:11,320 Speaker 1: for vision and dental help, things like I earned income 390 00:20:11,359 --> 00:20:14,000 Speaker 1: tax credits and child tax credits. Because if you look 391 00:20:14,000 --> 00:20:16,360 Speaker 1: at like the pen Morton budget model, they say those 392 00:20:16,400 --> 00:20:19,840 Speaker 1: things don't improve productivity. Things you mentioned Blair do So 393 00:20:19,880 --> 00:20:23,240 Speaker 1: do you draw a distinction. Do CEOs draw distinction between 394 00:20:23,320 --> 00:20:27,480 Speaker 1: investment in something that's going to increase I think distinction, David, 395 00:20:27,560 --> 00:20:30,240 Speaker 1: very fair question. We all draw distinction. I think out 396 00:20:30,240 --> 00:20:33,359 Speaker 1: of four trillion that we're talking about, you can and 397 00:20:33,400 --> 00:20:35,480 Speaker 1: again that number will change and we both know that. 398 00:20:36,040 --> 00:20:39,040 Speaker 1: UM let's assume that at least what I've seen two 399 00:20:39,080 --> 00:20:43,000 Speaker 1: thirds of it actually is investment oriented. UH, if you 400 00:20:43,160 --> 00:20:47,199 Speaker 1: look at the almost six trillion already spent, clearly, when 401 00:20:47,240 --> 00:20:50,040 Speaker 1: you get six percent growth last quarter, you can assume 402 00:20:50,200 --> 00:20:55,160 Speaker 1: directly because the tail and that's created. And I also 403 00:20:55,240 --> 00:21:00,360 Speaker 1: again do think that given how well so many have done, uh, 404 00:21:00,400 --> 00:21:04,240 Speaker 1: the idea share prosperity makes sense because really the goal 405 00:21:04,320 --> 00:21:08,600 Speaker 1: here is to keep our economy growing. That's Blair Affront 406 00:21:08,680 --> 00:21:12,399 Speaker 1: of Center View Partners. Coming up, we wrap up. Coming up, 407 00:21:12,440 --> 00:21:14,560 Speaker 1: we wrap up the week as we always do with 408 00:21:14,600 --> 00:21:22,119 Speaker 1: our special contributor Larry Summers of Harvard. This is Bloomberg 409 00:21:22,200 --> 00:21:26,440 Speaker 1: Wall Street Week with David Weston from Bloomberg Radio. We're 410 00:21:26,440 --> 00:21:28,399 Speaker 1: gonna conclude our week as we do every week with 411 00:21:28,480 --> 00:21:31,520 Speaker 1: Larry Summers of Harvard, our special contributor here on Wall 412 00:21:31,560 --> 00:21:34,080 Speaker 1: Street Week. So Larry, let's start with all of the 413 00:21:34,200 --> 00:21:37,280 Speaker 1: back and forth on Capitol Hill about the budget about taxes. 414 00:21:37,640 --> 00:21:40,879 Speaker 1: This week, we had a group of Nobel laureates in 415 00:21:40,960 --> 00:21:44,000 Speaker 1: economics write a letter saying they think it makes good 416 00:21:44,000 --> 00:21:46,440 Speaker 1: sense to invest in in fact, it won't be inflationary. 417 00:21:46,560 --> 00:21:48,560 Speaker 1: What did you make of that letter? I agree that 418 00:21:49,000 --> 00:21:53,119 Speaker 1: we absolutely need a bill that contains substantial public investment, 419 00:21:53,240 --> 00:21:56,640 Speaker 1: and I was glad to see the latter. I think 420 00:21:56,680 --> 00:21:59,679 Speaker 1: the letter could have said more. He could have warned 421 00:21:59,680 --> 00:22:05,639 Speaker 1: about inflation expectations becoming unanchored unless we pay for the 422 00:22:05,720 --> 00:22:10,000 Speaker 1: investments we make with revenue increases. It could have stressed 423 00:22:10,040 --> 00:22:16,600 Speaker 1: the importance of designing those investments so that they're maximally effective, 424 00:22:16,680 --> 00:22:24,000 Speaker 1: with benefits exceeding UH costs. It could have very usefully 425 00:22:24,280 --> 00:22:30,240 Speaker 1: warned against UH budget gimmicks where you only pay for 426 00:22:30,359 --> 00:22:37,680 Speaker 1: investments for a limited UH period of time. Yes, we should, 427 00:22:37,960 --> 00:22:42,280 Speaker 1: and have and need to pass a major investment in 428 00:22:42,320 --> 00:22:46,639 Speaker 1: the future of our country bill, but especially after the 429 00:22:46,720 --> 00:22:50,479 Speaker 1: indiscriminate spending early this year, we need to do it 430 00:22:50,560 --> 00:22:54,840 Speaker 1: in a rational, disciplined way. So that you mentioned inflation, particularly, 431 00:22:54,920 --> 00:22:57,320 Speaker 1: something we've talked about pretty much every week. Now. We've 432 00:22:57,320 --> 00:23:00,119 Speaker 1: got CPI numbers and states in this week, and they 433 00:23:00,119 --> 00:23:02,399 Speaker 1: came in a little lower than people expected. Some people 434 00:23:02,560 --> 00:23:05,520 Speaker 1: breathe the sort of collective sigh of relief. Are we 435 00:23:05,520 --> 00:23:09,240 Speaker 1: out of the woods yet? Or is that premature? I 436 00:23:09,280 --> 00:23:14,560 Speaker 1: think it's way premature. The labor market still looks extraordinarily tight. 437 00:23:15,480 --> 00:23:19,080 Speaker 1: The most interesting number of the week to me was 438 00:23:19,119 --> 00:23:22,720 Speaker 1: the New York Fed survey that really shows pretty clear 439 00:23:22,760 --> 00:23:27,400 Speaker 1: evidence that both one year inflation expectations and three year 440 00:23:27,440 --> 00:23:34,520 Speaker 1: at inflation expectations maybe becoming unanchored. If you did the 441 00:23:34,600 --> 00:23:40,080 Speaker 1: things that the inflation doves have done month after month, 442 00:23:40,760 --> 00:23:45,640 Speaker 1: and you looked at median inflation, or you took out 443 00:23:45,720 --> 00:23:51,159 Speaker 1: the outliers, the figures this week actually looked more ominous 444 00:23:51,520 --> 00:23:57,720 Speaker 1: relative to history. So we're not gonna know yet, but 445 00:23:58,359 --> 00:24:02,520 Speaker 1: the data flow, whether it's housing, whether it's more and 446 00:24:02,600 --> 00:24:06,320 Speaker 1: more anecdotes and more and more places of supply chains, 447 00:24:06,440 --> 00:24:13,920 Speaker 1: whether it's direct measures of expectations, looks increasingly concerning to me, So, Larry, 448 00:24:14,000 --> 00:24:15,800 Speaker 1: it seemed to be a week for letters. We not 449 00:24:15,880 --> 00:24:18,639 Speaker 1: only had the Nobel Lawyer's writing in about the budget, 450 00:24:18,840 --> 00:24:22,439 Speaker 1: we also had Leona Panetta, former Secretary of Defense, and 451 00:24:22,560 --> 00:24:27,399 Speaker 1: other former national security officials writing. It's a letter saying 452 00:24:27,440 --> 00:24:29,879 Speaker 1: we've got to be careful about applying or expanding and 453 00:24:30,080 --> 00:24:32,879 Speaker 1: trust when it comes to our tech companies because China's 454 00:24:32,880 --> 00:24:35,800 Speaker 1: taking a very different course. China's embracing their big tech. 455 00:24:35,920 --> 00:24:38,720 Speaker 1: That's what they call national champions. What is the challenge 456 00:24:38,760 --> 00:24:41,560 Speaker 1: for the United States and both being competitive globally in 457 00:24:41,600 --> 00:24:43,960 Speaker 1: tech but also making sure that our big tech doesn't 458 00:24:43,960 --> 00:24:45,919 Speaker 1: get out of control? You know, this is gonna be 459 00:24:45,920 --> 00:24:51,359 Speaker 1: a big process challenge for the Biden administration, for Brian Deese, 460 00:24:51,400 --> 00:24:54,800 Speaker 1: the director of the National Economic Council for Attorney General 461 00:24:54,840 --> 00:25:01,200 Speaker 1: Merrick Garland for National Security Advisor Jake uh Saw, and uh, 462 00:25:01,240 --> 00:25:03,760 Speaker 1: we've got to figure out that on the one hand, 463 00:25:04,560 --> 00:25:08,920 Speaker 1: there's much to worry about coming from our tech companies 464 00:25:08,960 --> 00:25:14,120 Speaker 1: on privacy, on market concentration, on what they're doing to uh, 465 00:25:14,160 --> 00:25:17,760 Speaker 1: the nature of our public dialogue, and we need public 466 00:25:17,800 --> 00:25:23,240 Speaker 1: policy there. But they're also our national champions in important 467 00:25:23,320 --> 00:25:29,160 Speaker 1: respects in key areas of competition around the globe, what 468 00:25:29,600 --> 00:25:33,240 Speaker 1: Secretary Panetta was stressing, and we've got to make a 469 00:25:33,400 --> 00:25:38,680 Speaker 1: policy that integrates those realities. And frankly, our national security 470 00:25:38,800 --> 00:25:42,680 Speaker 1: establishment isn't used to thinking about the first set of realities, 471 00:25:43,160 --> 00:25:46,919 Speaker 1: and our economic and antitrust policy makers aren't used to 472 00:25:46,960 --> 00:25:50,840 Speaker 1: thinking about the second set of realities, and so the 473 00:25:50,920 --> 00:25:53,560 Speaker 1: government's gonna need to find a way of bringing them 474 00:25:53,600 --> 00:25:59,240 Speaker 1: together so that we can craft uh the right uh 475 00:25:59,640 --> 00:26:03,520 Speaker 1: new HUNST policy. I think it's a hugely important area, 476 00:26:03,560 --> 00:26:06,480 Speaker 1: and I think so far we've probably had too much 477 00:26:06,520 --> 00:26:11,879 Speaker 1: in the way of sloganeering about some of the risks 478 00:26:12,040 --> 00:26:16,160 Speaker 1: on both sides, and we really need a very thoughtful 479 00:26:16,200 --> 00:26:20,840 Speaker 1: and serious policy process that brings together different parts of 480 00:26:20,840 --> 00:26:25,479 Speaker 1: the government that aren't usually in dialogue with each other. Larry, you, 481 00:26:25,680 --> 00:26:28,840 Speaker 1: of course co chaired the G twenty panel to address 482 00:26:28,880 --> 00:26:31,359 Speaker 1: how to really avoid the next pandemic. You have a 483 00:26:31,359 --> 00:26:33,560 Speaker 1: piece out in the Washington Post this week. We have 484 00:26:33,720 --> 00:26:36,480 Speaker 1: the United Nations General Assembly coming up next week. Give 485 00:26:36,560 --> 00:26:38,520 Speaker 1: us a sense of where you are in that process. 486 00:26:38,760 --> 00:26:41,040 Speaker 1: You were compared to sort of Bretton Woods, a new 487 00:26:41,119 --> 00:26:44,400 Speaker 1: version of Bretton Woods. US leadership really got Bretton Woods done? 488 00:26:44,400 --> 00:26:46,160 Speaker 1: Do we have that kind of U S leadership this time? 489 00:26:46,600 --> 00:26:49,920 Speaker 1: I'm encouraged by what President Biden has said and by 490 00:26:49,920 --> 00:26:54,800 Speaker 1: the meeting he's convening. Um, We've got this set of 491 00:26:54,840 --> 00:26:57,800 Speaker 1: meetings this week and next week, and then we have 492 00:26:57,880 --> 00:27:00,639 Speaker 1: a G twenty meeting that will take place at the 493 00:27:00,760 --> 00:27:03,800 Speaker 1: end of October. So I think the potential is there. 494 00:27:04,480 --> 00:27:06,760 Speaker 1: But look, I want to take a big picture of 495 00:27:06,800 --> 00:27:10,520 Speaker 1: you on this Uh, David. We've been celebrating the twentieth 496 00:27:10,560 --> 00:27:15,000 Speaker 1: anniversary of nine eleven, but something very important has happened. 497 00:27:15,040 --> 00:27:18,320 Speaker 1: We haven't had a major terrorist attack again. That Look, 498 00:27:18,440 --> 00:27:21,399 Speaker 1: that's a great victory relative to what people expected on 499 00:27:21,600 --> 00:27:25,280 Speaker 1: September twelve or October twelfth of two thousand and one, 500 00:27:25,320 --> 00:27:28,119 Speaker 1: and we should give credit for that. But at the 501 00:27:28,200 --> 00:27:31,720 Speaker 1: same time, I think with the twenty year Afghanistan War, 502 00:27:31,880 --> 00:27:34,639 Speaker 1: with the Iraq War, with various changes that have taken 503 00:27:34,640 --> 00:27:40,159 Speaker 1: place in the United States, people see many elements of 504 00:27:40,320 --> 00:27:45,400 Speaker 1: overreaction and excess. I am worried that twenty years from now, 505 00:27:46,280 --> 00:27:50,560 Speaker 1: a hundred million people will have died in pandemics, and 506 00:27:50,600 --> 00:27:55,560 Speaker 1: the world's climate will have been radically altered, and the 507 00:27:55,680 --> 00:28:00,600 Speaker 1: concern will not be overreaction but under reaction and to 508 00:28:00,720 --> 00:28:04,879 Speaker 1: what I think are an immense set of security challenges. 509 00:28:05,359 --> 00:28:08,160 Speaker 1: And so I think there's no danger we're gonna overreact 510 00:28:08,240 --> 00:28:12,399 Speaker 1: to the pandemic threat or the climate threat, and there's 511 00:28:13,040 --> 00:28:17,840 Speaker 1: enormous reason to fear that until we start seeing these 512 00:28:18,520 --> 00:28:25,080 Speaker 1: as top national security challenges, that we're gonna fall away short. Finally, Larry, 513 00:28:25,080 --> 00:28:27,240 Speaker 1: I'd like get one quick thought from you on something 514 00:28:27,240 --> 00:28:29,400 Speaker 1: I know you've dealt with before, and that's the dead ceiling. 515 00:28:29,840 --> 00:28:32,600 Speaker 1: We now are back up against that in Washington. It's 516 00:28:32,600 --> 00:28:34,760 Speaker 1: not clear exactly when we'll run a crowl of it. 517 00:28:34,880 --> 00:28:37,920 Speaker 1: Sometime late October maybe November. First. We had Janet Yellow, 518 00:28:37,960 --> 00:28:40,520 Speaker 1: the Secretary of Treasury, this week, calling up Mitch McConnell 519 00:28:40,600 --> 00:28:42,320 Speaker 1: and earlier saying you've got to do something with this. 520 00:28:42,400 --> 00:28:44,200 Speaker 1: He said, basically, it's up to you. What do you 521 00:28:44,200 --> 00:28:45,880 Speaker 1: make of this debt? Saying why do we have the dead? 522 00:28:45,920 --> 00:28:48,200 Speaker 1: Something doesn't make sense. Are we dealing this in a 523 00:28:48,320 --> 00:28:53,320 Speaker 1: in a sensible rational way? No. Um. As an investor, 524 00:28:53,920 --> 00:28:58,560 Speaker 1: I would hold treasuries because you're gonna see a lot 525 00:28:58,600 --> 00:29:02,560 Speaker 1: of stupid posturing and games games of Chicken and Washington. 526 00:29:03,120 --> 00:29:06,280 Speaker 1: But I have every confidence that this will be worked 527 00:29:06,280 --> 00:29:10,840 Speaker 1: out in the United States will honor its uh debts. 528 00:29:11,480 --> 00:29:16,000 Speaker 1: As a former Treasury secretary, I empathize with Secretary Yellen, 529 00:29:16,080 --> 00:29:21,120 Speaker 1: who's gonna probably have a sleepless night UM or two 530 00:29:21,160 --> 00:29:23,720 Speaker 1: along the way, and it is going to be involved 531 00:29:23,800 --> 00:29:29,960 Speaker 1: in all sorts of uh posturing that's uh necessary as 532 00:29:30,000 --> 00:29:34,520 Speaker 1: she explains what he is and uh what he isn't 533 00:29:34,680 --> 00:29:39,200 Speaker 1: uh possible. Uh. This is an area where I think 534 00:29:39,240 --> 00:29:44,320 Speaker 1: everybody just needs to uh grow up. No one's really 535 00:29:44,400 --> 00:29:48,320 Speaker 1: in doubt that when we borrowed money, the United States 536 00:29:48,440 --> 00:29:51,000 Speaker 1: is going to pay it back. And so this whole 537 00:29:51,080 --> 00:29:55,560 Speaker 1: ritual of pretending that we're gonna block paying it back, 538 00:29:56,080 --> 00:29:59,840 Speaker 1: I think is a fairly sorry spectacle for our country. 539 00:30:00,000 --> 00:30:04,360 Speaker 1: It diverts enormous amounts of political energy that could go 540 00:30:04,480 --> 00:30:08,640 Speaker 1: to solving real problems rather than artificial and contrived ones 541 00:30:08,720 --> 00:30:11,840 Speaker 1: like the dead silly. Okay, Larry Summers Harvard, thank you 542 00:30:11,920 --> 00:30:13,840 Speaker 1: so very much for being back with us, Larry, of course, 543 00:30:13,840 --> 00:30:17,240 Speaker 1: as our special contributor here at Wall Street Week. Finally, 544 00:30:17,360 --> 00:30:20,880 Speaker 1: one more thought, what could you buy for three hundred 545 00:30:21,000 --> 00:30:24,920 Speaker 1: million dollars? That's how much California spent this last week 546 00:30:24,960 --> 00:30:27,680 Speaker 1: on its recall. And that's before you count the seventy 547 00:30:27,680 --> 00:30:30,720 Speaker 1: million dollars the governor at Gavin Newsom spent to keep 548 00:30:30,840 --> 00:30:33,160 Speaker 1: his job. But in the end it turned out it 549 00:30:33,240 --> 00:30:38,440 Speaker 1: wasn't even close. Here's a way are enjoying overwhelmingly has 550 00:30:38,520 --> 00:30:41,440 Speaker 1: no voting tonight here in the state of California. And 551 00:30:41,520 --> 00:30:43,680 Speaker 1: it's not like it hasn't happened before. We all remember 552 00:30:43,720 --> 00:30:46,959 Speaker 1: back in two thousand three when Governor Gray Davis lost 553 00:30:47,080 --> 00:30:49,840 Speaker 1: his job only ten months into his second term. But 554 00:30:49,960 --> 00:30:52,280 Speaker 1: he had a lot of challenges. Let's be frank, They'd 555 00:30:52,320 --> 00:30:54,520 Speaker 1: had the collapse of the dot com bubble, which did 556 00:30:54,520 --> 00:30:56,880 Speaker 1: really hit California, and even back then they had a 557 00:30:56,920 --> 00:31:00,640 Speaker 1: lot of wildfires. Everyone running for office in California is 558 00:31:00,720 --> 00:31:03,720 Speaker 1: well aware that the people in California have the first 559 00:31:03,720 --> 00:31:06,160 Speaker 1: and last word. If you don't like that, well, don't 560 00:31:06,200 --> 00:31:08,560 Speaker 1: run for August in California. Run someplace else. So you 561 00:31:08,560 --> 00:31:10,280 Speaker 1: can't have mon and grown as his part of life 562 00:31:10,280 --> 00:31:14,600 Speaker 1: in California. And oh yes, Gray Davis was up against 563 00:31:14,640 --> 00:31:19,120 Speaker 1: a formidable opponent in the Terminator. But then again, Gavin 564 00:31:19,200 --> 00:31:21,720 Speaker 1: Newsom in some senses, was running against a different kind 565 00:31:21,720 --> 00:31:24,960 Speaker 1: of celebrity in the form of our most recent president. 566 00:31:25,200 --> 00:31:32,920 Speaker 1: You either keep Gavin Newsom as your governor or no, 567 00:31:33,120 --> 00:31:36,600 Speaker 1: get Donald Trump. California has made something a tradition of 568 00:31:36,680 --> 00:31:40,360 Speaker 1: trying to recall its governors. In the roughly one years 569 00:31:40,400 --> 00:31:42,800 Speaker 1: they've had the statute for the recall, they've had no 570 00:31:42,880 --> 00:31:46,440 Speaker 1: fewer than fifty five attempts to recall the governor. Yes, 571 00:31:46,480 --> 00:31:50,000 Speaker 1: if you're doing the math, that's roughly one every other year, 572 00:31:50,480 --> 00:31:52,800 Speaker 1: But in all that time only two have actually made 573 00:31:52,840 --> 00:31:55,760 Speaker 1: it to a formal election. Gray Davis that we talked 574 00:31:55,760 --> 00:31:58,800 Speaker 1: about who lost, and now Gavin Newstone one. So if 575 00:31:58,800 --> 00:32:01,920 Speaker 1: you're keeping score, it's roughly one and one at this point. 576 00:32:02,680 --> 00:32:05,680 Speaker 1: Gavin Newsom, the current governor, has some ideas of what 577 00:32:05,720 --> 00:32:07,640 Speaker 1: to do with that three million dollars. If you look 578 00:32:07,640 --> 00:32:10,720 Speaker 1: at his most recent budget for the state, he proposes, 579 00:32:10,760 --> 00:32:13,760 Speaker 1: for example, doing the way of the entire backlog of 580 00:32:13,880 --> 00:32:17,960 Speaker 1: unemployment insurance claims and also maybe forgiving all of the 581 00:32:18,000 --> 00:32:20,960 Speaker 1: traffic tickets issued to all low income residents of the 582 00:32:21,000 --> 00:32:24,640 Speaker 1: state for the last six years. And the price tag 583 00:32:24,720 --> 00:32:27,200 Speaker 1: for either one of those, well, it just happens to 584 00:32:27,240 --> 00:32:30,960 Speaker 1: be yes, you guessed it, three hundred million dollars, So 585 00:32:31,600 --> 00:32:34,520 Speaker 1: you make the call that does it. For this episode 586 00:32:34,560 --> 00:32:37,320 Speaker 1: of Wall Street Week, I'm David Weston. This is Bloomberg. 587 00:32:37,560 --> 00:32:39,239 Speaker 1: See you next week.