WEBVTT - Bloomberg Wall Street Week: Ketterer, Effron, Summers 0:00:00.240 --> 0:00:04.160 This is Bloomberg Wall Street Week. Market shrug off higher 0:00:04.160 --> 0:00:07.080 consumer prizes. The economy is in the process of rebounding. 0:00:07.120 --> 0:00:09.440 Will the utter reserve have its own digital currency? The 0:00:09.440 --> 0:00:12.440 financial stories that cheap hard work. Many people think the 0:00:12.480 --> 0:00:14.320 yields are just going to keep marching up. We have 0:00:14.440 --> 0:00:16.640 more spending coming out of Congress. One of the big 0:00:16.760 --> 0:00:19.600 questions I think on investor's mind inflations through the eyes 0:00:19.640 --> 0:00:22.720 of the most influential voices. Larry Summer is the former 0:00:22.760 --> 0:00:26.239 Treasury Secretary, Bryan Wynahan Back of America, Will CEO of 0:00:26.360 --> 0:00:30.479 Charlie Sharp. Bloomberg wool Street Week with David Weston from 0:00:30.560 --> 0:00:35.240 Bloomberg Radio. Cross currents in the economic data, in the virus, 0:00:35.400 --> 0:00:38.440 and in the markets as we look for direction. This 0:00:38.560 --> 0:00:42.280 is Bloomberg Wall Street Week. I'm David Weston. All in all, 0:00:42.360 --> 0:00:44.760 the markets didn't much like all those cross currents that 0:00:44.800 --> 0:00:47.640 they saw this week, with the SMP five having another 0:00:47.760 --> 0:00:50.720 down week and flirting with its fifty day moving average, 0:00:50.920 --> 0:00:53.599 while the yield on the ten year Treasury moved up 0:00:53.640 --> 0:00:55.760 above one point three five. All in all, sort of 0:00:55.880 --> 0:00:58.120 a risk off sort of week. To take us through 0:00:58.160 --> 0:01:00.320 what she's seeing in the markets. These days Welcome act Now. 0:01:00.400 --> 0:01:04.160 Sarah Kettter, CEO of Causeway Capital, is named the Waringstar 0:01:04.240 --> 0:01:07.119 International Manager of the Year for two thousand seventeen. Sarah, 0:01:07.120 --> 0:01:08.760 thank you so much for being back with us. So 0:01:08.880 --> 0:01:10.840 give us your sense of these markets. What are they 0:01:10.840 --> 0:01:14.160 telling us? Markets are driven by liquidity, They always have 0:01:14.319 --> 0:01:17.040 been and they always will be. Liquidity is incredibly important 0:01:17.080 --> 0:01:19.440 for asset prices and we've had so much of it. 0:01:19.480 --> 0:01:23.320 We've had an extraordinary amount of quantitative ease and globally 0:01:23.720 --> 0:01:27.360 and out of necessity due to the pandemic. But tapering 0:01:27.480 --> 0:01:30.000 is now in sight. We don't know precisely when, and 0:01:30.120 --> 0:01:32.960 we know it's coming, and the FED will engage in tapering, 0:01:33.560 --> 0:01:37.320 buying less bonds, and so likely will the European Central Bank. 0:01:37.800 --> 0:01:42.039 That's less money created, that's less rocket fuel for equities. 0:01:42.080 --> 0:01:46.440 And my I think the Causeway team we recognize that 0:01:46.480 --> 0:01:48.760 we've been through a very bulliant period and investor has 0:01:48.800 --> 0:01:51.600 been willing to pay almost anything to get growth. But 0:01:51.760 --> 0:01:54.760 now sobriety is setting in and that's some of what 0:01:54.880 --> 0:01:57.240 we think is happening in markets, and we've seen this week. 0:01:57.720 --> 0:02:00.000 So does that mean Sarah, that a lot of equity 0:02:00.080 --> 0:02:03.800 is are overpriced in your judgment, given all that liquidity 0:02:04.440 --> 0:02:06.920 at equities are all, it's just a question where the 0:02:06.960 --> 0:02:11.200 alternative is. And with bond yields it at intestinally low 0:02:11.320 --> 0:02:15.120 levels that makes equities very attractive. But as yields rise, 0:02:15.320 --> 0:02:18.040 and they likely will, we don't know about how much, 0:02:18.520 --> 0:02:20.919 but if any of the inflation signals we have become 0:02:20.960 --> 0:02:25.200 more persistent and or as the money supplies reined in, 0:02:25.800 --> 0:02:28.160 that's likely to put some upward pressure on bond yields, 0:02:28.480 --> 0:02:31.040 and that in turn makes the discount rate on stocks, 0:02:31.080 --> 0:02:33.360 which are just the present value of all the cash 0:02:33.400 --> 0:02:36.160 they can generate into perpetuity. It makes that that just 0:02:36.240 --> 0:02:39.560 got rate higher, and as a result, valuations tend to 0:02:39.600 --> 0:02:42.119 come down. Stocks tend to d rate, and the more 0:02:42.840 --> 0:02:45.680 long duration the stock, the more of the cash flows 0:02:45.680 --> 0:02:47.919 that are promised far under the future, those stocks will 0:02:47.960 --> 0:02:50.959 d rate more. Just the absolute opposite of what we've 0:02:51.000 --> 0:02:54.880 seen in a tremendously exciting bull market. So sir, there's 0:02:54.880 --> 0:02:57.120 a lot of talk about tapering, so called tapering, both 0:02:57.240 --> 0:02:58.840 in the United States with the FED, but also over 0:02:58.880 --> 0:03:01.359 in Europe as well. Sooner or later they're going to 0:03:01.440 --> 0:03:03.040 have to take some of those to quit of the market. 0:03:03.080 --> 0:03:06.040 I'm assuming right, trees don't go to the sky. Doesn't 0:03:06.080 --> 0:03:08.320 matter to investor when they do that, or is the 0:03:08.360 --> 0:03:10.880 more important thing that they will have to do it well. 0:03:10.919 --> 0:03:14.000 If we know precisely when, we could be market timers 0:03:14.000 --> 0:03:16.040 and get all kinds of accolades. But we don't know, 0:03:16.120 --> 0:03:19.240 and nobody knows. And for that reason, it's very important 0:03:19.240 --> 0:03:23.600 to be very diversified. We a causeway in our fundamental 0:03:23.639 --> 0:03:27.760 portfolios in international and global equity. We've taken risk off 0:03:27.840 --> 0:03:30.959 this year. We've seen a huge rally in cyclicals. In fact, 0:03:31.000 --> 0:03:34.160 equity markets just about everywhere have been led by cyclical 0:03:34.200 --> 0:03:39.240 stocks financials, materials, industrials with just a few exceptions, and 0:03:39.280 --> 0:03:42.720 those stocks have done really well in anticipation of economic recovery. 0:03:42.760 --> 0:03:44.840 So it's it's time to bank some of that and 0:03:45.200 --> 0:03:47.240 and go to more defensive areas. So so, one of 0:03:47.280 --> 0:03:49.240 the things I find fascinating is your idea that you 0:03:49.240 --> 0:03:52.240 want to invest in the least popular segments of equity 0:03:52.760 --> 0:03:55.680 and one of them, for example, let's pick on Chinese equities. 0:03:55.760 --> 0:03:57.280 Right now, there's a whole lot of reasons not to 0:03:57.360 --> 0:04:00.760 invest in Chinese equities. What makes you and tweagued at 0:04:00.800 --> 0:04:04.000 least have not attracted to Chinese equities. Now that's why 0:04:04.040 --> 0:04:08.080 we're read I am, I think it might help like 0:04:08.320 --> 0:04:12.640 Chinese equities are. China has been under so much regulatory 0:04:12.680 --> 0:04:15.400 pressure Chinese companies in the private sector that they hadn't 0:04:15.400 --> 0:04:19.160 seen here before, and it's been happening all of it 0:04:19.200 --> 0:04:22.200 seems that one announcement follows another, and this has been 0:04:22.360 --> 0:04:26.440 very difficult for companies that had been lightly regulated. Some 0:04:26.560 --> 0:04:28.640 of this regulation, as we wrote to our clients and 0:04:28.640 --> 0:04:31.599 put on our website, is very appropriate. We think it's 0:04:31.680 --> 0:04:36.200 more consistent to have have safeguards for consumers and for 0:04:36.320 --> 0:04:39.840 workers and so on in industries than what China had 0:04:39.880 --> 0:04:43.080 here before. It's just the capricious side and the unexpected 0:04:43.120 --> 0:04:47.599 that unnerves investors. So assuming that China doesn't make the 0:04:47.680 --> 0:04:52.720 Chinese government doesn't make miscalculations have become inconsistent and how 0:04:52.760 --> 0:04:55.720 they levy regulation and they make it very transparent, this 0:04:55.880 --> 0:04:58.599 could I know this sounds a little bit controversial, but 0:04:58.640 --> 0:05:00.080 we think it could end up being quite good for 0:05:00.160 --> 0:05:03.839 the market because it lowers the risk, increases transparency, and 0:05:03.839 --> 0:05:07.440 you can see understand and then invest around what the 0:05:07.800 --> 0:05:10.600 what the constraints are for a business once the regulation 0:05:10.680 --> 0:05:13.680 is very clear, But what about that capriciousness, because I 0:05:13.680 --> 0:05:15.159 mean you don't know, I mean I I don't know 0:05:15.160 --> 0:05:17.479 at least where they might wake up them tomorrow morning 0:05:17.480 --> 0:05:19.919 and decide where we want to go after that industry. Yes, 0:05:20.080 --> 0:05:22.920 and then, and that's quite unnerving. The one that makes 0:05:23.000 --> 0:05:25.680 us most concerned with what happened in education, in the 0:05:25.760 --> 0:05:29.320 for profit education sector. The government after many announcements, there 0:05:29.360 --> 0:05:33.720 was plenty of harbingers that indicated the government wasn't satisfied 0:05:33.760 --> 0:05:35.919 with it, but they made them non for profit. That 0:05:36.040 --> 0:05:39.440 is that is severe and jarring, and we understand the 0:05:39.520 --> 0:05:43.200 investor response. But there are some great companies in China 0:05:43.600 --> 0:05:47.320 that have such extraordinary balance sheets that they can pay 0:05:47.440 --> 0:05:50.040 fines in the regulator, they can make acquisitions, they can 0:05:50.120 --> 0:05:52.960 ultimately return a lot of capital to shareholders. Companies like 0:05:53.040 --> 0:05:56.640 gd dot Com or buy Do in search as well 0:05:56.680 --> 0:06:00.520 as in AI and cloud that that you can just 0:06:00.600 --> 0:06:03.440 get through this period for investors, just don't don't look. 0:06:03.520 --> 0:06:06.919 Just own these companies because they will be great in 0:06:07.000 --> 0:06:10.800 the future. It's just very hard when there's so much negativity, 0:06:10.960 --> 0:06:13.640 especially in the press, and that's part of what we do. 0:06:13.680 --> 0:06:16.520 We take a much longer time frame and how we invest. 0:06:17.360 --> 0:06:19.600 But that is one area of China. And another area 0:06:19.640 --> 0:06:22.080 that's really interesting you didn't ask me about was was 0:06:22.120 --> 0:06:25.640 what in the cyclicals hasn't hasn't rallied, and that is 0:06:25.839 --> 0:06:29.479 memory semiconductors. Those stocks have been a real drag for 0:06:29.520 --> 0:06:33.560 our clients here today and yet they're phenomenal consolidate industry, 0:06:33.800 --> 0:06:37.880 high barriers entry. It's incredibly capital intensive industry and the 0:06:37.920 --> 0:06:41.120 amount of memory chips that are used in our very 0:06:41.200 --> 0:06:45.159 data intensive economy is skyrocketing. The demand is going to 0:06:45.240 --> 0:06:48.120 be higher than we've ever seen it. That's Sarah Headerer, 0:06:48.400 --> 0:06:51.800 CEO of Causeway Capital. Coming up, we hear from the 0:06:51.880 --> 0:06:54.320 DNA the Tuch School of Business, the number two b 0:06:54.520 --> 0:06:57.880 school in the nation according to Bloomberg Business Week. That's 0:06:57.960 --> 0:07:06.520 next on Wall Street Week on bloomber This is Bloomberg 0:07:06.560 --> 0:07:10.960 Wall Street Week with David Weston from Bloomberg Radio. Bloomberg 0:07:11.000 --> 0:07:13.720 Business Week released its annual ranking of the nation's business 0:07:13.760 --> 0:07:16.440 schools this week and number one once again with Stanford, 0:07:16.440 --> 0:07:19.960 followed closely by dartmous Tuck School of Business. Welcome Now, 0:07:20.040 --> 0:07:23.880 it's Dean Matthew slaughter. So Dean, thank you for coming in. Congratulations, 0:07:23.880 --> 0:07:26.480 that's a pretty pretty good performance. There give us a 0:07:26.520 --> 0:07:28.760 sense of where the business schools in America are today 0:07:28.760 --> 0:07:30.760 and how have they changed over the last ten years. 0:07:31.080 --> 0:07:33.360 Thanks David. No. Total team effort for TUCK is always 0:07:33.960 --> 0:07:36.160 look the demand when we see talk the interest in 0:07:36.200 --> 0:07:38.920 business education remains quite high. You know. This past cycle 0:07:38.960 --> 0:07:41.920 or applications through up eleven percent. Last school year they 0:07:41.920 --> 0:07:44.080 were up almost ten percent, even amidst the tumin of 0:07:44.080 --> 0:07:46.200 the pandemic. And I think what we hear from business 0:07:46.280 --> 0:07:49.760 organizations is they are seeking, as they have for quite 0:07:49.760 --> 0:07:53.480 some time, individuals who can harness information um to articulate 0:07:53.520 --> 0:07:56.480 and defend points of view and environments of disruptive ambiguity, 0:07:56.520 --> 0:07:58.880 and really motivate high performing teams to bring those visions 0:07:58.920 --> 0:08:02.880 to life. What's changed, I think, uh is actually I 0:08:02.920 --> 0:08:06.120 think both the organizations that hire students and the students themselves, 0:08:06.480 --> 0:08:09.120 they recognize the complexity of our world in the twenty 0:08:09.160 --> 0:08:13.120 one century. Yes, you need analytical skills and functional expertise 0:08:13.160 --> 0:08:17.520 in finance and accountancy, and yet that probably was never sufficient, 0:08:17.640 --> 0:08:20.080 but it's definitely not sufficient in our complex world of 0:08:20.160 --> 0:08:23.600 the twenty one century. I think the interconnected issues around 0:08:23.600 --> 0:08:28.360 wealth and health and sustainability. Organizations and students alike are 0:08:28.400 --> 0:08:31.400 seeking developing those integrated skills that are going to allow 0:08:31.440 --> 0:08:34.120 them to navigate through what I think greatly is including 0:08:34.200 --> 0:08:37.840 called uch not to sharehold of his stakeholder capitalism. So 0:08:37.920 --> 0:08:39.720 do so, I want to unpack a little bit what 0:08:39.800 --> 0:08:41.360 you do while they were in business school and then 0:08:41.360 --> 0:08:42.880 where they go afterwards. But before you get do that, 0:08:43.040 --> 0:08:45.160 just give me a little bit of the numbers where 0:08:45.080 --> 0:08:48.079 applications from business schools, and particularly for for the Touch 0:08:48.120 --> 0:08:50.000 School of Business. Where are you are they up? You're down? 0:08:50.040 --> 0:08:52.600 Where are you're compared to history? Yeah, so compared to history. 0:08:52.640 --> 0:08:55.120 You know, a lot of business goes. There's always some cyclicality, 0:08:55.240 --> 0:08:58.200 so applications are slightly countercyclical with the strength of the 0:08:58.280 --> 0:09:01.400 labor market. Economists mayill say that because the opportunity costs 0:09:01.480 --> 0:09:04.240 varying through time of leading the labor market to earn 0:09:04.240 --> 0:09:06.920 a degree of any kind. Um, many schools go back 0:09:06.920 --> 0:09:09.160 and for years saw it drop and demand. Actually that 0:09:09.280 --> 0:09:11.560 came a lot from international students that had a lot 0:09:11.600 --> 0:09:14.000 to do with rising supply side competition and the rest 0:09:14.040 --> 0:09:16.360 of the world is good business schools come online more 0:09:16.360 --> 0:09:18.520 and the rest of the world. But we had talked 0:09:18.520 --> 0:09:20.920 in the past two years, they've seen strong growth and applications. 0:09:20.960 --> 0:09:23.200 They were up again over eleven percent this past cycle 0:09:23.280 --> 0:09:25.800 ten almost ten percent the previous cycle. Part of what 0:09:25.800 --> 0:09:28.559 we're also seeing as an increased breadth and interest. I 0:09:28.559 --> 0:09:30.439 think if you go back to an earlier period, the 0:09:30.520 --> 0:09:32.880 NBA degree was thought to be sort of a finishing 0:09:32.880 --> 0:09:36.199 degree for people who had already been in certain firms 0:09:36.280 --> 0:09:39.880 or certain occupations and capital markets and then consulting um. 0:09:40.000 --> 0:09:42.560 But we see an increased breadth in recent years among 0:09:42.640 --> 0:09:45.839 the perspective applicants for what they were doing in their 0:09:45.880 --> 0:09:48.320 post college years before thinking about an m b A. 0:09:48.800 --> 0:09:50.880 So the class of our first year class and talk 0:09:50.960 --> 0:09:53.480 now is a little und three hundred students two d 0:09:53.559 --> 0:09:56.760 nine students. They came from two hundred and twenty seven 0:09:56.840 --> 0:09:59.480 distinct employers, and what they were doing before coming here 0:09:59.480 --> 0:10:01.880 to the touch cool. So I think the recognition of 0:10:01.920 --> 0:10:05.240 the enduring value of an m b A, the communication skills, 0:10:05.640 --> 0:10:08.680 the analytical thinking, the self awareness that are the heart 0:10:08.679 --> 0:10:11.440 of management leadership in our world today. I think the 0:10:11.520 --> 0:10:14.959 breadth of interest that we see continues to grow. So 0:10:15.080 --> 0:10:17.040 so I have reception which is not based on fact, 0:10:17.120 --> 0:10:20.160 just an impression now that that business schools changed over time, 0:10:20.160 --> 0:10:22.559 that I used to think the graduates, the best graduates 0:10:22.600 --> 0:10:25.520 went to mackenzy sort of consulting firm, or to a 0:10:25.559 --> 0:10:28.680 Goldman Sachs on Wall Street. Then that evolved towards silicon 0:10:28.760 --> 0:10:31.160 value value a bit more on the tech side. Has 0:10:31.200 --> 0:10:33.959 the pandemic change things at all? Because, for example, I've 0:10:33.960 --> 0:10:36.839 talked to Albert Bowler, who's the CEO of Fightser. He said, boy, 0:10:36.520 --> 0:10:39.679 they just have so many people now wanting to go 0:10:39.800 --> 0:10:42.840 into into Fightser. Yeah. So I think this one thing 0:10:42.960 --> 0:10:45.800 that's terrific is the strength of demand for a graduates 0:10:45.840 --> 0:10:48.440 across a lot of industries. It is still the case 0:10:48.480 --> 0:10:50.240 if I look at the recent years at talk, we've 0:10:50.280 --> 0:10:52.840 had very strong labor market performance for our graduates in 0:10:52.920 --> 0:10:56.800 terms of compensation and other measures. Um consulting and finance 0:10:56.840 --> 0:10:59.400 are still very strong industries. So go you know, recent years, 0:10:59.440 --> 0:11:02.480 I'd say about our graduates, their first step back into 0:11:02.480 --> 0:11:04.840 the labor market is consulting. As you said, the Mackenzie's, 0:11:04.840 --> 0:11:07.280 the bands, the BCGS, the E wise, a lot of 0:11:07.280 --> 0:11:11.920 great firms about going to capital markets. I think investment 0:11:11.960 --> 0:11:13.920 banking is still a foundational next step for a lot 0:11:13.960 --> 0:11:18.079 of people. Technology relative to ten twenty years ago has 0:11:18.120 --> 0:11:20.719 surged in terms of their demand for NBA graduates as well. 0:11:21.000 --> 0:11:24.640 That's about tuck as well. I think the other trend 0:11:24.679 --> 0:11:27.800 that we see is whatever that first step is back 0:11:27.840 --> 0:11:30.760 into the labor market for a students post graduation, I 0:11:30.760 --> 0:11:33.760 think they are even more likely a few years beyond 0:11:33.800 --> 0:11:37.600 to think about a transition into some particular industry vertical 0:11:37.760 --> 0:11:39.960 that might be clean tech, that might be in health tech, 0:11:40.280 --> 0:11:42.640 or to take a step into entrepreneurship. So many of 0:11:42.679 --> 0:11:45.640 our tuck A lums are very successful entrepreneurs. Some do 0:11:45.720 --> 0:11:48.120 that at first step right beyond graduation, but many, like 0:11:48.160 --> 0:11:50.320 Sarah Kenner's with You Before Sarah is a great member 0:11:50.320 --> 0:11:52.760 of the Touch Class of eight seven. We have entrepreneurs 0:11:52.760 --> 0:11:57.040 who step into that new role of founding or joining 0:11:57.080 --> 0:11:59.480 some new business venture after they've done something in a 0:11:59.559 --> 0:12:02.160 post situation. One of the things that we've covered af 0:12:02.160 --> 0:12:04.520 a lot here at Bloomberg is some of the pressures 0:12:04.559 --> 0:12:06.840 being put on some of the younger bankers on Wall Street, 0:12:07.120 --> 0:12:10.079 and by the way, perhaps corresponding to that, the rapid 0:12:10.160 --> 0:12:12.720 increase in salary levels, we have to pay them more money. 0:12:13.120 --> 0:12:15.760 Are people more reluctant to go to banks or having 0:12:15.800 --> 0:12:18.120 getting paid much more money, are they more eager to 0:12:18.160 --> 0:12:20.560 go to banks? Uh, great question. I don't think they're 0:12:20.559 --> 0:12:22.040 more reluctant to go to banking. I think it's a 0:12:22.080 --> 0:12:24.880 couple of things. One is graduates, whether their undergraduates going 0:12:24.880 --> 0:12:27.839 into those analyst programs are are NBA graduates they want 0:12:27.880 --> 0:12:30.640 to receive a fair kind of market compensation for the 0:12:30.679 --> 0:12:33.320 skills they're bringing to their organization. And again, the demand 0:12:33.360 --> 0:12:36.120 for those skills globally continues to rise quite sharply, so 0:12:36.120 --> 0:12:38.880 they care about compensation. I think one of the changes 0:12:38.920 --> 0:12:41.160 to echo on your earlier question, I think there's a 0:12:41.200 --> 0:12:43.719 bit more sense of our NBA graduate's definitely talking in 0:12:43.840 --> 0:12:46.920 other industries. They're devoted to their careers, and yet they 0:12:46.960 --> 0:12:49.280 want to have work that helps them live their lives 0:12:49.360 --> 0:12:51.800 as opposed to sort of living to work. And so 0:12:51.880 --> 0:12:54.440 I think individuals are more seeking a match with an 0:12:54.520 --> 0:12:58.480 organization that thinks about the stakeholders that the global organization 0:12:58.520 --> 0:13:01.800 connects with, and they see of leaders in those organizations 0:13:02.000 --> 0:13:05.880 articulating values and taking stands on issues that um are 0:13:06.200 --> 0:13:09.320 broad definitions of who are the stakeholders for these companies, 0:13:09.360 --> 0:13:11.079 and so I think that's a change compared to an 0:13:11.080 --> 0:13:13.520 earlier time. Our students than what they want to learn 0:13:13.559 --> 0:13:15.439 in out of the classroom reflects that, and I think 0:13:15.480 --> 0:13:17.880 the organizations that are recruiting our students they need to 0:13:17.920 --> 0:13:20.040 present a value proposition for that. And I think that's 0:13:20.040 --> 0:13:22.240 really exciting. I think it's going to help our world, 0:13:22.640 --> 0:13:24.480 you know, better the world through business as we echo 0:13:24.520 --> 0:13:27.000 our mission statement and talk. So I have no doubt 0:13:27.080 --> 0:13:29.360 that you don't have any shortage of applicants to dart 0:13:29.360 --> 0:13:30.880 with talk and by the way, that they go on 0:13:30.960 --> 0:13:34.280 to really successful careers. But is that equally true throughout 0:13:34.360 --> 0:13:36.800 the range of business schools? Is there increasingly sort of 0:13:36.840 --> 0:13:40.600 assorting of the top schools really doing extremely well and 0:13:40.679 --> 0:13:42.840 maybe in the middle range, maybe it's not such a 0:13:42.840 --> 0:13:46.240 good investment frankly to go to business school. Yeah, boy, 0:13:46.280 --> 0:13:49.600 great question. UM. Like a lot of other industries we see, 0:13:49.720 --> 0:13:51.400 I think there is a sense where some of the 0:13:51.440 --> 0:13:56.720 more successful organizations they're seeing strong demand for us. Again, 0:13:56.760 --> 0:13:59.000 the demand is joined between the prospective students and the 0:13:59.160 --> 0:14:02.199 organizations that you're them, and I think some of the 0:14:02.320 --> 0:14:05.559 organization the past, we're quite good and yet and sort 0:14:05.600 --> 0:14:08.680 of a general growth market, which was business education in 0:14:08.720 --> 0:14:10.840 the last part of the twenties century. In the first 0:14:10.880 --> 0:14:14.600 maybe decade of the century, they were able to build 0:14:14.640 --> 0:14:17.080 programs and have them scale, especially as the rest of 0:14:17.120 --> 0:14:19.640 the world was recognized in the value of an m 0:14:19.760 --> 0:14:22.400 B A. But you're definitely right that in recent years 0:14:22.440 --> 0:14:25.240 there's been more of a quality sorting, and every organization 0:14:25.280 --> 0:14:27.440 talk no difference, has had to be very clear about 0:14:27.760 --> 0:14:30.560 what is its particular value proposition to the market and 0:14:30.600 --> 0:14:32.880 what what it thinks it's delivering on. So we speak 0:14:32.920 --> 0:14:36.480 of a personal and connected and therefore transformative experience here 0:14:36.480 --> 0:14:39.080 at talk UM making sure that we are delivering on 0:14:39.120 --> 0:14:41.200 that is why we wake up every day. I think 0:14:41.920 --> 0:14:45.160 NBA education, like a lot of other industries, there's been 0:14:45.200 --> 0:14:48.120 this competitive dynamic that you point to, So it keeps 0:14:48.160 --> 0:14:50.640 us UM waking up every day and listening even more 0:14:50.680 --> 0:14:53.720 intentionally to our students, to our great faculty, to the 0:14:53.800 --> 0:14:56.840 organizations that are part of our ecosystem. That's Dean Matthew 0:14:56.880 --> 0:15:01.000 Slaughter of the Dartmouth Talk School of Business coming up. 0:15:01.080 --> 0:15:03.640 Blair Efron of Center View Partners on what the c 0:15:03.800 --> 0:15:07.200 suite thinks about the tax debate that's going on in Washington. 0:15:07.680 --> 0:15:15.840 That's next on Wall Street Week on Bloomberg. This is 0:15:15.880 --> 0:15:20.240 Bloomberg Wall Street Week with David Weston from Bloomberg Radio. 0:15:20.760 --> 0:15:24.720 Build back Better. That's the promise presidential candidate Joe Biden 0:15:24.760 --> 0:15:27.360 made the voters over a year ago. It's time to 0:15:27.440 --> 0:15:31.520 reverse the priorities in this country. When the federal government 0:15:31.520 --> 0:15:35.600 spends taxpayers money, we should use it to buy American 0:15:35.720 --> 0:15:40.160 products and support American jobs. And that's the plan President 0:15:40.280 --> 0:15:43.320 Joe Biden laid out to Congress starting last March. But 0:15:43.440 --> 0:15:46.360 from the beginning he insisted he would not just borrow 0:15:46.480 --> 0:15:48.760 to get it done, that we had to figure out 0:15:48.840 --> 0:15:51.280 how to pay for it. The investments I'm proposed and 0:15:51.360 --> 0:15:54.920 would be fully paid for over the long term by 0:15:55.120 --> 0:16:00.000 having the largest corporations, including the corporations have paid zero 0:16:00.040 --> 0:16:04.800 of federal tax last year, and the super wealthy began 0:16:04.840 --> 0:16:07.280 to pay their fair share. And this week we got 0:16:07.320 --> 0:16:10.000 some specifics on just what it will take to pay 0:16:10.040 --> 0:16:12.160 for what the president wants. It may not be as 0:16:12.200 --> 0:16:16.080 dramatic as the fashion statement made by Representative Alexandria Ocasio 0:16:16.200 --> 0:16:18.800 Cortez at the met Gala this week, but it still 0:16:18.800 --> 0:16:21.800 would be the most sweeping set of tax increases in 0:16:21.840 --> 0:16:26.280 nearly thirty years, including raising the top rate on personal taxes, 0:16:26.600 --> 0:16:30.120 increasing taxes on capital gains, and imposing a three percent 0:16:30.280 --> 0:16:33.880 surcharge on anyone making more than five million dollars a year. 0:16:34.560 --> 0:16:37.280 And it's not just individuals who would get hit. The 0:16:37.320 --> 0:16:40.120 top corporate rate would go up to twenty six point five, 0:16:40.960 --> 0:16:44.200 there'd be new levies on overseas corporate income, and the 0:16:44.280 --> 0:16:47.920 carried interest breaks so beloved by private equity would get 0:16:47.920 --> 0:16:50.840 cut back further, applying only if you hold the asset 0:16:51.080 --> 0:16:54.280 for at least five years before you sell it. Not surprisingly, 0:16:54.480 --> 0:16:59.000 Democrats and Republicans see these proposals vary differently, with Brian 0:16:59.080 --> 0:17:02.560 D's president and chief economists claiming the corporate tax changes 0:17:02.600 --> 0:17:05.600 would bring more investment on shore. So I think that 0:17:05.720 --> 0:17:08.920 the core values the presidents put forward is reverse the 0:17:08.920 --> 0:17:11.320 most negative impact of the Trump tax cuts and get 0:17:11.359 --> 0:17:14.919 this corporate tax reform right so that we are encouraging 0:17:14.920 --> 0:17:18.600 more incentives to invest here domestically. While Republicans warned these 0:17:18.680 --> 0:17:23.000 hikes would make American industry less competitive. Here's Kevin Brady, 0:17:23.160 --> 0:17:26.400 the ranking chair of the House Ways and Means Committee. 0:17:26.520 --> 0:17:30.399 They'll be crippling for main street businesses. Certainly they'll land 0:17:30.480 --> 0:17:33.960 on working families. But as importantly, we're going to drive 0:17:34.000 --> 0:17:37.560 you as jobs overseas. Uh And and this is trying 0:17:37.560 --> 0:17:39.960 to find our way out of the pandemic. It is 0:17:40.080 --> 0:17:44.520 the biggest economic blunder I've ever seen a country make. Well, 0:17:44.520 --> 0:17:47.439 whatever the politicians think about tax hikes, what do the 0:17:47.440 --> 0:17:49.720 people who will have to pay them things? Will they 0:17:49.800 --> 0:17:52.680 affect the way they do business? Welcome now, someone who 0:17:52.720 --> 0:17:55.639 deals in the real world with real CEOs who make 0:17:55.640 --> 0:17:58.440 the decisions to drive the real economy. Blair efron is 0:17:58.520 --> 0:18:00.560 co founder and partner of Center Fing Partners. But are 0:18:00.600 --> 0:18:02.399 great to have you back with us. You talk with 0:18:02.480 --> 0:18:04.919 CEOs all the time. You can understand why they might 0:18:04.920 --> 0:18:06.840 be nervous given what we just heard from President Biden 0:18:06.880 --> 0:18:08.720 saying we're gonna pay for this by making sure the 0:18:08.800 --> 0:18:11.679 largest corporations pay their fair share. Our CEO is concerned 0:18:11.680 --> 0:18:13.639 about this. So what I would say is this, I 0:18:13.680 --> 0:18:17.320 think there is enough telling an economy that we'll be 0:18:17.359 --> 0:18:19.399 able to do this comfortably. Let's have a little bit 0:18:19.400 --> 0:18:24.320 of a historical perspective, uh. Donald Trump cut taxes two 0:18:24.400 --> 0:18:28.080 trillion dollars UH. If you look at the impact of 0:18:28.119 --> 0:18:31.840 that also neglative bold. In fact, you go back to 0:18:32.000 --> 0:18:35.280 the second term of President Obama, compare that to the 0:18:36.320 --> 0:18:40.680 Trump three and a half years before COVID. Fundamentally, UH 0:18:40.840 --> 0:18:45.680 under Obama the market was up nine more UH growth 0:18:45.800 --> 0:18:48.520 during both parioses around two and a half. The point is, 0:18:48.560 --> 0:18:52.040 I just don't think it's going to have a meaningful impact. Also, 0:18:52.119 --> 0:18:57.600 let's keep in mind that during COVID UH tremendous wealth 0:18:57.680 --> 0:19:02.320 has been created. The top UH ten percent have created 0:19:02.680 --> 0:19:07.520 ten trillion dollars wealth. I think the idea of a 0:19:07.640 --> 0:19:11.400 tax UH increase, particularly where half of it is corporate 0:19:11.560 --> 0:19:14.640 and only as personal, is something we can handle. Now. 0:19:14.680 --> 0:19:17.880 Of course, the key, very importantly, the key is that 0:19:18.440 --> 0:19:22.360 it is done for investment. And when we talked about infrastructure, 0:19:22.440 --> 0:19:25.960 be a physical or a human where the money gets applied, 0:19:26.000 --> 0:19:28.680 I think is going to really be the most important 0:19:28.960 --> 0:19:32.120 question we have. And to the extent um we really 0:19:32.160 --> 0:19:37.920 are focused on the physical side, water, airports, railroads, electric grid, 0:19:38.280 --> 0:19:40.240 that's a good thing. On the human side, to the 0:19:40.280 --> 0:19:43.680 extent it really goes to caregivers who can get back 0:19:43.840 --> 0:19:47.280 to work to the extent it goes to education, therefore 0:19:47.280 --> 0:19:51.240 getting more skills for UH future employment also a good thing. 0:19:51.280 --> 0:19:53.080 And we have a lot of as I said, a 0:19:53.119 --> 0:19:56.440 lot of telement economy done right, this hopefully will keep 0:19:56.960 --> 0:19:59.439 that tail went on a much more sustainable trajectory. So 0:19:59.480 --> 0:20:00.800 it was a lot. I don't want to be too 0:20:00.840 --> 0:20:02.720 cute here, but I noticed a couple of things you 0:20:02.760 --> 0:20:06.640 didn't mention in there, things like medicare for the elderly, 0:20:06.720 --> 0:20:11.320 for vision and dental help, things like I earned income 0:20:11.359 --> 0:20:14.000 tax credits and child tax credits. Because if you look 0:20:14.000 --> 0:20:16.360 at like the pen Morton budget model, they say those 0:20:16.400 --> 0:20:19.840 things don't improve productivity. Things you mentioned Blair do So 0:20:19.880 --> 0:20:23.240 do you draw a distinction. Do CEOs draw distinction between 0:20:23.320 --> 0:20:27.480 investment in something that's going to increase I think distinction, David, 0:20:27.560 --> 0:20:30.240 very fair question. We all draw distinction. I think out 0:20:30.240 --> 0:20:33.359 of four trillion that we're talking about, you can and 0:20:33.400 --> 0:20:35.480 again that number will change and we both know that. 0:20:36.040 --> 0:20:39.040 UM let's assume that at least what I've seen two 0:20:39.080 --> 0:20:43.000 thirds of it actually is investment oriented. UH, if you 0:20:43.160 --> 0:20:47.199 look at the almost six trillion already spent, clearly, when 0:20:47.240 --> 0:20:50.040