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Speaker 1: This is Bloomberg Wall Street. We turn our attention to

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Speaker 1: the markets this week. U s CPI never's reinforcing concerns

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Speaker 1: about inflation. The financial stories that chief are worth a

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Speaker 1: really different reaction to Mark. It's more indications of just

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Speaker 1: how hot the U. S. Economy really is. Through the

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Speaker 1: eyes of the most influential voice of Larry Summers, the

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Speaker 1: former Treator Secretary Katherine Keene, CEO of the n Y

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Speaker 1: mom Sam's l Sharmon and founder of Equatic Group Investment

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Speaker 1: in Bloomberg Wall Street Week with David Weston from Bloomberg Radio.

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Speaker 1: This hasn't happened in Japan in decades and decades to

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Speaker 1: the present Prime minister is a very solid guy. Japan

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Speaker 1: is a very very stable ally. It is cleaning out

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Speaker 1: of the will of the parliamentary Conservative Party that that

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Speaker 1: should be a new leader of that party, and that

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Speaker 1: for a new prime minister. Two world leaders gone, Boris

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Speaker 1: Johnson from Scandal and Shinzo Abe from an Assassin's Bullet.

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Speaker 1: This is Bloomber of Wall Street Week. I'm David Weston.

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Speaker 1: This week special contributor Larry Summers on how we can

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Speaker 1: have our recession with full employment it's not something we

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Speaker 1: have ever seen before. And Deborah Jackson of plumb Alley

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Speaker 1: on what a downturn could mean pre venture capital. Will

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Speaker 1: the market be there? In my opinion, look at look

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Speaker 1: at history. Two influential leaders left the world stage this week. First,

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Speaker 1: British Prime Minister Boris Johnson quit after a soap opera

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Speaker 1: played out at Number ten Downing Street, a board bullying

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Speaker 1: and abuse of power anywhere in this party or in

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Speaker 1: any other party. None of that explains why he promoted

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Speaker 1: him in the first place. I'm not going to trivialize

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Speaker 1: what it's absolutely true, Mr Speaker, that it was raised

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Speaker 1: with me. I greatly regret that he continued in office,

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Speaker 1: ultimately leading to Prime Minister Johnson stepping down and triggering

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Speaker 1: a search for a new government. And then at the

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Speaker 1: end of the week, an assassin took the life of

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Speaker 1: former Japanese Prime Minister Shinzo Abe. It was for us,

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Speaker 1: clearly it was great leader or death. NATO Secretary of

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Speaker 1: General Stoltenberg said that he would welcome Sweden and Finland

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Speaker 1: into the Alliance and said, by the way, there's room

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Speaker 1: for more. This is an historic day for Philon, for Sweden,

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Speaker 1: for natal and for you Atlantic security, while minutes from

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Speaker 1: the fo MC meeting last month did nothing to suggest

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Speaker 1: that the FED is looking to back off of its

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Speaker 1: tightening path regardless of the recession risk. In recent discussions,

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Speaker 1: Pale has been very very clear that that he understands

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Speaker 1: they have a big problem and they need to be

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Speaker 1: more and more restrictive. In the midst of the turmoil,

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Speaker 1: the Great and the Good of media and Tech gathered

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Speaker 1: for their annual Sun Valley retreat with Discoveries, David Zaslow

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Speaker 1: saying the downturn could be good for his media behemoth,

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Speaker 1: a lot of termoils hitting a lot of opportunity, and

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Speaker 1: with all that, the week still wasn't over, with US

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Speaker 1: jobs numbers on Friday coming in higher than anticipating in

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Speaker 1: number and a bit lower in wage growth, indicating that

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Speaker 1: the economy is still strong, much stronger, as it turned

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Speaker 1: out than Elon Musk's promised to buy Twitter. Because Friday

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Speaker 1: evening we learned that Mr Musk had thought better of

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Speaker 1: the deal he'd offered and was calling the whole thing off. Well,

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Speaker 1: what did the markets make of all this wild week? Well,

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Speaker 1: stocks were up, with the SMP five hundred higher by

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Speaker 1: just under two percent and the NASDAC rising four point

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Speaker 1: six percent, while bonds sold off a bit, leaving the

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Speaker 1: ten year yield just above three percent rather than just

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Speaker 1: under as it was last week, and the dollar posted

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Speaker 1: another week of games here to help us sort it

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Speaker 1: all out? Or liz Ane Saunders, chief strategist for Charles

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Speaker 1: Schwab and then only Causeway Capital Management, fundamental portfolio manager.

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Speaker 1: So let me start, Lisane, if I could with you,

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Speaker 1: what did we learn from the markets this week on

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Speaker 1: the economy? You know, if we start with the job's number,

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Speaker 1: I don't want to say on the surface it was strong.

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Speaker 1: I think there was you could you could nip pick

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Speaker 1: a little bit with the average work week down as

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Speaker 1: you mentioned, David, wages coming down. But I think that

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Speaker 1: the shift in the market maybe had less to do

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Speaker 1: with some change and outlook for the economy, because you

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Speaker 1: just sort of, for whatever reason, saw speculative juice is

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Speaker 1: sort of kick in again, the leadership back in those

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Speaker 1: highly speculation driven, lower quality segments of the market, which

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Speaker 1: at this point looks a little bit more like your

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Speaker 1: typical bear market rally where you see just some counter

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Speaker 1: trend moves versus new assessment of either the plaction or

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Speaker 1: the economic landscape. And I'm not sure that the jobs

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Speaker 1: data changed that to any significant degree either. So only

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Speaker 1: what about from your point of view as a as

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Speaker 1: an investor, here is it time to say maybe there

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Speaker 1: is an area for a bear market rally or is

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Speaker 1: this just a tiny blip? You know, the real earnings

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Speaker 1: hit will come in second half, as we're seeing, we're

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Speaker 1: hearing from companies, especially retailers, saying they're already seeing weakness

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Speaker 1: from consumers. And I believe this is a tiny blip.

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Speaker 1: Rates are up, you know, investment sentiment is down, and consumers,

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Speaker 1: especially to the middle to the lower level of income level,

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Speaker 1: they're getting squeezed. And we're already seeing consumer downtrading. Listen,

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Speaker 1: what about the consumer of the U. S economy? And

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Speaker 1: we kind of the consumer yet again, I don't think so.

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Speaker 1: I don't know that we see a significant implosion. But

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Speaker 1: what you're seeing in the data already is a slowdown

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Speaker 1: and demand is slow downa spending, specially in the stay

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Speaker 1: at home area, the goods oriented side of the economy,

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Speaker 1: which if there's a silver lining, that bodes well for

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Speaker 1: those components of metrics like CPI and inflation, because that

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Speaker 1: was the breeding ground for the inflation problem with which

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Speaker 1: we're still dealing. So that's a positive sign. You know,

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Speaker 1: there's this debate out there about excess savings and and

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Speaker 1: the strength of household balance sheets. David, we talked about

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Speaker 1: that earlier, and the only rub with that analysis if

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Speaker 1: you do it in the aggregate, it doesn't pick up

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Speaker 1: the fact that most of that call it excess savings

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Speaker 1: is concentrated up the income spectrum. So I think that

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Speaker 1: the surge that was represented by the consumer in the

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Speaker 1: economy coming out of the lockdowns, I think that's that's

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Speaker 1: very much in the review. It's such a good point.

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Speaker 1: Thank you so much, liz Ane Saunders and Eli will

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Speaker 1: be staying with us as we turned to some investment

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Speaker 1: advice in a somewhat conflicted market. That's gonna have next

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Speaker 1: on Wall Street Week on Bloomberg. This is Bloomberg Wall

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Speaker 1: Street Week with David Weston from Bloomberg Radio. But even

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Speaker 1: the slowdown seemed to be slowing down. While the mixed

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Speaker 1: news they are carried some unexpected blessings, such as a

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Speaker 1: temporary drop in the unemployment rate, the hope that the

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Speaker 1: recession might squeeze out substantial amounts of inflation seemed to

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Speaker 1: be generally fading even in the government's forecasts, and so

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Speaker 1: with eminently good cause to panic and crash the stock market,

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Speaker 1: that perverse little devil rallied and surged. And that was

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Speaker 1: the way Lewis Roguiser saw it on Wall Street. We've

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Speaker 1: been in the back in the fall of nine. We

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Speaker 1: were trying to address a much bigger beast of inflation

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Speaker 1: and looking for an economic downturn to do the trick

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Speaker 1: liz Ane Saunders of Charles Schwab and Ellen Lee of

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Speaker 1: Causeway Capital Management have saved with us. So let me

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Speaker 1: start to you with you about specific investment advice, because

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Speaker 1: I came across this and find it in shreaking idea

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Speaker 1: of idiosyncratic self help. I think you call it what

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Speaker 1: does that tell us about a company? So basically, i'd

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Speaker 1: caused we were looking at companies on a bottom up basis.

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Speaker 1: So I'm trying to find, you know, risk reward where

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Speaker 1: we're taking a conservative view on the outlook of the company,

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Speaker 1: but there are things within the control of the company

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Speaker 1: where the company can increase its earnings and better the

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Speaker 1: business model of the company. So an example, I will use.

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Speaker 1: Here is a company called Unilever, you know, based in

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Speaker 1: UK slash Netherlands, a massive consumer company. They recently had

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Speaker 1: Nelson Pelts, a share older activists come in and join

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Speaker 1: the board. And this is actually great news because the

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Speaker 1: restructuring that they had take on themselves, you know, is

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Speaker 1: going to be accelerated by a shareholder minority shareholder advocate

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Speaker 1: to push things forward. They had not been as good

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Speaker 1: as pushing the innovations as in a timely manner. We

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Speaker 1: believe an activists being there will really push the management

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Speaker 1: to accelerate that timetable. And this has nothing to do

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Speaker 1: with the economic slowdown we talked about in the previous segment,

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Speaker 1: because they're doing things internally to really energize their sales

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Speaker 1: and ultimately increased earnings of the company. So listen, I

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Speaker 1: love me put that and sell with different terms which

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Speaker 1: Ellen may agree with or disagree with. You know, we

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Speaker 1: say a rising tide lifts all boats. I think what

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Speaker 1: you're saying is that when the tides that going up,

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Speaker 1: you have to find some boats that float a little

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Speaker 1: better than other boats do. What are you looking for

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Speaker 1: is and in terms of advising people on investments right now, yeah,

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Speaker 1: so we have. We've really been taking more of a

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Speaker 1: factor based approach versus say, either a sector based approach

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Speaker 1: or trying to pick your traditional style boxes of large

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Speaker 1: cap small cap growth value. And really what the theme

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Speaker 1: has been around the factors we've been emphasizing. It's sort

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Speaker 1: of a quality wrapper um and almost hybrid factors where

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Speaker 1: where you look for reasonable value. But also especially in

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Speaker 1: what we think, and I know Ellen agrees, we're go

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Speaker 1: heading into I think a more earnings constrained environment. So

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Speaker 1: when that happens, earnings become more dear and there's more

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Speaker 1: value than two. Companies that have that higher profitability, have

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Speaker 1: that positive earnings revisions trends, while also keeping a mind

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Speaker 1: the need to have strong free cash flow, healthy balance

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Speaker 1: sheet with high cash, low debt. You sort of look

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Speaker 1: at the macro picture, see what's lacking, and then look

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Speaker 1: for companies that have that in relative terms, and you

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Speaker 1: can apply factor based analysis or factor based screening, and

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Speaker 1: Bloomberg has great data on factors across the spectrum of

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Speaker 1: large cap small cap. You can look for growth characteristics

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Speaker 1: in stocks that live in the value indexes and vice versa.

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Speaker 1: So I think it's you're less constrained when you take

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Speaker 1: a factor approach, then if you're just trying to make

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Speaker 1: a sector caller to let me put a geographic lens

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Speaker 1: on this if I could, and I'll start with you here.

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Speaker 1: What about your What about China? Some people are investors

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Speaker 1: are saying right now China is a good place for example,

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Speaker 1: to look because they're loosening monetary policy at the same

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Speaker 1: time the rest of the world is tightening it. I

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Speaker 1: think in you know, China recently, there's been a lot

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Speaker 1: of bad news price then because of the regulatory risk

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Speaker 1: and the COVID policy. And as an investor myself looking

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Speaker 1: at companies on the bottom up basis, you know, the

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Speaker 1: fact that there is you know that they're they're in

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Speaker 1: a loosening policy. Plus you know, hopefully in in the

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Speaker 1: foreseeable future, the zero COVID policy goes away. I think

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Speaker 1: there are companies like Macau, casino operators like Las Vegas,

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Speaker 1: Sands or Sands China that could really benefit from a

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Speaker 1: reopening of the country. And hence, you know, we find

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Speaker 1: those opportunities to be very attractive in the current time.

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Speaker 1: And in the case of Europe, you know, you you

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Speaker 1: you mentioned earlier in the segment. You know, dollar has

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Speaker 1: never been stronger, and now you know with your of

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Speaker 1: what it's based with the Ukraine situation, there's gonna be

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Speaker 1: a lot of fiscal spending to beef uppets infrastructure. I

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Speaker 1: know there's a lot of concerns about recession because energy

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Speaker 1: prices are going up, But if you are able to

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Speaker 1: find companies where they're going to be beneficiaries of more

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Speaker 1: spending because energy infrastructure has to go, has to be

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Speaker 1: beefed up, you will find good opportunities in those markets

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Speaker 1: as well los An opportunities geographically. So I think there's

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Speaker 1: still probably some storms that are going to have to

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Speaker 1: be weathered globally with with bouts of volatility, especially given

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Speaker 1: what's going on in currency markets, and not to mention

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Speaker 1: the war and the impact on the consumption side of

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Speaker 1: economies in UH in Europe. But I think, thinking from

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Speaker 1: a more secular standpoint longer term, I think when we

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Speaker 1: whenever we do come out of this, I like to

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Speaker 1: think of as a dual cycle when we're through the

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Speaker 1: bear mark it, when we're through the recession that that

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Speaker 1: I think is either happening or will happen. What tends

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Speaker 1: to happen when you come out of those dual cycles,

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Speaker 1: especially if they're global in nature, is you tend to

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Speaker 1: see a change and where leadership resides from a macro perspective,

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Speaker 1: And it is our view that we're going to see

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Speaker 1: more the greater benefits of diversification outside the United States.

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Speaker 1: That's different than saying we think, you know, non US

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Speaker 1: is going to handle the outperform US, but there hasn't

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Speaker 1: been that benefit of that global diversification. We think that's

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Speaker 1: the next secular shift. Is that I can't let you

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Speaker 1: go over that as well, Leon Musk and Twitter here,

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Speaker 1: I know you don't like to invest by sectors. Does

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Speaker 1: that phenomenon tell us anything about the sector of tech?

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Speaker 1: Or is it should use the word idiosyncratic when it

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Speaker 1: comes to along Musk, I don't think it's it's a

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Speaker 1: news slash that he's a bit of a quirky guy.

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Speaker 1: So I think making a broader inference about the industry um,

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Speaker 1: at least at this point, I think is a is

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Speaker 1: a stretch. I think it is more idiosyncratic that the

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Speaker 1: popular word of our segment here today. Does that sound

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Speaker 1: right to you? Ellen? Totally agree? Okay, that's nice to

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Speaker 1: end a note of agreement here many thanks now to

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Speaker 1: Ellen Lee of Causeway Capital Management and also to liz

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Speaker 1: Anne Saunders of Charles Schwab coming up. The economic slowdown

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Speaker 1: is hitting the public markets hard, but what's going on

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Speaker 1: behind the scenes in venture capital? We asked Deborah Jackson

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Speaker 1: of plumb Valley. This is Wall Street Week on Bloomberg.

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Speaker 1: Neil Armstrong waited six hours and thirty nine minutes to

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Speaker 1: step onto the surface of the moon. Jackie Robinson waited

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Speaker 1: twenty months to play his first game with the Brooklyn Dodgers,

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Speaker 1: and even DiCaprio had to wait twenty two years to

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Speaker 1: win an oscar. You can wait until your destination. Don't

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Speaker 1: text and drive, Visit stop Text Stop rex dot Org.

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Speaker 1: A message brought to you by the National Highway Traffic

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Speaker 1: Safety Administration, Project yellow Light and the AD Council. This

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Speaker 1: is Bloomberg Wall Street Week with David Weston from Bloomberg Radio.

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Speaker 1: Whether you call it a recession, there's probably close to

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Speaker 1: a fifty chance. Maybe it's a bit less than that

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Speaker 1: that we've had two negative quarters in a row or not.

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Speaker 1: I think there's nothing inevitable about this recession. There is

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Speaker 1: no question at this point that the economy is slowing

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Speaker 1: changing the world. Whether it's the world of stocks, we're

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Speaker 1: pretty close, you know, it's um it's sort of a

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Speaker 1: losing game to who call the bottom of the market

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Speaker 1: or of credit. Spreads were again much lower than you

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Speaker 1: might look at from a tenure average relative to economic outcomes.

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Speaker 1: But what about the world of patient capital, capital directed

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Speaker 1: toward long term innovation capital that's meant to change the world.

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Speaker 1: President Biden's Special Climate Envoy John Kerry thinks that there's

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Speaker 1: a lot of money in venture capital still headed toward

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Speaker 1: new technologies, directed to the energy transition. It is appropriate,

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Speaker 1: I think, to have a gas transition while you bring

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Speaker 1: technology to scale that is going to change altogether what

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Speaker 1: we're doing. And frankly, it's about a trillion dollars a

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Speaker 1: venture capital already moving towards these new technologies. But others

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Speaker 1: like Ben at Coasla of Coastal Ventures, think the downturn

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Speaker 1: will have to effect at least the more vulnerable venture

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Speaker 1: capital firms. So I do think given the hype we've

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Speaker 1: seen the last five years, we will see decline and returns.

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Speaker 1: The good firms continue to be disciplined about valuations. But

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Speaker 1: I do think in general for the industry will see

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Speaker 1: a decline, the best phones will still do well. Debord

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Speaker 1: Jackson's at the very center of venture capital with the

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Speaker 1: firm that she founded and now runs. It's called plumb Alley.

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Speaker 1: And we welcome right now to Wall Street Week. Great

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Speaker 1: to have you here, Debora, Thank you for joining us.

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Speaker 1: Thank you for having me, David. So, the big question

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Speaker 1: is there's a downturn, without doubt, you look at the

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Speaker 1: markets with its equities or dead or whatever downturn, is

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Speaker 1: it affecting venture capital? And if so, how well the

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Speaker 1: big macro issues that we're facing in the public markets

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Speaker 1: like inflation, um, supply chain challenges, and also things like

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Speaker 1: the recent Supreme Court ruling that would affect EPA regulations.

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Speaker 1: All of those factors come into play for the public markets.

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Speaker 1: They also have implications in the private markets. However, the

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Speaker 1: private markets are very, very different. So the private markets,

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Speaker 1: when you think of venture investors are looking at the

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Speaker 1: medium term time frame, not like short day to day

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Speaker 1: trading and immediate effects, but more over a course of

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Speaker 1: seven years for a series A level financing, and so

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Speaker 1: there are it's a it's a medium term kind of

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Speaker 1: investor mentality that's happening. I think it's important to know

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Speaker 1: that there is so much money that's been put out

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Speaker 1: into venture capital over the last few years. We had

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Speaker 1: a record amount it was over the previous year. So

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Speaker 1: you think about it, we have this huge amount of

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Speaker 1: capital that's already been deployed into early stage companies. We

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Speaker 1: also have about six hundred thirty million billion of dry

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Speaker 1: powder that's already been raised and ready to deploy. So

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Speaker 1: what does that mean? That really means that these venture firms,

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Speaker 1: early stage companies have a lot of fuel in the

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Speaker 1: tank to keep going to weather this current market situation?

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Speaker 1: Does that large amount of money, even huge amount of money,

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Speaker 1: make your job more difficult? You're looking for presently for

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Speaker 1: really great opportunities. If there are a lot of people

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Speaker 1: in there, maybe maybe not as disciplined as plumb Alley is.

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Speaker 1: What does that mean to valuations? Are people overbidding? Do

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Speaker 1: you have a tough time finding a prop or prices

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Speaker 1: for what you want to invest in? Yes? So at

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Speaker 1: plumb Alley were very, very focused on the fundamentals. And

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Speaker 1: I come from Wall Street. I spent twenty years on

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Speaker 1: Wall Street at Goldman and other places, as do my

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Speaker 1: team members. So we come at looking at venture from

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Speaker 1: a kind of fundamental point of view, which means, do

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Speaker 1: the companies have revenue, do they have real customers? Do

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Speaker 1: they have a real product that we need in the world.

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Speaker 1: If the answer to that is yes, then you drill

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Speaker 1: down and look at the numbers. And in our case,

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Speaker 1: the companies that we funded have revenues, but we only

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Speaker 1: look at you know, six to seven times current revenues

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Speaker 1: for a SAS company, and in the market that number

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Speaker 1: has been about twelve times revenues. So we have seen

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Speaker 1: this situation where valuations have been way overpriced um and

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Speaker 1: I think that's a reflection of the fact there is

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Speaker 1: so much capital coming into the market. When there's a

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Speaker 1: lot of capital in the market, it pumps up valuations.

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Speaker 1: But that's also presumably part why there's a lot of

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Speaker 1: dry powder. Because if you if you're only willing to

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Speaker 1: go to seven times and people are spending twelve times,

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Speaker 1: you don't spend the money. You have to set on

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Speaker 1: your money until you find the proper valuation. Where are

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Speaker 1: the opportunities that you find right now? That makes sense? Well,

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Speaker 1: we we've invested now sixty million in twenty seven companies,

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Speaker 1: so we've been at this for five years, so we

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Speaker 1: have had the opportunity to see the market change over time,

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Speaker 1: but we have stuck to our knitting. We have stuck

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Speaker 1: to the fundamentals, which is do what are the revenues?

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Speaker 1: What is the company actually doing? Is the company essential

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Speaker 1: for our future survival and for more productivity and industry?

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Speaker 1: Does it really matter versus companies that are sort of

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Speaker 1: optional like dog walking apps. Deborah Jackson, thank you so

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Speaker 1: much for joining. Debora Jackson is with Plumber Alley coming up.

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Speaker 1: We wrap up the week with our special contributor, Larry

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Speaker 1: Summers of Harvard. That's next on Wall Street Week on Bloomberg.

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Speaker 1: This is Wall Street Week. I'm David Weston. We are

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Speaker 1: joined once again this week by our very special contribute

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Speaker 1: to the Wall Street Week. He is Larry Summers of Harvard. So, Larry,

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Speaker 1: thanks so much for your coming to us, actually from

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Speaker 1: Sun Valley. It's good of you to do. We've lost

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Speaker 1: It strikes me two world leaders in a sense this week,

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Speaker 1: in very different circumstances. Boris Johnson of course forced to

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Speaker 1: step down as Prime Minister of the United Kingdom. But

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Speaker 1: then at the end of the week we lost to

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Speaker 1: an assassin's bullet Shinzo Abe, the longest serving Japanese prime

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Speaker 1: minister in history. I wonder is this telling us anything

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Speaker 1: larger about the state of the world When we have

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Speaker 1: these sorts of events in a single week. You know what,

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Speaker 1: The assassination of shin zhuo Abi in Japan is a tragedy.

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Speaker 1: Is a tragedy for his family, It is a tragedy

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Speaker 1: for Japan. It is a tragedy for the Japanese American relationship,

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Speaker 1: which is a lynchpin of our whole approach to Asia. Ultimately,

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Speaker 1: I think it is a global tragedy, and I have

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Speaker 1: to think about what it represents, and it represents a

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Speaker 1: manifestation of a kind of swirling anger that seems far

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Speaker 1: too pervasive in our politics almost everywhere in the world.

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Speaker 1: In a very different way, Brexit Boris Johnson's ascendency represents

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Speaker 1: that kind of swirling anger, and his ultimately falling UH

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Speaker 1: from power is a product of these kinds of divisions.

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Speaker 1: And we certainly see this Uh in our own country,

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Speaker 1: with the question of wordly succession of power on table,

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Speaker 1: with the bitter controversies that surround UH the Supreme Court.

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Speaker 1: And so I think Ultimately all of us have to

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Speaker 1: reckon with UH. This UH rage um. That seems to

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Speaker 1: be a feature that cuts across very very many societies,

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Speaker 1: and that is going to be a a framing aspect

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Speaker 1: as we discuss the more narrow particulars of economic policy

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Speaker 1: going forward. Larry strikes me that former Premnister Abbe had

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Speaker 1: fairly profound I believe macro economic effect, unlike a lot

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Speaker 1: of prime ministers and have matter of presidents. Even had

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Speaker 1: it named after him, abanamics, what was aminamics? And in

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Speaker 1: the end did it work? Abanomics was an attempt to

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Speaker 1: jolt UH the Japanese economy out of two decades of

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Speaker 1: secular stagnation and disinflation, with radically expansionary policy, both on

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Speaker 1: the fiscal side and on the monetary side, and with

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Speaker 1: UH structural policies like major efforts to get women working

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Speaker 1: and enfranchised in UH the labor force. And I think

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Speaker 1: one would have to say that it was a success

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Speaker 1: by the standards of what had come before, but it

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Speaker 1: was not a fully mission accomplished in terms of what

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Speaker 1: was happening UH in UH Japan. But I think it

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Speaker 1: will be remembered as one of the more aggressive and

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Speaker 1: successful reprogrammings of macroeconomic strategy that we've seen in a

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Speaker 1: long time. And if, as I fear um after this

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Speaker 1: current inflationary episode, the issues of absorbing savings secular stagnation

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Speaker 1: that we've talked about on and off on this show

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Speaker 1: recur in Europe and in the United States, then I

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Speaker 1: think that a economic legacy will be studied very very carefully,

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Speaker 1: because in some sense Japan was the first to experience UH,

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Speaker 1: the challenge of demographic UH contraction and of excess saving,

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Speaker 1: but it may not ultimately be the last. Bringing back

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Speaker 1: the United States and some of those questions you just

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Speaker 1: mentioned about inflation. We got jobs numbers at the end

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Speaker 1: of this week, higher in the terms of the overall

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Speaker 1: addition to jobs at the same time a little lower

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Speaker 1: than was expected by some, at least in the way increases.

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Speaker 1: What did you make of the jobs numbers? Look, I

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Speaker 1: think we have a very ambiguous UH economy right now.

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Speaker 1: We've got indicators of strength in many in many sectors,

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Speaker 1: particularly travel and services. This was a strong employment report.

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Speaker 1: Once again, in an economy where the labor force only

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Speaker 1: grows by fifty or seventy five thousand people a month,

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Speaker 1: you can't forever be creating three d and seventy five

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Speaker 1: thousand UH jobs. UH. There's nothing here to suggest that

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Speaker 1: the economy is currently collapsing into recession, and we certainly

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Speaker 1: could have seen a wage inflation number that was much

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Speaker 1: more alarming, and so from that point of view, I

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Speaker 1: think there was a little bit of reassurance on inflation here,

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Speaker 1: but we still have a very ambiguous UH picture. I

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Speaker 1: don't think that this changes fundamentally the picture we had

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Speaker 1: UH coming in. So I think that most people are

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Speaker 1: saying there's little in these jobs numbers they would indicate

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Speaker 1: to the Federal Reserve that they should back off at

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Speaker 1: least yet the rate hikes. Do you agree with that?

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Speaker 1: And what factors should they be looking at as they

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Speaker 1: determine whether, in fact and when they should back off.

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Speaker 1: I think that there's nothing here that should change somebody's

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Speaker 1: mind in a major way about what monetary policy is

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Speaker 1: going to need to need to do at the next meeting,

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Speaker 1: or at UH probably the meeting after UH. The next meeting,

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Speaker 1: I think what would UH start to change things would

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Speaker 1: be very strong have a is that the economy was

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Speaker 1: slowing substantially in an across the board way with respect

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Speaker 1: to consumption and investment demand. I think if you saw

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Speaker 1: a precipitous decline in the level of vacancies and level

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Speaker 1: of labor turnover, that would be an indicator that I

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Speaker 1: would be watching. But as long as we're in almost

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Speaker 1: unpressed were actually unprecedented territory in terms of the ratio

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Speaker 1: of job openings to unemployed people, I don't think we

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Speaker 1: can stop being uh concerned about inflation. Larre, It's always

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Speaker 1: so helpful to hear from you. Thank you so much.

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Speaker 1: That's Larry Summers. Our very special contribute here in Wall

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Speaker 1: Street Week is of course from Harvard University. Finally, one

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Speaker 1: more thought. Suddenly everyone's an expert on the economy. When

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Speaker 1: President Biden first proposed that massive one point nine trillion

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Speaker 1: dollar American Rescue Plan back in January of two one,

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Speaker 1: our own special contributor, Larry Summers was first to say

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Speaker 1: there was just too big, particularly coming after two earlier rounds.

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Speaker 1: You're talking about something that relative to the GDP GAP's

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Speaker 1: six times as large. But White House economists said it

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Speaker 1: was needed and would not be inflationary. Getting the state

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Speaker 1: of the problem and of the economy, risks of doing

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Speaker 1: too little far outweigh the risks of doing too much,

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Speaker 1: and Federal Reserved Chair J Powell, who by the way,

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Speaker 1: is trained as a lawyer, not an economist, stuck with

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Speaker 1: the transitory claim as long as he could before finally

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Speaker 1: admitting that he had been wrong. What did we get wrong?

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Speaker 1: And that really was looking at these supply side issues

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Speaker 1: and believing that they would be resolved relatively quickly. But

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Speaker 1: at least that was a bunch of economists disagreeing with

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Speaker 1: one another. Now we're going way past those trained in

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Speaker 1: the dark arts of economics. Inflation rules the game. Latian

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Speaker 1: fears are in your head. Inflation is high. Inslation, that's

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Speaker 1: the bigger problem right now. It is understandable that the

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Speaker 1: President has to weigh in on the issues. So last

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Speaker 1: week Mr Biden, who by the way, as a lawyer,

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Speaker 1: took to Twitter to explain why he thought gas prices

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Speaker 1: are too high, blaming the companies reaping record profits. I

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Speaker 1: call on the companies to pass this along, every penny

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Speaker 1: of this eighteen cent reduction to the consumers. But then

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Speaker 1: Jeff Bezos, whose degrees are in electrical engineering and computer science,

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Speaker 1: decided to give the president a lecture on economics. Responding

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Speaker 1: again on Twitter, calling Biden's words misdirection or a deep misunderstanding,

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Speaker 1: which in turn led John Kirby from the White House,

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Speaker 1: who's a retired rear admiral trained in international relations and

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Speaker 1: national security, to spring the president's defense. Anybody that knows

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Speaker 1: President Biden knows he's plain spoken, and he tells me

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Speaker 1: exactly what he's thinking and in terms that everybody can understand.

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Speaker 1: So I think we obviously take great exception at the

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Speaker 1: idea that this is somehow miss direction and not to

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Speaker 1: be left out of all the fun President of Vladimir

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Speaker 1: Putin of Russia apparently decided to impose his own solution

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Speaker 1: for inflation by imposing an excess profits tax on gas

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Speaker 1: prop without all that fancy economic talk. In the end,

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Speaker 1: it is easy for those of us to second guests

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Speaker 1: those who are making the decisions, particularly when they seem

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Speaker 1: to be going wrong or at least have unintended consequences,

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Speaker 1: which brings us back to that font off so much

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Speaker 1: wisdom from over a century ago. It was former President

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Speaker 1: Teddy Roosevelt at the Sorbonne who said, it is not

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Speaker 1: the critic who counts, not the man who points out

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Speaker 1: how the strong man stubbles. The credit belongs to the

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Speaker 1: man who is actually in the arena, who at the

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Speaker 1: best knows in the end the triumph of high achievement,

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Speaker 1: and who, at the worst, if he fails, at least

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Speaker 1: fails while daring greatly. There is no question that President Biden,

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Speaker 1: the one now in Roosevelt's arena, has dared greatly when

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Speaker 1: it comes to the economy. Now we all have to

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Speaker 1: hope for all of our sake, the there's triumph at

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Speaker 1: the end of this rocky road. That does it For

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Speaker 1: this episode of Wall Street Week, I'm David Weston. This

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Speaker 1: is Bloomberg. See you next week. M