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Speaker 1: This is Bloomberg Wall Street Week.

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Speaker 2: I mean may not have an overall recession. We're having

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Speaker 2: a rolling recession. To Cone rowl looks pretty strongly. It

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Speaker 2: is when it comes to jobs.

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Speaker 1: The financial stories that shape our world.

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Speaker 2: Three major regional bank failures send shockwaves through the banking system.

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Speaker 2: We're all trying to figure out what to make of

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Speaker 2: generative AI through.

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Speaker 1: The eyes of the most influential voices.

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Speaker 2: Welcome down, Doctor Paul Krugman, Ryan moynihan, a Bank of America,

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Speaker 2: deebro Lair of the Paulson Institute, well Then Hubbard of

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Speaker 2: the Columbia Business School.

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

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Speaker 2: Sometimes no news can be good news. No government shutdown,

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Speaker 2: no new flare up in US China relations, and no

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Speaker 2: news surge in inflation numbers. This is Bloomberg Wall Street Week.

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Speaker 2: I'm David Weston, this week's special contributor to Larry Summers

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Speaker 2: of Harvard on whether we're through the worst on inflation.

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Speaker 3: I'm not sure the inflation figures over the next two

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Speaker 3: years are going to be quite as favorable as the

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Speaker 3: market is expecting.

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Speaker 2: Tony James of Jefferson River capital on the past and

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Speaker 2: future of private equity and credit.

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Speaker 4: Private equity really needs to be operational as well. You

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Speaker 4: still need the transaction skills, You still need to be

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Speaker 4: an investor, but now you need to be able to

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Speaker 4: intervene in the company's fortunes.

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Speaker 2: And Dan Senor about the Israeli Hamas War and what

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Speaker 2: it means for the Israeli economy.

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Speaker 1: They can get through the short term.

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Speaker 5: I think in the long run, Israel's tech economy will

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Speaker 5: be stronger.

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Speaker 2: Global Wall Street had an exciting week, mainly because of

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Speaker 2: what didn't happen. President Biden met with President g during

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Speaker 2: the APEX summit, and they appeared to set a new

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Speaker 2: more constructive tone to US China relations.

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Speaker 6: Our meetings have always been Canada straightforward. We haven't always agreed,

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Speaker 6: but they've been straightforward and today build on the groundwork

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Speaker 6: related Over the past several months of high level diplomacy

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Speaker 6: between our teams, we've made some important progress.

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Speaker 2: I believe the US Congress got its act together and

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Speaker 2: finally agreed not to shut the government down at least

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Speaker 2: until after the new year. I have good news for

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Speaker 2: the American people this Friday night, there will be no

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Speaker 2: government shutdown but most exciting for global Wall Street this

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Speaker 2: week were those CPI numbers that came in even better

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Speaker 2: than expected, pointing to a continued sawing in the rate

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Speaker 2: of inflation and maybe just maybe no need for the

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Speaker 2: Fed to keep hiking rates.

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Speaker 7: It's a rather amazing number. This morning, CPI comes in flat.

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Speaker 7: The estimate was one tenth that it had been zero

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Speaker 7: point four back in September, and that leaves the year

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Speaker 7: over year headline number at three point two percent, down

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Speaker 7: from three point seven.

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Speaker 2: And then late on Friday, word came that the man

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Speaker 2: who made chat GPT famous, Sam Altman, was stepping down

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Speaker 2: immediately as CEO of open Ai after the board lost

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Speaker 2: confidence in his candor, and Microsoft shares dropped on that news.

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Speaker 2: The markets overall had a nice bump up during the

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Speaker 2: week with the news about slowing inflation and a strong economy.

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Speaker 2: The S and P five hundred was up two point

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Speaker 2: two four percent, ending at four five one four. That's

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Speaker 2: comfortably above the median number of our Bloomberg elves that

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Speaker 2: they're predicting for year end. The Nasdaq was up two

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Speaker 2: point three seven percent, while the yield on the tenure

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Speaker 2: dropped almost twenty two basis points to four point four.

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Speaker 2: Here to tell us what it all means are Sarah

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Speaker 2: Mallik Neuveen Asset Management CIO and Peter Borisch, Computer Trading CEO.

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Speaker 2: So welcome back both of you. It's great to have

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Speaker 2: you here. Sarah, let me start with you. Was it

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Speaker 2: really all about the CPI numbers in the end for

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Speaker 2: this week?

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Speaker 8: Well, the Santa.

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Speaker 9: Claus rally has come early this year for three reasons.

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Speaker 9: One of those is inflation, which is coming in under expectations.

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Speaker 9: Also the feedest signal the end of the rate pike cycle,

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Speaker 9: and finally the economy, which is showing some signs of

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Speaker 9: cooling but not enough to take us into a recession.

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Speaker 9: All of this caused ten year treasury yields to drop

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Speaker 9: by about fifty basis points and markets to rally. However,

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Speaker 9: I caught twenty twenty four looks a little bit more complicated.

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Speaker 9: The question is going to move not from how high

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Speaker 9: will interest rates go, but to how long will interest

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Speaker 9: rates stay high? And given that futures markets, you're expecting

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Speaker 9: four rate cuts in twenty twenty four. I think that's

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Speaker 9: optimistic because inflation is still above target and we're not

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Speaker 9: in a recession. So I don't see why the FED

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Speaker 9: would be cutting rates so aggressively going into next year.

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Speaker 2: So, Peter, before we get to twenty twenty four, which

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Speaker 2: we do want to get to, what are for the

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Speaker 2: rest of this year? Can we put our pencils down?

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Speaker 2: Our desks are in pretty good shape for the rest

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Speaker 2: of this year.

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Speaker 10: Do you think you know?

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Speaker 11: In this business, a week can be a long time.

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Speaker 11: Just look at the move from two Fridays ago to

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Speaker 11: this Friday. So no, and you can never put your

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Speaker 11: pencils down. And if you listen to some of the

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Speaker 11: FED talk President Collins, they're kind of like, wait a second,

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Speaker 11: financial conditions aren't really that tight. If you look at

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Speaker 11: the equity markets, we may have to raise again.

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Speaker 10: So I agree with Sarah.

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Speaker 11: I mean, I'm in the camp that I don't even

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Speaker 11: think the FED is going to cut at all next year,

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Speaker 11: and that's going to make for a bumpy road. And

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Speaker 11: depending on what the news conferences after the next FED meeting,

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Speaker 11: this could sort of be an upside down. Remember in

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Speaker 11: twenty eighteen you had the tremendous rally the last week

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Speaker 11: of the year.

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Speaker 10: This could be the opposite of that.

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Speaker 2: Oh really, so the reverse of a Santa Claus rally, Well.

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Speaker 11: You have a you know, if you pick any low

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Speaker 11: in the fourth quarter, by definition, you're going to have

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Speaker 11: a rally off of it. So yeah, she said, we

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Speaker 11: had an early Santa so Santa Claus rally, we had

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Speaker 11: a low, we rallied, but then we could have a

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Speaker 11: nice little correction going into the end of the year.

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Speaker 2: Sir, how much of it do you think is in

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Speaker 2: the hands of the Fed. We all focus on the FED.

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Speaker 2: It's understanding what we do, but it's not just the

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Speaker 2: FED that determines things like yields. For example, We've got

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Speaker 2: a lot of issuance coming out of the treasure these days.

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Speaker 2: It looks like that's not going to stop anytime soon.

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Speaker 8: I think it is still very important. And what is

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Speaker 8: the FED going to do next year?

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Speaker 9: Let's start with inflation at which Peter talked about, which

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Speaker 9: will have to do with whether we get rape. Inflation

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Speaker 9: is still about a percent above the FEDCE target when

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Speaker 9: it comes to CPI, and that last mile of inflation

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Speaker 9: could be the longest miile. Our view is that inflation

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Speaker 9: likely doesn't hit target in twenty twenty four. That's going

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Speaker 9: to prevent you from getting aggressive rate cuts. So that's

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Speaker 9: going to be an issue for the FED. And also

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Speaker 9: looking at the economy, the consumer and employment markets have

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Speaker 9: been driving the economy. Payrolls are still coming in close

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Speaker 9: to two hundred thousand. Yes, we did see unemployment claims

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Speaker 9: spiked to August levels this week, so employment is starting

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Speaker 9: to slow. Consumers starting to show some cracks when it

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Speaker 9: comes to delinquencies. But none of that means the recession

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Speaker 9: is imminent until you get those two factors of inflation

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Speaker 9: at or below target and a recession right in front

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Speaker 9: of us.

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Speaker 8: I don't think the Fed's going to have the room

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Speaker 8: to cut rates.

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Speaker 2: Well, what were the equity side, Sarah, Because we've had

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Speaker 2: sort of a I can say a subdued earnings earning

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Speaker 2: session here. What are we looking for in twenty twenty four?

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Speaker 8: Well, Q three marked the end of an earnings recession.

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Speaker 8: Before Q three we had three quarters.

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Speaker 9: Of negative earnings, so it was good to see this

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Speaker 9: growth in third quarter, and in twenty twenty four we

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Speaker 9: expect about five percent earnings growth. That will be positive.

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Speaker 9: It will be dependent on companies' ability to preserve margins

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Speaker 9: as inflation continues to moderate, so that'll be the positive.

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Speaker 9: I don't think we're going to see a lot of

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Speaker 9: valuation expansion driving the markets in twenty twenty four because

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Speaker 9: valuations are already out of premium.

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Speaker 2: So Peter, what about the consumer, Because the consumer really

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Speaker 2: feeds directly into earnings because companies have to sell things.

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Speaker 2: Where is the consumer right now? Are they running out

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Speaker 2: of all that excess savings that they had?

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Speaker 11: Well, first of all, Saraen made a great point, but

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Speaker 11: when I look at the consumer, I kind of try

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Speaker 11: to watch, you know, Visa and MasterCard as a proxy

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Speaker 11: for consumer and those stocks have continued to stay strong

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Speaker 11: close to their all time highs. So I think it's

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Speaker 11: a little premature given the fact that employment is still

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Speaker 11: high right, Unemployment is low again another indication that financial

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Speaker 11: conditions are not tight, and therefore I think the higher

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Speaker 11: probability of rates going up. So the consumer's in pretty

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Speaker 11: good shape for now. But I look at the three c's, copper, corn,

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Speaker 11: and crude, and they have been weak. So that's saying

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Speaker 11: something about the aggregate demand in the economy. So that's

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Speaker 11: the irony of markets. They have been weak. That drags

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Speaker 11: down inflation. But is that bullish, Sarah?

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Speaker 9: As it brings up a good point David about the consumer.

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Speaker 9: They continue to spend and consumer discretionary stocks have been

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Speaker 9: very strong this year. But if you look behind under

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Speaker 9: the hood at the consumer, auto and credit card delinquencies

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Speaker 9: are increasing significantly. I think the consumer is starting to

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Speaker 9: show some cracks. And if the employment markets continue to

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Speaker 9: slow and people do not feel secure in their jobs,

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Speaker 9: I think that'll be the unwinding of the economy that

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Speaker 9: does eventually get us into that recession.

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Speaker 8: But again, as I said, that is not right around

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Speaker 8: the corner.

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Speaker 2: Sarah, you usually like to pick a stock or two

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Speaker 2: for us. Do you have a stock or two to recommend?

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Speaker 9: We do, so we're looking at first of all, we

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Speaker 9: think the dollar is going to be it's at peak levels.

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Speaker 9: I'm going to weaken from here, so outside of the

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Speaker 9: US countries where there could be demand, and also commodities

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Speaker 9: which tend to.

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Speaker 8: Benefit from a week or dollar. Peter mentioned copper. That's

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Speaker 8: an area that we like. Supply is type for copper.

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Speaker 9: Freeport Macmaran is a company specifically, they're finishing their last

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Speaker 9: smelter in Indonesian in early twenty twenty four, so capex

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Speaker 9: is declining and they are returning cash to shareholders. Demand

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Speaker 9: for copper is strong. Not only has US production of

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Speaker 9: copper declined significantly over the last half century, but also

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Speaker 9: wind solar electric vehicles and increase need for US infrastructure

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Speaker 9: as we onshore, all of that will increase demand for copper.

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Speaker 9: Multi year tailwinds for that commodity.

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Speaker 2: Peter, so too soon to get back in the pool.

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Speaker 11: For real estate, well, there was a very interesting article

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Speaker 11: on Bloomberg today about how so many homeowners actually don't

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Speaker 11: have a mortgage. So this notion that well, the market's

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Speaker 11: frozen because people don't want to sell because they have

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Speaker 11: low mortgages.

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Speaker 10: That may not be true.

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Speaker 11: If that's the case, and people want to trade their stock,

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Speaker 11: that may increase the housing supply and that could drive

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Speaker 11: down some prices. Again, ironically, is that bullish or bearish

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Speaker 11: for interest rates as housing demand gets met with increased supply.

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Speaker 10: So is it too soon? No, but it's going to

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Speaker 10: be interesting in fascinating.

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Speaker 9: Well, Well, an area David within reads that looks really

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Speaker 9: attractive is actually the public reads sector. It's trading at

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Speaker 9: a discount to net asset value. Reads actually tend to

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Speaker 9: underperform while rates are going up and in periods of

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Speaker 9: rate pauses, and rate cuts, reads out perform, and I

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Speaker 9: think that's what we're getting to. This elongated pause by

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Speaker 9: the Fed should be positive for segments such as reads.

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Speaker 2: Well, so that's fascinating. Reads got clobbered, obviously. Do you

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Speaker 2: think they've bottomed, they're going to come back up.

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Speaker 9: We've actually seen them bottom in the last couple of

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Speaker 9: weeks as yields rolled over. And if you look at history,

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Speaker 9: as the Fed pauses and we don't expect any more

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Speaker 9: Fed rate hikes, that should be positive for reads. They're

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Speaker 9: still cheap, they're trading at a discount to nav Many

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Speaker 9: are worried about commercial real estate, but if you look

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Speaker 9: at the main benchmarks, it is a very insignificant, low

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Speaker 9: single digit percentage portion of their benchmarks, industrial rates, apartment reads,

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Speaker 9: all of those are actually doing very well. So it's

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Speaker 9: not just a commercial real estate story. That's a very

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Speaker 9: small piece of reds.

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Speaker 2: Sarah Malak and Peter Buscher are going to be staying

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Speaker 2: with us, but first we're going to take a look

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Speaker 2: back at another time we watch the Fed wait patiently

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Speaker 2: for inflation to come down. Here's Frank Capiello on Wall

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Speaker 2: Street Week with R. Lewis Rockeiser way back in nineteen

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Speaker 2: eighty two. This is a whole new operation.

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Speaker 12: And I think what's happening is economic policies now are

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Speaker 12: more important than the statistics, and the policies are less inflati.

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Speaker 12: We've really got a FED a reserve that's fighting many

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Speaker 12: recurrence of inflation, and we've got interest rates. It will

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Speaker 12: eventually come down.

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Speaker 2: This is Wall Street Week on Bloomberg.

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Speaker 13: President G is desperate for American investment because he has

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Speaker 13: made a series of economic decisions and political decisions are

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Speaker 13: arresting people where capital is fleeing the coin of the realm.

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Speaker 13: For the United States, we have allies, we have friends,

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Speaker 13: and they want to be aligned with us.

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Speaker 2: That was US investor in Japan, Rama Manuel, talking at

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Speaker 2: the APEX summit this week in San Francisco. Had efforts

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Speaker 2: by Chinese President G to attract Western investment flows back

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Speaker 2: into China. Sarah Malak of Nouvegne and Peter Borsh of

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Speaker 2: Computer Trading have stayed with us. So Sarah, let me

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Speaker 2: start with you. We had the meeting with President Biden

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Speaker 2: President G. Not a lot came out except they did talk.

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Speaker 2: They didn't fight with one another. I guess that's good.

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Speaker 2: But overall, do you think this affects the really the

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Speaker 2: status of investments right now that in fact US and

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Speaker 2: China may be at least not at Dagger's drawn.

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Speaker 9: I think there's two issues to think about from this

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Speaker 9: week's meeting and over the long term. One is geo

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Speaker 9: political issues, which I think did become reduced a bit

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Speaker 9: this week. You saw that with CDs spreads narrowing a bit.

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Speaker 9: But the main issue with China is exports. They've declined

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Speaker 9: significantly in terms of what they export to the US

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Speaker 9: over the last five years, and that I think until

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Speaker 9: they can turn that around, that's going to be an issue.

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Speaker 9: And there's other countries that are benefiting from this, like

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Speaker 9: Mexico with its near shoring, the increased need for infrastructure

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Speaker 9: in the US, which is a segment of the market

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Speaker 9: that we really like. Countries like Indonesia with the young populations,

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Speaker 9: and Japan which is benefiting with their weaker yen.

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Speaker 8: So as Chima loses in these areas, these other.

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Speaker 9: Emerging and developed international countries are winning, and I don't

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Speaker 9: see that trend reversing in the near term.

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Speaker 8: When it comes to China's exports.

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Speaker 2: To the US, who do you talked earlier about commodities.

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Speaker 2: We often think about China when it comes to things

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Speaker 2: like copper, for example, to one extent, is the demand

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Speaker 2: for copy of the price of copper are going determined

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Speaker 2: by what happens in China and whether they can really

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Speaker 2: rebound in their economy.

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Speaker 11: Well, I think a lot of that, and you could

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Speaker 11: see earlier this week they laid out the objective by

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Speaker 11: doing a big soybean purchase, right, which reminds us of

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Speaker 11: the early seventies when you had another crisis and they

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Speaker 11: came in and bought a bunch of grain before President

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Speaker 11: Nixon went to China. But I think the history lesson

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Speaker 11: here is that emerging countries in their markets understand that

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Speaker 11: if you partner with the US, you get rich. Now

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Speaker 11: you've had growth and they got rich, and then they're like, Okay,

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Speaker 11: we don't need you anymore. This crisis in China has

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Speaker 11: made them realize that if you want to stay rich,

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Speaker 11: you need to partner and continue partnering with the US.

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Speaker 11: So what Sarah said is critical, and yes, so they

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Speaker 11: need our capital, as an ambassador Manual just said, but

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Speaker 11: people aren't going to fly in there. They have to

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Speaker 11: demonstrate that the capital is going to be safe, that

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Speaker 11: the human capital in China is going to continue to

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Speaker 11: be safe.

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Speaker 10: So it's going to be.

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Speaker 11: A little bit of a slower process, and that's going

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Speaker 11: to be reflected not an immediate demand for commodities and copper,

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Speaker 11: but a slow and steady demand.

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Speaker 10: As Sarah was saying earlier.

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Speaker 2: Sarah, just briefly here at the end. Does that mean

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Speaker 2: for other opportunities? For example, in Japan, I think you've

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Speaker 2: just gotten back from Japan iView not I was.

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Speaker 9: I was in Japan last week, and Japan's economy is

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Speaker 9: growing very strongly for two reasons. One the increased focus

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Speaker 9: on governance not only within the country but from non

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Speaker 9: japan investors. Secondarily, Japanese government is very focused on getting

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Speaker 9: individuals out of cash into more investable asset classes. And

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Speaker 9: second is the Japanese economy is going very strong. The

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Speaker 9: yen has been weak. However, our view is with some

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Speaker 9: moderate inflation that we're seeing in Japan and likely higher

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Speaker 9: interest rates, I think the yen is likely to bottom

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Speaker 9: and reverse from here, but that does not unwind the

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Speaker 9: japan story that has been very strong this year and

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Speaker 9: should continue.

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Speaker 2: And finally, Peter also Mexico's a lot more attractive than it.

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Speaker 11: Was, absolutely for the near sourcing for their innovation. And

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Speaker 11: you know, again, climate change has a little impact on

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Speaker 11: that because we were saying earlier that the Panama Canal

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Speaker 11: is low, so Mexico's trying to build and increase their

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Speaker 11: transportation infrastructure. I just want to add in ten seconds,

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Speaker 11: China Japan that story that's bearish for US treasuries because

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Speaker 11: they are both selling treasuries to focus on their domestic economies.

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Speaker 11: It's a globally integrated world, so you have to be

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Speaker 11: careful what you wish for.

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Speaker 2: What about that? Just a word or two, Sarah, do

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Speaker 2: you agree there's a problem here with foreign buyers and treasuries.

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Speaker 8: I think Peter makes a good point and that could

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Speaker 8: be a headwind.

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Speaker 2: Okay, thank you so much both of you for reading

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Speaker 2: back with us. It's Peter Borsh of Computer Trading and

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Speaker 2: Sarah Malaka New Ven. This is Wall Street Week. I'm

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Speaker 2: David Weston. Israel's war with Hamas continues with Israeli troops

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Speaker 2: fighting Hamas in Gaza as the humanitarian toll mounts. SR

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Speaker 2: was a foreign policy advisor to George W. Bush when

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Speaker 2: he was President in his administration, and as well, to

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Speaker 2: admit Romney, he is the author of a brand new book.

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Speaker 2: It's called The Genius of Israel. So Dan, welcome, it's

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Speaker 2: good to have here. Congratulations in the book Congression of

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Speaker 2: the fact that's on the New York Times bestseller leans.

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Speaker 2: I should make you you actually wrote this book, completed

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Speaker 2: it before what happened in last October seven, at the

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Speaker 2: same time you were anticipating some difficulties with Israel. There

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Speaker 2: have been demonstrations because of what happened with the part

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Speaker 2: of Justice. So as we go forward, now, one of

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Speaker 2: your themes is Israel is resilient. You've got then your

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Speaker 2: subtitle Resilient and comes together. What have you learned since

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Speaker 2: October seven about Israel?

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Speaker 5: What we argued in the book because we wrote the

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Speaker 5: book at the point at which Israel's in the depth

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Speaker 5: of internal division, as you say, and we argued that

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Speaker 5: as divided as Israel was, it was politically polarized. And

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Speaker 5: we said, look, most Western affluent democracies are very politically polarized.

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Speaker 5: Israel's not immune to political polarization. The difference between Israel

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Speaker 5: and other Western countries is Israel has these societal shock

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Speaker 5: absorbers built into it. This infrastructure that just as polarized

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Speaker 5: as it may get, the country doesn't spin apart. And

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Speaker 5: that's why were we said that in a sense, is

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Speaker 5: like a blueprint for the West to look at how

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Speaker 5: they keep the country together even when it looks like it's.

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Speaker 1: About to go over the edge.

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Speaker 5: We look at the role of national military service, which

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Speaker 5: is interesting because it not only as we wrote in

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Speaker 5: our first book about the tech economy, the national military

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Speaker 5: the compulsory service helps young people develop management skills, leadership skills,

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Speaker 5: in some cases specific technology skills that help them in

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Speaker 5: the startup scene. But in this book we focus on

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Speaker 5: the national Compulsory Service brings Israelis together from all walks

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Speaker 5: of life, religious and secular, politically right wing, politically left

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Speaker 5: wing people from the center of the country, like in

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Speaker 5: booming cities like Tel Aviv, versus the struggling towns of

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Speaker 5: the periphery. It brings all these people together and has

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Speaker 5: them in the hull of a tank or in the

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Speaker 5: warehouse on a military base, and they are working together

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Speaker 5: and living together, and it makes it harder for them

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Speaker 5: to look at one another as the other. So that's

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Speaker 5: another important national compulsory service, and then lastly on national

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Speaker 5: compulsory service.

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Speaker 1: Is they focus on the we, not the me.

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Speaker 5: In other words, to be effective in national military service

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Speaker 5: in Israel and in other parts formative parts of Israeli life,

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Speaker 5: you have to focus on being part of a team, community,

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Speaker 5: a group. And we go through this in the book

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Speaker 5: and say, compare that experience to how Americans go through

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Speaker 5: life trying to get into colleges, trying to get into

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Speaker 5: elite colleges. It's all about your own individual performance, your

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Speaker 5: own individual excellence. There's a lot to learn from Israel

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Speaker 5: in terms of these institutions that keep people together even

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Speaker 5: though they see the world differently. And that's why we

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Speaker 5: were hopeful that even if there were an October seventh event,

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Speaker 5: an event, and we didn't anticipate in October seventh event,

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Speaker 5: but even if there were one, it wouldn't surprise us

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Speaker 5: if the country held together.

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Speaker 2: Obviously, the first priority is dealing with security of the

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Speaker 2: Israeli state and it's people. At the same time, there

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Speaker 2: is an economy, the thriving economy. Where does that stand

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Speaker 2: right now and what longer term challenges might this war pose.

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Speaker 1: Look, there's no doubt in the near term. This is

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Speaker 1: a setback.

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Speaker 5: You've called up three hundred The Israel's called up three

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Speaker 5: hundred and sixty thousand people, three hundred and sixty thousand reserves.

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Speaker 5: It's the largest call up I think in its modern history.

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Speaker 5: It's the number of Israelies have been called up for

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Speaker 5: reserves is larger than the standing armies of the UK

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Speaker 5: and France combined.

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Speaker 1: Those are people who.

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Speaker 5: Work in the hospitality industry and the tourism industry. Now

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Speaker 5: there's a lot of tourism right now and a lot

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Speaker 5: of people who work in the tech economy. So I

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Speaker 5: speak to venture capitalists in Israel quite regularly, and many

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Speaker 5: of them tell me that they're top that they look

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Speaker 5: at their portfolio companies about ten percent of their top

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Speaker 5: executives have been called up in one form or another.

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Speaker 5: Does that mean these companies grind to a halt, these startups. No,

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Speaker 5: but it does mean if they're in the middle trying

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Speaker 5: to close a fundraising round, or in the middle of

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Speaker 5: trying to complete an M and A deal or some

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Speaker 5: sort of business development or sales deal, it slows things down.

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Speaker 1: That's the bad news.

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Speaker 5: I think this size, the scale of the reserve call

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Speaker 5: up is going to shrink pretty soon. Particularly Israel's making

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Speaker 5: much more progress I think anyone expected in Gaza. So

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Speaker 5: I think they'll draw down on the reserves relatively soon.

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Speaker 1: I don't know exactly when.

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Speaker 5: And Two, if you look at how Israel the economy

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Speaker 5: has dealt with major security like I go back to

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Speaker 5: nineteen ninety one First Golf War, when the whole country

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Speaker 5: was shut down, when Saddam Hussein was launching scud missiles

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Speaker 5: into Israel and the whole country shut down. Most of

440
00:21:21,640 --> 00:21:24,440
Speaker 5: the multinationals set up in Israel that had Israel R

441
00:21:24,440 --> 00:21:25,040
Speaker 5: and D centers.

442
00:21:25,040 --> 00:21:25,879
Speaker 1: There are Israel teams.

443
00:21:25,920 --> 00:21:29,360
Speaker 5: Didn't miss a single deadline, didn't miss a single milestone.

444
00:21:29,560 --> 00:21:30,240
Speaker 1: So they've sort of.

445
00:21:30,200 --> 00:21:33,040
Speaker 5: Proven that even when they're these security shocks, they still

446
00:21:33,160 --> 00:21:35,720
Speaker 5: can hold together. I think the same will be true

447
00:21:35,760 --> 00:21:38,159
Speaker 5: here in the long term. The short term, it's going

448
00:21:38,200 --> 00:21:40,600
Speaker 5: to be pretty stressful. I do think the experience, so

449
00:21:40,600 --> 00:21:42,520
Speaker 5: I hate to say what I'm about to say, but

450
00:21:42,560 --> 00:21:45,800
Speaker 5: I do think the experience of these young people who

451
00:21:45,840 --> 00:21:49,520
Speaker 5: run companies in Israel going having to go through this experience,

452
00:21:49,920 --> 00:21:53,000
Speaker 5: developing interdisciplinary skills, having the sub in for someone who's

453
00:21:53,040 --> 00:21:55,880
Speaker 5: been called up, having to juggle a bunch of balls.

454
00:21:55,920 --> 00:21:58,320
Speaker 5: Just you know when you're in when you're in Gaza

455
00:21:58,400 --> 00:21:59,680
Speaker 5: for three days and you come back to work for

456
00:21:59,680 --> 00:22:01,480
Speaker 5: a week, and you go back to gazam for three days.

457
00:22:02,040 --> 00:22:05,240
Speaker 5: I do think there's a resilience factor that ultimately serves

458
00:22:05,280 --> 00:22:07,119
Speaker 5: these companies in the long run, wealth they can get

459
00:22:07,160 --> 00:22:08,080
Speaker 5: through the short term.

460
00:22:08,240 --> 00:22:10,560
Speaker 1: I think in the long run, Israel's tech economy will.

461
00:22:10,440 --> 00:22:12,919
Speaker 2: Be stronger Israel's had I think a disproportion of effect

462
00:22:12,920 --> 00:22:15,760
Speaker 2: in the global economy, given its size, in its location,

463
00:22:16,240 --> 00:22:19,360
Speaker 2: is that in any way in jeopardy the integration, certainly

464
00:22:19,400 --> 00:22:22,520
Speaker 2: within the Middle East we were hoping for really a

465
00:22:22,600 --> 00:22:25,880
Speaker 2: Repushwan with Saudi Arabia that certainly is not happening anytime soon,

466
00:22:26,040 --> 00:22:28,160
Speaker 2: but even more broadly in Europe and as the rest

467
00:22:28,160 --> 00:22:31,480
Speaker 2: of the world starts to be really uneasy with what's

468
00:22:31,480 --> 00:22:32,240
Speaker 2: going on in Gaza.

469
00:22:32,440 --> 00:22:34,840
Speaker 5: So I think there are two Look, if the US

470
00:22:34,960 --> 00:22:38,320
Speaker 5: stays strong it shoulder to shoulder with Israel during these

471
00:22:38,400 --> 00:22:40,720
Speaker 5: next few months that are going to be difficult, I

472
00:22:40,760 --> 00:22:42,600
Speaker 5: think the rest of the world will basically follow. I

473
00:22:42,600 --> 00:22:44,640
Speaker 5: don't think Europe is going to go in a dramatically

474
00:22:44,640 --> 00:22:47,000
Speaker 5: different direction. In the US, That's why it's very important

475
00:22:47,040 --> 00:22:50,080
Speaker 5: to Israel that it stays locked arms with the United States.

476
00:22:50,160 --> 00:22:53,399
Speaker 5: And so far that's pretty good. That all indicators are

477
00:22:53,400 --> 00:22:55,679
Speaker 5: that's pretty strong. The question, to your point, is the

478
00:22:55,720 --> 00:22:58,480
Speaker 5: golf in the Arab world, that's where the most progress

479
00:22:58,520 --> 00:22:59,800
Speaker 5: is being made. Now, if you go back in the

480
00:23:00,000 --> 00:23:04,239
Speaker 5: book at why the Sunni golf, Bahrain, the Emiradis, the

481
00:23:04,280 --> 00:23:07,280
Speaker 5: Saudis were in the works, as I call Israel's friends

482
00:23:07,320 --> 00:23:10,240
Speaker 5: in Israel's future friends. Why all that was deepening and

483
00:23:10,280 --> 00:23:13,679
Speaker 5: warming was not out of love for Israel. Those countries

484
00:23:13,680 --> 00:23:15,840
Speaker 5: were doing it because they believed in Israeli strength. They're

485
00:23:15,840 --> 00:23:19,080
Speaker 5: depending on the strength of Israel's economy, it's tech sectors,

486
00:23:19,119 --> 00:23:21,760
Speaker 5: we're just talking about. It's geopolitical positioning in the world

487
00:23:21,920 --> 00:23:25,000
Speaker 5: which had been growing, and they believed in the idea

488
00:23:25,040 --> 00:23:28,720
Speaker 5: that Israel's military and intelligence capabilities were a juggernaut and

489
00:23:28,760 --> 00:23:30,240
Speaker 5: they wanted a piece of it. They want to be

490
00:23:30,280 --> 00:23:33,360
Speaker 5: part of it because they shared a common enemy, specifically

491
00:23:33,920 --> 00:23:35,360
Speaker 5: Iran and the Muslim brotherhood.

492
00:23:35,520 --> 00:23:37,600
Speaker 2: Dan, it's really great to have you back on Wall Street.

493
00:23:37,600 --> 00:23:39,800
Speaker 2: Read that is Dan Senior. He is the author of

494
00:23:39,840 --> 00:23:44,760
Speaker 2: the new book The Genius of Israel. This is Wall

495
00:23:44,800 --> 00:23:56,800
Speaker 2: Street Week on Bloomberg Private equity. It's been around a while,

496
00:23:56,960 --> 00:23:58,960
Speaker 2: but it hit the big time back in the eighties

497
00:23:59,200 --> 00:24:02,200
Speaker 2: when the leverage out of R JR. Nabisco put Henry

498
00:24:02,240 --> 00:24:04,000
Speaker 2: Cravis up on the big screen.

499
00:24:04,480 --> 00:24:07,520
Speaker 5: I'm talking about putting a mountain of money into everybody's

500
00:24:07,520 --> 00:24:08,760
Speaker 5: pocket right now.

501
00:24:09,000 --> 00:24:12,080
Speaker 2: Since the go go days of lbo's, private equity and

502
00:24:12,240 --> 00:24:15,800
Speaker 2: alternative investments more broadly have come a long way. The

503
00:24:15,840 --> 00:24:21,240
Speaker 2: big guys like Cravis, KKR, Steve Schwarzman's Blackstone, David Rubinstein's Carlisle,

504
00:24:21,280 --> 00:24:24,600
Speaker 2: and Jim Colter's TPG have gone from being the upstart

505
00:24:24,640 --> 00:24:27,879
Speaker 2: pirates of finance to an entrenched and important part of

506
00:24:27,920 --> 00:24:31,199
Speaker 2: the establishment, and along the way have been joined by

507
00:24:31,280 --> 00:24:35,240
Speaker 2: a wide range of others, including the likes of Kim Kardashian.

508
00:24:35,680 --> 00:24:38,440
Speaker 3: I've often said that private equity is the highest calling

509
00:24:38,520 --> 00:24:39,280
Speaker 3: of mankind.

510
00:24:39,400 --> 00:24:41,480
Speaker 10: Why did it take you so long to realize that?

511
00:24:41,880 --> 00:24:43,720
Speaker 1: And that to join the private equity world?

512
00:24:45,480 --> 00:24:48,399
Speaker 2: I finally got talked into it once I came to

513
00:24:48,440 --> 00:24:52,560
Speaker 2: that realization. In the process, private equity has grown enormously,

514
00:24:52,840 --> 00:24:56,480
Speaker 2: accounting today for some twelve trillion dollars in assets, with

515
00:24:56,600 --> 00:24:59,840
Speaker 2: Blackstone now managing over one trillion dollars in assets all

516
00:25:00,000 --> 00:25:04,040
Speaker 2: by itself, KKR about half that and Carlisle about a third,

517
00:25:04,640 --> 00:25:08,159
Speaker 2: and they've taken somewhat different paths. With Blackstone's emphasis on

518
00:25:08,280 --> 00:25:10,880
Speaker 2: its access to private data that may not be as

519
00:25:10,920 --> 00:25:13,119
Speaker 2: readily available to public markets.

520
00:25:13,240 --> 00:25:18,760
Speaker 14: I believe AI will reinforce and further the advantage advantages

521
00:25:18,800 --> 00:25:21,960
Speaker 14: of private market investing relative to public market investing. Why

522
00:25:22,040 --> 00:25:24,399
Speaker 14: is that Well, I think the reason for that is

523
00:25:24,560 --> 00:25:28,520
Speaker 14: it's actually pretty simple public market investing, which relies obviously

524
00:25:28,600 --> 00:25:33,119
Speaker 14: on publicly available data. That sort of data will be

525
00:25:33,280 --> 00:25:37,080
Speaker 14: increasingly and further commoditized in an AI world. The value

526
00:25:37,080 --> 00:25:39,280
Speaker 14: of that sort of information and data and ability to

527
00:25:39,320 --> 00:25:42,400
Speaker 14: mind insights from that and have pattern recognition coming out

528
00:25:42,400 --> 00:25:45,520
Speaker 14: of that, both longitudinally and across your business that will

529
00:25:45,520 --> 00:25:47,280
Speaker 14: only be further enhanced.

530
00:25:47,080 --> 00:25:51,159
Speaker 2: To KKR's big move into Asia and stakeholder capitalism.

531
00:25:51,320 --> 00:25:54,600
Speaker 15: Our founders Henry Cravis and George Roberts say internally they

532
00:25:54,600 --> 00:25:57,399
Speaker 15: pioneered the private equity business, and they said, if we

533
00:25:57,400 --> 00:25:59,320
Speaker 15: were twenty two, we would go to Japan right now,

534
00:25:59,359 --> 00:26:01,600
Speaker 15: because that's actually where you're seeing some of the real

535
00:26:01,680 --> 00:26:04,320
Speaker 15: movement in creating some opportunities.

536
00:26:03,800 --> 00:26:08,280
Speaker 2: Look private equity is not perfect, capitalism's not perfect, but

537
00:26:08,640 --> 00:26:11,320
Speaker 2: this is a superior way of operating a company in

538
00:26:11,359 --> 00:26:15,879
Speaker 2: every respect. But those most involved say they've only just begun.

539
00:26:16,560 --> 00:26:19,480
Speaker 14: We have a very long term view on building the business.

540
00:26:19,760 --> 00:26:22,119
Speaker 14: You know, we don't just want to be a very

541
00:26:22,119 --> 00:26:25,280
Speaker 14: good asset management company. That's in addition to that. We

542
00:26:25,320 --> 00:26:27,359
Speaker 14: want to build really one of the great companies in

543
00:26:27,400 --> 00:26:30,360
Speaker 14: the world that is very enduring. That is Steve Schwarzman's

544
00:26:30,440 --> 00:26:33,040
Speaker 14: vision and it permeates, you know, our culture and everything

545
00:26:33,080 --> 00:26:33,640
Speaker 14: we do.

546
00:26:35,280 --> 00:26:37,040
Speaker 2: And to take us through where private equity and the

547
00:26:37,080 --> 00:26:39,920
Speaker 2: world of alternative investment, where broadly is today web So

548
00:26:40,040 --> 00:26:42,560
Speaker 2: who knows it terribly well? He is Tony James. He

549
00:26:42,680 --> 00:26:45,480
Speaker 2: is the founder and chair of Jefferson River Capital and

550
00:26:45,520 --> 00:26:48,280
Speaker 2: of course for years was president and COO of Blacksmith. Tony,

551
00:26:48,320 --> 00:26:50,560
Speaker 2: thank you so much for being here, pleasure, David. So,

552
00:26:50,760 --> 00:26:54,080
Speaker 2: this has grown rather dramatically over the time you've watched

553
00:26:54,119 --> 00:26:56,760
Speaker 2: it and participated, and it's like a twelve trillion dollar

554
00:26:56,840 --> 00:26:58,760
Speaker 2: business today. It didn't start out that way in the eighties.

555
00:26:59,160 --> 00:27:01,840
Speaker 2: So what gave rise to that? Why did it have

556
00:27:01,880 --> 00:27:04,120
Speaker 2: such an advantage over other ways of investing?

557
00:27:04,320 --> 00:27:05,040
Speaker 1: Well, as you point out.

558
00:27:05,040 --> 00:27:08,440
Speaker 4: It started about fifty years ago, so there's something appropriate

559
00:27:08,480 --> 00:27:10,320
Speaker 4: for now dealing with that. It started as a bit

560
00:27:10,359 --> 00:27:15,080
Speaker 4: of a curiosity industry. It was primarily dominated by investment bankers.

561
00:27:15,720 --> 00:27:18,159
Speaker 4: They perceived that the public markets.

562
00:27:17,760 --> 00:27:19,240
Speaker 1: Were not what they are today.

563
00:27:19,280 --> 00:27:23,840
Speaker 4: There were companies that were under managed, asset heavy, kind

564
00:27:23,840 --> 00:27:27,080
Speaker 4: of sleepy, and an investment baker come in there, use

565
00:27:27,119 --> 00:27:30,600
Speaker 4: the company's own assets to buy itself, spin off some assets,

566
00:27:30,640 --> 00:27:32,240
Speaker 4: cut some costs, and then flip it out again and

567
00:27:32,240 --> 00:27:36,520
Speaker 4: make some good returns. That pulled in more capital, of course,

568
00:27:36,680 --> 00:27:39,560
Speaker 4: and after a while that became more competitive, so that

569
00:27:39,600 --> 00:27:42,199
Speaker 4: the private equity industry then needed to actually not only

570
00:27:42,280 --> 00:27:44,439
Speaker 4: have the transactional skills, but they needed to be investors too.

571
00:27:44,520 --> 00:27:47,000
Speaker 4: They need to perceive value and where are the company's

572
00:27:47,040 --> 00:27:49,879
Speaker 4: going and will it be a good company and will

573
00:27:49,920 --> 00:27:52,320
Speaker 4: I be able to exit it at a good value.

574
00:27:52,680 --> 00:27:57,040
Speaker 4: And so that expanded a lot the opportunity set. But again,

575
00:27:57,600 --> 00:28:00,600
Speaker 4: the success of that pulled in more capital. Today it's

576
00:28:00,600 --> 00:28:04,800
Speaker 4: evolved to where private equity really needs to be operational

577
00:28:04,800 --> 00:28:06,840
Speaker 4: as well. You still need the transaction skills, you still

578
00:28:06,840 --> 00:28:09,119
Speaker 4: need to be an investor, but now you need to

579
00:28:09,160 --> 00:28:13,480
Speaker 4: be able to intervene in the company's fortunes and create value.

580
00:28:13,760 --> 00:28:17,439
Speaker 4: So at Blackstone we've figured we could add by our

581
00:28:17,520 --> 00:28:20,960
Speaker 4: own intervention, five to ten percent on average of a

582
00:28:21,000 --> 00:28:27,640
Speaker 4: company's EBITDA, just by things like procurement, redesigning the healthcare plans,

583
00:28:28,880 --> 00:28:35,600
Speaker 4: providing AI and data science, lean manufacturing, pricing, marketing, all

584
00:28:35,600 --> 00:28:39,040
Speaker 4: of those things. And we could have world leading experts

585
00:28:39,040 --> 00:28:43,680
Speaker 4: in that because we can deploy them and frankly deploy

586
00:28:43,720 --> 00:28:47,520
Speaker 4: their cost over two hundred or so portfolio companies, medium

587
00:28:47,520 --> 00:28:49,640
Speaker 4: and small companies, which are the focus that private equity

588
00:28:49,720 --> 00:28:54,640
Speaker 4: can't really afford to have world class experts in all.

589
00:28:53,560 --> 00:28:55,080
Speaker 1: These special areas.

590
00:28:55,440 --> 00:28:58,720
Speaker 4: So a private equity firm is very well positioned to.

591
00:28:58,720 --> 00:28:59,760
Speaker 1: Create the value.

592
00:29:00,720 --> 00:29:03,520
Speaker 4: And that's had some other implications.

593
00:29:04,000 --> 00:29:05,680
Speaker 1: In the early days, the.

594
00:29:06,600 --> 00:29:10,080
Speaker 4: Kind of buy a company that's ascid heavy, sell off

595
00:29:10,120 --> 00:29:12,720
Speaker 4: some assets, you made all your money, like in the

596
00:29:12,720 --> 00:29:14,200
Speaker 4: first year or so, you cut some costs, you so

597
00:29:14,240 --> 00:29:17,120
Speaker 4: al those asses, and then you flipped it. Now we're

598
00:29:17,120 --> 00:29:19,640
Speaker 4: trying to create great companies. We're trying to grow them,

599
00:29:20,080 --> 00:29:22,600
Speaker 4: and transforming a company takes the number of years and

600
00:29:22,640 --> 00:29:25,800
Speaker 4: you sow the seeds, but they don't blossom right away.

601
00:29:25,880 --> 00:29:27,000
Speaker 1: So private AQA.

602
00:29:26,880 --> 00:29:29,400
Speaker 4: Has come much much more of a long term holder

603
00:29:29,720 --> 00:29:31,000
Speaker 4: and builder of companies.

604
00:29:31,120 --> 00:29:33,600
Speaker 1: And I would wouldn't be surprised.

605
00:29:33,200 --> 00:29:36,640
Speaker 4: If in the early days of the industry, privately actually

606
00:29:36,680 --> 00:29:40,000
Speaker 4: cost jobs. But today there's absolutely no doubt about it

607
00:29:40,040 --> 00:29:43,920
Speaker 4: that it's a job creator. And so I think the

608
00:29:43,960 --> 00:29:46,040
Speaker 4: industry has evolved to a better place.

609
00:29:46,120 --> 00:29:46,880
Speaker 1: I kind of view.

610
00:29:47,560 --> 00:29:49,800
Speaker 4: I mean, the gains the private aquho are always going

611
00:29:49,800 --> 00:29:52,880
Speaker 4: to pensioners, but now I view the private itself as

612
00:29:52,920 --> 00:29:55,560
Speaker 4: a force for good in the economy to a much

613
00:29:55,600 --> 00:29:57,000
Speaker 4: greater degree than it was way back.

614
00:29:57,040 --> 00:29:59,400
Speaker 2: When does that require more patience on the part of

615
00:29:59,440 --> 00:30:01,360
Speaker 2: people who were giving them money to invest? I mean,

616
00:30:01,360 --> 00:30:03,600
Speaker 2: if you're holding the company a lot longer time to

617
00:30:03,640 --> 00:30:06,600
Speaker 2: get those operational benefits, and is there that patience? And

618
00:30:06,640 --> 00:30:08,640
Speaker 2: by the way, what about the liquidity issue? One of

619
00:30:08,640 --> 00:30:10,840
Speaker 2: the issues on private equity has always been I can't

620
00:30:10,880 --> 00:30:11,720
Speaker 2: pull my money out.

621
00:30:11,600 --> 00:30:16,320
Speaker 4: When I want to, right right, It does definitely require

622
00:30:16,440 --> 00:30:20,960
Speaker 4: more patients, But most investors now actually want longer holding

623
00:30:20,960 --> 00:30:25,440
Speaker 4: periods because because you get richer, you get richer. Compounding

624
00:30:25,440 --> 00:30:27,800
Speaker 4: something at twelve percent for twenty years, then you do

625
00:30:27,880 --> 00:30:32,320
Speaker 4: compounding at twenty percent for five years. So the IRR

626
00:30:32,400 --> 00:30:35,840
Speaker 4: that people talk about the compounding, that's only one aspect

627
00:30:35,960 --> 00:30:36,200
Speaker 4: of it.

628
00:30:36,400 --> 00:30:38,760
Speaker 1: So a lot of investors they want.

629
00:30:38,600 --> 00:30:40,400
Speaker 4: That money out, they want that money working for them

630
00:30:40,440 --> 00:30:42,760
Speaker 4: over a long period of time, and they're content with

631
00:30:43,560 --> 00:30:46,760
Speaker 4: longer holding periods. We can get into different investor classes,

632
00:30:46,800 --> 00:30:49,560
Speaker 4: but there are other ways you can get liquid if

633
00:30:49,600 --> 00:30:50,280
Speaker 4: you really need it.

634
00:30:50,360 --> 00:30:52,520
Speaker 2: Well, I was going to answer about that secondary there's

635
00:30:52,520 --> 00:30:54,520
Speaker 2: a secondary market now as I understand it. So actually

636
00:30:54,520 --> 00:30:56,840
Speaker 2: you can get your money out through secondary market, as

637
00:30:56,840 --> 00:30:57,880
Speaker 2: I understand explain that.

638
00:30:58,520 --> 00:31:02,360
Speaker 4: Sure, well, twelve trillion dollars, it's muff roomed out there.

639
00:31:02,640 --> 00:31:05,120
Speaker 4: Inevitably a certain number of vestors want to get their

640
00:31:05,120 --> 00:31:07,080
Speaker 4: money out, and not necessarily for.

641
00:31:07,400 --> 00:31:09,280
Speaker 1: Because assets not performing for them.

642
00:31:09,400 --> 00:31:11,640
Speaker 4: Private acuity has been the best performing asset class for

643
00:31:11,680 --> 00:31:16,480
Speaker 4: most institutions, and just a sidelight. One of the ironies

644
00:31:16,520 --> 00:31:19,920
Speaker 4: of that is if an institution has an asset allocation model,

645
00:31:19,920 --> 00:31:23,160
Speaker 4: so twenty percent in private equity, forty percent in public ateke,

646
00:31:23,280 --> 00:31:26,560
Speaker 4: forty percent in debt, let's just say, and private equly outperforms.

647
00:31:26,880 --> 00:31:28,640
Speaker 4: What happens is that all of a sudden they have

648
00:31:28,640 --> 00:31:31,640
Speaker 4: more than twenty percent in private equity, right, and so

649
00:31:31,760 --> 00:31:34,400
Speaker 4: now they need to sell down private equity. So it's

650
00:31:34,680 --> 00:31:38,680
Speaker 4: got a kind of a counterintuitive the success means they

651
00:31:38,720 --> 00:31:41,800
Speaker 4: need to be net sellers, which is kind of odd,

652
00:31:41,840 --> 00:31:42,360
Speaker 4: but that's.

653
00:31:42,160 --> 00:31:43,600
Speaker 1: The way, that's the way it works.

654
00:31:44,480 --> 00:31:50,000
Speaker 4: So but but reallocating, rebalancing the portfolio strategy changes with

655
00:31:50,960 --> 00:31:53,600
Speaker 4: corporate pension funds. When they've become fully funded, they then

656
00:31:53,640 --> 00:31:56,680
Speaker 4: want to go out of risk assets of just essentially

657
00:31:56,720 --> 00:32:01,720
Speaker 4: lock in the with double a credit stuff the liabilities,

658
00:32:01,760 --> 00:32:05,200
Speaker 4: so defeats the liabilities. If in retail investor, you have

659
00:32:05,280 --> 00:32:07,560
Speaker 4: life changes, you get divorced, you have the state planning,

660
00:32:07,800 --> 00:32:12,920
Speaker 4: so all those reasons. There are sellers of LP interest

661
00:32:13,040 --> 00:32:19,280
Speaker 4: and this business secondaries has ballooned as the primaries have.

662
00:32:19,360 --> 00:32:22,920
Speaker 1: It's still lagging. But to provide that liquidity.

663
00:32:23,120 --> 00:32:25,360
Speaker 2: Tony Yousers mentioned retail investors. I think if you go

664
00:32:25,400 --> 00:32:27,200
Speaker 2: back ten years ago, I wouldn't have thought of retail

665
00:32:27,200 --> 00:32:30,239
Speaker 2: investors in the same sentence with private equity. How has

666
00:32:30,280 --> 00:32:32,560
Speaker 2: that changed to what extent are retail investors coming in

667
00:32:32,560 --> 00:32:35,240
Speaker 2: and what is the profile of those retail investors in general?

668
00:32:36,040 --> 00:32:39,600
Speaker 4: Well, it started off as very high net worth investors.

669
00:32:39,680 --> 00:32:42,480
Speaker 4: There are almost many institutions in a way, but now

670
00:32:42,520 --> 00:32:45,280
Speaker 4: it's down to the mom and pop, and the industry

671
00:32:45,320 --> 00:32:47,880
Speaker 4: has evolved to create products that are more and more

672
00:32:47,960 --> 00:32:51,880
Speaker 4: appropriate for smaller investors. And retail investors have the same

673
00:32:51,920 --> 00:32:56,000
Speaker 4: need for returns that institutions do. And you know, we've

674
00:32:56,120 --> 00:32:58,520
Speaker 4: essentially had a forty year downtrend in interest rates, but

675
00:32:58,560 --> 00:33:02,360
Speaker 4: that's pulled the returns all asset classes down, so the

676
00:33:02,360 --> 00:33:06,320
Speaker 4: need for added returns becomes more and more acute. At

677
00:33:06,320 --> 00:33:10,240
Speaker 4: the same time, institutions realized particularly the first were the

678
00:33:10,320 --> 00:33:13,240
Speaker 4: endowments of the universities. They are the most sophisticated David

679
00:33:13,280 --> 00:33:14,040
Speaker 4: Swinson and so.

680
00:33:14,000 --> 00:33:14,640
Speaker 1: On and so forth.

681
00:33:15,160 --> 00:33:17,880
Speaker 4: Then there were the pensions, and then now to the

682
00:33:17,960 --> 00:33:22,160
Speaker 4: high networth individuals. Endowments have about fifty percent of their

683
00:33:22,320 --> 00:33:26,200
Speaker 4: endowments in private assets, pension funds about twenty five, retail

684
00:33:26,240 --> 00:33:32,000
Speaker 4: investors less than five, so they still have ways to go.

685
00:33:32,080 --> 00:33:35,520
Speaker 4: And what the institutions realized is, I don't need all

686
00:33:35,560 --> 00:33:39,520
Speaker 4: that liquidity. I'm never going to need to raise to

687
00:33:40,280 --> 00:33:45,520
Speaker 4: liquidate everything overnight. And I think increasingly high networth individuals

688
00:33:45,720 --> 00:33:49,960
Speaker 4: are realizing the same thing. If you have assets financially,

689
00:33:50,040 --> 00:33:52,680
Speaker 4: if you own your home, and you say you're lucky

690
00:33:52,760 --> 00:33:54,160
Speaker 4: enough to have a second home, and you have financial

691
00:33:54,200 --> 00:33:57,320
Speaker 4: assets multiples of annual spending. Do you really need to

692
00:33:57,320 --> 00:34:00,680
Speaker 4: be able to liquate everything tomorrow? Because it has a

693
00:34:00,720 --> 00:34:03,240
Speaker 4: real cost. It has a real cost in lower return.

694
00:34:04,080 --> 00:34:07,000
Speaker 4: And so it also has a cost because it's tempting

695
00:34:07,040 --> 00:34:10,200
Speaker 4: because individuals tend to do the wrong thing. They get

696
00:34:10,239 --> 00:34:13,000
Speaker 4: worried when the markets are collapsing. That's probably the time

697
00:34:13,000 --> 00:34:15,480
Speaker 4: they should buy, but they end up selling, and they

698
00:34:15,520 --> 00:34:17,520
Speaker 4: get embulent when they see everyone making a lot of

699
00:34:17,520 --> 00:34:19,239
Speaker 4: money and they throw them theirselves in the market.

700
00:34:19,280 --> 00:34:20,719
Speaker 1: That's probably the time they shouldn't do that.

701
00:34:21,200 --> 00:34:26,480
Speaker 4: So it's got a counterintuitive negative too. So yeah, it's

702
00:34:27,680 --> 00:34:30,480
Speaker 4: the sort of the new frontier is retail investors, and

703
00:34:30,520 --> 00:34:35,680
Speaker 4: the big new frontier is not their ULTRAI networth but

704
00:34:36,000 --> 00:34:37,279
Speaker 4: the mass market, and.

705
00:34:37,239 --> 00:34:41,000
Speaker 2: That's growing very much. Yeah, okay, Tony, really great to

706
00:34:41,040 --> 00:34:42,960
Speaker 2: have you with us on Walster. I really appreciate that's

707
00:34:43,000 --> 00:34:47,839
Speaker 2: Tony James of Jefferson River Capital. Coming up, we wrap

708
00:34:47,920 --> 00:34:50,759
Speaker 2: up the week with our special contributor Larry Summers of Harvard.

709
00:34:51,200 --> 00:35:03,640
Speaker 2: That's next on Wall Street Week on Bloomberg. This is

710
00:35:03,640 --> 00:35:05,719
Speaker 2: Wall Street Week. I'm David Weston. We're joined once again

711
00:35:05,719 --> 00:35:07,640
Speaker 2: by our very special contributor here in Wall Street Week,

712
00:35:07,680 --> 00:35:09,839
Speaker 2: he is Larry Summers of Harvard, So Larry, welcome back.

713
00:35:09,840 --> 00:35:11,960
Speaker 2: Great to have you here. Let's start with one of

714
00:35:11,960 --> 00:35:13,799
Speaker 2: the major events of the week, and that was the

715
00:35:13,840 --> 00:35:18,080
Speaker 2: President g and President Biden actually meeting around the APEC

716
00:35:18,160 --> 00:35:20,520
Speaker 2: meetings out there in San Francisco. It's hard to know

717
00:35:20,600 --> 00:35:23,239
Speaker 2: where this will go, but so far, so good. They

718
00:35:23,320 --> 00:35:26,200
Speaker 2: seem to be trying to really pull themselves back from

719
00:35:26,200 --> 00:35:26,920
Speaker 2: the precipice.

720
00:35:27,440 --> 00:35:31,800
Speaker 3: Look, it's important to have meetings like this. Churchill famously said,

721
00:35:32,400 --> 00:35:38,080
Speaker 3: much better jaw jaw than bang bang. On the other hand,

722
00:35:38,600 --> 00:35:40,919
Speaker 3: I think we need to remember that there are very

723
00:35:40,960 --> 00:35:47,520
Speaker 3: difficult fundamentals here, very different systems, very different views of

724
00:35:47,600 --> 00:35:54,600
Speaker 3: the world, profound competition in the technological arena, concerns on

725
00:35:54,920 --> 00:36:01,080
Speaker 3: the American side about China subversion of our our international

726
00:36:01,200 --> 00:36:06,920
Speaker 3: our vision of the international system, compares concerns on the

727
00:36:07,000 --> 00:36:10,239
Speaker 3: Chinese side that the United States is trying.

728
00:36:09,960 --> 00:36:12,320
Speaker 1: To hold them down.

729
00:36:12,840 --> 00:36:17,840
Speaker 3: So there are very profound geopolitical forces at play, and

730
00:36:18,400 --> 00:36:22,600
Speaker 3: this struggle is going to be with us for a long,

731
00:36:22,680 --> 00:36:26,680
Speaker 3: a very long time. So I'm glad to see the meeting,

732
00:36:26,840 --> 00:36:31,359
Speaker 3: but I'm concerned and I'm particularly concerned in light of

733
00:36:31,400 --> 00:36:36,080
Speaker 3: the gravity of the economic challenges that China is facing.

734
00:36:36,160 --> 00:36:40,240
Speaker 3: And my concern is that, as with the Soviet Union

735
00:36:41,480 --> 00:36:47,440
Speaker 3: in the nineteen sixties, a sense of very serious economic

736
00:36:47,600 --> 00:36:52,799
Speaker 3: challenges is going to drive a felt need for increasing

737
00:36:52,880 --> 00:36:57,839
Speaker 3: assertiveness in the international arena, as we saw with Khrushchev's

738
00:36:57,960 --> 00:37:01,880
Speaker 3: moves on Berlin, as we saw with the placement of

739
00:37:02,000 --> 00:37:07,000
Speaker 3: missiles in Cuba. And while I don't see anything concrete

740
00:37:07,560 --> 00:37:11,480
Speaker 3: like that that's happening right now, I think the economic

741
00:37:11,640 --> 00:37:16,080
Speaker 3: distress and the link to nationalism, given some of the

742
00:37:16,200 --> 00:37:20,520
Speaker 3: very strong positions that g has taken, is something that

743
00:37:21,200 --> 00:37:24,080
Speaker 3: is going to require the United States and the West

744
00:37:24,719 --> 00:37:27,880
Speaker 3: to be on their guard going forward.

745
00:37:28,600 --> 00:37:30,640
Speaker 2: Global Wall Street has paid a lot of attention this

746
00:37:30,680 --> 00:37:32,400
Speaker 2: week to those CPI numbers that came out for the

747
00:37:32,480 --> 00:37:35,520
Speaker 2: United States. Some people are, if not declaring victory, close

748
00:37:35,560 --> 00:37:38,120
Speaker 2: to declaring victory over inflation. Are they premature?

749
00:37:38,760 --> 00:37:41,440
Speaker 3: Look, those were good numbers. Those were better numbers than

750
00:37:41,480 --> 00:37:45,279
Speaker 3: I would have expected, better numbers than I think most

751
00:37:45,320 --> 00:37:50,640
Speaker 3: people would have expected. And I think inflation performance has

752
00:37:50,719 --> 00:37:55,560
Speaker 3: been more favorable certainly that I have expected over the

753
00:37:55,680 --> 00:38:00,480
Speaker 3: last year. I thought a lot about that. David and

754
00:38:00,520 --> 00:38:04,120
Speaker 3: I think there are two or three factors to emphasize.

755
00:38:05,040 --> 00:38:09,680
Speaker 3: The first is that policy has been much tighter than

756
00:38:09,840 --> 00:38:15,000
Speaker 3: was anticipated. In July of twenty twenty two, markets were

757
00:38:15,280 --> 00:38:19,800
Speaker 3: assigning a probability of under ten percent to the level

758
00:38:19,840 --> 00:38:25,239
Speaker 3: of tightness in policy that we have seen so far.

759
00:38:25,400 --> 00:38:30,200
Speaker 3: So more tight policy has led to better outcomes on inflation.

760
00:38:30,719 --> 00:38:34,200
Speaker 3: That doesn't mean inflation fears were unwarranted. It means that

761
00:38:34,680 --> 00:38:38,520
Speaker 3: people took the fears seriously, which was good. I think

762
00:38:38,560 --> 00:38:42,919
Speaker 3: that's one important aspect. I do think that given how

763
00:38:43,000 --> 00:38:47,160
Speaker 3: strong the economy has been, there's still a surprise in

764
00:38:47,280 --> 00:38:51,160
Speaker 3: what's happened to inflation, and that I think has to

765
00:38:51,200 --> 00:38:56,839
Speaker 3: do in part with transitory factors. Transitory factors that were

766
00:38:56,840 --> 00:39:01,560
Speaker 3: pushing inflation up from bottleneck that are now mean reverting

767
00:39:01,640 --> 00:39:05,719
Speaker 3: and are pushing inflation down. So I think there's been

768
00:39:05,760 --> 00:39:09,520
Speaker 3: a little bit of prematurity in some of the declarations

769
00:39:09,640 --> 00:39:13,399
Speaker 3: of victory. And I'm not sure the inflation figures over

770
00:39:13,440 --> 00:39:15,719
Speaker 3: the next two years are going to be quite as

771
00:39:15,760 --> 00:39:20,839
Speaker 3: favorable as the market is expecting, especially in light of

772
00:39:20,880 --> 00:39:27,839
Speaker 3: the geopolitical risks around oil and some other commodities. So

773
00:39:27,920 --> 00:39:31,240
Speaker 3: we'll have to see whether we're really able to get

774
00:39:31,280 --> 00:39:38,000
Speaker 3: down to two percent quite as easily as many people imagine.

775
00:39:38,040 --> 00:39:39,880
Speaker 2: And what is the risk right now of a recession

776
00:39:39,880 --> 00:39:41,239
Speaker 2: in the first half of next year.

777
00:39:41,520 --> 00:39:44,879
Speaker 3: It's certainly under fifty to fifty David. I think it's

778
00:39:44,880 --> 00:39:51,520
Speaker 3: probably on the order of twenty twenty five twenty five percent.

779
00:39:51,719 --> 00:39:55,440
Speaker 3: That ultimately something will happen which will cause the nber

780
00:39:56,560 --> 00:40:01,480
Speaker 3: to data recession is having begun in the first half

781
00:40:02,080 --> 00:40:07,319
Speaker 3: of the year. In general, when recessions come, we don't

782
00:40:07,320 --> 00:40:11,160
Speaker 3: even know that we're in them till they've been underway

783
00:40:11,400 --> 00:40:16,280
Speaker 3: for several months, so I think you got to recognize

784
00:40:16,920 --> 00:40:20,640
Speaker 3: that as a real risk. On the other hand, with

785
00:40:20,880 --> 00:40:24,520
Speaker 3: what we've been seeing in the employment reports, incomes are

786
00:40:24,920 --> 00:40:29,960
Speaker 3: continuing to grow, so I don't think that is the

787
00:40:30,600 --> 00:40:33,000
Speaker 3: preponderant scenario.

788
00:40:33,480 --> 00:40:35,640
Speaker 2: One thing that maybe at verse in store is actually,

789
00:40:35,640 --> 00:40:37,640
Speaker 2: besides of the federal deficit, a lot of talk about that.

790
00:40:37,719 --> 00:40:40,600
Speaker 2: This week. It appears we've avoided actually shutting down the government.

791
00:40:40,800 --> 00:40:42,920
Speaker 2: People came to their senses, but it's only up to

792
00:40:43,040 --> 00:40:45,560
Speaker 2: next January before they come to it again. And the

793
00:40:45,560 --> 00:40:48,000
Speaker 2: main issue is not even what they did this week,

794
00:40:48,040 --> 00:40:50,839
Speaker 2: but the larger issue about the weight that this may

795
00:40:50,880 --> 00:40:52,320
Speaker 2: impose on the US economy.

796
00:40:52,760 --> 00:40:56,960
Speaker 3: If somebody's got a basic problem of being overweight. It's

797
00:40:57,040 --> 00:41:02,439
Speaker 3: good if a skip desserts. It's good if they check

798
00:41:02,480 --> 00:41:06,320
Speaker 3: into a spa for a weekend. But what really matters

799
00:41:06,440 --> 00:41:10,239
Speaker 3: is whether they change their habits and they change their lifestyle,

800
00:41:10,840 --> 00:41:15,160
Speaker 3: And nothing in this agreement or anything in the discussions

801
00:41:15,239 --> 00:41:20,080
Speaker 3: currently underway, is about changing the American habit or lifestyle

802
00:41:20,520 --> 00:41:23,920
Speaker 3: with respect to spending in taxes. I look at the

803
00:41:23,960 --> 00:41:28,480
Speaker 3: world right now, and it is the most ominous world

804
00:41:29,080 --> 00:41:34,400
Speaker 3: geopolitically that I have seen, certainly since the Berlin Wall

805
00:41:34,520 --> 00:41:39,640
Speaker 3: fell in nineteen eighty nine. I look at projections for

806
00:41:39,719 --> 00:41:43,040
Speaker 3: the federal budget that call for defense spending as a

807
00:41:43,080 --> 00:41:47,279
Speaker 3: share of GDP to fall substantially. I don't think that

808
00:41:47,400 --> 00:41:51,760
Speaker 3: should happen, and I don't think that will happen, almost

809
00:41:51,800 --> 00:41:56,480
Speaker 3: regardless of how domestic politics play out. And so I think,

810
00:41:56,560 --> 00:41:59,480
Speaker 3: as I look at the budget picture, we got to

811
00:41:59,520 --> 00:42:03,800
Speaker 3: recognize that we've got a big national defense liability ahead

812
00:42:03,800 --> 00:42:07,279
Speaker 3: of us that we're not really budgeting for in the

813
00:42:07,360 --> 00:42:13,560
Speaker 3: current projections. And much more generally, David is a very

814
00:42:13,600 --> 00:42:20,400
Speaker 3: profound question of how long the world's greatest debtor will

815
00:42:20,440 --> 00:42:26,440
Speaker 3: remain the world's greatest and most secure power. And so

816
00:42:26,960 --> 00:42:31,840
Speaker 3: I think that everybody talks about our resilience as a country. Well,

817
00:42:32,200 --> 00:42:36,239
Speaker 3: part of resilience for a company, part of resilience for

818
00:42:36,320 --> 00:42:41,040
Speaker 3: a household is containing your leverage and containing your borrowing.

819
00:42:41,680 --> 00:42:43,920
Speaker 3: And I think that's something we need to think about

820
00:42:43,960 --> 00:42:44,480
Speaker 3: as a nation.

821
00:42:45,640 --> 00:42:48,560
Speaker 2: Larry, just give us a little wisdom from the nineteen nineties.

822
00:42:48,719 --> 00:42:50,960
Speaker 2: You serve in the Clinton administration back then when they

823
00:42:51,000 --> 00:42:54,279
Speaker 2: got their arms around the budget, and my recollection to

824
00:42:54,360 --> 00:42:57,080
Speaker 2: continue your analogy to dieting. If you're going to lose weight,

825
00:42:57,320 --> 00:42:59,719
Speaker 2: you can't just exercise. You can't just cut back on

826
00:42:59,719 --> 00:43:02,200
Speaker 2: what you You got to do both. And right now

827
00:43:02,360 --> 00:43:04,799
Speaker 2: one might think we have one party who doesn't want

828
00:43:04,840 --> 00:43:07,279
Speaker 2: to increase taxes and increase revenues, the other doesn't want

829
00:43:07,280 --> 00:43:10,520
Speaker 2: to cut spending. How did you manage in the nineteen

830
00:43:10,600 --> 00:43:12,799
Speaker 2: nineties to get over that home.

831
00:43:13,080 --> 00:43:17,120
Speaker 3: Well, I'm happy to try to answer the question how

832
00:43:17,120 --> 00:43:20,439
Speaker 3: Bill Clinton managed. I don't want to be the one

833
00:43:20,600 --> 00:43:27,439
Speaker 3: taking credit for the nineteen ninety three budget deal. Look,

834
00:43:27,560 --> 00:43:30,840
Speaker 3: I think he laid out the case. He brought people together,

835
00:43:31,400 --> 00:43:36,960
Speaker 3: He was willing to do things that were painful. His

836
00:43:37,400 --> 00:43:40,520
Speaker 3: for the people who were his.

837
00:43:42,200 --> 00:43:42,680
Speaker 1: Friends.

838
00:43:43,239 --> 00:43:47,680
Speaker 3: He was able to explain the case to the American people,

839
00:43:48,320 --> 00:43:51,200
Speaker 3: and that's the kind of leadership.

840
00:43:50,680 --> 00:43:51,520
Speaker 2: We're going to need.

841
00:43:52,320 --> 00:43:55,759
Speaker 3: And he reaped a benefit that I think people need

842
00:43:55,800 --> 00:43:59,880
Speaker 3: to recognize and that maybe hasn't come into focus quite Ye.

843
00:44:00,560 --> 00:44:02,640
Speaker 2: Okay, Larry, thank you so very much. Always great to

844
00:44:02,680 --> 00:44:07,680
Speaker 2: have you with us, as Larry Summers of Harvard coming up.

845
00:44:07,719 --> 00:44:11,719
Speaker 2: Second acts. Sometimes you win, sometimes you lose, and sometimes

846
00:44:11,840 --> 00:44:14,560
Speaker 2: you end up with the cat. That's the next time

847
00:44:14,640 --> 00:44:26,600
Speaker 2: Wall Street Week on Bloomberg. Finally, one more thought. F

848
00:44:26,640 --> 00:44:29,680
Speaker 2: Scott Fitzgerald told us that in American lives, there are

849
00:44:29,840 --> 00:44:33,560
Speaker 2: no second acts. The annals of business and politics and

850
00:44:33,680 --> 00:44:36,800
Speaker 2: sports are filled with stories of stars who had great

851
00:44:36,840 --> 00:44:39,720
Speaker 2: first acts but fell short when they tried to come back.

852
00:44:40,040 --> 00:44:43,160
Speaker 2: Think Michael Jordan's ill fated career as a professional baseball

853
00:44:43,160 --> 00:44:46,319
Speaker 2: player after he had dominated the world of basketball. Or

854
00:44:46,360 --> 00:44:50,080
Speaker 2: famed Hollywood agent Michael Ovitz, who left an indelible stamp

855
00:44:50,120 --> 00:44:53,399
Speaker 2: on the entertainment industry with his creation of CAA, only

856
00:44:53,440 --> 00:44:55,959
Speaker 2: to struggle with a transition to the corporate world under

857
00:44:56,000 --> 00:44:59,160
Speaker 2: Michael Eisner. But that doesn't keep people from trying and

858
00:44:59,200 --> 00:45:02,239
Speaker 2: sometimes succeed all the way back to the early nineteenth

859
00:45:02,239 --> 00:45:05,000
Speaker 2: century when President John Quincy Adams lost to his arch

860
00:45:05,120 --> 00:45:08,480
Speaker 2: rival Andrew Jackson, only to come back as a congressman,

861
00:45:08,520 --> 00:45:11,319
Speaker 2: and some have suggested he had more success in that role.

862
00:45:11,760 --> 00:45:14,440
Speaker 2: Or Arnold Schwarzenegger, who went from action star of the

863
00:45:14,440 --> 00:45:17,520
Speaker 2: big screen to become a successful governor of California.

864
00:45:19,360 --> 00:45:20,200
Speaker 1: I'll be back.

865
00:45:21,160 --> 00:45:23,920
Speaker 2: Just within the past two years, we've had two notable

866
00:45:23,960 --> 00:45:27,279
Speaker 2: comebacks in the corporate world, as Howard Schultz returned for

867
00:45:27,320 --> 00:45:30,640
Speaker 2: a second time to run Starbucks and he's seriously considered

868
00:45:30,719 --> 00:45:33,359
Speaker 2: a second act that would go way past coffee.

869
00:45:33,600 --> 00:45:37,080
Speaker 16: I am seriously thinking of running for president.

870
00:45:37,880 --> 00:45:40,680
Speaker 2: Bob Eyer returned to CEO to Disney just under a

871
00:45:40,719 --> 00:45:44,000
Speaker 2: year ago and was praised by competitors like Reid Hoffman.

872
00:45:44,440 --> 00:45:46,400
Speaker 16: Bob is I think one of the great CEOs of

873
00:45:46,400 --> 00:45:49,520
Speaker 16: our time. Part of what you want CEOs to be doing,

874
00:45:49,520 --> 00:45:53,400
Speaker 16: which is acting like owners and feeling that the important

875
00:45:53,400 --> 00:45:55,760
Speaker 16: thing is the legacy of the company that they hand

876
00:45:55,800 --> 00:45:59,280
Speaker 16: on to their successors, to employees, to society.

877
00:45:59,400 --> 00:46:02,239
Speaker 2: I think, Bob, And even as we speak, we have

878
00:46:02,360 --> 00:46:05,040
Speaker 2: Donald Trump, the forty fifth president, trying to come back

879
00:46:05,040 --> 00:46:09,320
Speaker 2: as the forty seventh vowing to make America great again again.

880
00:46:09,719 --> 00:46:12,640
Speaker 5: In order to make America great and glorious again, I

881
00:46:12,680 --> 00:46:17,239
Speaker 5: am tonight announcing my candidacy for President of the United States.

882
00:46:17,400 --> 00:46:20,240
Speaker 2: But perhaps the oddest story of attempted second acts comes

883
00:46:20,280 --> 00:46:23,280
Speaker 2: not from America, but from Great Britain. We all remember

884
00:46:23,400 --> 00:46:26,840
Speaker 2: David Cameron, that young, charismatic British Prime Minister who was

885
00:46:26,880 --> 00:46:29,480
Speaker 2: so confident his fellow Britons wanted to stay in the

886
00:46:29,520 --> 00:46:32,000
Speaker 2: European Union that he decided to put it to a vote.

887
00:46:32,440 --> 00:46:35,440
Speaker 2: He was wrong. They voted to leave, and mister Cameron

888
00:46:35,440 --> 00:46:37,280
Speaker 2: had little choice but to leave as well.

889
00:46:37,560 --> 00:46:40,480
Speaker 17: The British people have made a very clear decision to

890
00:46:40,600 --> 00:46:44,040
Speaker 17: take a different path, and as such, I think the

891
00:46:44,080 --> 00:46:48,000
Speaker 17: country requires fresh leadership to take it in this direction.

892
00:46:48,360 --> 00:46:52,560
Speaker 2: Now, seven years later, another struggling Tory Prime Minister, Rishi Sunak,

893
00:46:52,640 --> 00:46:55,840
Speaker 2: has decided to bring mister Cameron back, not as Prime Minister,

894
00:46:55,920 --> 00:46:59,040
Speaker 2: to be sure, but as his Foreign secretary. Things are

895
00:46:59,120 --> 00:47:01,880
Speaker 2: quite a bit different than they were when mister Cameron

896
00:47:01,960 --> 00:47:04,799
Speaker 2: left Number ten. The world's been through a pandemic. The

897
00:47:04,880 --> 00:47:08,080
Speaker 2: promises of economic prosperity made by the Brexiteers have proven

898
00:47:08,239 --> 00:47:11,399
Speaker 2: largely hollow and the polls point to labor being back

899
00:47:11,440 --> 00:47:13,560
Speaker 2: in power with the next general election.

900
00:47:14,160 --> 00:47:16,680
Speaker 8: The labor market data was also pretty positive.

901
00:47:16,840 --> 00:47:18,879
Speaker 1: Wage growth decelerated a little bit.

902
00:47:19,200 --> 00:47:22,239
Speaker 9: It's still incredibly high though, and so I would put

903
00:47:22,280 --> 00:47:24,040
Speaker 9: all of this in a category of good news.

904
00:47:24,200 --> 00:47:27,200
Speaker 2: But David Cameron will have one friendly face to greet

905
00:47:27,280 --> 00:47:30,080
Speaker 2: him when he pays visits Number ten Downing Street. That

906
00:47:30,200 --> 00:47:34,160
Speaker 2: of Larry, the chief mouser at the Prime Minister's residence,

907
00:47:34,520 --> 00:47:36,879
Speaker 2: a cat who shared the house with the Cameron's back

908
00:47:36,960 --> 00:47:39,520
Speaker 2: when they were in charge. That does it for this

909
00:47:39,520 --> 00:47:42,320
Speaker 2: episode of Wall Street Week. I'm David Weston. This is Bloomberg.

910
00:47:42,560 --> 00:47:47,239
Speaker 2: See you next week.