Speaker 1: This is Bloomberg Wall Street Week.
Speaker 2: I mean may not have an overall recession. We're having
Speaker 2: a rolling recession. To Cone rowl looks pretty strongly. It
Speaker 2: is when it comes to jobs.
Speaker 1: The financial stories that shape our world.
Speaker 2: Three major regional bank failures send shockwaves through the banking system.
Speaker 2: We're all trying to figure out what to make of
Speaker 2: generative AI through.
Speaker 1: The eyes of the most influential voices.
Speaker 2: Welcome down, Doctor Paul Krugman, Ryan moynihan, a Bank of America,
Speaker 2: deebro Lair of the Paulson Institute, well Then Hubbard of
Speaker 2: the Columbia Business School.
Speaker 1: Bloomberg Wall Street Week with David Weston from Bloomberg Radio.
Speaker 2: Sometimes no news can be good news. No government shutdown,
Speaker 2: no new flare up in US China relations, and no
Speaker 2: news surge in inflation numbers. This is Bloomberg Wall Street Week.
Speaker 2: I'm David Weston, this week's special contributor to Larry Summers
Speaker 2: of Harvard on whether we're through the worst on inflation.
Speaker 3: I'm not sure the inflation figures over the next two
Speaker 3: years are going to be quite as favorable as the
Speaker 3: market is expecting.
Speaker 2: Tony James of Jefferson River capital on the past and
Speaker 2: future of private equity and credit.
Speaker 4: Private equity really needs to be operational as well. You
Speaker 4: still need the transaction skills, You still need to be
Speaker 4: an investor, but now you need to be able to
Speaker 4: intervene in the company's fortunes.
Speaker 2: And Dan Senor about the Israeli Hamas War and what
Speaker 2: it means for the Israeli economy.
Speaker 1: They can get through the short term.
Speaker 5: I think in the long run, Israel's tech economy will
Speaker 5: be stronger.
Speaker 2: Global Wall Street had an exciting week, mainly because of
Speaker 2: what didn't happen. President Biden met with President g during
Speaker 2: the APEX summit, and they appeared to set a new
Speaker 2: more constructive tone to US China relations.
Speaker 6: Our meetings have always been Canada straightforward. We haven't always agreed,
Speaker 6: but they've been straightforward and today build on the groundwork
Speaker 6: related Over the past several months of high level diplomacy
Speaker 6: between our teams, we've made some important progress.
Speaker 2: I believe the US Congress got its act together and
Speaker 2: finally agreed not to shut the government down at least
Speaker 2: until after the new year. I have good news for
Speaker 2: the American people this Friday night, there will be no
Speaker 2: government shutdown but most exciting for global Wall Street this
Speaker 2: week were those CPI numbers that came in even better
Speaker 2: than expected, pointing to a continued sawing in the rate
Speaker 2: of inflation and maybe just maybe no need for the
Speaker 2: Fed to keep hiking rates.
Speaker 7: It's a rather amazing number. This morning, CPI comes in flat.
Speaker 7: The estimate was one tenth that it had been zero
Speaker 7: point four back in September, and that leaves the year
Speaker 7: over year headline number at three point two percent, down
Speaker 7: from three point seven.
Speaker 2: And then late on Friday, word came that the man
Speaker 2: who made chat GPT famous, Sam Altman, was stepping down
Speaker 2: immediately as CEO of open Ai after the board lost
Speaker 2: confidence in his candor, and Microsoft shares dropped on that news.
Speaker 2: The markets overall had a nice bump up during the
Speaker 2: week with the news about slowing inflation and a strong economy.
Speaker 2: The S and P five hundred was up two point
Speaker 2: two four percent, ending at four five one four. That's
Speaker 2: comfortably above the median number of our Bloomberg elves that
Speaker 2: they're predicting for year end. The Nasdaq was up two
Speaker 2: point three seven percent, while the yield on the tenure
Speaker 2: dropped almost twenty two basis points to four point four.
Speaker 2: Here to tell us what it all means are Sarah
Speaker 2: Mallik Neuveen Asset Management CIO and Peter Borisch, Computer Trading CEO.
Speaker 2: So welcome back both of you. It's great to have
Speaker 2: you here. Sarah, let me start with you. Was it
Speaker 2: really all about the CPI numbers in the end for
Speaker 2: this week?
Speaker 8: Well, the Santa.
Speaker 9: Claus rally has come early this year for three reasons.
Speaker 9: One of those is inflation, which is coming in under expectations.
Speaker 9: Also the feedest signal the end of the rate pike cycle,
Speaker 9: and finally the economy, which is showing some signs of
Speaker 9: cooling but not enough to take us into a recession.
Speaker 9: All of this caused ten year treasury yields to drop
Speaker 9: by about fifty basis points and markets to rally. However,
Speaker 9: I caught twenty twenty four looks a little bit more complicated.
Speaker 9: The question is going to move not from how high
Speaker 9: will interest rates go, but to how long will interest
Speaker 9: rates stay high? And given that futures markets, you're expecting
Speaker 9: four rate cuts in twenty twenty four. I think that's
Speaker 9: optimistic because inflation is still above target and we're not
Speaker 9: in a recession. So I don't see why the FED
Speaker 9: would be cutting rates so aggressively going into next year.
Speaker 2: So, Peter, before we get to twenty twenty four, which
Speaker 2: we do want to get to, what are for the
Speaker 2: rest of this year? Can we put our pencils down?
Speaker 2: Our desks are in pretty good shape for the rest
Speaker 2: of this year.
Speaker 10: Do you think you know?
Speaker 11: In this business, a week can be a long time.
Speaker 11: Just look at the move from two Fridays ago to
Speaker 11: this Friday. So no, and you can never put your
Speaker 11: pencils down. And if you listen to some of the
Speaker 11: FED talk President Collins, they're kind of like, wait a second,
Speaker 11: financial conditions aren't really that tight. If you look at
Speaker 11: the equity markets, we may have to raise again.
Speaker 10: So I agree with Sarah.
Speaker 11: I mean, I'm in the camp that I don't even
Speaker 11: think the FED is going to cut at all next year,
Speaker 11: and that's going to make for a bumpy road. And
Speaker 11: depending on what the news conferences after the next FED meeting,
Speaker 11: this could sort of be an upside down. Remember in
Speaker 11: twenty eighteen you had the tremendous rally the last week
Speaker 11: of the year.
Speaker 10: This could be the opposite of that.
Speaker 2: Oh really, so the reverse of a Santa Claus rally, Well.
Speaker 11: You have a you know, if you pick any low
Speaker 11: in the fourth quarter, by definition, you're going to have
Speaker 11: a rally off of it. So yeah, she said, we
Speaker 11: had an early Santa so Santa Claus rally, we had
Speaker 11: a low, we rallied, but then we could have a
Speaker 11: nice little correction going into the end of the year.
Speaker 2: Sir, how much of it do you think is in
Speaker 2: the hands of the Fed. We all focus on the FED.
Speaker 2: It's understanding what we do, but it's not just the
Speaker 2: FED that determines things like yields. For example, We've got
Speaker 2: a lot of issuance coming out of the treasure these days.
Speaker 2: It looks like that's not going to stop anytime soon.
Speaker 8: I think it is still very important. And what is
Speaker 8: the FED going to do next year?
Speaker 9: Let's start with inflation at which Peter talked about, which
Speaker 9: will have to do with whether we get rape. Inflation
Speaker 9: is still about a percent above the FEDCE target when
Speaker 9: it comes to CPI, and that last mile of inflation
Speaker 9: could be the longest miile. Our view is that inflation
Speaker 9: likely doesn't hit target in twenty twenty four. That's going
Speaker 9: to prevent you from getting aggressive rate cuts. So that's
Speaker 9: going to be an issue for the FED. And also
Speaker 9: looking at the economy, the consumer and employment markets have
Speaker 9: been driving the economy. Payrolls are still coming in close
Speaker 9: to two hundred thousand. Yes, we did see unemployment claims
Speaker 9: spiked to August levels this week, so employment is starting
Speaker 9: to slow. Consumers starting to show some cracks when it
Speaker 9: comes to delinquencies. But none of that means the recession
Speaker 9: is imminent until you get those two factors of inflation
Speaker 9: at or below target and a recession right in front
Speaker 9: of us.
Speaker 8: I don't think the Fed's going to have the room
Speaker 8: to cut rates.
Speaker 2: Well, what were the equity side, Sarah, Because we've had
Speaker 2: sort of a I can say a subdued earnings earning
Speaker 2: session here. What are we looking for in twenty twenty four?
Speaker 8: Well, Q three marked the end of an earnings recession.
Speaker 8: Before Q three we had three quarters.
Speaker 9: Of negative earnings, so it was good to see this
Speaker 9: growth in third quarter, and in twenty twenty four we
Speaker 9: expect about five percent earnings growth. That will be positive.
Speaker 9: It will be dependent on companies' ability to preserve margins
Speaker 9: as inflation continues to moderate, so that'll be the positive.
Speaker 9: I don't think we're going to see a lot of
Speaker 9: valuation expansion driving the markets in twenty twenty four because
Speaker 9: valuations are already out of premium.
Speaker 2: So Peter, what about the consumer, Because the consumer really
Speaker 2: feeds directly into earnings because companies have to sell things.
Speaker 2: Where is the consumer right now? Are they running out
Speaker 2: of all that excess savings that they had?
Speaker 11: Well, first of all, Saraen made a great point, but
Speaker 11: when I look at the consumer, I kind of try
Speaker 11: to watch, you know, Visa and MasterCard as a proxy
Speaker 11: for consumer and those stocks have continued to stay strong
Speaker 11: close to their all time highs. So I think it's
Speaker 11: a little premature given the fact that employment is still
Speaker 11: high right, Unemployment is low again another indication that financial
Speaker 11: conditions are not tight, and therefore I think the higher
Speaker 11: probability of rates going up. So the consumer's in pretty
Speaker 11: good shape for now. But I look at the three c's, copper, corn,
Speaker 11: and crude, and they have been weak. So that's saying
Speaker 11: something about the aggregate demand in the economy. So that's
Speaker 11: the irony of markets. They have been weak. That drags
Speaker 11: down inflation. But is that bullish, Sarah?
Speaker 9: As it brings up a good point David about the consumer.
Speaker 9: They continue to spend and consumer discretionary stocks have been
Speaker 9: very strong this year. But if you look behind under
Speaker 9: the hood at the consumer, auto and credit card delinquencies
Speaker 9: are increasing significantly. I think the consumer is starting to
Speaker 9: show some cracks. And if the employment markets continue to
Speaker 9: slow and people do not feel secure in their jobs,
Speaker 9: I think that'll be the unwinding of the economy that
Speaker 9: does eventually get us into that recession.
Speaker 8: But again, as I said, that is not right around
Speaker 8: the corner.
Speaker 2: Sarah, you usually like to pick a stock or two
Speaker 2: for us. Do you have a stock or two to recommend?
Speaker 9: We do, so we're looking at first of all, we
Speaker 9: think the dollar is going to be it's at peak levels.
Speaker 9: I'm going to weaken from here, so outside of the
Speaker 9: US countries where there could be demand, and also commodities
Speaker 9: which tend to.
Speaker 8: Benefit from a week or dollar. Peter mentioned copper. That's
Speaker 8: an area that we like. Supply is type for copper.
Speaker 9: Freeport Macmaran is a company specifically, they're finishing their last
Speaker 9: smelter in Indonesian in early twenty twenty four, so capex
Speaker 9: is declining and they are returning cash to shareholders. Demand
Speaker 9: for copper is strong. Not only has US production of
Speaker 9: copper declined significantly over the last half century, but also
Speaker 9: wind solar electric vehicles and increase need for US infrastructure
Speaker 9: as we onshore, all of that will increase demand for copper.
Speaker 9: Multi year tailwinds for that commodity.
Speaker 2: Peter, so too soon to get back in the pool.
Speaker 11: For real estate, well, there was a very interesting article
Speaker 11: on Bloomberg today about how so many homeowners actually don't
Speaker 11: have a mortgage. So this notion that well, the market's
Speaker 11: frozen because people don't want to sell because they have
Speaker 11: low mortgages.
Speaker 10: That may not be true.
Speaker 11: If that's the case, and people want to trade their stock,
Speaker 11: that may increase the housing supply and that could drive
Speaker 11: down some prices. Again, ironically, is that bullish or bearish
Speaker 11: for interest rates as housing demand gets met with increased supply.
Speaker 10: So is it too soon? No, but it's going to
Speaker 10: be interesting in fascinating.
Speaker 9: Well, Well, an area David within reads that looks really
Speaker 9: attractive is actually the public reads sector. It's trading at
Speaker 9: a discount to net asset value. Reads actually tend to
Speaker 9: underperform while rates are going up and in periods of
Speaker 9: rate pauses, and rate cuts, reads out perform, and I
Speaker 9: think that's what we're getting to. This elongated pause by
Speaker 9: the Fed should be positive for segments such as reads.
Speaker 2: Well, so that's fascinating. Reads got clobbered, obviously. Do you
Speaker 2: think they've bottomed, they're going to come back up.
Speaker 9: We've actually seen them bottom in the last couple of
Speaker 9: weeks as yields rolled over. And if you look at history,
Speaker 9: as the Fed pauses and we don't expect any more
Speaker 9: Fed rate hikes, that should be positive for reads. They're
Speaker 9: still cheap, they're trading at a discount to nav Many
Speaker 9: are worried about commercial real estate, but if you look
Speaker 9: at the main benchmarks, it is a very insignificant, low
Speaker 9: single digit percentage portion of their benchmarks, industrial rates, apartment reads,
Speaker 9: all of those are actually doing very well. So it's
Speaker 9: not just a commercial real estate story. That's a very
Speaker 9: small piece of reds.
Speaker 2: Sarah Malak and Peter Buscher are going to be staying
Speaker 2: with us, but first we're going to take a look
Speaker 2: back at another time we watch the Fed wait patiently
Speaker 2: for inflation to come down. Here's Frank Capiello on Wall
Speaker 2: Street Week with R. Lewis Rockeiser way back in nineteen
Speaker 2: eighty two. This is a whole new operation.
Speaker 12: And I think what's happening is economic policies now are
Speaker 12: more important than the statistics, and the policies are less inflati.
Speaker 12: We've really got a FED a reserve that's fighting many
Speaker 12: recurrence of inflation, and we've got interest rates. It will
Speaker 12: eventually come down.
Speaker 2: This is Wall Street Week on Bloomberg.
Speaker 13: President G is desperate for American investment because he has
Speaker 13: made a series of economic decisions and political decisions are
Speaker 13: arresting people where capital is fleeing the coin of the realm.
Speaker 13: For the United States, we have allies, we have friends,
Speaker 13: and they want to be aligned with us.
Speaker 2: That was US investor in Japan, Rama Manuel, talking at
Speaker 2: the APEX summit this week in San Francisco. Had efforts
Speaker 2: by Chinese President G to attract Western investment flows back
Speaker 2: into China. Sarah Malak of Nouvegne and Peter Borsh of
Speaker 2: Computer Trading have stayed with us. So Sarah, let me
Speaker 2: start with you. We had the meeting with President Biden
Speaker 2: President G. Not a lot came out except they did talk.
Speaker 2: They didn't fight with one another. I guess that's good.
Speaker 2: But overall, do you think this affects the really the
Speaker 2: status of investments right now that in fact US and
Speaker 2: China may be at least not at Dagger's drawn.
Speaker 9: I think there's two issues to think about from this
Speaker 9: week's meeting and over the long term. One is geo
Speaker 9: political issues, which I think did become reduced a bit
Speaker 9: this week. You saw that with CDs spreads narrowing a bit.
Speaker 9: But the main issue with China is exports. They've declined
Speaker 9: significantly in terms of what they export to the US
Speaker 9: over the last five years, and that I think until
Speaker 9: they can turn that around, that's going to be an issue.
Speaker 9: And there's other countries that are benefiting from this, like
Speaker 9: Mexico with its near shoring, the increased need for infrastructure
Speaker 9: in the US, which is a segment of the market
Speaker 9: that we really like. Countries like Indonesia with the young populations,
Speaker 9: and Japan which is benefiting with their weaker yen.
Speaker 8: So as Chima loses in these areas, these other.
Speaker 9: Emerging and developed international countries are winning, and I don't
Speaker 9: see that trend reversing in the near term.
Speaker 8: When it comes to China's exports.
Speaker 2: To the US, who do you talked earlier about commodities.
Speaker 2: We often think about China when it comes to things
Speaker 2: like copper, for example, to one extent, is the demand
Speaker 2: for copy of the price of copper are going determined
Speaker 2: by what happens in China and whether they can really
Speaker 2: rebound in their economy.
Speaker 11: Well, I think a lot of that, and you could
Speaker 11: see earlier this week they laid out the objective by
Speaker 11: doing a big soybean purchase, right, which reminds us of
Speaker 11: the early seventies when you had another crisis and they
Speaker 11: came in and bought a bunch of grain before President
Speaker 11: Nixon went to China. But I think the history lesson
Speaker 11: here is that emerging countries in their markets understand that
Speaker 11: if you partner with the US, you get rich. Now
Speaker 11: you've had growth and they got rich, and then they're like, Okay,
Speaker 11: we don't need you anymore. This crisis in China has
Speaker 11: made them realize that if you want to stay rich,
Speaker 11: you need to partner and continue partnering with the US.
Speaker 11: So what Sarah said is critical, and yes, so they
Speaker 11: need our capital, as an ambassador Manual just said, but
Speaker 11: people aren't going to fly in there. They have to
Speaker 11: demonstrate that the capital is going to be safe, that
Speaker 11: the human capital in China is going to continue to
Speaker 11: be safe.
Speaker 10: So it's going to be.
Speaker 11: A little bit of a slower process, and that's going
Speaker 11: to be reflected not an immediate demand for commodities and copper,
Speaker 11: but a slow and steady demand.
Speaker 10: As Sarah was saying earlier.
Speaker 2: Sarah, just briefly here at the end. Does that mean
Speaker 2: for other opportunities? For example, in Japan, I think you've
Speaker 2: just gotten back from Japan iView not I was.
Speaker 9: I was in Japan last week, and Japan's economy is
Speaker 9: growing very strongly for two reasons. One the increased focus
Speaker 9: on governance not only within the country but from non
Speaker 9: japan investors. Secondarily, Japanese government is very focused on getting
Speaker 9: individuals out of cash into more investable asset classes. And
Speaker 9: second is the Japanese economy is going very strong. The
Speaker 9: yen has been weak. However, our view is with some
Speaker 9: moderate inflation that we're seeing in Japan and likely higher
Speaker 9: interest rates, I think the yen is likely to bottom
Speaker 9: and reverse from here, but that does not unwind the
Speaker 9: japan story that has been very strong this year and
Speaker 9: should continue.
Speaker 2: And finally, Peter also Mexico's a lot more attractive than it.
Speaker 11: Was, absolutely for the near sourcing for their innovation. And
Speaker 11: you know, again, climate change has a little impact on
Speaker 11: that because we were saying earlier that the Panama Canal
Speaker 11: is low, so Mexico's trying to build and increase their
Speaker 11: transportation infrastructure. I just want to add in ten seconds,
Speaker 11: China Japan that story that's bearish for US treasuries because
Speaker 11: they are both selling treasuries to focus on their domestic economies.
Speaker 11: It's a globally integrated world, so you have to be
Speaker 11: careful what you wish for.
Speaker 2: What about that? Just a word or two, Sarah, do
Speaker 2: you agree there's a problem here with foreign buyers and treasuries.
Speaker 8: I think Peter makes a good point and that could
Speaker 8: be a headwind.
Speaker 2: Okay, thank you so much both of you for reading
Speaker 2: back with us. It's Peter Borsh of Computer Trading and
Speaker 2: Sarah Malaka New Ven. This is Wall Street Week. I'm
Speaker 2: David Weston. Israel's war with Hamas continues with Israeli troops
Speaker 2: fighting Hamas in Gaza as the humanitarian toll mounts. SR
Speaker 2: was a foreign policy advisor to George W. Bush when
Speaker 2: he was President in his administration, and as well, to
Speaker 2: admit Romney, he is the author of a brand new book.
Speaker 2: It's called The Genius of Israel. So Dan, welcome, it's
Speaker 2: good to have here. Congratulations in the book Congression of
Speaker 2: the fact that's on the New York Times bestseller leans.
Speaker 2: I should make you you actually wrote this book, completed
Speaker 2: it before what happened in last October seven, at the
Speaker 2: same time you were anticipating some difficulties with Israel. There
Speaker 2: have been demonstrations because of what happened with the part
Speaker 2: of Justice. So as we go forward, now, one of
Speaker 2: your themes is Israel is resilient. You've got then your
Speaker 2: subtitle Resilient and comes together. What have you learned since
Speaker 2: October seven about Israel?
Speaker 5: What we argued in the book because we wrote the
Speaker 5: book at the point at which Israel's in the depth
Speaker 5: of internal division, as you say, and we argued that
Speaker 5: as divided as Israel was, it was politically polarized. And
Speaker 5: we said, look, most Western affluent democracies are very politically polarized.
Speaker 5: Israel's not immune to political polarization. The difference between Israel
Speaker 5: and other Western countries is Israel has these societal shock
Speaker 5: absorbers built into it. This infrastructure that just as polarized
Speaker 5: as it may get, the country doesn't spin apart. And
Speaker 5: that's why were we said that in a sense, is
Speaker 5: like a blueprint for the West to look at how
Speaker 5: they keep the country together even when it looks like it's.
Speaker 1: About to go over the edge.
Speaker 5: We look at the role of national military service, which
Speaker 5: is interesting because it not only as we wrote in
Speaker 5: our first book about the tech economy, the national military
Speaker 5: the compulsory service helps young people develop management skills, leadership skills,
Speaker 5: in some cases specific technology skills that help them in
Speaker 5: the startup scene. But in this book we focus on
Speaker 5: the national Compulsory Service brings Israelis together from all walks
Speaker 5: of life, religious and secular, politically right wing, politically left
Speaker 5: wing people from the center of the country, like in
Speaker 5: booming cities like Tel Aviv, versus the struggling towns of
Speaker 5: the periphery. It brings all these people together and has
Speaker 5: them in the hull of a tank or in the
Speaker 5: warehouse on a military base, and they are working together
Speaker 5: and living together, and it makes it harder for them
Speaker 5: to look at one another as the other. So that's
Speaker 5: another important national compulsory service, and then lastly on national
Speaker 5: compulsory service.
Speaker 1: Is they focus on the we, not the me.
Speaker 5: In other words, to be effective in national military service
Speaker 5: in Israel and in other parts formative parts of Israeli life,
Speaker 5: you have to focus on being part of a team, community,
Speaker 5: a group. And we go through this in the book
Speaker 5: and say, compare that experience to how Americans go through
Speaker 5: life trying to get into colleges, trying to get into
Speaker 5: elite colleges. It's all about your own individual performance, your
Speaker 5: own individual excellence. There's a lot to learn from Israel
Speaker 5: in terms of these institutions that keep people together even
Speaker 5: though they see the world differently. And that's why we
Speaker 5: were hopeful that even if there were an October seventh event,
Speaker 5: an event, and we didn't anticipate in October seventh event,
Speaker 5: but even if there were one, it wouldn't surprise us
Speaker 5: if the country held together.
Speaker 2: Obviously, the first priority is dealing with security of the
Speaker 2: Israeli state and it's people. At the same time, there
Speaker 2: is an economy, the thriving economy. Where does that stand
Speaker 2: right now and what longer term challenges might this war pose.
Speaker 1: Look, there's no doubt in the near term. This is
Speaker 1: a setback.
Speaker 5: You've called up three hundred The Israel's called up three
Speaker 5: hundred and sixty thousand people, three hundred and sixty thousand reserves.
Speaker 5: It's the largest call up I think in its modern history.
Speaker 5: It's the number of Israelies have been called up for
Speaker 5: reserves is larger than the standing armies of the UK
Speaker 5: and France combined.
Speaker 1: Those are people who.
Speaker 5: Work in the hospitality industry and the tourism industry. Now
Speaker 5: there's a lot of tourism right now and a lot
Speaker 5: of people who work in the tech economy. So I
Speaker 5: speak to venture capitalists in Israel quite regularly, and many
Speaker 5: of them tell me that they're top that they look
Speaker 5: at their portfolio companies about ten percent of their top
Speaker 5: executives have been called up in one form or another.
Speaker 5: Does that mean these companies grind to a halt, these startups. No,
Speaker 5: but it does mean if they're in the middle trying
Speaker 5: to close a fundraising round, or in the middle of
Speaker 5: trying to complete an M and A deal or some
Speaker 5: sort of business development or sales deal, it slows things down.
Speaker 1: That's the bad news.
Speaker 5: I think this size, the scale of the reserve call
Speaker 5: up is going to shrink pretty soon. Particularly Israel's making
Speaker 5: much more progress I think anyone expected in Gaza. So
Speaker 5: I think they'll draw down on the reserves relatively soon.
Speaker 1: I don't know exactly when.
Speaker 5: And Two, if you look at how Israel the economy
Speaker 5: has dealt with major security like I go back to
Speaker 5: nineteen ninety one First Golf War, when the whole country
Speaker 5: was shut down, when Saddam Hussein was launching scud missiles
Speaker 5: into Israel and the whole country shut down. Most of
Speaker 5: the multinationals set up in Israel that had Israel R
Speaker 5: and D centers.
Speaker 1: There are Israel teams.
Speaker 5: Didn't miss a single deadline, didn't miss a single milestone.
Speaker 1: So they've sort of.
Speaker 5: Proven that even when they're these security shocks, they still
Speaker 5: can hold together. I think the same will be true
Speaker 5: here in the long term. The short term, it's going
Speaker 5: to be pretty stressful. I do think the experience, so
Speaker 5: I hate to say what I'm about to say, but
Speaker 5: I do think the experience of these young people who
Speaker 5: run companies in Israel going having to go through this experience,
Speaker 5: developing interdisciplinary skills, having the sub in for someone who's
Speaker 5: been called up, having to juggle a bunch of balls.
Speaker 5: Just you know when you're in when you're in Gaza
Speaker 5: for three days and you come back to work for
Speaker 5: a week, and you go back to gazam for three days.
Speaker 5: I do think there's a resilience factor that ultimately serves
Speaker 5: these companies in the long run, wealth they can get
Speaker 5: through the short term.
Speaker 1: I think in the long run, Israel's tech economy will.
Speaker 2: Be stronger Israel's had I think a disproportion of effect
Speaker 2: in the global economy, given its size, in its location,
Speaker 2: is that in any way in jeopardy the integration, certainly
Speaker 2: within the Middle East we were hoping for really a
Speaker 2: Repushwan with Saudi Arabia that certainly is not happening anytime soon,
Speaker 2: but even more broadly in Europe and as the rest
Speaker 2: of the world starts to be really uneasy with what's
Speaker 2: going on in Gaza.
Speaker 5: So I think there are two Look, if the US
Speaker 5: stays strong it shoulder to shoulder with Israel during these
Speaker 5: next few months that are going to be difficult, I
Speaker 5: think the rest of the world will basically follow. I
Speaker 5: don't think Europe is going to go in a dramatically
Speaker 5: different direction. In the US, That's why it's very important
Speaker 5: to Israel that it stays locked arms with the United States.
Speaker 5: And so far that's pretty good. That all indicators are
Speaker 5: that's pretty strong. The question, to your point, is the
Speaker 5: golf in the Arab world, that's where the most progress
Speaker 5: is being made. Now, if you go back in the
Speaker 5: book at why the Sunni golf, Bahrain, the Emiradis, the
Speaker 5: Saudis were in the works, as I call Israel's friends
Speaker 5: in Israel's future friends. Why all that was deepening and
Speaker 5: warming was not out of love for Israel. Those countries
Speaker 5: were doing it because they believed in Israeli strength. They're
Speaker 5: depending on the strength of Israel's economy, it's tech sectors,
Speaker 5: we're just talking about. It's geopolitical positioning in the world
Speaker 5: which had been growing, and they believed in the idea
Speaker 5: that Israel's military and intelligence capabilities were a juggernaut and
Speaker 5: they wanted a piece of it. They want to be
Speaker 5: part of it because they shared a common enemy, specifically
Speaker 5: Iran and the Muslim brotherhood.
Speaker 2: Dan, it's really great to have you back on Wall Street.
Speaker 2: Read that is Dan Senior. He is the author of
Speaker 2: the new book The Genius of Israel. This is Wall
Speaker 2: Street Week on Bloomberg Private equity. It's been around a while,
Speaker 2: but it hit the big time back in the eighties
Speaker 2: when the leverage out of R JR. Nabisco put Henry
Speaker 2: Cravis up on the big screen.
Speaker 5: I'm talking about putting a mountain of money into everybody's
Speaker 5: pocket right now.
Speaker 2: Since the go go days of lbo's, private equity and
Speaker 2: alternative investments more broadly have come a long way. The
Speaker 2: big guys like Cravis, KKR, Steve Schwarzman's Blackstone, David Rubinstein's Carlisle,
Speaker 2: and Jim Colter's TPG have gone from being the upstart
Speaker 2: pirates of finance to an entrenched and important part of
Speaker 2: the establishment, and along the way have been joined by
Speaker 2: a wide range of others, including the likes of Kim Kardashian.
Speaker 3: I've often said that private equity is the highest calling
Speaker 3: of mankind.
Speaker 10: Why did it take you so long to realize that?
Speaker 1: And that to join the private equity world?
Speaker 2: I finally got talked into it once I came to
Speaker 2: that realization. In the process, private equity has grown enormously,
Speaker 2: accounting today for some twelve trillion dollars in assets, with
Speaker 2: Blackstone now managing over one trillion dollars in assets all
Speaker 2: by itself, KKR about half that and Carlisle about a third,
Speaker 2: and they've taken somewhat different paths. With Blackstone's emphasis on
Speaker 2: its access to private data that may not be as
Speaker 2: readily available to public markets.
Speaker 14: I believe AI will reinforce and further the advantage advantages
Speaker 14: of private market investing relative to public market investing. Why
Speaker 14: is that Well, I think the reason for that is
Speaker 14: it's actually pretty simple public market investing, which relies obviously
Speaker 14: on publicly available data. That sort of data will be
Speaker 14: increasingly and further commoditized in an AI world. The value
Speaker 14: of that sort of information and data and ability to
Speaker 14: mind insights from that and have pattern recognition coming out
Speaker 14: of that, both longitudinally and across your business that will
Speaker 14: only be further enhanced.
Speaker 2: To KKR's big move into Asia and stakeholder capitalism.
Speaker 15: Our founders Henry Cravis and George Roberts say internally they
Speaker 15: pioneered the private equity business, and they said, if we
Speaker 15: were twenty two, we would go to Japan right now,
Speaker 15: because that's actually where you're seeing some of the real
Speaker 15: movement in creating some opportunities.
Speaker 2: Look private equity is not perfect, capitalism's not perfect, but
Speaker 2: this is a superior way of operating a company in
Speaker 2: every respect. But those most involved say they've only just begun.
Speaker 14: We have a very long term view on building the business.
Speaker 14: You know, we don't just want to be a very
Speaker 14: good asset management company. That's in addition to that. We
Speaker 14: want to build really one of the great companies in
Speaker 14: the world that is very enduring. That is Steve Schwarzman's
Speaker 14: vision and it permeates, you know, our culture and everything
Speaker 14: we do.
Speaker 2: And to take us through where private equity and the
Speaker 2: world of alternative investment, where broadly is today web So
Speaker 2: who knows it terribly well? He is Tony James. He
Speaker 2: is the founder and chair of Jefferson River Capital and
Speaker 2: of course for years was president and COO of Blacksmith. Tony,
Speaker 2: thank you so much for being here, pleasure, David. So,
Speaker 2: this has grown rather dramatically over the time you've watched
Speaker 2: it and participated, and it's like a twelve trillion dollar
Speaker 2: business today. It didn't start out that way in the eighties.
Speaker 2: So what gave rise to that? Why did it have
Speaker 2: such an advantage over other ways of investing?
Speaker 1: Well, as you point out.
Speaker 4: It started about fifty years ago, so there's something appropriate
Speaker 4: for now dealing with that. It started as a bit
Speaker 4: of a curiosity industry. It was primarily dominated by investment bankers.
Speaker 4: They perceived that the public markets.
Speaker 1: Were not what they are today.
Speaker 4: There were companies that were under managed, asset heavy, kind
Speaker 4: of sleepy, and an investment baker come in there, use
Speaker 4: the company's own assets to buy itself, spin off some assets,
Speaker 4: cut some costs, and then flip it out again and
Speaker 4: make some good returns. That pulled in more capital, of course,
Speaker 4: and after a while that became more competitive, so that
Speaker 4: the private equity industry then needed to actually not only
Speaker 4: have the transactional skills, but they needed to be investors too.
Speaker 4: They need to perceive value and where are the company's
Speaker 4: going and will it be a good company and will
Speaker 4: I be able to exit it at a good value.
Speaker 4: And so that expanded a lot the opportunity set. But again,
Speaker 4: the success of that pulled in more capital. Today it's
Speaker 4: evolved to where private equity really needs to be operational
Speaker 4: as well. You still need the transaction skills, you still
Speaker 4: need to be an investor, but now you need to
Speaker 4: be able to intervene in the company's fortunes and create value.
Speaker 4: So at Blackstone we've figured we could add by our
Speaker 4: own intervention, five to ten percent on average of a
Speaker 4: company's EBITDA, just by things like procurement, redesigning the healthcare plans,
Speaker 4: providing AI and data science, lean manufacturing, pricing, marketing, all
Speaker 4: of those things. And we could have world leading experts
Speaker 4: in that because we can deploy them and frankly deploy
Speaker 4: their cost over two hundred or so portfolio companies, medium
Speaker 4: and small companies, which are the focus that private equity
Speaker 4: can't really afford to have world class experts in all.
Speaker 1: These special areas.
Speaker 4: So a private equity firm is very well positioned to.
Speaker 1: Create the value.
Speaker 4: And that's had some other implications.
Speaker 1: In the early days, the.
Speaker 4: Kind of buy a company that's ascid heavy, sell off
Speaker 4: some assets, you made all your money, like in the
Speaker 4: first year or so, you cut some costs, you so
Speaker 4: al those asses, and then you flipped it. Now we're
Speaker 4: trying to create great companies. We're trying to grow them,
Speaker 4: and transforming a company takes the number of years and
Speaker 4: you sow the seeds, but they don't blossom right away.
Speaker 1: So private AQA.
Speaker 4: Has come much much more of a long term holder
Speaker 4: and builder of companies.
Speaker 1: And I would wouldn't be surprised.
Speaker 4: If in the early days of the industry, privately actually
Speaker 4: cost jobs. But today there's absolutely no doubt about it
Speaker 4: that it's a job creator. And so I think the
Speaker 4: industry has evolved to a better place.
Speaker 1: I kind of view.
Speaker 4: I mean, the gains the private aquho are always going
Speaker 4: to pensioners, but now I view the private itself as
Speaker 4: a force for good in the economy to a much
Speaker 4: greater degree than it was way back.
Speaker 2: When does that require more patience on the part of
Speaker 2: people who were giving them money to invest? I mean,
Speaker 2: if you're holding the company a lot longer time to
Speaker 2: get those operational benefits, and is there that patience? And
Speaker 2: by the way, what about the liquidity issue? One of
Speaker 2: the issues on private equity has always been I can't
Speaker 2: pull my money out.
Speaker 4: When I want to, right right, It does definitely require
Speaker 4: more patients, But most investors now actually want longer holding
Speaker 4: periods because because you get richer, you get richer. Compounding
Speaker 4: something at twelve percent for twenty years, then you do
Speaker 4: compounding at twenty percent for five years. So the IRR
Speaker 4: that people talk about the compounding, that's only one aspect
Speaker 4: of it.
Speaker 1: So a lot of investors they want.
Speaker 4: That money out, they want that money working for them
Speaker 4: over a long period of time, and they're content with
Speaker 4: longer holding periods. We can get into different investor classes,
Speaker 4: but there are other ways you can get liquid if
Speaker 4: you really need it.
Speaker 2: Well, I was going to answer about that secondary there's
Speaker 2: a secondary market now as I understand it. So actually
Speaker 2: you can get your money out through secondary market, as
Speaker 2: I understand explain that.
Speaker 4: Sure, well, twelve trillion dollars, it's muff roomed out there.
Speaker 4: Inevitably a certain number of vestors want to get their
Speaker 4: money out, and not necessarily for.
Speaker 1: Because assets not performing for them.
Speaker 4: Private acuity has been the best performing asset class for
Speaker 4: most institutions, and just a sidelight. One of the ironies
Speaker 4: of that is if an institution has an asset allocation model,
Speaker 4: so twenty percent in private equity, forty percent in public ateke,
Speaker 4: forty percent in debt, let's just say, and private equly outperforms.
Speaker 4: What happens is that all of a sudden they have
Speaker 4: more than twenty percent in private equity, right, and so
Speaker 4: now they need to sell down private equity. So it's
Speaker 4: got a kind of a counterintuitive the success means they
Speaker 4: need to be net sellers, which is kind of odd,
Speaker 4: but that's.
Speaker 1: The way, that's the way it works.
Speaker 4: So but but reallocating, rebalancing the portfolio strategy changes with
Speaker 4: corporate pension funds. When they've become fully funded, they then
Speaker 4: want to go out of risk assets of just essentially
Speaker 4: lock in the with double a credit stuff the liabilities,
Speaker 4: so defeats the liabilities. If in retail investor, you have
Speaker 4: life changes, you get divorced, you have the state planning,
Speaker 4: so all those reasons. There are sellers of LP interest
Speaker 4: and this business secondaries has ballooned as the primaries have.
Speaker 1: It's still lagging. But to provide that liquidity.
Speaker 2: Tony Yousers mentioned retail investors. I think if you go
Speaker 2: back ten years ago, I wouldn't have thought of retail
Speaker 2: investors in the same sentence with private equity. How has
Speaker 2: that changed to what extent are retail investors coming in
Speaker 2: and what is the profile of those retail investors in general?
Speaker 4: Well, it started off as very high net worth investors.
Speaker 4: There are almost many institutions in a way, but now
Speaker 4: it's down to the mom and pop, and the industry
Speaker 4: has evolved to create products that are more and more
Speaker 4: appropriate for smaller investors. And retail investors have the same
Speaker 4: need for returns that institutions do. And you know, we've
Speaker 4: essentially had a forty year downtrend in interest rates, but
Speaker 4: that's pulled the returns all asset classes down, so the
Speaker 4: need for added returns becomes more and more acute. At
Speaker 4: the same time, institutions realized particularly the first were the
Speaker 4: endowments of the universities. They are the most sophisticated David
Speaker 4: Swinson and so.
Speaker 1: On and so forth.
Speaker 4: Then there were the pensions, and then now to the
Speaker 4: high networth individuals. Endowments have about fifty percent of their
Speaker 4: endowments in private assets, pension funds about twenty five, retail
Speaker 4: investors less than five, so they still have ways to go.
Speaker 4: And what the institutions realized is, I don't need all
Speaker 4: that liquidity. I'm never going to need to raise to
Speaker 4: liquidate everything overnight. And I think increasingly high networth individuals
Speaker 4: are realizing the same thing. If you have assets financially,
Speaker 4: if you own your home, and you say you're lucky
Speaker 4: enough to have a second home, and you have financial
Speaker 4: assets multiples of annual spending. Do you really need to
Speaker 4: be able to liquate everything tomorrow? Because it has a
Speaker 4: real cost. It has a real cost in lower return.
Speaker 4: And so it also has a cost because it's tempting
Speaker 4: because individuals tend to do the wrong thing. They get
Speaker 4: worried when the markets are collapsing. That's probably the time
Speaker 4: they should buy, but they end up selling, and they
Speaker 4: get embulent when they see everyone making a lot of
Speaker 4: money and they throw them theirselves in the market.
Speaker 1: That's probably the time they shouldn't do that.
Speaker 4: So it's got a counterintuitive negative too. So yeah, it's
Speaker 4: the sort of the new frontier is retail investors, and
Speaker 4: the big new frontier is not their ULTRAI networth but
Speaker 4: the mass market, and.
Speaker 2: That's growing very much. Yeah, okay, Tony, really great to
Speaker 2: have you with us on Walster. I really appreciate that's
Speaker 2: Tony James of Jefferson River Capital. Coming up, we wrap
Speaker 2: up the week with our special contributor Larry Summers of Harvard.
Speaker 2: That's next on Wall Street Week on Bloomberg. This is
Speaker 2: Wall Street Week. I'm David Weston. We're joined once again
Speaker 2: by our very special contributor here in Wall Street Week,
Speaker 2: he is Larry Summers of Harvard, So Larry, welcome back.
Speaker 2: Great to have you here. Let's start with one of
Speaker 2: the major events of the week, and that was the
Speaker 2: President g and President Biden actually meeting around the APEC
Speaker 2: meetings out there in San Francisco. It's hard to know
Speaker 2: where this will go, but so far, so good. They
Speaker 2: seem to be trying to really pull themselves back from
Speaker 2: the precipice.
Speaker 3: Look, it's important to have meetings like this. Churchill famously said,
Speaker 3: much better jaw jaw than bang bang. On the other hand,
Speaker 3: I think we need to remember that there are very
Speaker 3: difficult fundamentals here, very different systems, very different views of
Speaker 3: the world, profound competition in the technological arena, concerns on
Speaker 3: the American side about China subversion of our our international
Speaker 3: our vision of the international system, compares concerns on the
Speaker 3: Chinese side that the United States is trying.
Speaker 1: To hold them down.
Speaker 3: So there are very profound geopolitical forces at play, and
Speaker 3: this struggle is going to be with us for a long,
Speaker 3: a very long time. So I'm glad to see the meeting,
Speaker 3: but I'm concerned and I'm particularly concerned in light of
Speaker 3: the gravity of the economic challenges that China is facing.
Speaker 3: And my concern is that, as with the Soviet Union
Speaker 3: in the nineteen sixties, a sense of very serious economic
Speaker 3: challenges is going to drive a felt need for increasing
Speaker 3: assertiveness in the international arena, as we saw with Khrushchev's
Speaker 3: moves on Berlin, as we saw with the placement of
Speaker 3: missiles in Cuba. And while I don't see anything concrete
Speaker 3: like that that's happening right now, I think the economic
Speaker 3: distress and the link to nationalism, given some of the
Speaker 3: very strong positions that g has taken, is something that
Speaker 3: is going to require the United States and the West
Speaker 3: to be on their guard going forward.
Speaker 2: Global Wall Street has paid a lot of attention this
Speaker 2: week to those CPI numbers that came out for the
Speaker 2: United States. Some people are, if not declaring victory, close
Speaker 2: to declaring victory over inflation. Are they premature?
Speaker 3: Look, those were good numbers. Those were better numbers than
Speaker 3: I would have expected, better numbers than I think most
Speaker 3: people would have expected. And I think inflation performance has
Speaker 3: been more favorable certainly that I have expected over the
Speaker 3: last year. I thought a lot about that. David and
Speaker 3: I think there are two or three factors to emphasize.
Speaker 3: The first is that policy has been much tighter than
Speaker 3: was anticipated. In July of twenty twenty two, markets were
Speaker 3: assigning a probability of under ten percent to the level
Speaker 3: of tightness in policy that we have seen so far.
Speaker 3: So more tight policy has led to better outcomes on inflation.
Speaker 3: That doesn't mean inflation fears were unwarranted. It means that
Speaker 3: people took the fears seriously, which was good. I think
Speaker 3: that's one important aspect. I do think that given how
Speaker 3: strong the economy has been, there's still a surprise in
Speaker 3: what's happened to inflation, and that I think has to
Speaker 3: do in part with transitory factors. Transitory factors that were
Speaker 3: pushing inflation up from bottleneck that are now mean reverting
Speaker 3: and are pushing inflation down. So I think there's been
Speaker 3: a little bit of prematurity in some of the declarations
Speaker 3: of victory. And I'm not sure the inflation figures over
Speaker 3: the next two years are going to be quite as
Speaker 3: favorable as the market is expecting, especially in light of
Speaker 3: the geopolitical risks around oil and some other commodities. So
Speaker 3: we'll have to see whether we're really able to get
Speaker 3: down to two percent quite as easily as many people imagine.
Speaker 2: And what is the risk right now of a recession
Speaker 2: in the first half of next year.
Speaker 3: It's certainly under fifty to fifty David. I think it's
Speaker 3: probably on the order of twenty twenty five twenty five percent.
Speaker 3: That ultimately something will happen which will cause the nber
Speaker 3: to data recession is having begun in the first half
Speaker 3: of the year. In general, when recessions come, we don't
Speaker 3: even know that we're in them till they've been underway
Speaker 3: for several months, so I think you got to recognize
Speaker 3: that as a real risk. On the other hand, with
Speaker 3: what we've been seeing in the employment reports, incomes are
Speaker 3: continuing to grow, so I don't think that is the
Speaker 3: preponderant scenario.
Speaker 2: One thing that maybe at verse in store is actually,
Speaker 2: besides of the federal deficit, a lot of talk about that.
Speaker 2: This week. It appears we've avoided actually shutting down the government.
Speaker 2: People came to their senses, but it's only up to
Speaker 2: next January before they come to it again. And the
Speaker 2: main issue is not even what they did this week,
Speaker 2: but the larger issue about the weight that this may
Speaker 2: impose on the US economy.
Speaker 3: If somebody's got a basic problem of being overweight. It's
Speaker 3: good if a skip desserts. It's good if they check
Speaker 3: into a spa for a weekend. But what really matters
Speaker 3: is whether they change their habits and they change their lifestyle,
Speaker 3: And nothing in this agreement or anything in the discussions
Speaker 3: currently underway, is about changing the American habit or lifestyle
Speaker 3: with respect to spending in taxes. I look at the
Speaker 3: world right now, and it is the most ominous world
Speaker 3: geopolitically that I have seen, certainly since the Berlin Wall
Speaker 3: fell in nineteen eighty nine. I look at projections for
Speaker 3: the federal budget that call for defense spending as a
Speaker 3: share of GDP to fall substantially. I don't think that
Speaker 3: should happen, and I don't think that will happen, almost
Speaker 3: regardless of how domestic politics play out. And so I think,
Speaker 3: as I look at the budget picture, we got to
Speaker 3: recognize that we've got a big national defense liability ahead
Speaker 3: of us that we're not really budgeting for in the
Speaker 3: current projections. And much more generally, David is a very
Speaker 3: profound question of how long the world's greatest debtor will
Speaker 3: remain the world's greatest and most secure power. And so
Speaker 3: I think that everybody talks about our resilience as a country. Well,
Speaker 3: part of resilience for a company, part of resilience for
Speaker 3: a household is containing your leverage and containing your borrowing.
Speaker 3: And I think that's something we need to think about
Speaker 3: as a nation.
Speaker 2: Larry, just give us a little wisdom from the nineteen nineties.
Speaker 2: You serve in the Clinton administration back then when they
Speaker 2: got their arms around the budget, and my recollection to
Speaker 2: continue your analogy to dieting. If you're going to lose weight,
Speaker 2: you can't just exercise. You can't just cut back on
Speaker 2: what you You got to do both. And right now
Speaker 2: one might think we have one party who doesn't want
Speaker 2: to increase taxes and increase revenues, the other doesn't want
Speaker 2: to cut spending. How did you manage in the nineteen
Speaker 2: nineties to get over that home.
Speaker 3: Well, I'm happy to try to answer the question how
Speaker 3: Bill Clinton managed. I don't want to be the one
Speaker 3: taking credit for the nineteen ninety three budget deal. Look,
Speaker 3: I think he laid out the case. He brought people together,
Speaker 3: He was willing to do things that were painful. His
Speaker 3: for the people who were his.
Speaker 1: Friends.
Speaker 3: He was able to explain the case to the American people,
Speaker 3: and that's the kind of leadership.
Speaker 2: We're going to need.
Speaker 3: And he reaped a benefit that I think people need
Speaker 3: to recognize and that maybe hasn't come into focus quite Ye.
Speaker 2: Okay, Larry, thank you so very much. Always great to
Speaker 2: have you with us, as Larry Summers of Harvard coming up.
Speaker 2: Second acts. Sometimes you win, sometimes you lose, and sometimes
Speaker 2: you end up with the cat. That's the next time
Speaker 2: Wall Street Week on Bloomberg. Finally, one more thought. F
Speaker 2: Scott Fitzgerald told us that in American lives, there are
Speaker 2: no second acts. The annals of business and politics and
Speaker 2: sports are filled with stories of stars who had great
Speaker 2: first acts but fell short when they tried to come back.
Speaker 2: Think Michael Jordan's ill fated career as a professional baseball
Speaker 2: player after he had dominated the world of basketball. Or
Speaker 2: famed Hollywood agent Michael Ovitz, who left an indelible stamp
Speaker 2: on the entertainment industry with his creation of CAA, only
Speaker 2: to struggle with a transition to the corporate world under
Speaker 2: Michael Eisner. But that doesn't keep people from trying and
Speaker 2: sometimes succeed all the way back to the early nineteenth
Speaker 2: century when President John Quincy Adams lost to his arch
Speaker 2: rival Andrew Jackson, only to come back as a congressman,
Speaker 2: and some have suggested he had more success in that role.
Speaker 2: Or Arnold Schwarzenegger, who went from action star of the
Speaker 2: big screen to become a successful governor of California.
Speaker 1: I'll be back.
Speaker 2: Just within the past two years, we've had two notable
Speaker 2: comebacks in the corporate world, as Howard Schultz returned for
Speaker 2: a second time to run Starbucks and he's seriously considered
Speaker 2: a second act that would go way past coffee.
Speaker 16: I am seriously thinking of running for president.
Speaker 2: Bob Eyer returned to CEO to Disney just under a
Speaker 2: year ago and was praised by competitors like Reid Hoffman.
Speaker 16: Bob is I think one of the great CEOs of
Speaker 16: our time. Part of what you want CEOs to be doing,
Speaker 16: which is acting like owners and feeling that the important
Speaker 16: thing is the legacy of the company that they hand
Speaker 16: on to their successors, to employees, to society.
Speaker 2: I think, Bob, And even as we speak, we have
Speaker 2: Donald Trump, the forty fifth president, trying to come back
Speaker 2: as the forty seventh vowing to make America great again again.
Speaker 5: In order to make America great and glorious again, I
Speaker 5: am tonight announcing my candidacy for President of the United States.
Speaker 2: But perhaps the oddest story of attempted second acts comes
Speaker 2: not from America, but from Great Britain. We all remember
Speaker 2: David Cameron, that young, charismatic British Prime Minister who was
Speaker 2: so confident his fellow Britons wanted to stay in the
Speaker 2: European Union that he decided to put it to a vote.
Speaker 2: He was wrong. They voted to leave, and mister Cameron
Speaker 2: had little choice but to leave as well.
Speaker 17: The British people have made a very clear decision to
Speaker 17: take a different path, and as such, I think the
Speaker 17: country requires fresh leadership to take it in this direction.
Speaker 2: Now, seven years later, another struggling Tory Prime Minister, Rishi Sunak,
Speaker 2: has decided to bring mister Cameron back, not as Prime Minister,
Speaker 2: to be sure, but as his Foreign secretary. Things are
Speaker 2: quite a bit different than they were when mister Cameron
Speaker 2: left Number ten. The world's been through a pandemic. The
Speaker 2: promises of economic prosperity made by the Brexiteers have proven
Speaker 2: largely hollow and the polls point to labor being back
Speaker 2: in power with the next general election.
Speaker 8: The labor market data was also pretty positive.
Speaker 1: Wage growth decelerated a little bit.
Speaker 9: It's still incredibly high though, and so I would put
Speaker 9: all of this in a category of good news.
Speaker 2: But David Cameron will have one friendly face to greet
Speaker 2: him when he pays visits Number ten Downing Street. That
Speaker 2: of Larry, the chief mouser at the Prime Minister's residence,
Speaker 2: a cat who shared the house with the Cameron's back
Speaker 2: when they were in charge. That does it for this
Speaker 2: episode of Wall Street Week. I'm David Weston. This is Bloomberg.
Speaker 2: See you next week.