1 00:00:00,080 --> 00:00:13,040 Speaker 1: Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene 2 00:00:13,480 --> 00:00:17,560 Speaker 1: Jay Ley. We bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,520 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,600 --> 00:00:34,200 Speaker 1: Bloomberg dot Com, and of course on the Bloomberg John 5 00:00:34,280 --> 00:00:36,960 Speaker 1: Fifth AVENU are really down towards New York University in 6 00:00:37,000 --> 00:00:40,240 Speaker 1: the offices John of your Raisia group, And of course 7 00:00:40,280 --> 00:00:43,080 Speaker 1: that always means our annual first of the year visit 8 00:00:43,479 --> 00:00:46,720 Speaker 1: with Ian Bremer and their top risk for two thousand 9 00:00:46,720 --> 00:00:49,880 Speaker 1: and nineteen, we've had a spirited discussion through the morning, John, 10 00:00:49,920 --> 00:00:52,400 Speaker 1: Why don't you kick it off with Dr Bremer and 11 00:00:52,560 --> 00:00:55,280 Speaker 1: I Speagan shadowy with the tough risk that you guys 12 00:00:55,320 --> 00:00:57,800 Speaker 1: are looking at. You put out this list every single year, 13 00:00:57,840 --> 00:00:59,920 Speaker 1: and we have the privilege of opening some of our 14 00:01:00,000 --> 00:01:01,840 Speaker 1: overage up with you when you do do that. And 15 00:01:01,880 --> 00:01:04,440 Speaker 1: I think it's interesting that you mentioned what could transpire 16 00:01:04,480 --> 00:01:07,119 Speaker 1: over the coming years because of what is happening now, 17 00:01:07,200 --> 00:01:09,440 Speaker 1: the bad seats that we're planting. Just walk us through 18 00:01:09,440 --> 00:01:13,720 Speaker 1: that thinking again, sure, I mean you know there are 19 00:01:13,800 --> 00:01:16,840 Speaker 1: so if you look at the major things that are 20 00:01:16,880 --> 00:01:20,400 Speaker 1: happening in the world today, the geopolitical trends, both domestically, 21 00:01:20,440 --> 00:01:25,679 Speaker 1: within countries and internationally, all of them are trending in 22 00:01:25,680 --> 00:01:27,760 Speaker 1: the negative directions. The first time since we started the 23 00:01:27,760 --> 00:01:30,520 Speaker 1: company twenty one years ago when we could say that 24 00:01:30,800 --> 00:01:33,200 Speaker 1: none of them are urgent. Whether we look at the 25 00:01:33,240 --> 00:01:37,640 Speaker 1: erosion of US political institutions, whether we look at challenges 26 00:01:37,760 --> 00:01:40,800 Speaker 1: inside Europe as a whole and inside those individual countries, 27 00:01:40,959 --> 00:01:44,400 Speaker 1: whether we look at the system of global alliances US Russia, 28 00:01:44,520 --> 00:01:49,040 Speaker 1: US China, Transatlantic and within the Middle East, or the 29 00:01:49,160 --> 00:01:52,680 Speaker 1: rise of populism and nationalism, none of these things are urgent. 30 00:01:53,160 --> 00:01:55,120 Speaker 1: All of them trend in negative direction. All of the 31 00:01:55,200 --> 00:01:57,760 Speaker 1: mean that we won't respond effectively to the next crisis 32 00:01:57,760 --> 00:02:01,040 Speaker 1: when it comes. Your team is so good a calculus 33 00:02:01,080 --> 00:02:05,760 Speaker 1: the first and second derivative rates of change of international relations. 34 00:02:05,800 --> 00:02:09,960 Speaker 1: I love your word. I gotta pronounce it right here. Escalatory. 35 00:02:10,040 --> 00:02:13,679 Speaker 1: We are escalatory right now. What is our movement towards 36 00:02:13,960 --> 00:02:17,920 Speaker 1: escalatory crisis? Well, I guess I would say, with the 37 00:02:17,919 --> 00:02:22,560 Speaker 1: global economy doing well, it doesn't feel like twenty nineteen 38 00:02:22,880 --> 00:02:25,440 Speaker 1: is your challenge. But if you think about when the 39 00:02:25,480 --> 00:02:30,000 Speaker 1: big recession hit in two thousand eight, everyone responded constructively 40 00:02:30,080 --> 00:02:34,079 Speaker 1: so that we avoided depression the United States, there was 41 00:02:34,120 --> 00:02:37,200 Speaker 1: a lot of strength nine eleven. The response came from 42 00:02:37,200 --> 00:02:39,840 Speaker 1: the United States. The whole country came together behind the 43 00:02:40,160 --> 00:02:44,200 Speaker 1: coalition of Russians. No, no, whatever the next shock is, 44 00:02:44,240 --> 00:02:47,120 Speaker 1: whether it's cyber or terror or more likely the next 45 00:02:47,160 --> 00:02:52,160 Speaker 1: economic downturn, the reaction inside our country and internationally is 46 00:02:52,160 --> 00:02:54,639 Speaker 1: gonna be toxic. And I think that that's what's under 47 00:02:54,680 --> 00:02:58,560 Speaker 1: appreciated issue. What measure for is the confidence of the 48 00:02:58,600 --> 00:03:01,079 Speaker 1: system right now in the markets, in all of global 49 00:03:01,120 --> 00:03:03,720 Speaker 1: Wall Street that listens to us every day, they're hard 50 00:03:03,800 --> 00:03:07,280 Speaker 1: wired to the confidence for investment, the confidence to find 51 00:03:07,320 --> 00:03:10,079 Speaker 1: the bid in various markets as well. What is our 52 00:03:10,280 --> 00:03:13,600 Speaker 1: I our confidence right now? Yeah, I mean the confidence 53 00:03:13,720 --> 00:03:17,800 Speaker 1: in the economy is I would say reasonably strong. The 54 00:03:18,000 --> 00:03:22,519 Speaker 1: i R. The international relations confidence is low and trending 55 00:03:22,600 --> 00:03:25,639 Speaker 1: worse on a daily basis. Now A lot of that, 56 00:03:26,000 --> 00:03:28,280 Speaker 1: A lot of the reason that I our confidence isn't 57 00:03:28,360 --> 00:03:31,920 Speaker 1: high in the markets is because of Trump. But it 58 00:03:31,919 --> 00:03:35,200 Speaker 1: shouldn't be that. It should be much more structural. It 59 00:03:35,240 --> 00:03:38,120 Speaker 1: should be that the forces that got Trump elected in 60 00:03:38,160 --> 00:03:40,360 Speaker 1: the United States, it should be the forces that led 61 00:03:40,400 --> 00:03:42,520 Speaker 1: to Brexit in the UK. It should be the forces 62 00:03:42,880 --> 00:03:44,960 Speaker 1: that have led to the Italian government as well as 63 00:03:44,960 --> 00:03:47,600 Speaker 1: the rise of China. Is here one off? I mean, 64 00:03:47,640 --> 00:03:49,600 Speaker 1: that's the question. I see you out doing all the 65 00:03:49,680 --> 00:03:51,840 Speaker 1: media for your raising group and all that, they never 66 00:03:51,960 --> 00:03:55,120 Speaker 1: ask you that, just the pregnant question. Is President Trump 67 00:03:55,200 --> 00:03:58,480 Speaker 1: a one off phenomenon? I think of William James Bryant 68 00:03:58,520 --> 00:04:03,000 Speaker 1: when I see Alexander your Ocasio Cortez on sixty minutes 69 00:04:03,120 --> 00:04:07,640 Speaker 1: yesterday saying, uh, I may get the facts wrong, but 70 00:04:07,760 --> 00:04:10,480 Speaker 1: you need to focus on the underlying morality of what 71 00:04:10,560 --> 00:04:14,560 Speaker 1: I'm saying. Right, That's exactly what Trump was saying. Take 72 00:04:14,680 --> 00:04:19,080 Speaker 1: him seriously but not literally. That's exactly why the Brexit 73 00:04:20,480 --> 00:04:24,400 Speaker 1: is the Is the liberal progressive new confidence that we 74 00:04:24,440 --> 00:04:26,640 Speaker 1: see in the House, will that be a one off? 75 00:04:27,000 --> 00:04:29,479 Speaker 1: Or is there a real sustained move back to a 76 00:04:29,520 --> 00:04:32,720 Speaker 1: more liberal theology in America? I get what I'm saying 77 00:04:32,920 --> 00:04:35,800 Speaker 1: is I think the center not holding is not a 78 00:04:35,880 --> 00:04:38,680 Speaker 1: one off. And while Trump himself, in terms of his 79 00:04:38,800 --> 00:04:42,880 Speaker 1: volatility is character or lack thereof that that is indeed 80 00:04:42,920 --> 00:04:46,920 Speaker 1: an extreme outcome in the US, the likelihood that the 81 00:04:46,960 --> 00:04:50,560 Speaker 1: next president or series of leaders would come from the 82 00:04:50,680 --> 00:04:54,320 Speaker 1: farther right and farther left I think is growing. Do 83 00:04:54,320 --> 00:04:56,880 Speaker 1: you have an optimism that we can do in practice 84 00:04:56,960 --> 00:05:00,719 Speaker 1: democracy given this polarity, I mean, George Herb Walker Bush 85 00:05:00,800 --> 00:05:03,520 Speaker 1: was one of our great losses for two thousand and eighteen, 86 00:05:03,880 --> 00:05:06,920 Speaker 1: That middle ground seems to be gone. I have an 87 00:05:06,920 --> 00:05:12,600 Speaker 1: optimism that American political institutions are surprisingly strong and resilient 88 00:05:12,640 --> 00:05:17,080 Speaker 1: and they can withstand whatever Trump and his administration has 89 00:05:17,120 --> 00:05:20,039 Speaker 1: to offer against it. But that's different from saying that 90 00:05:20,120 --> 00:05:23,320 Speaker 1: democracy fundamentally is working for a majority of Americans. I 91 00:05:23,320 --> 00:05:26,080 Speaker 1: think that when Trump says the system is rigged against you, 92 00:05:26,240 --> 00:05:30,080 Speaker 1: and people respond to that, it's because he's right. Now. 93 00:05:30,240 --> 00:05:33,200 Speaker 1: Trump hasn't made the system less rigged against them, but 94 00:05:33,279 --> 00:05:35,760 Speaker 1: he did identify the problem. And a lot of people 95 00:05:35,800 --> 00:05:39,760 Speaker 1: out there are telling their constituents liberal democracy has been 96 00:05:39,800 --> 00:05:43,520 Speaker 1: gained to create much greater inequality and to give access 97 00:05:43,560 --> 00:05:46,520 Speaker 1: to power and speak power to truth. And that's not 98 00:05:46,600 --> 00:05:48,920 Speaker 1: a useful thing for most of those. When I look 99 00:05:48,920 --> 00:05:53,760 Speaker 1: at bad seas, US, China, cybergloves off europopulism, Mexico, Ukraine 100 00:05:54,080 --> 00:05:55,640 Speaker 1: and the rest. I want to go back to the 101 00:05:55,800 --> 00:05:58,560 Speaker 1: arching theme of surveillance for last year, and I don't 102 00:05:58,600 --> 00:06:02,560 Speaker 1: think I nailed this of months ago, which is technology. 103 00:06:02,880 --> 00:06:06,040 Speaker 1: What all of our listeners global Wall Street people just 104 00:06:06,160 --> 00:06:10,039 Speaker 1: wired into Wall Street, in the great professional group of 105 00:06:10,080 --> 00:06:14,200 Speaker 1: all ages that listen to us, they're all affected by technology. 106 00:06:14,320 --> 00:06:16,840 Speaker 1: And you're calling for an innovation winter. What is that? 107 00:06:17,040 --> 00:06:21,440 Speaker 1: Innovation winter means that a combination of a fragmentation of 108 00:06:21,520 --> 00:06:24,960 Speaker 1: the most important technology trend. So five G, which is 109 00:06:25,000 --> 00:06:27,400 Speaker 1: going to be the backbone not just of smartphones, but 110 00:06:27,440 --> 00:06:29,840 Speaker 1: the Internet of things smart cities, is not going to 111 00:06:29,960 --> 00:06:32,120 Speaker 1: be one system like four G was. It's gonna be 112 00:06:32,160 --> 00:06:34,640 Speaker 1: a China lead system and a Western lead system and 113 00:06:34,680 --> 00:06:38,440 Speaker 1: they won't interact. That's one part, and the second part 114 00:06:38,560 --> 00:06:43,400 Speaker 1: is the growing tech lash, the political trends against the 115 00:06:43,480 --> 00:06:47,880 Speaker 1: big tech firms in the West. To ask you this question, 116 00:06:48,040 --> 00:06:53,440 Speaker 1: and does technology enhance or accentuate the guilded age so 117 00:06:53,480 --> 00:06:56,640 Speaker 1: many of our listeners feel we're living in. It makes 118 00:06:57,200 --> 00:07:00,200 Speaker 1: uh those that don't participate in the guilded age age 119 00:07:00,240 --> 00:07:02,640 Speaker 1: more aware of the fact that they're left behind. It 120 00:07:02,680 --> 00:07:05,440 Speaker 1: makes it easier for them to connect with others that 121 00:07:05,520 --> 00:07:10,440 Speaker 1: feel the same way. UM. It also speeds up the 122 00:07:10,480 --> 00:07:14,200 Speaker 1: ability of those in the Gilded Age UM to build 123 00:07:14,320 --> 00:07:19,320 Speaker 1: walls that effectively differentiate these people. What will the Democratic Party, 124 00:07:19,400 --> 00:07:22,520 Speaker 1: or you're a great student of domestic politics, what will 125 00:07:22,600 --> 00:07:27,560 Speaker 1: the new Democratic Party look like? Um? Because they are 126 00:07:27,960 --> 00:07:32,320 Speaker 1: all um focused on twenty twenty after these midterm elections, 127 00:07:32,400 --> 00:07:35,240 Speaker 1: and focused on April of this year and Trump, Well, 128 00:07:35,280 --> 00:07:37,960 Speaker 1: I mean they're they're gonna be focused on impeachment proceedings 129 00:07:37,960 --> 00:07:40,200 Speaker 1: as well. And I have a hard time seeing Pelosi 130 00:07:40,640 --> 00:07:44,560 Speaker 1: uh keeping that off of the agenda. But I do 131 00:07:44,600 --> 00:07:48,440 Speaker 1: think that it helps to coalesce the Democrats when they 132 00:07:48,480 --> 00:07:52,160 Speaker 1: are all kind of on message against the American president. 133 00:07:52,200 --> 00:07:56,560 Speaker 1: But let's be clear, seventeen Republican candidates, most of them 134 00:07:56,760 --> 00:07:59,720 Speaker 1: were pretty establishment in the middle. You're gonna have freny 135 00:07:59,800 --> 00:08:04,120 Speaker 1: to thirty Democratic candidates and they're going to be some 136 00:08:04,240 --> 00:08:07,360 Speaker 1: in the middle, some on the left, and some complete outsiders. 137 00:08:07,360 --> 00:08:10,920 Speaker 1: And that does make from the Democratic perspective, much more 138 00:08:10,960 --> 00:08:14,000 Speaker 1: of a crapshoot. What you get, Brower, Thank you so much. 139 00:08:14,040 --> 00:08:16,760 Speaker 1: Top Risks of two thousand nineteen at euris your group 140 00:08:16,840 --> 00:08:21,120 Speaker 1: as we visit his office is here, unfit there having 141 00:08:36,480 --> 00:08:38,160 Speaker 1: I want to bring it in Pria Misra, now TV 142 00:08:38,280 --> 00:08:41,199 Speaker 1: Securities head of Global Race Strategy, to talk about the 143 00:08:41,280 --> 00:08:45,240 Speaker 1: bond market, Priya, A big change in tone from the chairman. 144 00:08:45,320 --> 00:08:47,560 Speaker 1: Just to go through some of his recent comments, listening 145 00:08:47,640 --> 00:08:51,720 Speaker 1: carefully to market risks, prepared to be patient, flexible, even 146 00:08:51,800 --> 00:08:55,680 Speaker 1: open to balance sheet policy change, Priya, the Chairman seems 147 00:08:55,679 --> 00:09:01,040 Speaker 1: to be all over the place the last couple of months. Hi, John, Um, Yes, 148 00:09:01,280 --> 00:09:05,360 Speaker 1: So I think the market interpretation of the chairman's comments 149 00:09:05,440 --> 00:09:07,959 Speaker 1: has changed now. I do think in in the December 150 00:09:08,000 --> 00:09:10,880 Speaker 1: press conference, he was trying to signal this flexibility, but 151 00:09:11,000 --> 00:09:13,680 Speaker 1: we were we sort of went into that meeting expecting 152 00:09:13,720 --> 00:09:17,720 Speaker 1: a lot. Uh. There were certainly people expecting no hikes there, uh, 153 00:09:18,120 --> 00:09:20,000 Speaker 1: and the Chairman did hike. I think it's very hard 154 00:09:20,080 --> 00:09:23,199 Speaker 1: to hike and then sound extremely nervous or panicky. So 155 00:09:23,320 --> 00:09:25,720 Speaker 1: I think, you know, the hikes sort of set him 156 00:09:25,800 --> 00:09:27,920 Speaker 1: up to sound somewhat hawkish. But what we heard from 157 00:09:28,000 --> 00:09:30,960 Speaker 1: him on Friday was this idea that they're flexible, nothing 158 00:09:31,080 --> 00:09:34,040 Speaker 1: is on autopilot. Um. You know, I think the fact 159 00:09:34,080 --> 00:09:36,800 Speaker 1: that he's listening to financial conditions actually tells me that, 160 00:09:37,440 --> 00:09:41,199 Speaker 1: you know, he's setting up somewhat for a pause here. 161 00:09:41,280 --> 00:09:44,000 Speaker 1: So um, you know, whether it's a pause, whether um 162 00:09:44,320 --> 00:09:46,360 Speaker 1: it's it's the end of the hiking cycle. I think 163 00:09:46,440 --> 00:09:48,599 Speaker 1: that only data will tell us. But at least we 164 00:09:48,720 --> 00:09:51,960 Speaker 1: have the FED now suggesting that they are watching uh, 165 00:09:52,679 --> 00:09:55,520 Speaker 1: the tightening and financial conditions much more closely than they 166 00:09:55,559 --> 00:09:58,520 Speaker 1: were earlier, uh, you know, the last few months. So 167 00:09:58,880 --> 00:10:01,079 Speaker 1: let's begin by talking about potential for a pause, and 168 00:10:01,120 --> 00:10:03,760 Speaker 1: then we can explore this tension between the market and 169 00:10:03,840 --> 00:10:07,160 Speaker 1: the economic data. I think for many people, for now, 170 00:10:07,880 --> 00:10:09,800 Speaker 1: many investors are going to run with the idea that 171 00:10:09,880 --> 00:10:13,800 Speaker 1: Poal is going with the twenty sixteen FED playbook. Can 172 00:10:13,840 --> 00:10:17,599 Speaker 1: we take a page out of the playbook in I 173 00:10:17,679 --> 00:10:22,559 Speaker 1: think we can. I mean, the similarity of is is 174 00:10:22,600 --> 00:10:25,959 Speaker 1: pretty high right now. Now. It is ultimately going to 175 00:10:26,040 --> 00:10:28,719 Speaker 1: depend on whether we get the global growth rebound that 176 00:10:28,800 --> 00:10:31,880 Speaker 1: we did see in twenty six we saw significant China easing. 177 00:10:32,480 --> 00:10:34,400 Speaker 1: I'm not sure that the triple our cut is enough, 178 00:10:34,480 --> 00:10:37,520 Speaker 1: but but if we do get you know, significant fiscal 179 00:10:37,559 --> 00:10:41,040 Speaker 1: easing in China, if global growth rebounds, I think then 180 00:10:41,120 --> 00:10:45,080 Speaker 1: twenty six uh is the reasonable uh you know thing 181 00:10:45,160 --> 00:10:49,119 Speaker 1: to um sort of watch for. If growth starts to decelerate, 182 00:10:49,200 --> 00:10:51,520 Speaker 1: so we actually don't get that rebound, then I think 183 00:10:51,559 --> 00:10:54,160 Speaker 1: we're you know, I'll be looking more at two thousand seven. 184 00:10:54,480 --> 00:10:56,520 Speaker 1: So I think right now, just given that we don't 185 00:10:56,559 --> 00:10:59,439 Speaker 1: know enough, the US economy still seems to be you know, 186 00:10:59,559 --> 00:11:01,440 Speaker 1: powering true. I think we really have to look at 187 00:11:01,520 --> 00:11:04,720 Speaker 1: what happens to global growth, what happens on the trade front, 188 00:11:04,760 --> 00:11:07,480 Speaker 1: to say whether this is or this is two thousand 189 00:11:07,559 --> 00:11:10,640 Speaker 1: seven had some really extreme price action on the Thursday, 190 00:11:10,760 --> 00:11:13,040 Speaker 1: never mind the Friday. In fact, maybe Friday told us 191 00:11:13,080 --> 00:11:16,040 Speaker 1: more about the extreme positioning after Thursday than it did 192 00:11:16,080 --> 00:11:19,079 Speaker 1: anything else. Prayer, I just wander your thoughts on the 193 00:11:19,320 --> 00:11:22,640 Speaker 1: on the tension right now between financial markets where things 194 00:11:22,679 --> 00:11:25,000 Speaker 1: are a little bit darker relative to twelve months ago, 195 00:11:25,120 --> 00:11:28,040 Speaker 1: maybe a whole lot darker in your view, compared to 196 00:11:28,080 --> 00:11:31,600 Speaker 1: the data. Whether data seems to be okay, especially here 197 00:11:31,600 --> 00:11:33,880 Speaker 1: in the United States. Softer, yes, in some parts, but 198 00:11:33,960 --> 00:11:37,920 Speaker 1: the labor market still looking very strong, right. I think 199 00:11:37,960 --> 00:11:40,880 Speaker 1: the tension that you're talking about is also you know, 200 00:11:41,000 --> 00:11:43,640 Speaker 1: in the data front, a lot of the forward looking 201 00:11:44,080 --> 00:11:48,160 Speaker 1: measures are looking uh, you know, more worrisome. I think 202 00:11:48,600 --> 00:11:51,640 Speaker 1: the Bureau report is still somewhat of a backward looking 203 00:11:52,040 --> 00:11:54,199 Speaker 1: data point we still have for still using in the 204 00:11:54,320 --> 00:11:56,400 Speaker 1: system in the US. So I think what we're seeing 205 00:11:56,520 --> 00:11:59,720 Speaker 1: is that the US economy, at least backward looking, seems 206 00:11:59,720 --> 00:12:02,079 Speaker 1: to be pretty strong. We sort of knew that. I 207 00:12:02,160 --> 00:12:05,480 Speaker 1: think the fear is that the China I s M, 208 00:12:06,160 --> 00:12:08,280 Speaker 1: the U s I s M, all of these forward 209 00:12:08,320 --> 00:12:11,480 Speaker 1: looking measures are suggesting some slowdown. Now, if we slow 210 00:12:11,520 --> 00:12:13,320 Speaker 1: down from a three and a half the cent GDP 211 00:12:13,559 --> 00:12:15,720 Speaker 1: to let's say two and a half the cent GDP, 212 00:12:16,160 --> 00:12:18,160 Speaker 1: that is the slowdown, But then two and a half 213 00:12:18,400 --> 00:12:20,480 Speaker 1: is still well above potential. So I think that can 214 00:12:20,520 --> 00:12:23,960 Speaker 1: allow the market to sort of stabilize. I think if 215 00:12:24,000 --> 00:12:26,240 Speaker 1: we're slowing down much more than that, and that's what 216 00:12:26,400 --> 00:12:28,199 Speaker 1: we really don't know, that's where the tension is. I 217 00:12:28,240 --> 00:12:30,960 Speaker 1: think all forward looking measures are going to be extremely 218 00:12:31,559 --> 00:12:33,720 Speaker 1: strutinized by the market because I think now the Fed 219 00:12:33,800 --> 00:12:37,880 Speaker 1: policy mistake issue that should go in the background. I 220 00:12:37,920 --> 00:12:40,200 Speaker 1: think now it's all going to be does the US 221 00:12:40,240 --> 00:12:44,280 Speaker 1: economy slow down above potential or do we go below potential? 222 00:12:44,600 --> 00:12:47,319 Speaker 1: And how is the global growth backdrop here? I think 223 00:12:47,360 --> 00:12:50,319 Speaker 1: that's where you know, what's what's going to become extremely 224 00:12:50,360 --> 00:12:53,199 Speaker 1: important as we analyze data. It's really going to be 225 00:12:53,280 --> 00:12:55,960 Speaker 1: the forward looking versus backward looking different. So we need 226 00:12:56,040 --> 00:12:58,600 Speaker 1: to analyze the soft data versus the hard dates are 227 00:12:58,920 --> 00:13:01,040 Speaker 1: once again, and the tension between that and not just 228 00:13:01,160 --> 00:13:03,280 Speaker 1: the tension between the data of the market. Preyer, I 229 00:13:03,320 --> 00:13:05,679 Speaker 1: want some final thoughts on what your base cases right 230 00:13:05,720 --> 00:13:07,960 Speaker 1: now for the US economy and for US rates. How 231 00:13:08,000 --> 00:13:11,160 Speaker 1: difficult is it to construct a base case? It is 232 00:13:11,320 --> 00:13:14,360 Speaker 1: very difficult, Um, I say, you know, what we're suggesting 233 00:13:14,640 --> 00:13:17,120 Speaker 1: is for investors to stay somewhat in the front end. 234 00:13:17,160 --> 00:13:19,000 Speaker 1: You know, when the two year old or three month 235 00:13:19,000 --> 00:13:23,160 Speaker 1: treasury builds are giving you two forty or um. You know, 236 00:13:23,240 --> 00:13:26,559 Speaker 1: basis points versus the tenure that's giving you to sixty, 237 00:13:26,880 --> 00:13:28,679 Speaker 1: you're not getting a whole lot more to take on 238 00:13:28,760 --> 00:13:31,599 Speaker 1: the additional duration risk. So I'm actually still suggesting that 239 00:13:31,720 --> 00:13:34,559 Speaker 1: investors stay in the front end and then start looking 240 00:13:34,760 --> 00:13:37,960 Speaker 1: at parts of the fixed in markets where risk premium 241 00:13:38,040 --> 00:13:41,120 Speaker 1: has been adequately repriced. So some of the markets have 242 00:13:41,320 --> 00:13:45,480 Speaker 1: seen significant widening in spreads, I think it might make 243 00:13:45,600 --> 00:13:48,880 Speaker 1: sense to start dipping in your tours. They're keeping an 244 00:13:48,920 --> 00:13:51,079 Speaker 1: eye on the data because if if the data does 245 00:13:51,120 --> 00:13:54,080 Speaker 1: start to deteriorate significantly, then you want to move out 246 00:13:54,120 --> 00:13:57,280 Speaker 1: of risk asses. But something we have that signal just yet. 247 00:13:57,440 --> 00:13:59,520 Speaker 1: Pre always great to catch you out with your TV 248 00:13:59,640 --> 00:14:14,520 Speaker 1: Security's head of Global Rights Strategy and bringing in Meredith 249 00:14:14,600 --> 00:14:18,520 Speaker 1: Sumter of ERAISA Group head of Research, Strategy and Operations. 250 00:14:18,640 --> 00:14:20,480 Speaker 1: I was a bit surprised for him. It's the first 251 00:14:20,520 --> 00:14:23,480 Speaker 1: time I've brought it up. President of Trump, the huge 252 00:14:23,720 --> 00:14:26,760 Speaker 1: distraction in Davos last year, and he goes for re 253 00:14:26,960 --> 00:14:28,960 Speaker 1: DUX this year if he can get through the t 254 00:14:29,200 --> 00:14:31,600 Speaker 1: s A at the airport to fly there. I mean 255 00:14:31,880 --> 00:14:36,240 Speaker 1: President Trump against speaking to the international community. Yes, Davos 256 00:14:36,400 --> 00:14:39,520 Speaker 1: is certainly a critical stage for him and for his 257 00:14:39,640 --> 00:14:43,440 Speaker 1: brand globally. Like that his brand, his brand for sure, 258 00:14:43,560 --> 00:14:46,480 Speaker 1: and I think he also his speech at last year's 259 00:14:46,560 --> 00:14:51,040 Speaker 1: Davos played fairly well according to the White House, so 260 00:14:51,400 --> 00:14:54,240 Speaker 1: look for a repeat performance there. But also watched for 261 00:14:54,480 --> 00:14:59,160 Speaker 1: President Trump to have a sideline meeting with Chinese Vice 262 00:14:59,240 --> 00:15:02,960 Speaker 1: President Wong she Sean at Davos. That is something that 263 00:15:03,200 --> 00:15:05,160 Speaker 1: all of us will be watching for signs as to 264 00:15:05,280 --> 00:15:08,200 Speaker 1: how the ongoing round of negotiations between the US and 265 00:15:08,320 --> 00:15:10,360 Speaker 1: China are faring. We've spent a lot of times to 266 00:15:10,480 --> 00:15:13,360 Speaker 1: the morning was really up top your Chinese risk as well. 267 00:15:13,400 --> 00:15:16,440 Speaker 1: I want to dress right now your lengthy essay on 268 00:15:16,640 --> 00:15:20,840 Speaker 1: Europe populism, which is decidedly different than it was twelve 269 00:15:20,880 --> 00:15:24,000 Speaker 1: months ago. What is the threat to democracy in Europe 270 00:15:24,120 --> 00:15:27,480 Speaker 1: right now? Well, twenty nineteen is really the year when 271 00:15:27,560 --> 00:15:30,520 Speaker 1: the populace will take center stage in Europe and begin 272 00:15:30,640 --> 00:15:34,200 Speaker 1: to erode the EU from within. We've written for several 273 00:15:34,280 --> 00:15:37,160 Speaker 1: months now about the lives of populism and populist leaders 274 00:15:37,240 --> 00:15:41,080 Speaker 1: and uh, you know Europe's third and fourth largest market 275 00:15:41,160 --> 00:15:45,080 Speaker 1: economies in other countries such as Hungary and Poland. But 276 00:15:45,200 --> 00:15:49,680 Speaker 1: what's critical now is that we expect that populists their 277 00:15:49,800 --> 00:15:52,800 Speaker 1: numbers are going to fare even better in twenty nine 278 00:15:53,480 --> 00:15:56,080 Speaker 1: and keep an eye on the May parliamentary elections. We 279 00:15:56,240 --> 00:16:00,560 Speaker 1: expect that their numbers are going to grow following those elections, 280 00:16:00,600 --> 00:16:04,160 Speaker 1: which will put them at center stage in Europe's most 281 00:16:04,200 --> 00:16:08,280 Speaker 1: important democratic institution. In the dominant countries as well. Your 282 00:16:08,320 --> 00:16:10,400 Speaker 1: age group was so out front on the fractures of 283 00:16:10,440 --> 00:16:13,120 Speaker 1: Germany one and two and even three years ago, and 284 00:16:13,200 --> 00:16:15,720 Speaker 1: of course Mr mccrawl with the challenges Now, how does 285 00:16:15,760 --> 00:16:19,520 Speaker 1: that readdound back to Brussels, where I was just two 286 00:16:19,560 --> 00:16:22,600 Speaker 1: weeks ago. I guess when when I look at Brussels, 287 00:16:22,720 --> 00:16:26,560 Speaker 1: what is the strength of this European Union within the 288 00:16:26,680 --> 00:16:31,800 Speaker 1: media frenzy of Brexit. Well, look the Brussels it's it's 289 00:16:31,880 --> 00:16:34,920 Speaker 1: dealing both with Brexit, but it's going to have to 290 00:16:35,120 --> 00:16:38,320 Speaker 1: deal with the growing voice and the growing influence of 291 00:16:38,400 --> 00:16:42,280 Speaker 1: the Populace not only in the European Parliament following May's elections, 292 00:16:42,360 --> 00:16:44,960 Speaker 1: but tom if if the Populace get enough of a 293 00:16:45,000 --> 00:16:48,200 Speaker 1: strong showing in the May parliamentary elections, you combine that 294 00:16:48,840 --> 00:16:53,160 Speaker 1: with their fairly solid basis of support and several Keys states, 295 00:16:53,600 --> 00:16:57,480 Speaker 1: and you have a risk of uh, you know, euroskeptic 296 00:16:57,720 --> 00:17:00,240 Speaker 1: populist having a voice not only in the parlor meant, 297 00:17:00,560 --> 00:17:03,680 Speaker 1: but also in the European Commission, which oversees the day 298 00:17:03,680 --> 00:17:06,440 Speaker 1: to day operations of Europe, as as well as the 299 00:17:06,520 --> 00:17:09,840 Speaker 1: European Council. This affords them real decision making power. Is 300 00:17:09,920 --> 00:17:12,800 Speaker 1: this within all of your top risks your Asia group? 301 00:17:13,040 --> 00:17:16,439 Speaker 1: Is the system fractured? To steal a word from Franci 302 00:17:16,560 --> 00:17:20,879 Speaker 1: Laquois earlier this morning, is the system fractured? Are you 303 00:17:21,080 --> 00:17:23,919 Speaker 1: optimistic with Dr Bremer that we can see a healing 304 00:17:24,400 --> 00:17:27,040 Speaker 1: If not in two thousand nineteen, then on through twenty 305 00:17:27,359 --> 00:17:31,080 Speaker 1: after the presidential cycle. In the ensuing years so is 306 00:17:31,080 --> 00:17:34,280 Speaker 1: the question more so with Europe or broadly spec Broadly speaking, 307 00:17:34,320 --> 00:17:36,800 Speaker 1: I think our listeners are you know, they're they're interested 308 00:17:36,840 --> 00:17:38,879 Speaker 1: in Europe, and they're interested in Wall Street and that. 309 00:17:39,440 --> 00:17:42,440 Speaker 1: But it's sort of a broad feeling of Okay, when 310 00:17:42,560 --> 00:17:45,600 Speaker 1: does this heal? Right, Look, it's going to take several 311 00:17:45,640 --> 00:17:48,240 Speaker 1: more years of healing. But but the length of time 312 00:17:48,320 --> 00:17:51,440 Speaker 1: that it takes for us to actually heal depends upon 313 00:17:51,600 --> 00:17:56,720 Speaker 1: the ability of leaders from largely industrialized economies tackling head 314 00:17:56,800 --> 00:17:59,280 Speaker 1: on the reforms that are necessary to bring more of 315 00:17:59,320 --> 00:18:03,119 Speaker 1: their popular ations into the economy of the future. A 316 00:18:03,200 --> 00:18:06,000 Speaker 1: lot of the geopolitical flux that we're seeing now part 317 00:18:06,040 --> 00:18:09,040 Speaker 1: of it. It's a long term process of evolving from 318 00:18:09,080 --> 00:18:11,440 Speaker 1: the post World war to order to what that new 319 00:18:11,520 --> 00:18:14,440 Speaker 1: world war, what that new world order? Will know that 320 00:18:14,640 --> 00:18:17,440 Speaker 1: this is critical. Do we know that new order that's 321 00:18:17,480 --> 00:18:22,280 Speaker 1: out there? Cicaria, post American order, bremer g zero world, 322 00:18:22,640 --> 00:18:25,520 Speaker 1: your own writings, Merit of the Sumter as well, and others. 323 00:18:25,680 --> 00:18:29,440 Speaker 1: What's the new consensus after the Washington Consensus? I don't 324 00:18:29,480 --> 00:18:32,159 Speaker 1: see it. Well. Part of that will depend upon what 325 00:18:32,520 --> 00:18:36,280 Speaker 1: role Washington decides to play in this post world war 326 00:18:36,400 --> 00:18:40,560 Speaker 1: to order and to what extent Washington can get along 327 00:18:40,640 --> 00:18:43,960 Speaker 1: with other key power brokers, even if they don't agree 328 00:18:44,080 --> 00:18:45,879 Speaker 1: with them, even if they don't agree with him. This 329 00:18:46,200 --> 00:18:51,560 Speaker 1: this fundamentally includes China Beijing. So regardless of whatever tariff 330 00:18:51,600 --> 00:18:55,960 Speaker 1: deal is agreed to, our call is that that relationships 331 00:18:56,080 --> 00:18:59,040 Speaker 1: between the two that these two world powers, is going 332 00:18:59,119 --> 00:19:01,720 Speaker 1: to get even huffer and he will. Let's bring the 333 00:19:01,800 --> 00:19:05,640 Speaker 1: immediacy of a shutdown where the president's made clear it's 334 00:19:05,720 --> 00:19:09,520 Speaker 1: his way or the highway. Is that his relationship with China. 335 00:19:09,680 --> 00:19:12,040 Speaker 1: Is that what we're going to see in the talks 336 00:19:12,800 --> 00:19:15,679 Speaker 1: this week, the talks maybe at Davos, and the talks 337 00:19:15,720 --> 00:19:17,879 Speaker 1: and the talks and the talks after that. Is it 338 00:19:17,960 --> 00:19:21,760 Speaker 1: a Trump lateral world. It would be a Trump lateral 339 00:19:21,880 --> 00:19:26,120 Speaker 1: world if we had an unending US economic growth and strength, 340 00:19:26,240 --> 00:19:29,639 Speaker 1: but that's not necessarily what we're seeing right now. Trump 341 00:19:29,840 --> 00:19:32,320 Speaker 1: is fairly confident in the U s economy, but we're 342 00:19:32,320 --> 00:19:35,639 Speaker 1: all watching the increased market volatility. We're all watching signs 343 00:19:35,720 --> 00:19:38,399 Speaker 1: of a potential slowdown in the US economy, and that 344 00:19:38,440 --> 00:19:41,639 Speaker 1: could force his hand earlier than than he would like. 345 00:19:42,040 --> 00:19:44,160 Speaker 1: But the key question is whether it's Trump or post 346 00:19:44,200 --> 00:19:47,520 Speaker 1: Trump to what extent is America going to lead and 347 00:19:47,680 --> 00:19:51,200 Speaker 1: what does that mean for the post world order? You, 348 00:19:51,320 --> 00:19:54,640 Speaker 1: more than any other guest we speak to, is hardwired 349 00:19:54,920 --> 00:19:58,159 Speaker 1: for distance from capital. You did your academics at the 350 00:19:58,280 --> 00:20:01,440 Speaker 1: University of Washington. You where were you? You and the 351 00:20:01,480 --> 00:20:04,520 Speaker 1: grizzly bears up an anchorage? Right, something like that. I'm 352 00:20:04,560 --> 00:20:06,680 Speaker 1: from Alaska, but it did my my graduate work at LSE. 353 00:20:06,960 --> 00:20:09,120 Speaker 1: I know you went to London for your graduate work. 354 00:20:09,160 --> 00:20:12,000 Speaker 1: I get that. But nobody I know spent more time 355 00:20:12,200 --> 00:20:16,159 Speaker 1: distance from a capital than you. What does Wanhington not 356 00:20:16,440 --> 00:20:19,520 Speaker 1: get about what's out there? The rest of the world 357 00:20:19,640 --> 00:20:24,479 Speaker 1: is moving on regardless of what that's right, that's right, 358 00:20:24,600 --> 00:20:26,840 Speaker 1: And if you if you're in Washington circles and you 359 00:20:26,920 --> 00:20:29,399 Speaker 1: listen to the kind of discussions happening there, to me, 360 00:20:29,520 --> 00:20:32,560 Speaker 1: it's not apparent. That reality is not yet apparent to 361 00:20:32,600 --> 00:20:35,040 Speaker 1: the key thought leaders and decision makers in Washington, and 362 00:20:35,119 --> 00:20:37,920 Speaker 1: the faster they realized that, the faster that they're able 363 00:20:37,960 --> 00:20:41,119 Speaker 1: to turn away from this high levels of partisanship and 364 00:20:41,200 --> 00:20:44,320 Speaker 1: internal naval gazing and really focus on, no kidding, what 365 00:20:44,400 --> 00:20:46,880 Speaker 1: does it really take for America and the American workforce 366 00:20:47,000 --> 00:20:50,760 Speaker 1: to be competitive and global economy? Then take it over 367 00:20:50,840 --> 00:20:54,359 Speaker 1: to your wheelhouse of international relations. We're not getting along 368 00:20:54,400 --> 00:20:58,400 Speaker 1: with their allies. Is that one off of this distrust 369 00:20:58,560 --> 00:21:02,160 Speaker 1: with our this limited US, as you say, with our allies, 370 00:21:02,440 --> 00:21:05,159 Speaker 1: or is there can there be a recovery towards some 371 00:21:05,359 --> 00:21:08,200 Speaker 1: trust with our core ellis it's going to be a 372 00:21:08,240 --> 00:21:11,240 Speaker 1: bit of an apphole battle to get a recovery of 373 00:21:11,600 --> 00:21:14,000 Speaker 1: the kind of trust that we saw pre Trump. In 374 00:21:14,040 --> 00:21:15,560 Speaker 1: other words, I think we're going to have to see 375 00:21:15,560 --> 00:21:20,240 Speaker 1: a refashioning of the US related commitment to its alliance relationships, 376 00:21:20,280 --> 00:21:23,080 Speaker 1: not only with traditional allies but also with new emerging 377 00:21:23,160 --> 00:21:26,440 Speaker 1: partners with with whom Washington will need to partner to 378 00:21:26,520 --> 00:21:30,320 Speaker 1: be an effective and strategic power in person, Meredith Sumter, 379 00:21:30,440 --> 00:21:32,520 Speaker 1: thank you so much with your raising group, Head of Research, 380 00:21:32,560 --> 00:21:51,200 Speaker 1: Strategy and Operations. Folding in the state of our capitalism 381 00:21:51,280 --> 00:21:54,119 Speaker 1: and particularly the state of our technology, which means it's 382 00:21:54,119 --> 00:21:56,960 Speaker 1: a wonderful time to speak to Sally craw Check. You 383 00:21:57,080 --> 00:21:59,919 Speaker 1: know her from Wall Street, you know her from Elevant, uh, 384 00:22:00,080 --> 00:22:03,520 Speaker 1: Elevate and Elavesta should say and all that she's done 385 00:22:03,560 --> 00:22:07,760 Speaker 1: within digital, particularly with a thrust towards how women should 386 00:22:07,800 --> 00:22:11,199 Speaker 1: adapt to the markets and to capitalism and she joins us. 387 00:22:11,800 --> 00:22:16,800 Speaker 1: This morning, Sally, what have you and Albus learned about 388 00:22:16,840 --> 00:22:22,960 Speaker 1: how the digital platforms, the digital technologies will deal with volatility. 389 00:22:23,160 --> 00:22:27,800 Speaker 1: You enjoyed February, then you enjoyed October and on to 390 00:22:27,920 --> 00:22:31,200 Speaker 1: the end of the year. It's different than Smith Barney, 391 00:22:31,359 --> 00:22:34,800 Speaker 1: isn't it. Well, it is different than Smith Barney and 392 00:22:34,960 --> 00:22:39,399 Speaker 1: different from Merrill Lynch and everybody told me. And the 393 00:22:39,480 --> 00:22:43,160 Speaker 1: conventional wisdom is if you have a digital first investing 394 00:22:43,280 --> 00:22:47,440 Speaker 1: platform and we get into some tough markets, your clients 395 00:22:47,480 --> 00:22:49,920 Speaker 1: will leave you. There won't be a person there to 396 00:22:50,800 --> 00:22:54,200 Speaker 1: either sue them or grab them around the ankles and 397 00:22:54,359 --> 00:22:56,800 Speaker 1: keep them from leaving. And Tom, that's it, not at 398 00:22:56,880 --> 00:23:00,399 Speaker 1: all what we saw that you know, we have built 399 00:23:00,400 --> 00:23:04,960 Speaker 1: a product platform here at Labs that shows our clients 400 00:23:05,280 --> 00:23:08,399 Speaker 1: are they on or off track for achieving their goals. 401 00:23:08,800 --> 00:23:11,600 Speaker 1: We built in plenty of down markets as we project 402 00:23:11,680 --> 00:23:14,760 Speaker 1: there and eating their goals, buying that home, starting that business, 403 00:23:14,840 --> 00:23:17,760 Speaker 1: retiring at the age of six, and can show them 404 00:23:18,200 --> 00:23:20,560 Speaker 1: on a day by day, moment by moment basis are 405 00:23:20,640 --> 00:23:23,520 Speaker 1: they on track or off? And so what we found 406 00:23:23,720 --> 00:23:27,080 Speaker 1: was attrition ary actually went down during the periods of 407 00:23:27,119 --> 00:23:29,119 Speaker 1: volatility because our clients were able to log in and 408 00:23:29,119 --> 00:23:34,280 Speaker 1: see I'm fine, okay, back to living my life. This 409 00:23:34,520 --> 00:23:37,480 Speaker 1: is incredibly important, folks. And of course the age old 410 00:23:37,520 --> 00:23:41,520 Speaker 1: idea here is everybody's talking their book. The constant themes 411 00:23:41,560 --> 00:23:45,840 Speaker 1: Sally has been low interest rates, where the fees have 412 00:23:45,960 --> 00:23:51,000 Speaker 1: been compressed. We saw Abby H. Johnson up at Fidelity 413 00:23:51,400 --> 00:23:54,080 Speaker 1: having to go to two funds I believe index funds 414 00:23:54,119 --> 00:23:57,560 Speaker 1: that were completely free of fees as well. Fold in 415 00:23:57,720 --> 00:24:02,119 Speaker 1: the fee micro economics that you see for the future 416 00:24:02,320 --> 00:24:06,360 Speaker 1: of personal investment, Well, the fees are coming down, an Tom. 417 00:24:06,440 --> 00:24:08,720 Speaker 1: What's interesting is since you and I were since you 418 00:24:08,840 --> 00:24:11,640 Speaker 1: were a little kid and I was a baby. Um, 419 00:24:11,840 --> 00:24:15,560 Speaker 1: everybody has said the pressure, feed pressure, feed pressure, but 420 00:24:15,600 --> 00:24:18,639 Speaker 1: it didn't really show up. In fact, you know, in 421 00:24:18,680 --> 00:24:21,960 Speaker 1: the fifteen years before I took responsibility for Merrill Lynch 422 00:24:22,040 --> 00:24:25,120 Speaker 1: Wealth Management, the r o A revenue on assets had 423 00:24:25,240 --> 00:24:28,240 Speaker 1: been flat for that fifty years. Now, there were certain 424 00:24:28,280 --> 00:24:31,880 Speaker 1: products where there was seed pressure, but overall that business 425 00:24:32,000 --> 00:24:34,920 Speaker 1: continued to earn. And you've seen the research that says 426 00:24:35,000 --> 00:24:38,160 Speaker 1: that the cost of financial intermediation is you know called 427 00:24:38,240 --> 00:24:42,000 Speaker 1: one and a half or two percent. All in technology, 428 00:24:42,560 --> 00:24:47,280 Speaker 1: we're able to UM bring that cost substantially down to 429 00:24:47,440 --> 00:24:50,880 Speaker 1: really the first time, and the benefit of the cost 430 00:24:50,960 --> 00:24:53,399 Speaker 1: coming down goes straight into the pods of the consumers. 431 00:24:53,480 --> 00:24:57,359 Speaker 1: So you're giving them highly customized investment portfolios put together 432 00:24:57,520 --> 00:25:01,520 Speaker 1: through investing algorithms that don't panic when the market goes down. 433 00:25:01,560 --> 00:25:04,440 Speaker 1: You're able to to you know, feed them information on 434 00:25:04,640 --> 00:25:06,240 Speaker 1: or off track, and you're able to do it in 435 00:25:06,440 --> 00:25:10,040 Speaker 1: much lower price than having a thick layer of person 436 00:25:10,760 --> 00:25:13,560 Speaker 1: in their lead to what do I mean thick layer 437 00:25:13,840 --> 00:25:15,800 Speaker 1: the person who's doing all the you know, not only 438 00:25:15,880 --> 00:25:19,719 Speaker 1: the client relationship, but also the investing right also the planning. 439 00:25:19,760 --> 00:25:22,240 Speaker 1: By using technology to do what technology does best, in 440 00:25:22,400 --> 00:25:25,080 Speaker 1: using people to do what people do best, the ultimate 441 00:25:25,400 --> 00:25:29,200 Speaker 1: end client is better off both emotionally and when it 442 00:25:29,280 --> 00:25:32,240 Speaker 1: comes to dollars and then slid crow check. I'm wondering 443 00:25:32,240 --> 00:25:34,359 Speaker 1: if you could just expand a little bit on the 444 00:25:34,520 --> 00:25:41,040 Speaker 1: algorithm that LVEST uses because it's tailored specifically to women's 445 00:25:41,240 --> 00:25:44,800 Speaker 1: incomes and also to their life cycles, and this is 446 00:25:44,880 --> 00:25:48,760 Speaker 1: something that no one else has really been able to do. Well. Look, 447 00:25:48,880 --> 00:25:52,359 Speaker 1: if you are planning to um you know, you're saving 448 00:25:52,400 --> 00:25:55,399 Speaker 1: and investing for retirement, and you put together plan and 449 00:25:55,680 --> 00:26:00,240 Speaker 1: you assume in your plan that you die on average, UM, 450 00:26:00,400 --> 00:26:02,600 Speaker 1: and you assume in your plan that your earnings grow 451 00:26:02,800 --> 00:26:06,160 Speaker 1: on average for an industry. That works really well. If 452 00:26:06,200 --> 00:26:08,640 Speaker 1: you're a man, because I hate to say a gentleman, 453 00:26:08,720 --> 00:26:11,600 Speaker 1: but you know, you die earlier. UM. It also works 454 00:26:11,640 --> 00:26:15,119 Speaker 1: really well because you earn more. For a woman, you know, 455 00:26:15,480 --> 00:26:18,520 Speaker 1: the chances of being left without you know, an income 456 00:26:18,600 --> 00:26:20,399 Speaker 1: at the end or without wealth at the end are 457 00:26:20,480 --> 00:26:22,920 Speaker 1: much higher unless you take it into account. And so 458 00:26:23,119 --> 00:26:25,320 Speaker 1: l of us was really the first two things we 459 00:26:25,440 --> 00:26:31,359 Speaker 1: do to you know, really, um customize this to either gender, 460 00:26:31,440 --> 00:26:34,080 Speaker 1: but to women. They are about a thousand other things 461 00:26:34,160 --> 00:26:36,240 Speaker 1: that we do based off of hundreds and hundreds of 462 00:26:36,280 --> 00:26:38,800 Speaker 1: hours of research that women said they were looking for 463 00:26:39,000 --> 00:26:40,800 Speaker 1: one as goals based investing. And by the way, I 464 00:26:40,840 --> 00:26:43,800 Speaker 1: know many of your listeners, what an investing platform for women? 465 00:26:43,960 --> 00:26:47,359 Speaker 1: That is so dumb? I thought so too, up until 466 00:26:47,440 --> 00:26:50,080 Speaker 1: I realized that women weren't investing nearly as much as 467 00:26:50,160 --> 00:26:54,200 Speaker 1: men were. It costs typical woman hundreds of thousands a 468 00:26:54,280 --> 00:26:56,760 Speaker 1: million plus over the course of her life, and what 469 00:26:56,880 --> 00:26:59,040 Speaker 1: the industry was doing, which was telling her to change, 470 00:26:59,680 --> 00:27:02,280 Speaker 1: telling her she needed more financial education, telling her she 471 00:27:02,320 --> 00:27:04,640 Speaker 1: needed to just buy a mutual fund. We can keep 472 00:27:04,640 --> 00:27:06,720 Speaker 1: trying to do that, but it wasn't working before. So 473 00:27:06,880 --> 00:27:08,680 Speaker 1: we saw no reason that was work going forward, and 474 00:27:08,720 --> 00:27:11,960 Speaker 1: so we built an investing platform completely around her. And 475 00:27:12,040 --> 00:27:13,200 Speaker 1: by the way, there are a lot of guys who 476 00:27:13,240 --> 00:27:16,760 Speaker 1: love it too. I would imagine, can you tell us 477 00:27:16,760 --> 00:27:20,680 Speaker 1: all about something called the risk quiz and why that's 478 00:27:20,800 --> 00:27:24,040 Speaker 1: not enough and why it's about reaching the goal, not 479 00:27:24,280 --> 00:27:26,600 Speaker 1: necessarily what happens in the market on a day to 480 00:27:26,720 --> 00:27:30,840 Speaker 1: day or even month to month basis. It's a great question. 481 00:27:31,119 --> 00:27:36,240 Speaker 1: So most investment providers out there ask client potential clients 482 00:27:36,280 --> 00:27:38,840 Speaker 1: their list tolerance. What we found when we did the 483 00:27:38,920 --> 00:27:44,440 Speaker 1: research is many will answer that question. Men on typically 484 00:27:44,520 --> 00:27:47,440 Speaker 1: will answer that question. They don't know the answer to it, 485 00:27:47,560 --> 00:27:50,240 Speaker 1: but they will answer it. Women typically will not answer 486 00:27:50,280 --> 00:27:52,720 Speaker 1: the question, and we'll leave and say, I gotta go 487 00:27:52,840 --> 00:27:54,560 Speaker 1: figure this out, I gotta go buy a book, I 488 00:27:54,600 --> 00:27:56,159 Speaker 1: gotta read about it, and I'll come back, and then 489 00:27:56,200 --> 00:27:59,280 Speaker 1: they never come back. The truth is, no one really knows. 490 00:27:59,359 --> 00:28:01,800 Speaker 1: The research shows you, and my my years in the 491 00:28:01,880 --> 00:28:04,600 Speaker 1: business tell me no one really knows what their risk 492 00:28:04,640 --> 00:28:07,800 Speaker 1: tolerances until they face up to a down market, and 493 00:28:07,920 --> 00:28:10,159 Speaker 1: then they figure it out. And asking the question and 494 00:28:10,240 --> 00:28:13,199 Speaker 1: then investing based on that. We as a producer at 495 00:28:13,200 --> 00:28:16,119 Speaker 1: all of us, uh no, what we do instead it 496 00:28:16,320 --> 00:28:19,080 Speaker 1: tell us what you want to achieve. And if you 497 00:28:19,119 --> 00:28:21,119 Speaker 1: don't have an emergency fund, I don't care if you 498 00:28:21,200 --> 00:28:22,680 Speaker 1: think you're going to take on it. You want to 499 00:28:22,720 --> 00:28:24,080 Speaker 1: take on a lot of risks, you're not. We're not 500 00:28:24,240 --> 00:28:27,080 Speaker 1: letting you. And by the way, if your twenties five 501 00:28:27,560 --> 00:28:30,480 Speaker 1: and your only goal is retirement, we're going to build 502 00:28:30,520 --> 00:28:32,399 Speaker 1: you a portfolio with quite a bit more risk there 503 00:28:32,400 --> 00:28:34,399 Speaker 1: because you'll have the time to earn the returns and 504 00:28:34,440 --> 00:28:37,560 Speaker 1: recover for interns. So we give a risk budget rather 505 00:28:37,640 --> 00:28:40,400 Speaker 1: than hey, what do you want? And then you know, 506 00:28:40,560 --> 00:28:45,000 Speaker 1: act the act in that way, Sally, the top risk 507 00:28:45,080 --> 00:28:47,800 Speaker 1: of two thousand nineteen lead us to the top risks 508 00:28:47,840 --> 00:28:51,560 Speaker 1: of a generation, whichever that generation may be. And to me, 509 00:28:51,680 --> 00:28:54,440 Speaker 1: it comes down to actual assumption. We've had the gift 510 00:28:54,520 --> 00:28:57,160 Speaker 1: of a bull market which has made not all but 511 00:28:57,440 --> 00:29:01,440 Speaker 1: a select group look pretty smart. Do you just assume? 512 00:29:01,680 --> 00:29:04,800 Speaker 1: And I go and folks, this is with Sally's iconic 513 00:29:04,880 --> 00:29:09,440 Speaker 1: work at Sanford Bernstein in math and securities analysis years ago. 514 00:29:09,880 --> 00:29:13,600 Speaker 1: Do you just assume? Finally, the single digit world is 515 00:29:13,720 --> 00:29:17,120 Speaker 1: upon us. That's what that's what we project and so 516 00:29:17,840 --> 00:29:21,080 Speaker 1: that and if it isn't fantastic, but at l of 517 00:29:21,160 --> 00:29:24,320 Speaker 1: US we project that and if the returns end up 518 00:29:24,360 --> 00:29:26,760 Speaker 1: being better, so be it. So not only do we 519 00:29:26,840 --> 00:29:30,080 Speaker 1: project single digit returns, but then we also project to 520 00:29:30,160 --> 00:29:33,000 Speaker 1: try to get her to the quantitative goal she wants 521 00:29:33,040 --> 00:29:35,880 Speaker 1: to achieve in the substantial majority of markets, so we 522 00:29:36,000 --> 00:29:39,040 Speaker 1: try to build in a layer of conservatism to conservatism 523 00:29:39,120 --> 00:29:42,480 Speaker 1: to conservatism, which can make the initials sell hard time 524 00:29:42,480 --> 00:29:44,520 Speaker 1: because we're not out there saying it will be a millionaire, 525 00:29:45,320 --> 00:29:49,239 Speaker 1: but we believe it a prudent way to help her 526 00:29:49,360 --> 00:29:52,560 Speaker 1: plan for her future and look for the For the women, 527 00:29:52,640 --> 00:29:55,160 Speaker 1: this is important. You know, you hit an important point. 528 00:29:55,600 --> 00:29:58,400 Speaker 1: Women live longer than men do. Therefore, if we do 529 00:29:58,560 --> 00:30:03,760 Speaker 1: not have enough money as a country for retirement savings, 530 00:30:04,240 --> 00:30:07,200 Speaker 1: it is a gender issue. It is a gender issue, 531 00:30:07,240 --> 00:30:10,360 Speaker 1: and so our goal at Elvest is to help close 532 00:30:10,440 --> 00:30:14,240 Speaker 1: this gender investing gap, to help close the retirement savings gap. 533 00:30:14,280 --> 00:30:15,840 Speaker 1: And if you think about it, if we could get 534 00:30:16,240 --> 00:30:18,840 Speaker 1: more money in the hands of women, close the gender 535 00:30:18,880 --> 00:30:21,840 Speaker 1: pay gap, close the gender investing gap, that helps the 536 00:30:21,960 --> 00:30:24,680 Speaker 1: it's good for everybody, helps the economy grow, It puts 537 00:30:24,720 --> 00:30:27,520 Speaker 1: money into the markets, It helps the women have more resources, 538 00:30:27,600 --> 00:30:30,840 Speaker 1: it helps there their families. You know, it's not a 539 00:30:30,920 --> 00:30:33,800 Speaker 1: zero sum game by any means. And so for Elvest, 540 00:30:34,120 --> 00:30:36,880 Speaker 1: we are an investing firm for women, but we're really 541 00:30:36,960 --> 00:30:39,600 Speaker 1: mission driven to try to you know, at our core 542 00:30:39,680 --> 00:30:42,120 Speaker 1: is to try to help women live and better live. 543 00:30:43,160 --> 00:30:45,160 Speaker 1: So I'm gonna leave it there. Thank you so much. 544 00:30:45,160 --> 00:30:48,240 Speaker 1: Sally called check of ls to helping out Ian Bremmer 545 00:30:48,280 --> 00:30:57,480 Speaker 1: today with a top risk of two thousand nineteen. Thanks 546 00:30:57,520 --> 00:31:01,720 Speaker 1: for listening to the Bloomberg Surveillance podcast. Subscribe and listen 547 00:31:02,000 --> 00:31:07,320 Speaker 1: to interviews on Apple Podcasts, SoundCloud, or whichever podcast platform 548 00:31:07,440 --> 00:31:11,720 Speaker 1: you prefer. I'm on Twitter at Tom Keene before the podcast. 549 00:31:11,800 --> 00:31:15,280 Speaker 1: You can always catch us worldwide. I'm Bloomberg Radio.