Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along
Speaker 1: with Jonathan Ferroll and Lisa Brownwitz. Daily we bring you
Speaker 1: insight from the best and economics, finance, investment, and international relations.
Speaker 1: Find Bloomberg Surveillance on Apple Podcast, Suncloud, Bloomberg dot Com,
Speaker 1: and of course on the Bloomberg Terminent Laurence Somers was
Speaker 1: with us the other day, the Secretary of Treasury and
Speaker 1: obviously from Harvard University, and he wrote a blistering essay
Speaker 1: today in the Washington Post, and we will begin with
Speaker 1: that with the wonderful Ellen Setner of Morgan Stanley. The
Speaker 1: FETE is not internalized, the magnitude, the magnitude of its
Speaker 1: errors over the past year, is operating with an inappropriate
Speaker 1: and dangerous framework. Professor Somers, with alan Stonemash, goes on
Speaker 1: to say, there can be no reliable progress against inflation
Speaker 1: without substantial increases in real interest rates, which means temporary
Speaker 1: increases in unemployment. Mazentner is with Morgan Stanley. Ellen, you
Speaker 1: know that the word magnitude is used differently by people
Speaker 1: like Xanner, people like Summers. How hard is it right
Speaker 1: now to gauge the magnitude of this moment, this march magnitude.
Speaker 1: How hard is it to gauge the how muchness forward
Speaker 1: for you? The how much of nous? I love it?
Speaker 1: Uh So, look the the It's easy to get on
Speaker 1: the train of saying the feed is behind the curve.
Speaker 1: And I think there are folks on the FO m
Speaker 1: C that would agree that they're probably behind the curve. UM.
Speaker 1: But there are enough risks in the economy still and
Speaker 1: with renewed geo new geopolitical concerns, um, that does make
Speaker 1: sense to start off with the basis point hike. You
Speaker 1: don't want to add to the volatility that's already in
Speaker 1: the markets. I think what we're going to see is
Speaker 1: that Chair Pal is going to leave the door open
Speaker 1: to the door. Then markets know that they can go
Speaker 1: in bigger increments at any time. But to say that
Speaker 1: the FED is operating under the wrong framework, I think
Speaker 1: it's just absolutely uh inconsistent with what we've heard from
Speaker 1: the FED. I think it was pretty quickly that they
Speaker 1: abandoned the new framework when they went solely to focusing
Speaker 1: on UH inflation. Uh. I don't think they're operating on
Speaker 1: the under that old framework. The old twenty framework framework,
Speaker 1: and the headline there is Zentor pushing back against somers Ellen.
Speaker 1: I want to stay on magnitude, which goes to the
Speaker 1: reaction functions of the Fed. Can we have any predictable
Speaker 1: reaction functions given the mix of economic data the dynamics
Speaker 1: of the American system? Are we literally with Chairman Powell
Speaker 1: flying blind out of this pandemic with the overlay of
Speaker 1: war in Ukraine? Yeah? So, uh, I mean flying blind?
Speaker 1: There is a good way to put it. Uh. You know,
Speaker 1: I think under this environment, it's absolutely appropriate to expect
Speaker 1: high volatility to continue. Um Volatility equals uncertainty, and it
Speaker 1: means that you have monetary policy makers that are going
Speaker 1: to have to make decisions meeting by meeting based on
Speaker 1: the data that they have in hand and where they
Speaker 1: think it is likely going. You know, when you're when
Speaker 1: you're following financial conditions so closely, and when those are
Speaker 1: being impacted uh, not just by your own communication, but
Speaker 1: uh of late by external sources. You know, it's it's
Speaker 1: out of your control and you just really have to
Speaker 1: watch and take it step by step, feel your way
Speaker 1: in the sand with your toes. Uh. And that's what
Speaker 1: the FED is going to be doing, and so I
Speaker 1: think Chap is going to underscore that in his Q
Speaker 1: and A session uh today, um. And that means that
Speaker 1: markets are going to have to really be nimble as
Speaker 1: the FED is going to be nimble. That you could
Speaker 1: see twenty five basis points fifty fifty or all twenty
Speaker 1: five or what we do know is that they're hiking.
Speaker 1: The hiking cycle has begun, and there is a lot
Speaker 1: of room for them to get far in rate hikes
Speaker 1: without impacting the economy. And I think that's what is
Speaker 1: most misunderstood by the market. Well, Ellen to that point,
Speaker 1: let's put some numbers on that that you expect we're
Speaker 1: going to end the year of three with a base
Speaker 1: of FED funds rate of two point six to five,
Speaker 1: well above where the tenure and frankly the thirty year
Speaker 1: are at this point. And you also expect quantitative tightening,
Speaker 1: not just a cessation of purchases of bonds, but actually
Speaker 1: the shrinking of the balance sheet to begin in May.
Speaker 1: So here's what I'm struggling with, struggling with Ellen. If
Speaker 1: this is actually going to be effective FED tightening, why
Speaker 1: will that not translate to a slower growth paradigm that
Speaker 1: could potentially slow the trajectory of their rate hikes. Yeah,
Speaker 1: so it's it's a great question, Lisa, So they do.
Speaker 1: So here's the part of Summer's uh op ed that
Speaker 1: I do agree with. The Basically, he's laying out in
Speaker 1: a way that the Fed can um that their other
Speaker 1: job is to raise the unemployment rate. Um. Now, it
Speaker 1: doesn't sound very good for policymakers to stand in front
Speaker 1: of the public and say, hey, we're we need to
Speaker 1: raise the unemployment rate, but that's part of their job.
Speaker 1: They have to create slack, and to create slack, you've
Speaker 1: got to slow the economy. So we do have the
Speaker 1: economy slowing. Uh And we've taken growth forecast down for
Speaker 1: this year and significantly raised inflation forecast, but the economy
Speaker 1: is still growing well beyond its potential, which is in
Speaker 1: the one and a half to one point eight percent range.
Speaker 1: Uh And, so you are still gonna put downward pressure
Speaker 1: on the unemployment rates. At the very least towards the
Speaker 1: end of the year, we should start to see the
Speaker 1: unemployment rate flat and out. If it doesn't, as policymakers
Speaker 1: have warned, then you could see an unemployment rate in
Speaker 1: the high twos, and that's still going to mean as
Speaker 1: the Fed has a lot more to do, so I
Speaker 1: think in order to slow the economy and help inflation cool,
Speaker 1: they are going to have to hike as much as
Speaker 1: we believe in Again, you all mentioned the market is
Speaker 1: expecting seven rate hikes this year is a basis point equivalent.
Speaker 1: We're expecting six basis point equivalent. It's really in three
Speaker 1: where we expect four additional hikes to get UH in
Speaker 1: that range of two and a half to two and
Speaker 1: three quarters per cent. That's where the market has it wrong.
Speaker 1: This economy is less sensitive to hire interest rates UH,
Speaker 1: and so the Feed is going to have to hike
Speaker 1: further in order to slow the economy enough and raise
Speaker 1: the unemployment rate enough. And we have to leave in
Speaker 1: that ammon center of Morgan Stanley, thank you right now.
Speaker 1: We got to get to this and there's like eight
Speaker 1: ways to go here, including the news out of Chelsea
Speaker 1: and football. But on a serious note, we talked Abob
Speaker 1: Michael right now see I oh at JP Morgan Investment
Speaker 1: management of the note and Bob, I just want to
Speaker 1: tell you I have completed my bracket. And Gorgonzola is
Speaker 1: who I have going all the way to the finals.
Speaker 1: That's what I'm looking forward to. Put too much money
Speaker 1: on Gorgons. Not go with Yale, folks, I had to
Speaker 1: go with Purdue because the woman from Produce signs my
Speaker 1: paycheck is as simple as that, Bob. On a serious note,
Speaker 1: Chairman Powell faces serious consequences of the decisions today and
Speaker 1: may fourth, what's his biggest focus to get to the
Speaker 1: autumn of this year. Well, it's interesting to me if
Speaker 1: you go back to January, who walked into this year
Speaker 1: surprisingly hawkish and that that caught the market off guard.
Speaker 1: I'm looking for three things from the FETE today. I
Speaker 1: want to see if they're opening the door to fifty
Speaker 1: basis point hikes and how soon they'll do it. I'm
Speaker 1: also looking at um the quantitative tightening. How fast will
Speaker 1: they roll that forward? I think they should bring that
Speaker 1: forward to June. And then lastly, I want to see
Speaker 1: that trade off between growth and inflation. For sure, growth
Speaker 1: will slow down in the back end of the year,
Speaker 1: but if inflation is still high, I think the market
Speaker 1: expects they may back off a bit. I think the
Speaker 1: market will be surprised how hawk as she is today
Speaker 1: and how focused on inflation he is today. Let's go
Speaker 1: through that point by point, Bob, and let's start with
Speaker 1: the dot plot and then we'll go to the news conference.
Speaker 1: The DOP plot for twenty three right now about six,
Speaker 1: just a little north of two. What kind of shift
Speaker 1: are you expecting that? Well, it's throwing darts today given
Speaker 1: where all the data is. But what I'd like to
Speaker 1: see is I'd like to see the dots for the
Speaker 1: end of this year at two percent, and I want
Speaker 1: to see if anyone has the courage to put them
Speaker 1: at three percent at the end of That's that's what
Speaker 1: you want to happen. What do you think will happen? Oh,
Speaker 1: I think they'll do it. I'm certain they'll do it.
Speaker 1: I think they'll throw in a fifty at the main
Speaker 1: meeting and they'll do uh six basis point hikes at
Speaker 1: the other six meetings this year. So, Bob, where does
Speaker 1: quantitative tightening fit into this? How much can they really
Speaker 1: execute a shrinking of the balance sheet? Oh? I think
Speaker 1: they'll announce it at the main meeting and do it
Speaker 1: in June. I think all of it gets pulled forward. Look,
Speaker 1: they've already made one policy error so far by letting
Speaker 1: inflation get to where it is. We're looking at the
Speaker 1: Dallas trim mean personal consumption expenditures, it's close to seven percent.
Speaker 1: And that's without all the inflation that's going in the
Speaker 1: pipeline now that we're going to see over the next
Speaker 1: three to six months. So they've got a lot to
Speaker 1: do to lean into inflation. And I think what you're
Speaker 1: going to hear from them is that's their focus, even
Speaker 1: if it means sacrificing growth at the end of the year. Well,
Speaker 1: but Bob, that's exactly where I wanted to go, because
Speaker 1: you're saying that they've already made a huge policy error.
Speaker 1: But a lot of the inflationary inputs are far out
Speaker 1: of their control. Their commodity driven. They also are driven
Speaker 1: by some of the pandemic era distortion. So at this point,
Speaker 1: is that the only tool they have to materially slow
Speaker 1: the economy even further than inflation will do naturally, nonsense.
Speaker 1: Not everything has been out of their control. There have
Speaker 1: been an awful lot of things that have been in
Speaker 1: their control. Look at the price of new homes, look
Speaker 1: at the cost of shelter, the cost of housing that's
Speaker 1: gone through the roof. Why because if it costs more,
Speaker 1: but the cost to finance it remains close to zero.
Speaker 1: Guess what you can pay more. They should have hiked
Speaker 1: rates and stop purchasing mortgages six to twelve months ago,
Speaker 1: and that would have slowed down the housing market a bit.
Speaker 1: I think they've got a tough summer ahead because there's
Speaker 1: a lot of pent up demand yet to be satiated.
Speaker 1: That's going to happen over the summer. I see the
Speaker 1: toughest month for them to get through as July. Well, Michael,
Speaker 1: you know this works. You do one, Mike, We've got
Speaker 1: a ton of money to put some work. What do
Speaker 1: you tell them now? What'd you put it? Well? As
Speaker 1: you know, we walked into this year somewhat conservative thinking
Speaker 1: at things, have gotten a bit of themselves ahead of
Speaker 1: themselves in the credit market and raise cash. Now we're
Speaker 1: putting it back to work. I think over the course
Speaker 1: of a couple of months, we've got a year's worth
Speaker 1: of repricing. We're looking at high yield for example, that
Speaker 1: we came into this year at an all in yield
Speaker 1: around four percent, we're now at over six percent. You
Speaker 1: look at investment grade credit spreads have gone up from
Speaker 1: eighty or ninety basis points to a hundred and fifty
Speaker 1: basis points. Yields are up one point three, so there's
Speaker 1: a lot of concern about what's going to happen to
Speaker 1: corporate America. In corporate Europe, we think they'll be more
Speaker 1: resilient than a lot of investors anticipate. And there's a
Speaker 1: lot of cash on the sidelines. There was a lot
Speaker 1: coming into this year because of the d risking. More
Speaker 1: has built off build up. I think you're going to
Speaker 1: see that put to work in the second quarter. But
Speaker 1: Michael Friday evening seven pm, you're gaming Liverpool's next victory.
Speaker 1: I'm reading Kasman and Faroli cover to cover and Weekly Prospect.
Speaker 1: As you read your colleagues Kasmin and Faroli, what does
Speaker 1: it tell you, given higher yields, what foreign flows will do?
Speaker 1: My problem with the dooming gloom of moving out to
Speaker 1: higher yields lower fixed ingram prices is the foreigners always
Speaker 1: show up, don't they? Yeah, they do, And you'll probably
Speaker 1: see some of that in the coming quarter. Because for sure,
Speaker 1: you're not going to see the Bank of Japan raise
Speaker 1: rates in here. For sure, the e c B, I
Speaker 1: think they'll still hike this year. But they'll talk it
Speaker 1: down until the back end of the year, so that
Speaker 1: money will look at the higher yields and come in.
Speaker 1: That's probably why you don't get to three ten years
Speaker 1: treasuries over the next couple of months. Can you get
Speaker 1: there by the end of the year. I think with
Speaker 1: the inflationary pressures in the pipeline, you will get there.
Speaker 1: What would you like to see the cops at Chausea?
Speaker 1: Just as a Red Sox Liverpool man, would you like
Speaker 1: to see that happen? There are so many bad things
Speaker 1: in that question. First of all, I'm a Philadelphia guy,
Speaker 1: so it's the Phillies and now I'm a Liverpool supporter.
Speaker 1: This is just a bridge too far from me. How
Speaker 1: did it happen? How did the Liverpool thing happen? Bob Um,
Speaker 1: It's a it's a very long story, but we have time.
Speaker 1: We I spent nine years in London. We landed in
Speaker 1: London the year that England beat Germany five one. Michael
Speaker 1: Owen scored a hat trick. We all looked at Michael Evan,
Speaker 1: who did he play for Liverpool? And that became our
Speaker 1: club and that was that. But Michael, thank you, sir,
Speaker 1: our goal here for this invasion. This war, or as
Speaker 1: Mr Putin says, this special operation is to bring you
Speaker 1: guests of authority and earned expertise. Georgia is to the
Speaker 1: southern side, think Joseph Stalin. And it was one of
Speaker 1: Mr Putin's first wars in Russia. It was violent, in brutal,
Speaker 1: with courage. Ian Kelly is the former US Ambassador Georgia,
Speaker 1: served in a very tenuous time, and he joins US
Speaker 1: now with his brilliant academics out of Colombia and his
Speaker 1: academics out of Northwestern this day, Professor Kelly, Ambassador Kelly,
Speaker 1: Welcome to Bloomberg. Wonderful to have you today. My book
Speaker 1: of the year is Angelus Stents Putin's World. You use
Speaker 1: it in class. What does Putin's world look like right now?
Speaker 1: Putin's world looks very, very circumscribed right now. He started
Speaker 1: out telling the Russian people that they were going to
Speaker 1: be able to become fully participatory in international financial systems,
Speaker 1: be able to travel, be able to use UH and
Speaker 1: and hold in their banks foreign currency, be able to
Speaker 1: use H worldwide credit cards. And of course that has
Speaker 1: now come crashing down and UH. The Putin's world, as
Speaker 1: I say, is now very small. Let's let's go to
Speaker 1: your expertise. And I don't want to make allusions here
Speaker 1: to Hitler and Putin and that that would be inappropriate,
Speaker 1: but I will suggest that all of his work, including
Speaker 1: his battles in Georgia, is with a Slavic certitude. You
Speaker 1: study the Slavic nations culture in language. Is that breaking
Speaker 1: down for Mr Putin right now? That certitude of the
Speaker 1: Russian Slavic experience. Well, I think that he made a
Speaker 1: serious mistake in thinking that the that the Ukrainians would
Speaker 1: welcome their Eastern Slavic brothers. I think what he's trying
Speaker 1: to do in in Ukraine and what he has been
Speaker 1: doing with UH, with Yellow Rouse and to a certain
Speaker 1: extent Kazaks down where are many Russian speakers, is to
Speaker 1: try and create a Russian world, to create a Moscow
Speaker 1: centric community. UH. I don't think he wants to build
Speaker 1: the Soviet Union, but he does want to restore in
Speaker 1: Eastern Slavic homeland or or community. The idea that there
Speaker 1: are borders between Russia and Ukraine UH pains him. And
Speaker 1: what even more pains him is the idea that the
Speaker 1: Ukrainians would want to orient themselves towards the West and
Speaker 1: not towards Moscow, Ambassador. As we sit here today, we
Speaker 1: are still getting a series of headlines saying that talks
Speaker 1: are ongoing and seem more realistic between Ukraine and Russia.
Speaker 1: Do you buy that, given that we cannot reset the
Speaker 1: clock and go back to where we were, that it
Speaker 1: means more NATO troops on the borders of Russia, that
Speaker 1: it means a Ukraine that's living with this scarred history. Well,
Speaker 1: I think it's it was impossible for anyone, really, I
Speaker 1: think to see how there could be a diplomatic solution
Speaker 1: based on Putin's initial maximalist goal goals, which was the
Speaker 1: decapitation of the Ukrainian government and what he called the
Speaker 1: demilitarization of the Ukrainian armed forces, which he said, falsely,
Speaker 1: we're being controlled by the US and NATO. It's interesting
Speaker 1: that you're starting to see UM a change in the
Speaker 1: rhetoric in terms of their goals. They're not talking about
Speaker 1: the de nazification of the government. They're talking more about
Speaker 1: Ukraine becoming neutral, in other words, not joining NATO. Uh
Speaker 1: So that I think is significant UM. But whether or
Speaker 1: not it leads to a cessation of hostilities because uh,
Speaker 1: the the other the new demand that they put in
Speaker 1: as a recognition of Crimea and the eastern Ukraine enclave
Speaker 1: of of dom Bas And I can't see the Ukrainians
Speaker 1: giving up the sovereignty over a chunk of their territory.
Speaker 1: Ambasta can I just jumped in just quickly slightly off
Speaker 1: track where we just got a headline about how to
Speaker 1: get Ukraine more military help. We've been trying to figure
Speaker 1: out why sending them mix would be considered an escalation.
Speaker 1: Why has the US declared that as an escalation if
Speaker 1: they were to do so. I think what it is
Speaker 1: is uh uh, the uh Poles wanted to send the
Speaker 1: the planes to uh Ramstein air Base and US air
Speaker 1: base in Germany and then have the planes flown in
Speaker 1: from a US base in Germany. I think it's that particular,
Speaker 1: Uh you know, it's it's it's the origin of the planes,
Speaker 1: I think, which is giving UH Washington pause and I uh,
Speaker 1: I I think that they're they're overestimating the possible risk
Speaker 1: of flying from me from a US base. But it
Speaker 1: is my understanding of it. And thank you just for
Speaker 1: that clarification at the end there as well. In Kelly
Speaker 1: that the former US Ambassador to Georgia. If you are
Speaker 1: a gentleman from North Carolina state, you know the distance
Speaker 1: from my seventy five from Knoxville down to Chattanooga. Yes,
Speaker 1: Dennis Gartman, in my bracket, I've got Knoxville playing Chattanooga.
Speaker 1: I'm gonna go for the romance of a South there
Speaker 1: in basketball. But the backdrop here in America, across our
Speaker 1: agricultural complex is the planting season. In the serious moment
Speaker 1: for Ukraine and their agriculture. We speak to the younger.
Speaker 1: The younger Dennis Gartman of the Kansas Kansas Board of Trade,
Speaker 1: Chairman of the University of Akron and Domin. Dennis, I
Speaker 1: don't want to buy stocks today. I don't want to
Speaker 1: go long short. I want to talk to you from
Speaker 1: your ute and the Kansas Board of Trade about the
Speaker 1: planting season. How serious is that for Ukraine? Very serious, Tom,
Speaker 1: It's it's something that we have to pay very much
Speaker 1: attention to. Ukraine and Russia are about eight percent of
Speaker 1: the world's exports of wheat. The fact is the winner
Speaker 1: wheat crop, which is in the ground now is probably
Speaker 1: deteriorating something fierce. Nobody's paying attention to it, nobody's being
Speaker 1: able to get into the fields to take care of it.
Speaker 1: It's coming out of dormancy, and it's going to be
Speaker 1: a greatly reduced crop. There will be a corn crop
Speaker 1: of some size, but it'll be demonstrably smaller than in
Speaker 1: the past. And the question shall be, well they get
Speaker 1: next year's winter weak crop planted in September and October
Speaker 1: November when that crop has to go on the ground.
Speaker 1: So the wheat crop prices here in the United States
Speaker 1: have been on an absolute tear from the lower left
Speaker 1: of the upper right. They've dropped a little bit in
Speaker 1: the past several days, but it's been just a demonstrative,
Speaker 1: monstrous bull market led by week. Dennis, you and I
Speaker 1: have said in the boardroom of the New York Stock
Speaker 1: Exchange and talked about this. Can we monitor the Ukraine
Speaker 1: planting season by whether or are there other factors we
Speaker 1: can't observe, including the danger of Russian troops? Well, clearly,
Speaker 1: the danger of Russian troops is one thing. That the
Speaker 1: ability to get the crop out of the ground and
Speaker 1: shift is another thing. Completely. Whether the port facilities that
Speaker 1: are so will be operative is is another question. Entirely.
Speaker 1: Will the rail facilities that have to move the crop
Speaker 1: from from the interior of the country to the to
Speaker 1: the ports is another question entirely. It's one question after another,
Speaker 1: and confusion breeds contempt. Confusion breeds uh higher prices under
Speaker 1: most circumstances for a while, and then suddenly you see
Speaker 1: an increase in the planet acreage here in the United States,
Speaker 1: will probably see a big increase in spring weed planting
Speaker 1: here in the US to take advantage of the fact
Speaker 1: that wheat prices have gone so high. So it's a
Speaker 1: real question that it's something people are not paying much
Speaker 1: attention to. The other thing we paid we need to
Speaker 1: pay attention to, is that here in the States, how
Speaker 1: high soybean prices are, and the fact that you're gonna
Speaker 1: have and how high fertilizer prices are, which means you're
Speaker 1: gonna have a huge shift probably three four or five
Speaker 1: million acres out of corn into soybeans because you need
Speaker 1: you don't need fertilizer for the bean prop and you
Speaker 1: need fertilizer for the for the corn crop. This this
Speaker 1: could be the first time in twenty years that we
Speaker 1: actually plant more acreage to soybeans that we do to corn.
Speaker 1: Strange during strange circumstances. Indeed, Dennis, do you feel like
Speaker 1: the market is underestimating the elasticity of some of these
Speaker 1: agricultural commodities. Yes, yes, I think the market is underestimating.
Speaker 1: I think that we can still see demonstrably higher prices
Speaker 1: over the course of the next year or two. As
Speaker 1: as I always tell people, watch what the term structures
Speaker 1: are doing in storable commodities. When the backwardations widen on
Speaker 1: on updates and then backwardations widen on down days, Also
Speaker 1: it tells you that the market still wants to go higher.
Speaker 1: So the answer to your question, yes, Dennis, has been
Speaker 1: a while, it's gonna catch up, particularly in this environment,
Speaker 1: Dennis countyman that on this commonity market. What we're gonna
Speaker 1: do here is have a bit of a different conversation
Speaker 1: with David Rubinstein. This morning we celebrate his interview here
Speaker 1: with Mr Chesky. Let's do that quickly as we can.
Speaker 1: Who is Mr Chesky and why is he ger Main
Speaker 1: right now? Brian Chesky is one of the three people
Speaker 1: that started Airbnb, which is a phenomenon among young people
Speaker 1: but also middle aged people now. And it's relevant now
Speaker 1: because as the world is changing, and people aren't coming
Speaker 1: to the office quite the much as much they used to.
Speaker 1: They're working remotely. More and more people are using Airbnb
Speaker 1: to kind of relocate themselves. And in fact, roughly of
Speaker 1: all the people that use air and B and B
Speaker 1: do it for thirty days or more, and half the
Speaker 1: people use it for a week or more. It's not
Speaker 1: like a one night kind of overnight thing like a
Speaker 1: hotel might be. So it's changed completely the perception of
Speaker 1: what you do with your time when you're away from
Speaker 1: your home. You can stay a much longer period of
Speaker 1: time than you did before. And his company is doing
Speaker 1: quite well well. And the future of Airbnb in some
Speaker 1: ways hinges on the future of work from home, on
Speaker 1: the future of the ability to take a month and
Speaker 1: go to Hawaii and spend it there. How much on
Speaker 1: Wall Street is that really going to be the story
Speaker 1: when you see the likes of Goldman, Sachs and even
Speaker 1: JP Morgan really emphasizing working in the office, well, J P.
Speaker 1: Morgan and Morgan's uh. JP Morgan and others are saying,
Speaker 1: come to the office. But these are very unique and
Speaker 1: unusual firms are centered in New York to financial service
Speaker 1: kinds of organizations. The average person doesn't work at Goldman
Speaker 1: Sacks and JP Morgan. The average person might be can
Speaker 1: work from home, work can work from very remote sources.
Speaker 1: So it's changed the way people live and work. I
Speaker 1: don't think after the pandemic that we've gone through, people
Speaker 1: are going to come back to the office five days
Speaker 1: a week in the same pattern that we've had before.
Speaker 1: And Airbnb is gonna, uh, I think capitalize on that
Speaker 1: it already has. It's done quite well despite the fact
Speaker 1: that initially, when when the pandemic came about, all of
Speaker 1: a sudden, Airbnb was in big trouble. People weren't traveling
Speaker 1: at all. Now it's rebounded and it's doing quite well.
Speaker 1: It's got a market value of about ninety two billion
Speaker 1: dollars now go ahead. So honestly, this has been a
Speaker 1: really interesting moment because we're talking about these work from
Speaker 1: home trends. We're talking about the return to offices amid
Speaker 1: a new backdrop of crisis, right, and I wonder, as
Speaker 1: as the head of a company and trying to figure
Speaker 1: out as an investment company talking to other heads of companies,
Speaker 1: how are people rethinking their business plans on the prospect
Speaker 1: of more prolonged commodity prices of more prolonged disruption even
Speaker 1: beyond the pandemic. I think all employers are learning it's
Speaker 1: not as easy to get your people back to work
Speaker 1: as you once thought. You just can't say come back
Speaker 1: to work and they all come back exactly five days
Speaker 1: a week the way they used to. So you also
Speaker 1: have a hard time getting employees now and many many companies,
Speaker 1: so you have to be more tolerant of what employees
Speaker 1: want to do. And employees have now tasted the idea
Speaker 1: that you can work at home a couple of days
Speaker 1: a week, or you can work remotely and in the whole.
Speaker 1: I think this is changing the way people will work
Speaker 1: for quite some time in the future. Airbnb is taking
Speaker 1: advantage of that because it's providing homes or other apartments
Speaker 1: to people who can take away a week or a
Speaker 1: month or more from their place where they actually supposed
Speaker 1: to be in the office working. David yesterday, the announcement
Speaker 1: of the death after I believe a tenure battle, real
Speaker 1: illness for Michael Price, the great value investor. He used
Speaker 1: to wear his Yankees ring just to aggravate me on set.
Speaker 1: Tell our audience worldwide this complete class act. Michael Price.
Speaker 1: Michael Price is one of the best value investors the
Speaker 1: country has ever seen. Obviously, Warren Buffett is probably the
Speaker 1: class of all value investors. Michael Price was trained by
Speaker 1: somebody else. Michael Price took over a firm many years
Speaker 1: ago from a mentor and built it into a powerhouse,
Speaker 1: and became not only a great philanthropist, but a good
Speaker 1: sports fan, as you know from his stake in the
Speaker 1: New York Yankees. And what was important here was the
Speaker 1: grace of it in this modern day. The snark of
Speaker 1: the modern day, we've we've lost the grace that you
Speaker 1: would see of a Michael Price or John Templeton and
Speaker 1: the others. Both John Templeton and Michael Price didn't brag
Speaker 1: about themselves very much. Relatively modest people, and Michael Price
Speaker 1: wasn't a headline person. Most people in the investment world
Speaker 1: probably didn't even know him, and outside the investment world
Speaker 1: probably very few knew him. But he was seen as
Speaker 1: a class act, a smart person, and he was very
Speaker 1: very philanthropic. David Rubinstein, thank you for joining us. Look
Speaker 1: forward to sting your particularly on Russia. This is the
Speaker 1: Bloomberg Surveillance Podcast. Thanks for listening, Join us live weekdays
Speaker 1: from seven to ten am Eastern on Bloomberg Radio and
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Speaker 1: Tom Keene, and this is Bloomberg