1 00:00:00,080 --> 00:00:12,719 Speaker 1: Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene 2 00:00:12,800 --> 00:00:16,239 Speaker 1: with David Gura. Daily we bring you insight from the 3 00:00:16,239 --> 00:00:21,640 Speaker 1: best of economics, finance, investment, and international relations. Find Bloomberg 4 00:00:21,720 --> 00:00:26,599 Speaker 1: Surveillance on Apple Podcasts, SoundCloud, Bloomberg dot Com, and of 5 00:00:26,640 --> 00:00:33,440 Speaker 1: course on the Bloomberg Lord Irvin King, formerly in the 6 00:00:33,479 --> 00:00:35,000 Speaker 1: Bank of England, now at the n y U Stern 7 00:00:35,040 --> 00:00:38,400 Speaker 1: School of Business. He's the Alan Greenspan Professor of Economics 8 00:00:38,400 --> 00:00:40,400 Speaker 1: there and the author of the End of Alchemy, Money 9 00:00:40,440 --> 00:00:42,479 Speaker 1: Banking and the Future of the Global Economy. He and 10 00:00:42,479 --> 00:00:44,360 Speaker 1: I last spoke upon the publication of that book and 11 00:00:44,400 --> 00:00:46,800 Speaker 1: I recommend it heartily. Great to have you with us 12 00:00:46,840 --> 00:00:49,239 Speaker 1: here on the program this morning. Good morning, very nice 13 00:00:49,240 --> 00:00:50,960 Speaker 1: to be with you. Let me start by asking you 14 00:00:51,000 --> 00:00:53,320 Speaker 1: about the meeting upon which we're focusing today. That's the 15 00:00:53,400 --> 00:00:56,600 Speaker 1: f o MC meeting in Washington. There's a lot of speculation. 16 00:00:56,640 --> 00:00:58,600 Speaker 1: We're gonna learn a bit more, perhaps with regard to 17 00:00:58,640 --> 00:01:01,560 Speaker 1: timing for this pro sense of normalization or the balance 18 00:01:01,640 --> 00:01:04,520 Speaker 1: sheet unwind, pick your pick your term for it. What 19 00:01:04,600 --> 00:01:06,640 Speaker 1: do you think they should be considering as they as 20 00:01:06,680 --> 00:01:11,199 Speaker 1: they determine the timetable for that so I think they'll 21 00:01:11,200 --> 00:01:14,959 Speaker 1: be looking at the inflation outlook primarily. They're also concerned 22 00:01:15,000 --> 00:01:18,440 Speaker 1: about the speed of recovery in the United States, but 23 00:01:18,760 --> 00:01:22,920 Speaker 1: we have all been surprised by how quiescent inflation and 24 00:01:22,959 --> 00:01:25,959 Speaker 1: particularly wage inflation has been and I think what they'll 25 00:01:25,959 --> 00:01:28,959 Speaker 1: focus on primarily are any signals that they can detect 26 00:01:29,400 --> 00:01:33,080 Speaker 1: that wage inflation is picking up. I wonder about him. 27 00:01:33,200 --> 00:01:36,759 Speaker 1: The way they've telegraphed this thus far from economists I've 28 00:01:36,760 --> 00:01:39,319 Speaker 1: spoken with, there is seemingly a lot of agreement that 29 00:01:39,720 --> 00:01:42,640 Speaker 1: they've done this well in terms of central bank communication. 30 00:01:42,680 --> 00:01:44,680 Speaker 1: This is this is maybe a high mark. The way 31 00:01:44,720 --> 00:01:47,720 Speaker 1: they've outlined this, the broad strokes they've given the markets 32 00:01:48,000 --> 00:01:49,760 Speaker 1: ahead of this has been done well. Do you agree? 33 00:01:49,800 --> 00:01:50,960 Speaker 1: Do you do you think we have a good sense 34 00:01:51,080 --> 00:01:52,840 Speaker 1: of how this is going to play out? Well? I 35 00:01:52,840 --> 00:01:55,560 Speaker 1: think that's true, But I think it's not really very 36 00:01:55,600 --> 00:01:59,080 Speaker 1: important whether or not markets understand what will happen at 37 00:01:59,120 --> 00:02:02,440 Speaker 1: the next meeting. Much much more important is that markets 38 00:02:02,440 --> 00:02:04,960 Speaker 1: have a clear view as to how the FED or 39 00:02:05,000 --> 00:02:08,160 Speaker 1: other central banks are going to react to economic data 40 00:02:08,320 --> 00:02:10,400 Speaker 1: as they come in whatever they are. None of us 41 00:02:10,440 --> 00:02:12,840 Speaker 1: can foresee the future, and so we shouldn't be in 42 00:02:12,880 --> 00:02:15,720 Speaker 1: the business of pretending to forecast where interest rates will 43 00:02:15,720 --> 00:02:17,799 Speaker 1: be in the future. What we need to be able 44 00:02:17,840 --> 00:02:20,160 Speaker 1: to do is to be confident of how the central 45 00:02:20,160 --> 00:02:22,760 Speaker 1: bank will respond to whatever those data turn out to be. 46 00:02:23,240 --> 00:02:26,440 Speaker 1: If high frequency is the watchword or the watch phrase. 47 00:02:26,480 --> 00:02:28,519 Speaker 1: Now when it comes to to the markets, how equipped 48 00:02:29,200 --> 00:02:30,680 Speaker 1: is the FED or for any matter, any number of 49 00:02:30,680 --> 00:02:33,160 Speaker 1: central banks to deal with the way that markets that 50 00:02:33,200 --> 00:02:36,000 Speaker 1: have evolved. You've thought a lot about the the evolution 51 00:02:36,000 --> 00:02:38,079 Speaker 1: of central banking and where where things might be headed. 52 00:02:38,600 --> 00:02:40,600 Speaker 1: Are central banks equipped to deal with what we're seeing 53 00:02:40,680 --> 00:02:43,160 Speaker 1: is as faster markets for lack of a better phrase, Yes, 54 00:02:43,240 --> 00:02:44,800 Speaker 1: I think they are. I think they're very much in 55 00:02:44,840 --> 00:02:47,040 Speaker 1: tune with what is happening. The risk in all this 56 00:02:47,680 --> 00:02:50,480 Speaker 1: is that it becomes circular. That is that central banks 57 00:02:50,480 --> 00:02:53,160 Speaker 1: try and give hints and suggestions as to where they're going. 58 00:02:53,280 --> 00:02:57,080 Speaker 1: Markets respond to that. In turn, central banks respond to 59 00:02:57,080 --> 00:02:59,720 Speaker 1: what markets are doing. What's much more important is it 60 00:02:59,800 --> 00:03:02,880 Speaker 1: some troum banks look further ahead and think about the 61 00:03:02,919 --> 00:03:06,280 Speaker 1: underlying determinants of what is going to influence inflation, and 62 00:03:06,280 --> 00:03:09,720 Speaker 1: that requires a closer look at various components of the 63 00:03:09,760 --> 00:03:13,720 Speaker 1: money supply and credit and the way that's impacting on 64 00:03:14,040 --> 00:03:17,320 Speaker 1: underlying inflation reforces Lord movement King with us in our 65 00:03:17,320 --> 00:03:19,280 Speaker 1: Bloomberg eleven three oh studio. Just want to paint the 66 00:03:19,280 --> 00:03:21,600 Speaker 1: picture here. I've I've walked across town as one does 67 00:03:21,639 --> 00:03:24,120 Speaker 1: here during you in general Assembly a week from Bloomberg 68 00:03:24,160 --> 00:03:26,919 Speaker 1: headquarters to the Plaza Hotel where this conference has taken place. 69 00:03:26,919 --> 00:03:28,639 Speaker 1: Tom Keen going to join me in short order. Of course, 70 00:03:28,639 --> 00:03:30,799 Speaker 1: he just got off air on television. He's with that 71 00:03:30,919 --> 00:03:35,000 Speaker 1: lurking in our Bloomberg studios. Good morning, David girl. I'll 72 00:03:35,080 --> 00:03:37,720 Speaker 1: join David at the Plaza Hotel with some important guests 73 00:03:37,720 --> 00:03:42,160 Speaker 1: and conversations that we hope will be more than thought leaders. 74 00:03:42,160 --> 00:03:44,200 Speaker 1: These are not thought leaders. These are world leaders and 75 00:03:44,240 --> 00:03:48,720 Speaker 1: acclaimed and expert leaders, such as Lord h King, Lord King. 76 00:03:48,720 --> 00:03:50,840 Speaker 1: One of the joys of talking to the Laureate Michael 77 00:03:50,880 --> 00:03:55,320 Speaker 1: Spence is the times at Oxford that he had studying 78 00:03:55,320 --> 00:03:59,160 Speaker 1: with John Hicks. John Hicks invented this odd thing called 79 00:03:59,160 --> 00:04:01,920 Speaker 1: the I S L A model you know very well, 80 00:04:02,000 --> 00:04:05,600 Speaker 1: you've taught it for years. Can we have our traditional 81 00:04:05,720 --> 00:04:10,160 Speaker 1: models for chair yelling for governor currently for Lord King. 82 00:04:10,680 --> 00:04:14,160 Speaker 1: If we don't know where the interest rate is is 83 00:04:14,200 --> 00:04:17,800 Speaker 1: the keel on the sailboat gone? Do we do? Can? We? Can? 84 00:04:17,839 --> 00:04:21,400 Speaker 1: We do our economic models of tradition if we have 85 00:04:21,600 --> 00:04:27,320 Speaker 1: a arbitrary and artificial interest rate, well excessively low interest rates. 86 00:04:27,360 --> 00:04:29,760 Speaker 1: And I think that interest rates close to zero, which 87 00:04:29,800 --> 00:04:32,520 Speaker 1: is where we are in real terms, is not the 88 00:04:32,520 --> 00:04:35,320 Speaker 1: basis on which a market economy can hope to succeed. 89 00:04:36,160 --> 00:04:39,279 Speaker 1: What's really important is it two things? I think the 90 00:04:39,320 --> 00:04:42,839 Speaker 1: first is a clear reaction function that people know will 91 00:04:42,960 --> 00:04:47,080 Speaker 1: drive the central bank decisions on interest rates and money 92 00:04:47,120 --> 00:04:52,400 Speaker 1: and quantitative easing. And second, a government that recognizes that 93 00:04:52,600 --> 00:04:55,680 Speaker 1: the central bank isn't the only game in town, and 94 00:04:55,720 --> 00:04:58,479 Speaker 1: that it's very important to have coherent policies on the 95 00:04:58,520 --> 00:05:03,160 Speaker 1: supply side, not just tax and regulation, but also education 96 00:05:03,200 --> 00:05:07,360 Speaker 1: and measures to boost productivity and on exchange rates. And 97 00:05:07,400 --> 00:05:10,159 Speaker 1: I think these you need both of these in order 98 00:05:10,200 --> 00:05:14,440 Speaker 1: to move towards a successful growing economy. I mean, I 99 00:05:15,040 --> 00:05:17,359 Speaker 1: look at where we are, and as you mentioned the 100 00:05:17,440 --> 00:05:21,320 Speaker 1: green Spin word quiescent. We associate that in America with 101 00:05:21,440 --> 00:05:26,400 Speaker 1: Chairman Greenspan. The quiescence speaks of a low nominal GDP. 102 00:05:27,120 --> 00:05:30,480 Speaker 1: Do you look at the economy and global economy challenges 103 00:05:30,520 --> 00:05:34,440 Speaker 1: now within the real economy, or do you overlay this 104 00:05:34,640 --> 00:05:37,960 Speaker 1: dearth of inflation and look at a more tap adenomenal 105 00:05:38,040 --> 00:05:40,680 Speaker 1: g d P. Which is it. I think the real 106 00:05:40,720 --> 00:05:43,360 Speaker 1: problems on the are on the real side. I think 107 00:05:43,400 --> 00:05:47,440 Speaker 1: the imbalances and the world economy are growing again, and 108 00:05:47,480 --> 00:05:50,680 Speaker 1: I think the nature of fixed exchange rates within the 109 00:05:50,680 --> 00:05:54,159 Speaker 1: Monetary Union in Europe is proving a dampening effect not 110 00:05:54,320 --> 00:05:57,320 Speaker 1: just in Europe but on the abilities of China to 111 00:05:57,880 --> 00:06:01,279 Speaker 1: rebalance its economy. And we've got ourselves into a into 112 00:06:01,320 --> 00:06:03,880 Speaker 1: a bit of a hole from which is quite difficult 113 00:06:03,920 --> 00:06:05,800 Speaker 1: to pull for any one country on its own to 114 00:06:05,839 --> 00:06:08,680 Speaker 1: pull itself out. And I think therefore it's the real 115 00:06:08,760 --> 00:06:12,680 Speaker 1: challenges that I think of the most problematic, because I 116 00:06:12,680 --> 00:06:15,440 Speaker 1: think central banks will be able to take care of 117 00:06:15,560 --> 00:06:20,880 Speaker 1: inflationary pressures as they rise. Um, I was just gonna 118 00:06:21,080 --> 00:06:23,200 Speaker 1: to ask you here. For many years we've heard the 119 00:06:23,240 --> 00:06:27,159 Speaker 1: Fed issuing the sounding the clarion here that Congress that 120 00:06:27,160 --> 00:06:29,080 Speaker 1: that the government needed to do more, that we needed 121 00:06:29,120 --> 00:06:31,799 Speaker 1: to have this handoff between monetary policy to fiscal policy. 122 00:06:31,800 --> 00:06:34,719 Speaker 1: And it seemed like after this election and inauguration that 123 00:06:34,800 --> 00:06:36,680 Speaker 1: the time had come the baton could be passed and 124 00:06:36,720 --> 00:06:39,160 Speaker 1: there was a seeming willingness from the administration and the 125 00:06:39,240 --> 00:06:42,120 Speaker 1: legislature to to do that. Uh, fair to say, I 126 00:06:42,120 --> 00:06:43,960 Speaker 1: think that's been botched. The handoff has been badged a 127 00:06:44,000 --> 00:06:47,520 Speaker 1: little bit here. How do you ease that transition? You 128 00:06:47,560 --> 00:06:51,320 Speaker 1: ease the transition from monetary policy to fiscal policy doing more? Well, 129 00:06:51,360 --> 00:06:54,080 Speaker 1: I don't think it's a case of fiscal policy doing more. 130 00:06:54,120 --> 00:06:57,159 Speaker 1: I think it's a case of structural policies measures to 131 00:06:57,200 --> 00:07:00,560 Speaker 1: boost productivity. We've heard from several people about the need 132 00:07:00,600 --> 00:07:03,039 Speaker 1: to improve the public school system. You could say that 133 00:07:03,120 --> 00:07:06,880 Speaker 1: about the United Kingdom to these are the measures ultimately 134 00:07:06,920 --> 00:07:11,560 Speaker 1: will make it possible for people who have suffered a 135 00:07:11,560 --> 00:07:15,320 Speaker 1: great deal from the consequences of globalization to feel that 136 00:07:15,360 --> 00:07:19,480 Speaker 1: they can now participate in what will be a high productivity, 137 00:07:19,520 --> 00:07:22,360 Speaker 1: growth rate economy. One more question, Lord King, on this, 138 00:07:22,480 --> 00:07:24,960 Speaker 1: and I want to move onunder things more British and 139 00:07:25,000 --> 00:07:27,040 Speaker 1: our next section. Generous of you to be with us 140 00:07:27,080 --> 00:07:30,960 Speaker 1: for this time. Please tell our national audience what stand 141 00:07:31,000 --> 00:07:35,800 Speaker 1: Fisher means for our monetary economics and for our ability 142 00:07:35,840 --> 00:07:39,320 Speaker 1: to get through crisis. Well. Stan Fisher has been a 143 00:07:39,360 --> 00:07:43,560 Speaker 1: superb public servant, both in the United States and in 144 00:07:43,640 --> 00:07:46,480 Speaker 1: Israel where he was governor, and on the international stage, 145 00:07:46,480 --> 00:07:49,080 Speaker 1: both at the World Bank and the International Monetary Fund. 146 00:07:49,800 --> 00:07:53,080 Speaker 1: He is the sort of person that every central bank 147 00:07:53,320 --> 00:07:56,880 Speaker 1: would want to hire if they could, and I very 148 00:07:56,920 --> 00:07:59,160 Speaker 1: much hoped at one stage that he might have come 149 00:07:59,200 --> 00:08:01,320 Speaker 1: to the Bank of England. So he's like a great 150 00:08:01,320 --> 00:08:04,120 Speaker 1: football or baseball player, you know, who would come on 151 00:08:04,200 --> 00:08:08,360 Speaker 1: the highest price in the transfer market. So it's unfortunate 152 00:08:08,440 --> 00:08:10,400 Speaker 1: that he's leaving the Federal Reserve, but I hope there 153 00:08:10,400 --> 00:08:13,240 Speaker 1: will be other opportunities to him to contribute to the 154 00:08:13,280 --> 00:08:16,680 Speaker 1: debate on policy in the months. In Yes, dec I 155 00:08:16,720 --> 00:08:19,280 Speaker 1: can see it now. I mean, I guess he's just retired. 156 00:08:19,320 --> 00:08:22,600 Speaker 1: But Vice Chairman Fisher, if you're listening, you can get 157 00:08:22,680 --> 00:08:27,880 Speaker 1: Wayne Rooney money. I think I think he probably could. 158 00:08:28,120 --> 00:08:31,920 Speaker 1: He probably could. Will continue with Mervin, Lord King as 159 00:08:31,960 --> 00:08:34,320 Speaker 1: we can hear much to talk about. I want to 160 00:08:34,320 --> 00:08:37,400 Speaker 1: go back to a speech of two thousand nine, which 161 00:08:37,400 --> 00:08:40,719 Speaker 1: I consider a landmark speech of all that we've been 162 00:08:40,760 --> 00:08:43,160 Speaker 1: through to the last year. David, you're at the plaza. 163 00:08:43,200 --> 00:08:45,440 Speaker 1: I'm at our World End quarters. I'll join you soon 164 00:08:45,840 --> 00:08:48,600 Speaker 1: there with Mike Callen. I should mention of Axios. It's 165 00:08:48,600 --> 00:08:52,160 Speaker 1: good to see Axios participating today in our event. I 166 00:08:52,160 --> 00:08:55,120 Speaker 1: know they had an important note on the President's speech 167 00:08:55,200 --> 00:08:57,880 Speaker 1: yesterday at the u N. Mike Allen will be with 168 00:08:57,960 --> 00:09:01,760 Speaker 1: us here along the way right now with us in 169 00:09:01,840 --> 00:09:05,439 Speaker 1: our studios in New York. Mervin King, and it's easy 170 00:09:05,480 --> 00:09:07,600 Speaker 1: to trot out that he is Lord King. It is 171 00:09:07,600 --> 00:09:10,400 Speaker 1: easy to trot out that he was a former Governor 172 00:09:10,440 --> 00:09:13,840 Speaker 1: of the Bank of England. But far more importantly, Mervin 173 00:09:13,920 --> 00:09:16,679 Speaker 1: King gave one of the most important speeches of our 174 00:09:16,760 --> 00:09:21,320 Speaker 1: ten year financial crisis in Somewhat Exit on October twenty 175 00:09:21,320 --> 00:09:24,240 Speaker 1: of two thousand nine. And in it, Lord King, you 176 00:09:24,280 --> 00:09:27,600 Speaker 1: went back to seventeen seventy two and that it is 177 00:09:27,640 --> 00:09:31,400 Speaker 1: about character, and it is about people. You talked about 178 00:09:31,440 --> 00:09:35,199 Speaker 1: the terrible warning of the air bank crisis of seventeen 179 00:09:35,280 --> 00:09:38,400 Speaker 1: seventy two, and then you went on to talk about, well, 180 00:09:38,520 --> 00:09:42,400 Speaker 1: the majority were good men. There may have been among 181 00:09:42,559 --> 00:09:46,080 Speaker 1: so numerous about the men of different character, fishers in 182 00:09:46,160 --> 00:09:51,439 Speaker 1: trouble waters, capitalists who sought gain not by encouragement a 183 00:09:51,440 --> 00:09:55,640 Speaker 1: fair trade and honest industry, but by affording temporary fuel 184 00:09:56,200 --> 00:10:01,760 Speaker 1: to rashness or avarice. Our We're still there. If we 185 00:10:02,000 --> 00:10:07,000 Speaker 1: learned anything from your important speech eight years ago. I'm 186 00:10:07,040 --> 00:10:09,480 Speaker 1: not sure if anyone learned anything from the speech, but 187 00:10:09,559 --> 00:10:13,040 Speaker 1: I think the experience of the financial crisis has led 188 00:10:13,080 --> 00:10:17,160 Speaker 1: to a change in culture amongst at least younger people 189 00:10:17,160 --> 00:10:19,920 Speaker 1: in the banking sector, and I think those who were 190 00:10:19,960 --> 00:10:23,040 Speaker 1: responsible for handling and cleaning up the problems after two 191 00:10:23,120 --> 00:10:26,960 Speaker 1: thousand and eight. Before the crisis, I think there was 192 00:10:26,960 --> 00:10:30,280 Speaker 1: a sense of hubris and that many people working on 193 00:10:30,320 --> 00:10:33,160 Speaker 1: Wall Street and in the city in London felt, you know, 194 00:10:33,240 --> 00:10:36,800 Speaker 1: we're really smart, and because we're really smart, wouldn't it 195 00:10:36,800 --> 00:10:38,760 Speaker 1: be fun to make money out of people who aren't 196 00:10:38,760 --> 00:10:41,679 Speaker 1: as smart as we are? That was exploiting them And 197 00:10:41,720 --> 00:10:43,800 Speaker 1: I think that has now changed, and what we need 198 00:10:43,800 --> 00:10:46,080 Speaker 1: to get to is a position in which people feel 199 00:10:46,640 --> 00:10:49,840 Speaker 1: we're really smart and we've been given the privilege of 200 00:10:49,920 --> 00:10:52,679 Speaker 1: managing money for people who are less smart than we are. 201 00:10:52,960 --> 00:10:55,920 Speaker 1: Magnan desire Else has written about this, and as it 202 00:10:56,040 --> 00:10:58,679 Speaker 1: was my book of the summer two summers ago, Hubris 203 00:10:58,760 --> 00:11:04,760 Speaker 1: and also Sir Howard Davies writing Ship at RBS has 204 00:11:04,800 --> 00:11:08,120 Speaker 1: to live it day to day. Do you see British 205 00:11:08,320 --> 00:11:12,600 Speaker 1: banking with lessons learned prospering or where they have to 206 00:11:12,640 --> 00:11:16,880 Speaker 1: be mergers and combinations. No, I think it is prospering 207 00:11:16,920 --> 00:11:19,760 Speaker 1: and I think it will prosper as a banking sector 208 00:11:19,880 --> 00:11:23,240 Speaker 1: supplying the needs of the UK economy. I think one 209 00:11:23,280 --> 00:11:26,120 Speaker 1: of the things that went wrong was the diversion of 210 00:11:26,240 --> 00:11:29,920 Speaker 1: energy and effort at senior management level into thinking that 211 00:11:30,000 --> 00:11:32,800 Speaker 1: investment banking is all that matters. And I think the 212 00:11:32,840 --> 00:11:35,440 Speaker 1: banks that have done well. Lloyd's is a very good example. 213 00:11:35,760 --> 00:11:39,720 Speaker 1: It's focused entirely on becoming the retail and commercial bank 214 00:11:39,760 --> 00:11:42,559 Speaker 1: in the UK. That's how in the long run they 215 00:11:42,559 --> 00:11:45,800 Speaker 1: will make sustained profits. Lord King a question about Breggs 216 00:11:45,840 --> 00:11:48,800 Speaker 1: that if if I could, after that referendum happened, you 217 00:11:48,800 --> 00:11:51,840 Speaker 1: talked about the divide that it illuminated between London and 218 00:11:51,920 --> 00:11:55,160 Speaker 1: large parts of the United Kingdom, and I wonder, now 219 00:11:55,200 --> 00:11:58,480 Speaker 1: that we're a year out, has that gap narrowed? Does 220 00:11:58,520 --> 00:12:01,720 Speaker 1: each side understand the other better than it did before. No. 221 00:12:01,960 --> 00:12:04,520 Speaker 1: I think, if anything, it may even have widened slightly. 222 00:12:05,000 --> 00:12:08,600 Speaker 1: As you say in the referendum that there are nine 223 00:12:08,840 --> 00:12:12,800 Speaker 1: regions of England, eight voted to leave the EU and 224 00:12:12,880 --> 00:12:15,840 Speaker 1: only one voted to stay, and that was London. And 225 00:12:15,920 --> 00:12:18,720 Speaker 1: I think you can see in the debates that have 226 00:12:18,760 --> 00:12:22,240 Speaker 1: become so politically divisive. I can't recall in my lifetime 227 00:12:22,280 --> 00:12:26,200 Speaker 1: an issue that's been more divisive politically than Brexit, and 228 00:12:26,240 --> 00:12:28,960 Speaker 1: I think this is really very unfortunate. And I see 229 00:12:28,960 --> 00:12:32,360 Speaker 1: no coming together as yet, and I see a great 230 00:12:32,679 --> 00:12:35,160 Speaker 1: model in the center in which the government is trying 231 00:12:35,200 --> 00:12:39,040 Speaker 1: to somehow bridge these two different views. And I think 232 00:12:39,040 --> 00:12:41,240 Speaker 1: it's impossible to do that. And now for the most 233 00:12:41,240 --> 00:12:44,760 Speaker 1: important question of the morning with Irving King. Are you 234 00:12:44,880 --> 00:12:50,880 Speaker 1: enjoying the United States of America? You're askanced professorially in Manhattan. 235 00:12:51,360 --> 00:12:55,360 Speaker 1: Are you enjoying the New York University? I am enjoying 236 00:12:55,360 --> 00:12:59,480 Speaker 1: it enormously, And I cannot understand why so many Americans 237 00:12:59,520 --> 00:13:03,520 Speaker 1: have become pessimistic about the future in that country that does, 238 00:13:03,559 --> 00:13:06,800 Speaker 1: more than any other I know, to inspire young people 239 00:13:06,840 --> 00:13:09,200 Speaker 1: to think that they can achieve the impossible. So if 240 00:13:09,200 --> 00:13:11,400 Speaker 1: the city is gonna move, why can't they move to 241 00:13:11,440 --> 00:13:16,360 Speaker 1: New York? What do they need Frankfort for what? I 242 00:13:16,400 --> 00:13:20,040 Speaker 1: don't know why people need need need Frankfort. And I 243 00:13:20,080 --> 00:13:22,160 Speaker 1: don't think you'll find that the city of London will 244 00:13:22,160 --> 00:13:25,600 Speaker 1: actually change very much. People will talk a good game 245 00:13:25,679 --> 00:13:29,040 Speaker 1: in order to get concessions from their for their operations 246 00:13:29,040 --> 00:13:31,320 Speaker 1: in Europe. But in the end they'll come back and 247 00:13:31,400 --> 00:13:33,760 Speaker 1: operate in the city of London, just as they were 248 00:13:33,800 --> 00:13:37,079 Speaker 1: doing before the referendum. Lord King, thank you so much 249 00:13:37,120 --> 00:13:39,240 Speaker 1: more than generous with your time. And again, folks, the 250 00:13:39,280 --> 00:13:42,920 Speaker 1: end of Alchemy is David mentioned earlier. There are ten 251 00:13:43,120 --> 00:13:47,640 Speaker 1: twenty forty books on a financial crisis, and there are 252 00:13:47,679 --> 00:13:52,800 Speaker 1: a select few to give wonderful perspective back and also 253 00:13:52,880 --> 00:13:56,199 Speaker 1: look forward, like the End of Alchemy, A really one 254 00:13:56,200 --> 00:13:59,880 Speaker 1: of my financial times, giving it more than accolades. Is 255 00:14:00,080 --> 00:14:03,400 Speaker 1: well a few years back. Futures up, one down, Futures 256 00:14:03,440 --> 00:14:06,720 Speaker 1: up to a quiet tape. It is Fenday, two p m. Afternoon, 257 00:14:06,840 --> 00:14:10,640 Speaker 1: Wall Street Time. Scarlett Food leads our coverage. Michael McKee 258 00:14:10,640 --> 00:14:23,280 Speaker 1: in Washington. Sir Martin Sorrel joins me now, of course, 259 00:14:23,280 --> 00:14:28,160 Speaker 1: to see how he is marveling at my multitasking here, 260 00:14:28,240 --> 00:14:32,080 Speaker 1: especially with Tom out of the picture. I'm doing the pain. 261 00:14:33,320 --> 00:14:35,680 Speaker 1: Say that again. I think my boss is in in earshot. 262 00:14:35,720 --> 00:14:37,400 Speaker 1: Great to have you with us. Let me start. Let's 263 00:14:37,400 --> 00:14:39,080 Speaker 1: start on the news and we can talk about advertising 264 00:14:39,120 --> 00:14:41,040 Speaker 1: here in the next the next segment. But you've been 265 00:14:41,080 --> 00:14:45,200 Speaker 1: following Boris being Boris as we all have. Yeah, what 266 00:14:45,560 --> 00:14:47,560 Speaker 1: do you make of the Daily Telegraph piece that he 267 00:14:47,600 --> 00:14:51,440 Speaker 1: wrote and sort of the fallout from that as a 268 00:14:51,480 --> 00:14:54,400 Speaker 1: bit for the leadership, So you see the political motivations there, 269 00:14:54,440 --> 00:14:55,800 Speaker 1: and it seems to be I mean, he did it 270 00:14:55,920 --> 00:14:59,240 Speaker 1: one time around, you know, I'm the leadership contest failed 271 00:14:59,360 --> 00:15:02,440 Speaker 1: failed on that, not the Foreign Secretary job decided having 272 00:15:02,440 --> 00:15:06,160 Speaker 1: to go. I mean, whilst I have some sympathy for him, 273 00:15:06,200 --> 00:15:08,600 Speaker 1: I rather like him actually, and I think he has 274 00:15:09,600 --> 00:15:13,200 Speaker 1: I think he thinks he has some Churchillian characteristics. He 275 00:15:13,280 --> 00:15:15,240 Speaker 1: wrote a biography of them, so I think he was 276 00:15:15,520 --> 00:15:18,000 Speaker 1: fascinated and I think he sees himself as sort of 277 00:15:18,000 --> 00:15:21,480 Speaker 1: some Churchillian figure. I think he's actually more like than 278 00:15:21,560 --> 00:15:24,720 Speaker 1: people people understand in the in the country, and therefore 279 00:15:24,840 --> 00:15:27,480 Speaker 1: is a is a contender. But I would just critique 280 00:15:27,520 --> 00:15:29,680 Speaker 1: his timing. I think, you know, with the Prime Minister 281 00:15:29,720 --> 00:15:32,080 Speaker 1: due to give them a very important speaking speech in 282 00:15:32,240 --> 00:15:37,880 Speaker 1: Florence on Friday about and are negotiating stance on brexits, 283 00:15:38,680 --> 00:15:41,080 Speaker 1: I think timing is a little bit unfortunate. You know. 284 00:15:41,160 --> 00:15:43,520 Speaker 1: One construction of it is that you know, he pulls 285 00:15:43,600 --> 00:15:47,440 Speaker 1: in the Brexit hears the hard liners that to raise 286 00:15:47,520 --> 00:15:50,240 Speaker 1: the may it's the scilla and steering between the scylla 287 00:15:50,320 --> 00:15:55,840 Speaker 1: and charybdis one side of the one, one side of 288 00:15:55,840 --> 00:15:57,840 Speaker 1: the party to the other and try to drive I 289 00:15:57,840 --> 00:16:01,160 Speaker 1: mean one interpret I think it's Jacob brief MoG's interpretations 290 00:16:01,240 --> 00:16:04,000 Speaker 1: that you know he's done her a favor by trying 291 00:16:04,000 --> 00:16:07,360 Speaker 1: to curry favor with the hardliners. Having said that, I 292 00:16:07,400 --> 00:16:10,880 Speaker 1: thought the timing was unfortunate, but they seem to have 293 00:16:10,920 --> 00:16:13,320 Speaker 1: healed the breach and the Prime Minister seems to think 294 00:16:13,400 --> 00:16:18,240 Speaker 1: he's better inside the tent. I won't make the full 295 00:16:18,440 --> 00:16:21,000 Speaker 1: the full comment on that, and inside the tent rather 296 00:16:21,040 --> 00:16:22,680 Speaker 1: than outside the time very good. What will you be 297 00:16:22,720 --> 00:16:24,520 Speaker 1: listing for on Friday when she speaks in Thorts. I'm 298 00:16:24,520 --> 00:16:26,480 Speaker 1: struck by the fact that now a year plus into 299 00:16:26,520 --> 00:16:28,240 Speaker 1: this process, we are still at the point which we're 300 00:16:28,240 --> 00:16:31,720 Speaker 1: waiting to hear the details about it. Really is debilitating 301 00:16:31,800 --> 00:16:33,920 Speaker 1: and I think one of the interesting things for us 302 00:16:34,000 --> 00:16:36,920 Speaker 1: is that our UK business has been very strong and 303 00:16:37,400 --> 00:16:39,440 Speaker 1: as one of the few parts of the world that 304 00:16:39,480 --> 00:16:41,840 Speaker 1: are strong in the moment, and one of the reasons 305 00:16:41,880 --> 00:16:45,200 Speaker 1: may well be that clients, because of the uncertainty, are 306 00:16:45,280 --> 00:16:49,680 Speaker 1: investing in variable marketing expense because they think they can 307 00:16:49,760 --> 00:16:51,720 Speaker 1: tickle up the top line, which they have managed to 308 00:16:51,720 --> 00:16:54,320 Speaker 1: do by spending on that, and then next year if 309 00:16:54,360 --> 00:16:56,360 Speaker 1: they need to pull back a bit because it's variable, 310 00:16:56,400 --> 00:16:59,360 Speaker 1: they can pull it back. So I think actually there's 311 00:16:59,400 --> 00:17:01,720 Speaker 1: a silver sing here. But having said that, you know, 312 00:17:01,800 --> 00:17:04,960 Speaker 1: we haven't laid out our stool well with the Europeans. 313 00:17:05,200 --> 00:17:08,280 Speaker 1: I was on Bloomberg with Tom and Irvin King and 314 00:17:08,320 --> 00:17:11,000 Speaker 1: Merwyn King thinks, you know, basically we should get on 315 00:17:11,080 --> 00:17:13,840 Speaker 1: with it, that in the long term Brexit will be 316 00:17:13,880 --> 00:17:17,120 Speaker 1: a good thing and we should plan for no agreement. 317 00:17:17,119 --> 00:17:19,560 Speaker 1: There should be a plan B for no agreement. But 318 00:17:19,640 --> 00:17:24,399 Speaker 1: the uncertainty is excruciating. You know the four markets Germany, France, 319 00:17:24,400 --> 00:17:27,520 Speaker 1: sitting in Spain and number four, number six, number nine 320 00:17:27,520 --> 00:17:30,359 Speaker 1: and number ten for US. Brussels is an important market 321 00:17:30,440 --> 00:17:35,400 Speaker 1: for US in terms of a business generally with the Commission. 322 00:17:35,400 --> 00:17:37,800 Speaker 1: And then having said that, I mean the free movement 323 00:17:37,840 --> 00:17:40,520 Speaker 1: of people. Seventeen percent of our people in the UK. 324 00:17:40,640 --> 00:17:43,120 Speaker 1: We have fifteen sixteen thousand people in the UK, seventeen 325 00:17:43,160 --> 00:17:46,000 Speaker 1: percent of them are EU nationals. What do they do 326 00:17:46,119 --> 00:17:50,720 Speaker 1: their position is unclear, So the uncertainty is excruciating and 327 00:17:50,960 --> 00:17:53,199 Speaker 1: we don't seem to have laid out our policy. There 328 00:17:53,200 --> 00:17:55,560 Speaker 1: seems to be some distance, not just between Boris and 329 00:17:56,000 --> 00:17:59,040 Speaker 1: the Prime Minister, but you know, the the organization of 330 00:17:59,040 --> 00:18:01,560 Speaker 1: our civil servants seen one of the lead civil servants 331 00:18:02,320 --> 00:18:07,440 Speaker 1: was moved to Downing Streets so supposedly because there were 332 00:18:07,480 --> 00:18:11,800 Speaker 1: some some issues with well our negotiated David Davis. So 333 00:18:12,000 --> 00:18:16,119 Speaker 1: we'll see, we'll we'll see what happens over the coming weeks. 334 00:18:16,160 --> 00:18:18,399 Speaker 1: But we're running out of time very quickly here if 335 00:18:18,440 --> 00:18:20,240 Speaker 1: three seconds will come back at just a second. Do 336 00:18:20,280 --> 00:18:22,199 Speaker 1: we have a better sense of trade policy globally at 337 00:18:22,200 --> 00:18:23,920 Speaker 1: this point? You just got back from China obviously a 338 00:18:23,960 --> 00:18:26,880 Speaker 1: big focus at these Brexit conversations about trade. Are we're 339 00:18:26,880 --> 00:18:30,199 Speaker 1: getting it? It seems to be increasingly fractured, um, you know, 340 00:18:30,240 --> 00:18:32,359 Speaker 1: because of the problems in North Korea. I mean, I 341 00:18:32,640 --> 00:18:36,679 Speaker 1: thought the present speech yesterday the Unitedations was was a 342 00:18:36,720 --> 00:18:40,399 Speaker 1: good speech. Actually, I thought that sort of signaled and 343 00:18:40,480 --> 00:18:42,640 Speaker 1: think wanted to commented us this morning to talk about 344 00:18:42,640 --> 00:18:45,040 Speaker 1: the rebranding and Trump. I think I think his opinion 345 00:18:45,080 --> 00:18:47,679 Speaker 1: poll in the Wall Street Journalism' sorry to mention that 346 00:18:49,080 --> 00:18:53,440 Speaker 1: is up a bit at that's up. I think Obama 347 00:18:53,480 --> 00:18:56,200 Speaker 1: was about forty eight percent of an equivalent time, so 348 00:18:56,200 --> 00:18:59,360 Speaker 1: so I actually think things are sort of thought. It 349 00:18:59,400 --> 00:19:03,040 Speaker 1: seems to me as a foreigner, things are starting to turn. 350 00:19:03,119 --> 00:19:05,040 Speaker 1: And if the President managed to get us his tax 351 00:19:05,119 --> 00:19:08,359 Speaker 1: bill through, yeah, not a talk of health cavity, and 352 00:19:08,440 --> 00:19:12,000 Speaker 1: we have infrastructure spending, and we have regulation being reduced. 353 00:19:12,000 --> 00:19:13,639 Speaker 1: Who knows what, We'll see what happened. Sir Martin st 354 00:19:13,800 --> 00:19:15,159 Speaker 1: here with us the see of w p P P at 355 00:19:15,160 --> 00:19:17,520 Speaker 1: the Bloomberg Global Forum here in New York. Will have 356 00:19:17,600 --> 00:19:19,119 Speaker 1: much more from here, much more with him in just 357 00:19:19,200 --> 00:19:22,399 Speaker 1: a moment. This is Bloomberg. David Garatum can here at 358 00:19:22,400 --> 00:19:24,280 Speaker 1: the Bloomberg Global Business Form with Sir Martin Soil of 359 00:19:24,400 --> 00:19:26,760 Speaker 1: w PP. We're having a conversation about Brexit and trade. 360 00:19:26,800 --> 00:19:29,919 Speaker 1: Let's talk a bit about advertising. There's been a slump 361 00:19:30,200 --> 00:19:32,720 Speaker 1: wet to the we got to the heart of the 362 00:19:32,800 --> 00:19:35,480 Speaker 1: heart of life, the heart of the vata there, there's 363 00:19:35,520 --> 00:19:38,040 Speaker 1: been this slowed this, this slowdown, this downturn, whatever you 364 00:19:38,040 --> 00:19:40,159 Speaker 1: wanna call it. What's going to bring us out of it? 365 00:19:40,200 --> 00:19:42,320 Speaker 1: Are you seeing a green shoot signs that things that 366 00:19:42,400 --> 00:19:45,280 Speaker 1: will change? Uh? Well a little bit. I mean people 367 00:19:45,560 --> 00:19:48,480 Speaker 1: in the in the sense that clients are talking about 368 00:19:48,520 --> 00:19:52,119 Speaker 1: spending more and what what they what they lost on 369 00:19:52,160 --> 00:19:54,159 Speaker 1: the swings in the first half, they're getting on the 370 00:19:54,240 --> 00:19:57,040 Speaker 1: roundabouts in the second half. Well, yet to see that 371 00:19:57,119 --> 00:19:59,880 Speaker 1: can't come through. August was a little bit better than July, 372 00:20:00,000 --> 00:20:02,960 Speaker 1: but that wasn't saying much because July was tough. So 373 00:20:03,240 --> 00:20:05,720 Speaker 1: some signs of that. But I think the fundamental problem 374 00:20:05,800 --> 00:20:08,800 Speaker 1: I don't think it's about Google or Facebook eating our lunch. 375 00:20:08,880 --> 00:20:12,920 Speaker 1: I think there are much more friendly, certainly not as 376 00:20:13,160 --> 00:20:14,480 Speaker 1: much of a friend of me as they used to. 377 00:20:14,480 --> 00:20:16,760 Speaker 1: What's the relationship like between you and them? Well, our 378 00:20:16,760 --> 00:20:20,919 Speaker 1: Google is our biggest source of or deployment of media funds. 379 00:20:20,960 --> 00:20:24,680 Speaker 1: Out of our seventy billion dollar media book, about just 380 00:20:24,800 --> 00:20:28,320 Speaker 1: under six billion goes to Google, about to two and 381 00:20:28,359 --> 00:20:31,840 Speaker 1: a quarter billion goes to Facebook. So they're either one 382 00:20:31,880 --> 00:20:34,160 Speaker 1: and three or one and two in terms of our 383 00:20:34,200 --> 00:20:37,639 Speaker 1: media destinations for our clients. So it's very strong. I 384 00:20:37,680 --> 00:20:40,280 Speaker 1: don't think so much about the consultants eating our lunch. 385 00:20:40,600 --> 00:20:43,520 Speaker 1: I think the key issue is cheap money. We were 386 00:20:43,520 --> 00:20:46,159 Speaker 1: talking about this with Mervin with Tom earlier, and I 387 00:20:46,200 --> 00:20:48,960 Speaker 1: think Mervyn agreed in the sense that it leads to 388 00:20:49,040 --> 00:20:53,680 Speaker 1: misallocation of funds. You have pools of capital available for 389 00:20:54,000 --> 00:20:58,880 Speaker 1: z BB or activists investors, and that may not necessarily 390 00:20:58,960 --> 00:21:02,040 Speaker 1: be securing the right deployment of funds. There's very much 391 00:21:02,080 --> 00:21:06,240 Speaker 1: of a focus on cutting costs in a low growth, 392 00:21:06,600 --> 00:21:10,000 Speaker 1: low inflation environment where there's little pricing power. I think 393 00:21:10,040 --> 00:21:12,520 Speaker 1: that continues. So they answer your question is I think 394 00:21:12,560 --> 00:21:14,639 Speaker 1: the only thing that stops it is a rise in 395 00:21:14,640 --> 00:21:17,600 Speaker 1: interest rates. But all these things are relative, and interest 396 00:21:17,680 --> 00:21:19,000 Speaker 1: rates are not going to come back to where they 397 00:21:19,040 --> 00:21:21,240 Speaker 1: were a few years ago. And when you have those 398 00:21:21,280 --> 00:21:27,800 Speaker 1: wonderful charts about sterling trade weighted for government, absolutely so 399 00:21:27,880 --> 00:21:30,679 Speaker 1: that wonderful chart which showed what happened pre two thousand 400 00:21:30,720 --> 00:21:33,040 Speaker 1: and nine when sterling, in his view, was too strong, 401 00:21:33,880 --> 00:21:36,120 Speaker 1: we'll see we're paying the price for that now. But anyway, 402 00:21:36,880 --> 00:21:39,040 Speaker 1: the answer to your question, Dave is probably going to 403 00:21:39,119 --> 00:21:43,040 Speaker 1: get a little bit better. But the the the essence 404 00:21:43,040 --> 00:21:47,359 Speaker 1: of this is whether cheap money is securing the inequality issue. 405 00:21:47,440 --> 00:21:50,760 Speaker 1: And what's happened since Layman is that cheap money has 406 00:21:50,840 --> 00:21:54,960 Speaker 1: driven asset allocations would have increased inequality rather than reduce it. 407 00:21:55,040 --> 00:21:58,560 Speaker 1: Hence our populist popular swing. The size of the elect 408 00:21:58,680 --> 00:22:00,920 Speaker 1: Where were little you just got from China. You're a new, 409 00:22:01,080 --> 00:22:03,439 Speaker 1: freshly minted columnist for the Shanghai Daily. I saw this 410 00:22:03,480 --> 00:22:05,960 Speaker 1: morning writing a piece for them about your trip there, 411 00:22:05,960 --> 00:22:08,119 Speaker 1: in your sense of where things are going in China 412 00:22:08,359 --> 00:22:11,400 Speaker 1: from an advertising watch watch out West. Tell me more 413 00:22:11,400 --> 00:22:13,520 Speaker 1: about that. What we've said, Well, what do you see 414 00:22:13,520 --> 00:22:16,199 Speaker 1: this trip in particular? Well, I I saw again that 415 00:22:16,240 --> 00:22:20,359 Speaker 1: the Chinese filling the vacuum that the Obama administration and 416 00:22:20,359 --> 00:22:24,560 Speaker 1: Trump administration really have left. I think in in Asia, 417 00:22:24,600 --> 00:22:27,840 Speaker 1: you've seen Belton Road, you see the Brick Bank, you 418 00:22:27,920 --> 00:22:31,960 Speaker 1: see the Asia Development Bank, all these institutions and initiatives. 419 00:22:32,359 --> 00:22:35,880 Speaker 1: China is filling, filling the vacuum. We saw that many 420 00:22:35,920 --> 00:22:38,920 Speaker 1: years ago in Africa and in Latin America. It's being 421 00:22:38,920 --> 00:22:42,840 Speaker 1: exacerbated by what we're seeing. So I think China. And 422 00:22:42,840 --> 00:22:46,159 Speaker 1: then another couple of other observations. We always think in 423 00:22:46,200 --> 00:22:49,240 Speaker 1: the West that China steals technology. Wrong. If they did 424 00:22:49,280 --> 00:22:51,239 Speaker 1: steal it before, they're not stealing it now. You look 425 00:22:51,280 --> 00:22:54,000 Speaker 1: at Wahwei, you look at ten Cent, you look at Alabama. 426 00:22:54,040 --> 00:22:56,320 Speaker 1: We have Jack mar here today. These are all good 427 00:22:56,320 --> 00:23:00,760 Speaker 1: examples one plus yew me all examples. Leno High of 428 00:23:00,840 --> 00:23:04,480 Speaker 1: companies that are building technology in an effective way. The 429 00:23:04,560 --> 00:23:08,480 Speaker 1: local companies are the big competition for the Western multinationals, 430 00:23:08,520 --> 00:23:12,000 Speaker 1: not their fellow Western multinationals. And the final point, if 431 00:23:12,119 --> 00:23:16,960 Speaker 1: Chinese consumers, China's consumers Tom are willing to pay more 432 00:23:17,520 --> 00:23:20,520 Speaker 1: for brands they appreciate this, says, since says say things 433 00:23:20,560 --> 00:23:27,600 Speaker 1: about them and have tangible We're gonna have justin for 434 00:23:27,760 --> 00:23:30,600 Speaker 1: Washington email there and he said, would you ask sir 435 00:23:30,680 --> 00:23:34,000 Speaker 1: Martin about Tim Cook the Apple X I kid about it, 436 00:23:34,080 --> 00:23:37,680 Speaker 1: the Apple ten in all this new technology and how 437 00:23:37,720 --> 00:23:41,800 Speaker 1: we're going to consume w pp AD product, a new fancy, 438 00:23:41,880 --> 00:23:45,160 Speaker 1: gorgeous four case cell phones? Are they gonna be? I mean, 439 00:23:45,359 --> 00:23:47,200 Speaker 1: so many sites and I don't want to badmouth to 440 00:23:47,240 --> 00:23:51,159 Speaker 1: anybody are cluttered up with ads. How is your world 441 00:23:51,160 --> 00:23:55,680 Speaker 1: gonna dove till the iPhone? Then hangs the challenge. We 442 00:23:55,680 --> 00:24:00,119 Speaker 1: were in this increasingly cluttered, complex environment where people needed 443 00:24:00,240 --> 00:24:03,320 Speaker 1: us more, clients need us more than they ever did before. 444 00:24:03,320 --> 00:24:07,560 Speaker 1: Because it is complicated. It is very well KLATSA means 445 00:24:07,600 --> 00:24:12,119 Speaker 1: optimization is more difficult. It means advice is more important. 446 00:24:12,440 --> 00:24:15,280 Speaker 1: And that's so I think. I think the opportunities and 447 00:24:15,680 --> 00:24:19,520 Speaker 1: creativity in all its form is Michaellen of Axiosan and 448 00:24:19,560 --> 00:24:24,640 Speaker 1: they're putting the ads gorgeously within their feed, sort of transparent. 449 00:24:24,680 --> 00:24:30,800 Speaker 1: They say it's outrageous. It's outrageous, But I want you 450 00:24:30,840 --> 00:24:34,240 Speaker 1: to tell me how you can become more seamless in 451 00:24:34,359 --> 00:24:41,040 Speaker 1: messaging important products. Every other people have not been doing it. No, 452 00:24:41,440 --> 00:24:44,040 Speaker 1: My point is you're leading the way. When does everybody 453 00:24:44,080 --> 00:24:47,680 Speaker 1: else catch up with you with a transparency and grace 454 00:24:48,400 --> 00:24:51,040 Speaker 1: to this ancient business. You've gotta make money to pay 455 00:24:51,080 --> 00:24:54,200 Speaker 1: the medical plan of the journalists. It is. I mean, 456 00:24:54,280 --> 00:24:59,480 Speaker 1: it is evolving, certainly, not in the physical journalist world, 457 00:24:59,480 --> 00:25:04,080 Speaker 1: but we've seen degradation, extreme degradation in the last couple 458 00:25:04,080 --> 00:25:06,840 Speaker 1: of years in particular, but in the digital journalistic world 459 00:25:06,880 --> 00:25:10,960 Speaker 1: that is developing and content and content development becoming increasingly important. 460 00:25:11,000 --> 00:25:14,280 Speaker 1: I mean, there's no it's sort of like clarages, isn't 461 00:25:14,320 --> 00:25:17,080 Speaker 1: this room, David Girls sort of like clarages. It's beautiful. 462 00:25:18,040 --> 00:25:22,600 Speaker 1: Off again it PTUs interview the question about the royal family. 463 00:25:22,640 --> 00:25:24,800 Speaker 1: It's like now he's talking about the Plaza. Tiro just 464 00:25:24,960 --> 00:25:28,160 Speaker 1: look looks like the Sir Martin's Peddittarian New York. Yes, 465 00:25:28,400 --> 00:25:31,199 Speaker 1: there you go. Uh, let me ask you lastly, how 466 00:25:31,359 --> 00:25:32,879 Speaker 1: how you as a business respond to all of what 467 00:25:32,880 --> 00:25:35,960 Speaker 1: we've been talking about. Uh is w P going to 468 00:25:35,960 --> 00:25:38,680 Speaker 1: be with Flatten and some say consolidated in some way? 469 00:25:38,800 --> 00:25:41,840 Speaker 1: Has the man we're simplifying our structure. I mean we 470 00:25:42,040 --> 00:25:44,800 Speaker 1: talk about horizontality, which getting our people to work together, 471 00:25:45,080 --> 00:25:47,720 Speaker 1: benefit of clients. Our clients are interested in the best people. 472 00:25:47,920 --> 00:25:50,000 Speaker 1: They don't care where they come from. The second thing 473 00:25:50,080 --> 00:25:52,960 Speaker 1: is fast growth markets they continue the third of our business. 474 00:25:53,200 --> 00:25:55,640 Speaker 1: That's where the next billion consumers are going to come from, 475 00:25:55,720 --> 00:25:57,600 Speaker 1: not from the US or Western Europe, whether the UK 476 00:25:57,760 --> 00:26:01,120 Speaker 1: is in Western Europe or not. And then thirdly digital 477 00:26:01,160 --> 00:26:04,639 Speaker 1: we just touched on that of our business. Worldwide average 478 00:26:04,680 --> 00:26:07,600 Speaker 1: is about it's going to be. It's gonna permere everything 479 00:26:07,640 --> 00:26:10,159 Speaker 1: we do. And last but not least and really importantly, 480 00:26:10,600 --> 00:26:14,159 Speaker 1: data and control of data is the critical area. These 481 00:26:14,280 --> 00:26:17,000 Speaker 1: voice activated devices. You know we have five from the 482 00:26:17,040 --> 00:26:19,359 Speaker 1: Fierce and five we have ding Dong at j D 483 00:26:19,720 --> 00:26:24,639 Speaker 1: dot com which is their wonderfully named and Genie Genie 484 00:26:24,680 --> 00:26:27,600 Speaker 1: from ali Baba launching the last month. Or this is 485 00:26:27,640 --> 00:26:32,080 Speaker 1: where the fight is going to be between the distributors 486 00:26:32,200 --> 00:26:35,680 Speaker 1: Amazon and ali Baba and the branded goods, manufacturers, big 487 00:26:35,720 --> 00:26:40,080 Speaker 1: fight coming control of data critical Thank you, thank you 488 00:26:40,200 --> 00:26:49,840 Speaker 1: to everything is killing it. I'm mistaken for David Geret. 489 00:26:50,480 --> 00:27:08,920 Speaker 1: I love that it's fed days. Stay with us. He's 490 00:27:08,960 --> 00:27:14,000 Speaker 1: a man of numerous accomplishments. One is surviving Duke University. 491 00:27:14,040 --> 00:27:16,840 Speaker 1: I think far more, David Girl, you should bring in uh, 492 00:27:17,080 --> 00:27:21,960 Speaker 1: Mr Rubinstein, the guy from UNC. How to bring in 493 00:27:22,000 --> 00:27:24,359 Speaker 1: the guy from Duke. But he has been more than generous, 494 00:27:24,840 --> 00:27:29,000 Speaker 1: and particularly with his understanding of the place of American history. 495 00:27:29,080 --> 00:27:33,000 Speaker 1: His contributions to our Library of Congress, UH leave one speechless. 496 00:27:33,040 --> 00:27:34,800 Speaker 1: And of course anyone who's in the know of our 497 00:27:34,880 --> 00:27:38,320 Speaker 1: history knows that can only be David Rubinstein, your public 498 00:27:38,359 --> 00:27:42,280 Speaker 1: service to President Carter years ago. People within the business 499 00:27:42,280 --> 00:27:45,159 Speaker 1: community know you. I want to get an updne On 500 00:27:45,359 --> 00:27:49,680 Speaker 1: Ruben's the historian. What are you doing? You've been able 501 00:27:49,720 --> 00:27:53,399 Speaker 1: to husband wealth. What are you doing now in terms 502 00:27:53,440 --> 00:27:56,040 Speaker 1: of the kind of acquisition as you did with that 503 00:27:56,240 --> 00:27:58,959 Speaker 1: important I think some book out of New England from 504 00:27:59,040 --> 00:28:01,960 Speaker 1: years ago? What's the new thing? Well, what I've tried 505 00:28:01,960 --> 00:28:04,920 Speaker 1: to do is a couple of things by historic documents 506 00:28:05,040 --> 00:28:07,600 Speaker 1: or like the first book, the Besalm's book, or the 507 00:28:07,600 --> 00:28:09,879 Speaker 1: first map of the United States and put them on 508 00:28:09,960 --> 00:28:12,920 Speaker 1: display where people can see them so that they might 509 00:28:12,960 --> 00:28:16,040 Speaker 1: be inspired to learn more about American history. It's very 510 00:28:16,080 --> 00:28:20,359 Speaker 1: sad how little Americans know about our history recently. In fact, 511 00:28:20,359 --> 00:28:23,760 Speaker 1: this last week, UH the Annenberg School out of the 512 00:28:23,840 --> 00:28:26,639 Speaker 1: University of Pennsylvania came out with a survey that showed 513 00:28:26,680 --> 00:28:31,479 Speaker 1: that seventy Americans cannot name three the three branches of government. 514 00:28:31,720 --> 00:28:34,479 Speaker 1: We have three branches of government. Americans cannot name that. 515 00:28:34,680 --> 00:28:37,200 Speaker 1: In fact, one third of Americans cannot name even one 516 00:28:37,200 --> 00:28:40,120 Speaker 1: branch of government. So my theory is, let's have more 517 00:28:40,240 --> 00:28:45,480 Speaker 1: things that bring people to museums, memorials, let them learn 518 00:28:45,520 --> 00:28:48,680 Speaker 1: more about American history by seeing these documents firsthand, then 519 00:28:48,680 --> 00:28:50,800 Speaker 1: maybe go back and studying them more. To keep the 520 00:28:50,840 --> 00:28:53,680 Speaker 1: politics out of it. To be polite, we're witnessing this 521 00:28:54,240 --> 00:28:57,040 Speaker 1: today with the launch of the American Almanac, Michael Brun's 522 00:28:57,080 --> 00:29:01,200 Speaker 1: wonderful book two thousand pages on the people of our politics. 523 00:29:01,480 --> 00:29:04,400 Speaker 1: To be polite, there's been a dumbing down. How do 524 00:29:04,480 --> 00:29:07,960 Speaker 1: we get the rigger back in our civics for children? 525 00:29:08,280 --> 00:29:11,840 Speaker 1: Right now, very few public high schools and junior high 526 00:29:11,840 --> 00:29:15,200 Speaker 1: schools require civics. Thank you yes. And when I went 527 00:29:15,240 --> 00:29:17,320 Speaker 1: to high school and junior high school, you had to 528 00:29:17,320 --> 00:29:20,920 Speaker 1: take something relating civics course. Today, even more amazingly, you 529 00:29:21,000 --> 00:29:24,600 Speaker 1: can major in history at any American college and not 530 00:29:24,640 --> 00:29:26,479 Speaker 1: have to take a course in American history as part 531 00:29:26,520 --> 00:29:29,080 Speaker 1: of that. Are you gonna save that at Duke forget 532 00:29:29,080 --> 00:29:33,440 Speaker 1: about UNC Well? Uh, I have stepped down from my 533 00:29:33,520 --> 00:29:36,320 Speaker 1: Championship of University board. I was here for four years 534 00:29:36,320 --> 00:29:38,320 Speaker 1: and on the board for twelve, so I don't know 535 00:29:38,360 --> 00:29:40,200 Speaker 1: that I have the influence any longer. But the truth 536 00:29:40,320 --> 00:29:44,720 Speaker 1: is all American colleges should have graduates learned something about 537 00:29:44,720 --> 00:29:46,920 Speaker 1: the history of America. I think, and in this to 538 00:29:47,000 --> 00:29:50,760 Speaker 1: explain folks with Bloomberg surveillance as digest is the joy 539 00:29:50,800 --> 00:29:53,560 Speaker 1: of being surrounded by David Gura and David Rubinstein with 540 00:29:53,600 --> 00:29:57,160 Speaker 1: the grove of families. Uh, mastering of pre Civil War 541 00:29:57,520 --> 00:30:00,280 Speaker 1: American history. It must must have been something David grow 542 00:30:00,400 --> 00:30:03,880 Speaker 1: to grow up in the crucible of eighteen thirties America. 543 00:30:04,040 --> 00:30:06,040 Speaker 1: Very true, And I seven or eight miles away from 544 00:30:06,120 --> 00:30:08,400 Speaker 1: Duke University despite that allegiance to you and speak see, 545 00:30:08,400 --> 00:30:10,920 Speaker 1: I did spend some time in the Duke Library, which 546 00:30:11,080 --> 00:30:13,360 Speaker 1: in part bears your name David Rubinson. Let me ask you. 547 00:30:13,480 --> 00:30:15,480 Speaker 1: We we've talked with Arthur Levitt about the role of 548 00:30:15,840 --> 00:30:18,440 Speaker 1: history of the liberal arts in business, and he says, 549 00:30:18,440 --> 00:30:20,840 Speaker 1: not enough people going into business today have that background. 550 00:30:21,840 --> 00:30:23,400 Speaker 1: What's the case that you would make to them that 551 00:30:23,440 --> 00:30:25,360 Speaker 1: it's worth doing that? That doesn't it doesn't matter if 552 00:30:25,400 --> 00:30:27,360 Speaker 1: you're an economics major. There are other things that can 553 00:30:27,360 --> 00:30:29,960 Speaker 1: be beneficial in business. Take the CEOs of most of 554 00:30:29,960 --> 00:30:33,160 Speaker 1: the major Wall Street firms that they were not STEM majors. 555 00:30:33,720 --> 00:30:36,760 Speaker 1: They were social science or liberal arts majors. And so 556 00:30:36,800 --> 00:30:38,880 Speaker 1: clearly there is something you get from being a liberal 557 00:30:38,920 --> 00:30:41,600 Speaker 1: arts major, social science major that gives you ability to 558 00:30:41,600 --> 00:30:44,040 Speaker 1: process information, to think, to think out of the box. 559 00:30:44,360 --> 00:30:46,800 Speaker 1: So while STEM is important, I think if you are 560 00:30:47,000 --> 00:30:48,560 Speaker 1: you want to rise up to be the top of 561 00:30:48,560 --> 00:30:50,760 Speaker 1: a leader in Wall Street or in business, you might 562 00:30:50,800 --> 00:30:53,200 Speaker 1: do better to have a degree in social sciences or 563 00:30:53,280 --> 00:30:56,360 Speaker 1: history or literature. There are many that would suggest President 564 00:30:56,360 --> 00:31:00,840 Speaker 1: Wilson and President Carter, and frankly President Clinton probably had 565 00:31:00,880 --> 00:31:04,160 Speaker 1: the most raw intelligence of anybody to enter the White House. 566 00:31:04,560 --> 00:31:06,560 Speaker 1: I don't think we were out of any of them, 567 00:31:06,640 --> 00:31:11,040 Speaker 1: and others Republicans as well. The phrase destroy North Korea 568 00:31:11,760 --> 00:31:16,480 Speaker 1: your comments on the rhetoric. We're seeing the physicality of 569 00:31:16,520 --> 00:31:20,680 Speaker 1: our international rhetoric out of America police. There's no doubt 570 00:31:20,720 --> 00:31:24,360 Speaker 1: that the rhetoric sometimes gets ahead of the reality. And 571 00:31:24,360 --> 00:31:27,040 Speaker 1: without commenting on any specific speech, there's no doubt that 572 00:31:27,080 --> 00:31:30,400 Speaker 1: I think if we best have more bipartisanship in Washington, 573 00:31:30,440 --> 00:31:33,320 Speaker 1: d C. I've tried to do something about that. In 574 00:31:33,480 --> 00:31:37,040 Speaker 1: my modest way. I have started a program to um 575 00:31:37,080 --> 00:31:40,640 Speaker 1: bring historians to the Library Congress, where I interviewed them 576 00:31:40,920 --> 00:31:42,920 Speaker 1: in front of members of Congress. Members of Congress only 577 00:31:43,040 --> 00:31:45,600 Speaker 1: are allowed to come, and we've had ours current's Goodwin 578 00:31:45,680 --> 00:31:48,600 Speaker 1: and David McCullum and usual people like that, and members 579 00:31:48,640 --> 00:31:50,680 Speaker 1: of Congress really want to learn about American history. And 580 00:31:50,720 --> 00:31:52,239 Speaker 1: I asked them to kind of sit with people from 581 00:31:52,240 --> 00:31:54,240 Speaker 1: the opposite party in the opposite house, and so they 582 00:31:54,280 --> 00:31:58,560 Speaker 1: actually spend time with yes, and they tell me that 583 00:31:58,920 --> 00:32:00,800 Speaker 1: this is something they don't we're usually do, and they 584 00:32:00,800 --> 00:32:03,160 Speaker 1: actually like it very much because there's no press there 585 00:32:03,200 --> 00:32:05,320 Speaker 1: to watch them, and they don't have to be concerned 586 00:32:05,320 --> 00:32:07,040 Speaker 1: that somebody will say, why why are you sitting down 587 00:32:07,040 --> 00:32:09,040 Speaker 1: next to a Democrat if you're a Republican and vice versa. 588 00:32:09,320 --> 00:32:11,320 Speaker 1: And so this has gone off about three plus years 589 00:32:11,360 --> 00:32:13,720 Speaker 1: and it's worked out pretty well. What was the book 590 00:32:13,840 --> 00:32:15,640 Speaker 1: or the piece of a femiary that got you interested 591 00:32:15,640 --> 00:32:18,160 Speaker 1: in rare books in general? What what is it about 592 00:32:18,160 --> 00:32:20,400 Speaker 1: picking up, say the base on the book that Tom 593 00:32:20,440 --> 00:32:22,960 Speaker 1: mentioned from the seventeenth century that excites you or does 594 00:32:23,000 --> 00:32:25,360 Speaker 1: something different than reading it online or or you know, 595 00:32:25,400 --> 00:32:28,520 Speaker 1: seeing it from a distance. Why don't we have museums? Uh, 596 00:32:28,640 --> 00:32:31,440 Speaker 1: why don't we have libraries? You can get anything online 597 00:32:31,480 --> 00:32:33,120 Speaker 1: now and you can you don't have to go visit 598 00:32:33,120 --> 00:32:34,960 Speaker 1: a museum. The reason we have museums I think we 599 00:32:34,960 --> 00:32:37,560 Speaker 1: should and have libraries is when you go and see 600 00:32:37,680 --> 00:32:40,720 Speaker 1: something in in person, you get more inspired to learn 601 00:32:40,720 --> 00:32:42,160 Speaker 1: more about it. So if you go to the museum, 602 00:32:42,200 --> 00:32:45,000 Speaker 1: a Smithsonian museum, you see an artifact, you might go 603 00:32:45,040 --> 00:32:46,920 Speaker 1: back and read more about it. And that's the important thing. 604 00:32:47,040 --> 00:32:49,720 Speaker 1: There's clearly a difference between seeing something online and seeing 605 00:32:49,760 --> 00:32:52,800 Speaker 1: on person. And I would mention David Mr. Rubinstein's assistance 606 00:32:52,920 --> 00:32:57,240 Speaker 1: in the rejuvenation affords theaters. Maybe a museum it would 607 00:32:57,240 --> 00:32:59,640 Speaker 1: be an example. Let's get over to finance. I talk 608 00:32:59,680 --> 00:33:02,000 Speaker 1: of an angel engineering in the shift. We're beginning to 609 00:33:02,040 --> 00:33:06,360 Speaker 1: see from a creative deals too diluted deals. There seems 610 00:33:06,400 --> 00:33:08,120 Speaker 1: to be a little bit of a change in the 611 00:33:08,160 --> 00:33:11,720 Speaker 1: wind of deal making in America. If the FED becomes 612 00:33:11,720 --> 00:33:14,719 Speaker 1: more restrictive, rates come up even a little bit. Do 613 00:33:14,760 --> 00:33:17,720 Speaker 1: we see a shift in the mergers and acquisitions to 614 00:33:17,800 --> 00:33:20,840 Speaker 1: terrain Well, murders and acquisitions are going to be with 615 00:33:20,920 --> 00:33:22,600 Speaker 1: us all the time. This is what some people do, 616 00:33:22,680 --> 00:33:24,440 Speaker 1: and some people think that's necessary to do it. And 617 00:33:24,640 --> 00:33:26,080 Speaker 1: if you're in the private equied world, this is what 618 00:33:26,120 --> 00:33:27,880 Speaker 1: we do. We buy companies and we ultimately sell them 619 00:33:27,880 --> 00:33:30,120 Speaker 1: after we fix them up. I think right now prices 620 00:33:30,160 --> 00:33:32,400 Speaker 1: have been high, but you don't see people walking away 621 00:33:32,400 --> 00:33:34,719 Speaker 1: from deals necessarily. They may be paying a little bit 622 00:33:34,760 --> 00:33:37,760 Speaker 1: lower price than than sometimes they might have paid in 623 00:33:37,760 --> 00:33:39,960 Speaker 1: the past, But right now, like people want to do 624 00:33:40,040 --> 00:33:43,000 Speaker 1: deals within that and I guess the latest is not 625 00:33:43,080 --> 00:33:45,240 Speaker 1: for you. You may be involved in these transactions of 626 00:33:45,280 --> 00:33:48,720 Speaker 1: T Mobile in Sprint. We have the phrase monopoly, duopoly, 627 00:33:49,360 --> 00:33:51,760 Speaker 1: maybe a triopoly. What's a four opera do you have 628 00:33:51,800 --> 00:33:55,800 Speaker 1: a phrase for? I mean, there's this, there's this interesting 629 00:33:55,880 --> 00:33:58,840 Speaker 1: thing of the business world in the world of utilities, 630 00:33:59,520 --> 00:34:02,960 Speaker 1: is my the fourteen cell phone bills I pay? David 631 00:34:03,040 --> 00:34:07,560 Speaker 1: Rubins Diner. They a utility. Well I pay them as well. 632 00:34:09,000 --> 00:34:12,680 Speaker 1: On the Bloomberg Show that I have, I did ask 633 00:34:12,880 --> 00:34:15,719 Speaker 1: Brian Roberts uh if I could make the bills, you 634 00:34:15,760 --> 00:34:17,880 Speaker 1: could make the bills simpler so I can actually understand 635 00:34:17,920 --> 00:34:19,480 Speaker 1: the bills and I'm hanging. He said he was working 636 00:34:19,520 --> 00:34:21,120 Speaker 1: on that, so that would be a good thing. Um. 637 00:34:21,120 --> 00:34:23,279 Speaker 1: When you have right now in the in the sell 638 00:34:23,320 --> 00:34:25,960 Speaker 1: your telephone business, you have four companies United States, and 639 00:34:26,000 --> 00:34:28,200 Speaker 1: I think what Massa Son is saying he might want 640 00:34:28,200 --> 00:34:30,400 Speaker 1: to do is is get the two smaller ones to 641 00:34:30,400 --> 00:34:32,880 Speaker 1: become the big three to be more competitive with A 642 00:34:32,920 --> 00:34:35,200 Speaker 1: T and T and Barage. David Rubins, thank you so much, 643 00:34:35,200 --> 00:34:40,080 Speaker 1: and thank you for your contribute. Contribute, contribution, contribution there 644 00:34:40,080 --> 00:34:41,920 Speaker 1: it is. I went to you and see what can 645 00:34:41,960 --> 00:34:55,360 Speaker 1: I say? Contribution Uh to uh A Bloomberg Television. Thanks 646 00:34:55,360 --> 00:34:59,479 Speaker 1: for listening to the Bloomberg Surveillance podcast. Subscribe and listen 647 00:34:59,560 --> 00:35:04,640 Speaker 1: to interview. Use on Apple Podcasts, SoundCloud, or whichever podcast 648 00:35:04,719 --> 00:35:08,240 Speaker 1: platform you prefer. I'm on Twitter at Tom Keene. David 649 00:35:08,280 --> 00:35:12,480 Speaker 1: Gura is at David Gura. Before the podcast, you could 650 00:35:12,480 --> 00:35:15,600 Speaker 1: always catch us worldwide. I'm Bloomberg Radio