Speaker 1: Ye. Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene
Speaker 1: Jay Ley. We bring you insight from the best in economics, finance, investment,
Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,
Speaker 1: Bloomberg dot com, and of course, on the Bloomberg. A
Speaker 1: speech about the zero lower bound a day before the blackout,
Speaker 1: weeks before the Federal Reserve decision, and woman to believe
Speaker 1: it was purely academic. It's like the smoke signals of
Speaker 1: Arthur Burns pipe. It's it's become a parlor game. And
Speaker 1: the good news is we have the right guest to
Speaker 1: try and parse the silliness of this. Joy James Sweet.
Speaker 1: Just credit Sweet, chief Economist dropping by the studio. Great
Speaker 1: to see it, James, try and make sense of this
Speaker 1: for us. What on earth has happened with FED speak
Speaker 1: in the last twenty four hours. Well, everything I say
Speaker 1: is part of an academic speech and has nothing to
Speaker 1: do course of course. Um yeah, I think the Fed
Speaker 1: has signaled that they're going to cut. I mean we
Speaker 1: expect him to cut by um. The market speculation is
Speaker 1: maybe they'll do fifty. Ironically, the data says maybe they
Speaker 1: should do zero. But but the marketers really debating whether
Speaker 1: they're going to do twenty five or fifty, and the
Speaker 1: comments from from President Williams yesterday really moved the market
Speaker 1: sharply towards expecting fifty. And then he brought that back
Speaker 1: later in the day. Did he bring it back because
Speaker 1: they're not going to do fifty and he doesn't want
Speaker 1: to market miss priced, or did he bring it back
Speaker 1: because they're gonna do fifty. Anyone surprised the market and
Speaker 1: have everyone excited about a dubble shock from the Fed.
Speaker 1: I'm not sure. But you know, again, I don't think
Speaker 1: the data really supports any cut at all, So we're
Speaker 1: going to continue to forecast. The heart of this discussion
Speaker 1: is we're asking too much from one institution forrest about
Speaker 1: the names of the people, governor pharaoh, you know, you know, whatever,
Speaker 1: nobody needs. That just we're asking too much of economists
Speaker 1: who have a toolkit that everyone agrees, including Vice Chairman Clarada,
Speaker 1: with world class research, which is prone to probabilities and likelihoods. Right.
Speaker 1: I think that's fair and I think even you know
Speaker 1: a lot of the presidents, including Mr Williams, were past
Speaker 1: um research heads at their local feds UM, and you know,
Speaker 1: very competent monetary policy experts UM, but you know certain
Speaker 1: kind of people may be prone to a certain kind
Speaker 1: of thinking. And lots of papers about this scary zero bound.
Speaker 1: Let's go to the inertial force. Here is it linear?
Speaker 1: They cut let's forget about fifty basis point they got,
Speaker 1: then they cut another. Always see the date I get
Speaker 1: all that is it. That's a measured green spanning and
Speaker 1: linear move. I don't buy it for a minute. When
Speaker 1: does the umph click in? Well, I think when you
Speaker 1: when you need a sharp move, um, you know you can,
Speaker 1: you can deliver that. But really the question is do
Speaker 1: you need it? Governor Ferrell was saying yesterday. Know, I
Speaker 1: think most people don't think you need it right now.
Speaker 1: I think the communication we've had quite clearly from the FETE, though,
Speaker 1: is that they think they need to get ahead of it.
Speaker 1: They need to do more with less, they have limited ammunition.
Speaker 1: Don't wait for it to materialize, James. I think that's
Speaker 1: why so many people find it so confusing at the moment,
Speaker 1: because they look at the heart day in America and
Speaker 1: they say things are okay. Then they listen to the
Speaker 1: feed and the communication and they're wondering what's wrong, Well,
Speaker 1: the real tailor rule probably should have p M eyes
Speaker 1: and forward break evens in it. And it feels like
Speaker 1: it's a good point. Yeah, it feels like that's what
Speaker 1: they're responding to, because I think the tailor rule that
Speaker 1: has forward actual inflation and you know, forward actual unemployment
Speaker 1: based on really what you can see now, it doesn't
Speaker 1: really suggest a breakdown of inflation or or arise in unemployment.
Speaker 1: So you have to have a pro you have to
Speaker 1: be forecasting something meaningful in the absence of cuts to
Speaker 1: justify cuts, and we're not. Is there value to the
Speaker 1: five year five year forward's looking at five years and
Speaker 1: then five years for it from that? Is there too
Speaker 1: far up? It's not. There's not really much value because
Speaker 1: it's it's basically very correlated with oil prices, and it's
Speaker 1: really telling you whether the ten year and the thirty
Speaker 1: year going up and down or not. So what's the
Speaker 1: X axis of tools that would be useful for them?
Speaker 1: And the answer is, I'll a p M E S.
Speaker 1: It's shockingly short, isn't it. Well, the p M I
Speaker 1: S I don't. I think they do definitely respond to
Speaker 1: and we've done some some thorough empirical work showing that
Speaker 1: both the ECB and the FED tend to react to
Speaker 1: sharp moves down in in P M I S. But
Speaker 1: the problem is the labor market tends not to react
Speaker 1: to sharp move downs in PM. You and I did
Speaker 1: thorough empyropical work. Was that over those beers. Paul Sweeney
Speaker 1: out is over for Budweiser's and we did her oracle work.
Speaker 1: And right, James, just thinking about things at the moment.
Speaker 1: The research that you guys have done on industrial production
Speaker 1: worldwide and manufacturing. You came out quite early and said
Speaker 1: that there are some one off factors behind the manufacturing
Speaker 1: recession we are seeing as it was gaining momentum, and
Speaker 1: you think they're fading. And what I find really interesting
Speaker 1: is not where we are right now, where will be
Speaker 1: month end? Were set to get an interest right cut.
Speaker 1: It's what the economy looks like going into the back
Speaker 1: end of this year. And your base case with a
Speaker 1: right cup without a rate cut is things are going
Speaker 1: to improve. So just walk me through that because I
Speaker 1: think it's important, right well, I I really separate the
Speaker 1: real economy into global manufacturing trade industrial production, which of course,
Speaker 1: as a US component and labor market, households in developed economies,
Speaker 1: so on. On the first, on industrial production, basically, trade
Speaker 1: uncertainty tariff fears caused a sharp, sharp slowdown towards the
Speaker 1: end of last year, centered on a drop in imports
Speaker 1: in China. UH. And so from October to March you
Speaker 1: had really bad global industrial production growth, and the Chinese
Speaker 1: industrial production data, for mysterious reasons, didn't really reflect it.
Speaker 1: But um, but I think, you know, I I think
Speaker 1: we had a really big slump. It wasn't a U
Speaker 1: S slump, but it was a big slump. March to May,
Speaker 1: we actually had some recovery. Um. Since since the tariffs
Speaker 1: went up, it's likely that we're back in that slump
Speaker 1: in manufacturing activity. UH. Investment is likely to be pretty
Speaker 1: soft in manufacturing globally. But meanwhile, the labor market in
Speaker 1: the US, nothing has happened. Inflation in the US nothing
Speaker 1: has happened either. Financial services inflation, which they can't measure,
Speaker 1: came down a little bit. Basically, the rest of the
Speaker 1: inflation data are stable, and if anything, core inflation is
Speaker 1: likely to rise. So so you know, basically you've got
Speaker 1: two things. You've got a manufacturing slump, which should really
Speaker 1: get no worse, but not really, you know, we don't
Speaker 1: see robust growth and inflation and and and unemployment where
Speaker 1: basically still nothing is happening. I've never seen Sweeney is
Speaker 1: fired up. What solid mean? Do you? When when the
Speaker 1: when these fancy guys at these institutions say it's a
Speaker 1: solid economy? What solid you? Because right now, I mean
Speaker 1: unemployment is at three six three seven GDP. Growth for
Speaker 1: the first half of the year is going to be
Speaker 1: mid two's um you know, corporates the flow of credit
Speaker 1: to just about anyone who wants it in the US,
Speaker 1: it's pretty good right now. So what's not solid? Really?
Speaker 1: The straight James Sweeney with se does David Blanche Flowers
Speaker 1: no doubt listening up in the handover thew Hampshire going
Speaker 1: he doesn't know he's talking about he wants. Do you
Speaker 1: think Danny wants fifty beats? I'm not sure I actually
Speaker 1: I haven't spoke to him for a couple of weeks,
Speaker 1: but imagine it's up there at the fifty level. I
Speaker 1: think he wants a big adjustment. You too short of
Speaker 1: is it now? A chapterin Man of City Groupe The
Speaker 1: Chief Economists and always kept a man on international economics,
Speaker 1: except we're not going to do that on a New
Speaker 1: York Friday. We're going to talk domestic economics with Dr Man.
Speaker 1: What is the research that you see with your vast
Speaker 1: team at City Group? Is it an economy that justifies
Speaker 1: no decision? I guess an out front basis point cut
Speaker 1: or Catherine, can you get all dramatic today and tell
Speaker 1: me we need a fifty basis point cut? Well, you know,
Speaker 1: I think that there's been um, some real challenging communications
Speaker 1: that the FED has been uh presenting to us. I
Speaker 1: think your person who is on before talks about fresh
Speaker 1: clues as if you know, we're trying to uncover the
Speaker 1: true FED, and I think we're The real challenge here
Speaker 1: is that there was a very dramatic pivot from language
Speaker 1: that used the vocabulary of patient monitor data dependence to
Speaker 1: change to language and vocabulary of preemptive, preventive, large and
Speaker 1: bold moves. And so you know, it's like, Wow, how
Speaker 1: do we all of a sudden move from patient and
Speaker 1: monitoring and data dependence to something completely different? Because the
Speaker 1: incoming data for the United States do not warrant change
Speaker 1: in tone, and so it's what happened? What what did
Speaker 1: we see? In? Frankly, the incoming data from the foreign
Speaker 1: economies as well, does not warrant the type of market
Speaker 1: pricing in of dramatic action of you know, fifty basis
Speaker 1: point to mark. The market UM is pricing in much
Speaker 1: more than the data warrant, and they are effectively pricing
Speaker 1: in this recent language change, which is also a puzzle
Speaker 1: because the language change is dramatic without the data being
Speaker 1: with it being dramatic, Doctor man, how did we get
Speaker 1: to the point where we're preemptive? And if you read
Speaker 1: melts or three volumes or Timberlake of the Georgia School
Speaker 1: or Bernanke and the rest of it from academics, where's
Speaker 1: the evidence of preemptive works? Well, we can go back
Speaker 1: to the you know, the long and variable lags UH
Speaker 1: story about monetary policy, that it does take a long
Speaker 1: time for monetary policy to work through um the real
Speaker 1: side of the economy, because in the olden days, that
Speaker 1: was the channel you changed monetary policy. Banks reacted, then
Speaker 1: you had to change in the cost of capital uh
Speaker 1: to cost of credit, and then and then that followed
Speaker 1: through the real economy. And so so you did need
Speaker 1: to look very far forward, uh to prospects for the
Speaker 1: economy and adjust monetary policy appropriately in light of the
Speaker 1: change in economic activity. And then of course also we
Speaker 1: cared a lot about inflation um and that also had
Speaker 1: long and variable lives to affect inflation um. But we're
Speaker 1: at a time right now where what matters more or
Speaker 1: seems to be much more of the dynamic is the
Speaker 1: market expects something to happen, for the FED to move
Speaker 1: in a particular way, and then if the FED does
Speaker 1: not deliver on what the market expects, then that yields
Speaker 1: an implied tightening. The market believes the implied tightening, even
Speaker 1: if there's no change at all, the implied tightening generates
Speaker 1: a real tightening, or they believe so, and that real
Speaker 1: tightening has consequences for the real side economy. And and
Speaker 1: you know, we can argue about whether or not that's
Speaker 1: that's appropriate or to consider, but it means the transmission
Speaker 1: mechanism is very different. So, Katherine, I'm just looking at
Speaker 1: one of your recent notes and the charts that you
Speaker 1: find interesting. I'm looking at the one on job growth.
Speaker 1: I mean, you know, you look at some of the data.
Speaker 1: This is a data dependent FED. The jobs growth would
Speaker 1: suggest that the FED can maybe sit this one out,
Speaker 1: But that's not what the language seems to be. Well,
Speaker 1: that's right. I mean, as I say, we when the
Speaker 1: you know, the language uh was patient, monitor and data
Speaker 1: to pantheons uh and then it and then then it
Speaker 1: really really pivoted very rapidly to this notion of needing
Speaker 1: to have insurance guns or preventive cuts, preemptive uh cuts UH.
Speaker 1: And I think that they're you're getting very different language
Speaker 1: from from different members of the broad body, not just
Speaker 1: the f o MC that there is, the voting body,
Speaker 1: but the broad body that addresses the state of the
Speaker 1: U S economy, state of the global economy and how
Speaker 1: it impacts the US economy as part of the decision
Speaker 1: making process. So you are starting to you know, you
Speaker 1: are seeing quite a range of views uh in in
Speaker 1: the in the commentary. But but the market had definitely
Speaker 1: tended to um focus quite a bit more on this preemptive, preventive,
Speaker 1: large and bold moves that have come out in in
Speaker 1: the most recent testimony and other commentary of the past
Speaker 1: several days too short of visit, Dr Man, thank you
Speaker 1: so much for joining us. Really wonderful to get a
Speaker 1: briefing from City Group chief economist Catherine Man this morning.
Speaker 1: It's rare, Paul, that we have someone dark in the
Speaker 1: door who has a degree in natural philosophy from William
Speaker 1: and Mary, which is so no, but I mean, I
Speaker 1: mean in physics right now, William and Mary. It's the
Speaker 1: William Smallhow small was Thomas Jefferson's iconic mentor, Like Jefferson
Speaker 1: always said, this guy is a guy that jumped started in,
Speaker 1: Lisa Ellis with us. What was it like doing physics
Speaker 1: where you're supposed to do history. You go to William
Speaker 1: Mary to do American history and you got out of
Speaker 1: slide rule? Yeah, yeah, that's right. Well when the Mary
Speaker 1: is beautiful as you highlighted, steeped in history. I was
Speaker 1: actually there during the three hundredth anniversary and the institution
Speaker 1: and um. But it's the natural sciences are strong too.
Speaker 1: There's a lot of um. The NASA has a big
Speaker 1: and wrong that barely describes the physics program as one
Speaker 1: of the best in the country. Paul, why don't you
Speaker 1: bring it from offa Nathan's and Lisa Ellis here on
Speaker 1: a on a three year old computer company that ain't
Speaker 1: get done? You know, I was saying earlier. I pulled
Speaker 1: up the five year chart on IBM, and it's returned
Speaker 1: to whopping negative one point two percent over the last
Speaker 1: five years. Just looking at the stocks at LASA, I
Speaker 1: know they reported earnings. What's what's the key takeaway here?
Speaker 1: I know you're not really constructive on the stock here,
Speaker 1: but what was the takeaway you took out of the earnings? Yeah,
Speaker 1: there's they were mixed results. That's the overall takeaway. The
Speaker 1: two that this strong the big positive and the strong
Speaker 1: negative pretty bipolar. Actually. UM on the on the positive side,
Speaker 1: the software number, which is a lot of what tends
Speaker 1: to move the stock on earnings, was quite good five
Speaker 1: point four percent for their software business. That's a very
Speaker 1: profitable business, very important to the sort of perpetuation of
Speaker 1: the franchise. UM. On the flip side, however, their cloud
Speaker 1: number was terrible. It was five percent in the quarter.
Speaker 1: That's down from twelve percent growth a last quarter. And
Speaker 1: this was a business that just in as of two
Speaker 1: thousand seventeen was doing. And obviously you compare that to
Speaker 1: you know, Microsoft to just reported and for Microsoft Azure,
Speaker 1: they're putting up numbers like an excess of sixty percent growth.
Speaker 1: So alright, so that brings us to red Hat. Red Hat,
Speaker 1: as I recall, was a big acquisition presumably going to
Speaker 1: help them in the cloud. What can you tell us
Speaker 1: about red Hat You think that is going to do
Speaker 1: what IBM needs to be done to their cloud business? Well,
Speaker 1: it it definitely helps UM, you know, within the scale
Speaker 1: of IBM. Unfortunately, just from a financial perspective, it doesn't
Speaker 1: move the needle that much just because of the difference
Speaker 1: in scale UM. But from a competitiveness perspective, it helps them.
Speaker 1: The real area where IBM is struggling right now in
Speaker 1: cloud is in the platform as a service business. That's
Speaker 1: where they would compete with like a Microsoft Azure. Red
Speaker 1: Hat has one of the leading products in that space,
Speaker 1: their open Shift product. Again, financially not a big deal,
Speaker 1: it's only a few hundred million in revenue, but more
Speaker 1: strategically it should help IBM positioning in that space where
Speaker 1: IBMS product, uh you know, has been lagging those piers.
Speaker 1: I look at the vectors of their income statement and frankly,
Speaker 1: if you didn't know what was IBM their constructive EBITA
Speaker 1: manage rising, free cash flow manage rising. The revenue line
Speaker 1: is an unmitigated disaster at the board level. Are they
Speaker 1: just simply managing IBM to be a smaller company? Uh, realistically, yes,
Speaker 1: I mean they are in you know that sort of
Speaker 1: like shrink to grow type of mode. Does that work
Speaker 1: in your experience at Mackenzie years ago? Does Mackenzie do
Speaker 1: shrink to grow? What is that? Well? I mean meaning
Speaker 1: there are pieces of IBM that are in areas of
Speaker 1: of of I T that are in structural decline and
Speaker 1: they've got to work their way well the challenges that
Speaker 1: you know, IBM is really about major large customers where
Speaker 1: they are selling almost like an all you can eat.
Speaker 1: They sell hundreds of millions in software servers services. Microsoft
Speaker 1: does that as as well. That's true, but they the
Speaker 1: point is you can't really break apart those pieces. It's
Speaker 1: like the you know, it's like these large customer situations.
Speaker 1: So they sort of have to just manage manage through that,
Speaker 1: you know, runoff of some of the declining area. Do
Speaker 1: not know this? They have three employees? Yeah, wow, that's right.
Speaker 1: It's because they still are the within IBM um they
Speaker 1: have over forty you know, over half of IBM's revenue
Speaker 1: is in services. They actually are still although Accenture is
Speaker 1: inching up on them, the single largest I T services
Speaker 1: player out there. That's why they that's the hundreds of
Speaker 1: thousands of employees are there services. So at least I
Speaker 1: see on August two they're having an investor webcast. They're
Speaker 1: not even gonna bring you in for the rubber chicken.
Speaker 1: It's just a webcast. So what do they need to
Speaker 1: get across to the street on this August two kind
Speaker 1: of webcast with this kind of their investor meeting. The
Speaker 1: UM Well that the key thing in the immediate term
Speaker 1: for the street is going to be numbers. There is
Speaker 1: some uncertainty around how red Hat because it's a software company,
Speaker 1: there's this purchase Accounty Dynamics is going to fold in.
Speaker 1: So they're going to give new twenty nineteen guidance. They're
Speaker 1: also going to give some new medium term guidance around
Speaker 1: the revenue and earnings and free cash flow impacts on
Speaker 1: the business for the street. Honestly, a lot of it
Speaker 1: will be about that, but I think to get the
Speaker 1: stock to move positively, they'll need to give more tangible
Speaker 1: UM nearer term meaning twenty type of time frame synergies
Speaker 1: from Red Hat and they talk a lot about the
Speaker 1: concept of the synergies, but not a lot about the
Speaker 1: numbers for ten years. I mean they're all concept. I mean,
Speaker 1: you know the stock is up this year. Let's give
Speaker 1: a little bit of a break. Okay, there are one
Speaker 1: your targets one right, that's right. How soon do we
Speaker 1: get to your target? I mean is this by next week?
Speaker 1: Or uh no, we would we I mean our price
Speaker 1: targets are when your price targets, so that would be
Speaker 1: a one year time frame. Um, the big, the big
Speaker 1: question marks are going to be you know, the this
Speaker 1: you know will Will red Hat. Really it can't just
Speaker 1: be red Hat folded into IBM. Red Hat has to
Speaker 1: make the broader IBM businesses be better to really change
Speaker 1: that long term, like you said, that long term negative
Speaker 1: trajectory on the revenue, and that's what we'll all be
Speaker 1: watching for. Just does that cloud number get better? Right now?
Speaker 1: Cloud number five percent versus azure at sixty three I
Speaker 1: think percent or sixty seven was the number they put up.
Speaker 1: You know that those growth rates need to start normalizing.
Speaker 1: You're sit in the same room with Moffatt Nathanson. Do
Speaker 1: you have to hear them? They do? They sit right
Speaker 1: to write down the hall from me and you just
Speaker 1: you just all day. It's media, media, cable. What's the content?
Speaker 1: Very quickly, what's the content of IBM? It's a Nathanson question.
Speaker 1: What's the content of IBM, meaning like what what's their future?
Speaker 1: What's the code? Yeah, that means cloud software at services.
Speaker 1: That's I mean they there with the d n A
Speaker 1: and the specialty is infrastructures. Is is big enterprise I
Speaker 1: T infrastructure services like the platforms that run business software.
Speaker 1: So this includes everything from the servers, the storage, the
Speaker 1: middleware layers, the service you know, the labor that wraps
Speaker 1: around that. And that's what's moving into these cloud models
Speaker 1: and they need to be a leader there. Lisa, thank us.
Speaker 1: Lisa Ellis Moffatt Nathanson with a cell on international business
Speaker 1: right now out of Stanford, and not a body joins us.
Speaker 1: She has been just superb on questioning banks in the
Speaker 1: shadows of the shadows within our banking system were under
Speaker 1: the professor body join us this morning. Wonderful to have
Speaker 1: you with us. Professor you're right about the leverage ratchet effect.
Speaker 1: Are we leveraging up a global system as we did
Speaker 1: in two thousand five? In two thousand six. Yeah, I
Speaker 1: think that basically the system continues to be built on
Speaker 1: piles and piles of that, and we you know, it
Speaker 1: all worked wonderfully with leverage on the upside, but there's
Speaker 1: leverage on the upside. Is a character of the leverage
Speaker 1: build up this time? Is it different than what we
Speaker 1: saw twelve years ago? You know, they're they're always variations
Speaker 1: on exactly what it is that that's the underlying assets.
Speaker 1: But fundamentally, you know, that is that you invest in
Speaker 1: various things. You call them, you know, loans or other
Speaker 1: real world, real world economy firms, our small businesses, you know,
Speaker 1: leverage loans. They now call them covenant light loans, you know,
Speaker 1: not subprime mortgages, um where households are as indebted. But yeah,
Speaker 1: that is a huge part of the economy. So, professor,
Speaker 1: just ten years after the financial crisis, wonder if you
Speaker 1: could just give us a sense of or your sense
Speaker 1: of kind of the state of the US financial system.
Speaker 1: Is it safer than it was pre crisis? I don't
Speaker 1: think it's fundamentally safer. I think, uh, it's you know,
Speaker 1: you could imagine where the next big shock will come from.
Speaker 1: Will it come from from you? Know, business or corporations
Speaker 1: default or will it come from I'm kind of scared
Speaker 1: of any kind of cyber problem. Uh, any many hacking
Speaker 1: or some systems crashing and all of a sudden, uh,
Speaker 1: you know, if a fragile system collapses. So I think
Speaker 1: that it's still remains very difficult to see through a
Speaker 1: system that's so connected and so global and so uh.
Speaker 1: There is a lot of debt, and a lot of
Speaker 1: debt that we don't see it off balance sheet commitment,
Speaker 1: things that can sort of trigger all kinds of contagion
Speaker 1: mechanisms that we saw. So I'm not I'm not feeling
Speaker 1: that it's much different. Professor. In your paper, you have
Speaker 1: a wonderful literature review of thinking about our behavior when
Speaker 1: we leverage up and you go back to you know,
Speaker 1: I love the paper from the late eighties Jacob Frankel
Speaker 1: Folks now the chairman of JP Morgan International, Michael Dooley
Speaker 1: legendary and Peter Wickham as well, and I remember that
Speaker 1: paper is being foundational to the fact that we leverage
Speaker 1: and then we're successful, so we feel good, So we
Speaker 1: leverage more and we feel successful, so we feel good,
Speaker 1: which everybody would say, well, that's a normal human condition.
Speaker 1: What's changed now from the time of Frankel, Dooley and
Speaker 1: Wickham not much. Our paper that you're referring to, for
Speaker 1: me was a revelation because for a long time we
Speaker 1: you know, we teach basic corporate finance and we teach
Speaker 1: about that and equity funding, and we have a very
Speaker 1: static way of thinking about it. You know, you sort
Speaker 1: of put in place that and equity and then the
Speaker 1: world ends, at least in the story we tell, and
Speaker 1: we talk about how the risk gets split between that
Speaker 1: and equity and all of that. But if you look
Speaker 1: at it for a living, breathing, you know, firm, what
Speaker 1: ends up happening is that there's a very uh over
Speaker 1: time because you keep making decisions both investments exactly balancy,
Speaker 1: you become sort of addicted to it. And that's what
Speaker 1: we explored. And it's interesting because a while ago, when
Speaker 1: I got into banking, someone us talking about why about
Speaker 1: leveraging exactly what you're saying that if you gamble with
Speaker 1: board money and you succeed, then you think leverage is
Speaker 1: wonderful and that you're smart. Yeah, you're jenous. So now
Speaker 1: thank you so much, and automounting with us from Stanford,
Speaker 1: the leverage, ratchet effect. Me A Feynman joins us. Now
Speaker 1: the curator in photography at the museum, with an ample
Speaker 1: history of massaging black and white film, and she joins us, Uh,
Speaker 1: now me a congratulations on your show. Have you been
Speaker 1: stunned by the turnout? I visited a couple of days
Speaker 1: ago and it was packed. Is it had a genuine interest? Oh?
Speaker 1: Hi Tom, Uh Yeah, it's been a very popular show. Uh,
Speaker 1: but I did expect that. I mean, everybody likes the moon,
Speaker 1: you know, it's and and with the anniversary, there's just
Speaker 1: so much going on around Apollo Leap and thinking about IP.
Speaker 1: I love the imagery and then you slam it at
Speaker 1: the end with the TV set, the old antique nine
Speaker 1: TV set of Walter Cronkite. Why did you do that?
Speaker 1: Why did you go from the still photography all the
Speaker 1: way through the imagery, the paintings and then right at
Speaker 1: the end, boom, there we were in ninety nine. Um, well,
Speaker 1: we thought it would be. We had to show the
Speaker 1: video in some way because it really was the first
Speaker 1: worldwide media events that everybody tuned into and that's how
Speaker 1: most people experienced this moment. And so we felt that
Speaker 1: putting it on a vintage television set and letting people
Speaker 1: watch the CBS news footage, uh and see Neil Armstrong's
Speaker 1: first steps on the moon was a way of bringing
Speaker 1: that experience to life in a visceral way. There are
Speaker 1: imageries within all of our past about science, and of
Speaker 1: course the huge up or now of some would say
Speaker 1: the death of science. We think New Jersey Institute of
Speaker 1: Technology for their commitment on Bloomberg surveillance to science. But
Speaker 1: you know, I think of Peter Coyote and the keys
Speaker 1: clinking and et and they're just these these images that
Speaker 1: we have, and so much of that comes from Tom Hanks,
Speaker 1: the actor. He wrote the introduction to your book. Explain
Speaker 1: how Tom Hanks looks at your Moon show in this
Speaker 1: moment of Apollo history. Well, Tom Hanks's introduction is really
Speaker 1: beautiful and poetic, and he sort of steps back and, uh,
Speaker 1: you know, looked at the big picture of you know
Speaker 1: what the mystery of the moon and how this mysterious
Speaker 1: shining orb in the sky has always fascinated human being
Speaker 1: from the very beginning of time. Um and looks at
Speaker 1: the different ways you know, sort of talks thinks about
Speaker 1: the different ways that people have interpreted the Moon, you know,
Speaker 1: as a goddess um as you know, and and you know,
Speaker 1: up into the space age where we actually were able
Speaker 1: to um get human beings there to another planet in
Speaker 1: time and putting the chronology together, what was the biggest
Speaker 1: surprise for you, I mean your expert in you know,
Speaker 1: the derogatypes and the photography and the film and all
Speaker 1: that in the art and the other exhibit as well,
Speaker 1: But what was the biggest surprise for you in that chronology? Um? Well,
Speaker 1: I had never really thought about the far side of
Speaker 1: the moon, the decide that we never see and how
Speaker 1: that is always been the ultimate mystery, something that human
Speaker 1: eyes had never seen until nineteen nine when the Soviets
Speaker 1: sent an orbiter around the Moon with the camera inside
Speaker 1: of it, and then they sent some pictures back. And
Speaker 1: this photograph that's in the exhibition is the first time anyone,
Speaker 1: any human being has ever seen this. And that that
Speaker 1: I found kind of moving and and and you know
Speaker 1: a little thrilling, you know. So that was that was
Speaker 1: a surprise for me. If you're joining us on this
Speaker 1: day of a pottle eleven Mia Fineman with us with
Speaker 1: a spectacular show at the Metropolitan Museum of Art of
Speaker 1: the imagery of the Moon and goes back to Friederich
Speaker 1: painting that we all grew up with. Yeah, everything, But
Speaker 1: did you do you have a copy of good Night
Speaker 1: Moon in there, the children's book that everybody grew up.
Speaker 1: We've got that in the gift shop. The gift shop.
Speaker 1: You couldn't get a first edition a good Night to
Speaker 1: show the literature of it. There's so much popular culture
Speaker 1: around the Moon, um. And you know, if we if
Speaker 1: we had, like you know, another few galleries could have
Speaker 1: gone down that road. But we just we had to
Speaker 1: make a lot of hard decisions about what to include
Speaker 1: and what not in the in the exhibition itself, and
Speaker 1: some very good decisions. Well, Mia, Fireman, thank you so
Speaker 1: much for joining us an incredibly busy week, a successful
Speaker 1: show at the Metropolitan muse uh Museum of our Apollos
Speaker 1: mus The Moon in the age of photography really can't
Speaker 1: say enough about it as well right now with my
Speaker 1: past in his past, Robert Moon shows up. Of course
Speaker 1: he has provided huge leadership for surveillance on the STEM
Speaker 1: Report every morning and the science of it. And you
Speaker 1: and I go way back on this to the absolute
Speaker 1: sweat Bob Moon and it's seen in Mia Fireman Show.
Speaker 1: We didn't know what we were landing on, did we know?
Speaker 1: Not until we finally clue. We finally put some sort
Speaker 1: of spacecraft up there to take high resolution pictures. And
Speaker 1: you know, you and I were kids. We wore kids once.
Speaker 1: It's hard to believe. I bow tie on the boats
Speaker 1: and uh. And when I was a kid, my mother
Speaker 1: worked for Hughes Aircraft and they built the Surveyor lander
Speaker 1: and uh. And I remember all the while she was
Speaker 1: doing the wiring, she was doing the harnesses that held
Speaker 1: all the wires that ran the cameras and and that
Speaker 1: sort of thing. I remember her telling me what she
Speaker 1: was doing and not quite really understanding the significance of
Speaker 1: it and what's great about it. Whether it's surveyor, which
Speaker 1: my father was hugely excited about, he did not it
Speaker 1: was an ranger, which was as a kid, was so
Speaker 1: exciting because they're going to fly it right into the
Speaker 1: moon and they'll be that last photo before and this, folks,
Speaker 1: this is way before nine. It's like five six, seven
Speaker 1: years before is it was all bolts and steel. You know,
Speaker 1: you think about it, directors, how did we, in that
Speaker 1: very short amount of time get to the Moon. And
Speaker 1: I think about all these stories, like my mom's story,
Speaker 1: of all these people all across the country having a
Speaker 1: role in getting us there. I mean, she had a
Speaker 1: personal role in finding out if we could even land
Speaker 1: on the surface of the Moon by helping to build
Speaker 1: that spacecraft. People built the rocket engines, people built the
Speaker 1: lander that Neil Armstrong and Buzz Aldrin used. That was
Speaker 1: a Grumming product, and and all of those different things.
Speaker 1: Indulge me with just a quick bit of family folk clues.
Speaker 1: When I was growing up, I came home from school
Speaker 1: one day a little kid, and there was a Manila
Speaker 1: envelope sitting on the living room table, and I asked
Speaker 1: my mom, what's that? And she showed it to me.
Speaker 1: She pulled out a picture of herself. It was a
Speaker 1: glossy picture of her in a one piece piece bathing suit, right,
Speaker 1: And I what's that? She said, Well, they needed to
Speaker 1: test the cameras for the surveyor, and so they took
Speaker 1: this picture to the resolution studies and that sort of thing.
Speaker 1: And I didn't know whether that meant that her picture
Speaker 1: was going to be on the Moon. To this day,
Speaker 1: I think that I looked at the schematic for the surveyor.
Speaker 1: There's a little little part of the surveyor that says
Speaker 1: focusing target, and I wonder if my mom is up
Speaker 1: there there's a focusing target. I got a million anecdotes
Speaker 1: of this, folks, and I'll just give you one. When
Speaker 1: I was fifteen, I couldn't go to Germany. There was
Speaker 1: a stamp in my passport that I was not allowed
Speaker 1: to go to Germany. That's how tense it was. It
Speaker 1: was really as you know it, Hughes. My father was
Speaker 1: with the Eastman Kodak company up in the land of
Speaker 1: genesc and uh, it was, you know, within all the
Speaker 1: remembrance of it, it was really serious time, wasn't it was?
Speaker 1: It wasn't We were in a race. We were in
Speaker 1: a race to the moon, and it was serious. Thank
Speaker 1: you so much for those remembrances. Thanks for listening to
Speaker 1: the Bloomberg Surveillance podcast. Subscribe and listen to interviews on
Speaker 1: Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. I'm
Speaker 1: on Twitter at Tom Keane before the podcast. You can
Speaker 1: always catch us worldwide. I'm Bloomberg Radio