Speaker 1: Welcome to the Bloomberg Surveillance podcast and I'm Tom Keene.
Speaker 1: Daily 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. Joining
Speaker 1: us right now is David mal Pass. Here is Mr
Speaker 1: Trump's selection his World Bank president. He's come in under
Speaker 1: some controversy and then he has had to focus on
Speaker 1: this horrific virus. He is a physicist from Colorado College. David,
Speaker 1: I want you to look right now at the inertial
Speaker 1: force of this ugly pandemic. How is your world bank
Speaker 1: adapting to the momentum of this pandemic? Hi? Hi, Tom,
Speaker 1: and John and Lisa. So the adapt the world banks
Speaker 1: doing okay. People are able to work from home. We
Speaker 1: gotten a lot of programs out over a hundred programs
Speaker 1: that are directly at the health emergency. The problem is
Speaker 1: that developing countries are under immense pressure because of the
Speaker 1: global recession, that economic shutdown in the advanced countries, and
Speaker 1: the pandemic itself is still spreading through countries. Uh. And
Speaker 1: they also entered this problem with a lot of debt
Speaker 1: already on their books. So those are the problems that
Speaker 1: we're trying to address as we as the recession deepens,
Speaker 1: and then we hope find the other side and we
Speaker 1: come out of it. In your distinguished career at bear Sterns,
Speaker 1: and particularly David, as you build out that world best
Speaker 1: Latin American coverage at bear Sterns, there was a mechanism
Speaker 1: for challenges in the third world in the emerging markets.
Speaker 1: Are the mechanisms there right now or do we just
Speaker 1: have to go to a debt suspension? I mean, can
Speaker 1: we use the processes in the e M that we
Speaker 1: have available or is this a new territory. I think
Speaker 1: we have to look at new territory because the debt
Speaker 1: itself has changed. In the nineteen eighties, I was in
Speaker 1: the regular administration and there was a Latin debt crisis
Speaker 1: that had come from the petro dollar recycling. Remember, the
Speaker 1: oil prices had been high and so the banks could uh.
Speaker 1: The banks had a lot of deposits and they would
Speaker 1: lend those to the developing world, and the problem was
Speaker 1: they didn't get paid back when oil prices went low.
Speaker 1: So it was a bank crisis because they couldn't the
Speaker 1: bank deposits were a big portion of the capitalization of
Speaker 1: the banks or they were critical. Um, it was syndicated loans.
Speaker 1: So this is quite different. There's euro bonds involved. Uh.
Speaker 1: There so a lot more commercial creditors than in in
Speaker 1: the past. Uh. And also the nature of the debt China.
Speaker 1: China is a much bigger player in this. They weren't
Speaker 1: really a creditor in the nineteen eighties. So that those
Speaker 1: two changes mean you have to look at a different process.
Speaker 1: What we're doing is a suspension of debt payments. Now
Speaker 1: that that that's the official bilateral creditors, and we're encouraging
Speaker 1: the commercial creditors to stop taking payments from the poorest countries. Uh.
Speaker 1: That that's a response to the crisis. David, you do
Speaker 1: not represent the Trump administration, but you were certainly selected
Speaker 1: by the president to take over this important task at
Speaker 1: the World Bank. Great, he's going after other institutions, his
Speaker 1: own CDC, He's going after the World Health Organization for
Speaker 1: all I know, he's going to go after the World Bank.
Speaker 1: How should your institution respond to a president who is
Speaker 1: not an internationalist? One correction Toime, I wasn't selected by him.
Speaker 1: I was proposed by him to the World Community. I
Speaker 1: was happy to be elected noted that board by the
Speaker 1: Board and Governors of the World Bank unanimously. And it's
Speaker 1: been going well in terms of the changes that we're
Speaker 1: making at the World Bank that can help countries with growth,
Speaker 1: with better living standards, with all the things that were
Speaker 1: that we're trying to do, climate, education, health, uh and
Speaker 1: on down the line. Poverty is a big part of
Speaker 1: the problem. Um so if you if you boil it down,
Speaker 1: we want to have international cooperation among the various organizations,
Speaker 1: but the drive for growth has to come from individual countries.
Speaker 1: So that's what we're trying hard to do at the
Speaker 1: World Bank. Are we have country offices in almost all
Speaker 1: of the developing countries, and those offices work with the
Speaker 1: governments to find out what will work best for the
Speaker 1: countries and then we can help fund it with grants
Speaker 1: and loans. You know, the World Bank heavily is doing grants,
Speaker 1: which helps a lot with the net positive flow into
Speaker 1: the poorest countries. That's what we want others to do.
Speaker 1: You know, it's it's hard to say you're going to
Speaker 1: make a own to a country that's that's in extreme poverty.
Speaker 1: Because where they're going to get the resources to pay
Speaker 1: it back, So we try to shift the balance towards grants, David,
Speaker 1: that seems to be a theme throughout the world, certainly
Speaker 1: in Europe, the idea of grants not loans. We're also
Speaker 1: talking about debt reduction, and you have been on the
Speaker 1: record saying that you do think that there needs to
Speaker 1: be some debt reduction throughout the developing world. How big
Speaker 1: a haircut are you talking about. Well, we we need
Speaker 1: to do the analysis of countries and what their debt
Speaker 1: sustainability levels are, how much debt can they support, and
Speaker 1: then reduce the amounts of debt to that. But right now,
Speaker 1: the bigger, the immediate problem is the need for transparency.
Speaker 1: One thing that's going on in the market is debt
Speaker 1: rescheduling and restructuring where people don't know what the terms are,
Speaker 1: and that means other creditors are reluctant to participate. Uh,
Speaker 1: if there's if there's not knowledge of the terms. When
Speaker 1: I'm saying terms, for example, governments in the poorest countries
Speaker 1: are sometimes borrowing money and it's never disclosed how much
Speaker 1: they're supposed to pay. Then the government leaves and the
Speaker 1: people of the country are left with the burden of
Speaker 1: the debt. That's something that's a cycle, that a debt
Speaker 1: cycle that we have to get out of because the
Speaker 1: politicians or the leaders can benefit from the immediate loan,
Speaker 1: but then it's very hard for the people of the
Speaker 1: country to repay that. David in the news this weekend
Speaker 1: Listalize article in the Washington Post on Lebanon was heartbreaking.
Speaker 1: How can you affect assistance to a Lebanon It's being
Speaker 1: absolutely crushed right now. These are tough, tough challenges. Lebanon
Speaker 1: had taken deposits into its banking system and paid a
Speaker 1: very high interest rate. I think you know, I'll test
Speaker 1: your history, but remember the SNL crisis long ago in
Speaker 1: the US. You had this elevated interest rate that made
Speaker 1: it look good for depositors, but then when they began
Speaker 1: to withdraw, it created a banking crisis. Um, what we're
Speaker 1: doing in Lebanon is trying to support the social safety
Speaker 1: net that means actual cash to actual people, individual people,
Speaker 1: rather than trying to run it through the government in
Speaker 1: the banking system, which is so problematic now. David, don't
Speaker 1: test Tom's history. Will be here all day. He'll start, David,
Speaker 1: you know how this works. We'll be here for a
Speaker 1: long long time. You know as well as I do
Speaker 1: that everybody wants to receive a grant. Nobody wants to
Speaker 1: receive a loan. When you say there needs to be haircuts,
Speaker 1: who are you speaking to? That the the official bilateral
Speaker 1: creditors right now, and so that's uh, that's uh institutions
Speaker 1: in the US government institutions that are lending heavily. More
Speaker 1: than half of it now is China. Chinese institutions that
Speaker 1: have lent to these countries. Uh. They what they're doing
Speaker 1: right now is putting the debt payments at the end
Speaker 1: of the term. They're they're pushing it down the down
Speaker 1: the line rather than reducing it, so the net present
Speaker 1: value is being preserved. At some point, you have to
Speaker 1: reduce the net present value in order to create light
Speaker 1: at the end of the tunnel for the poorest countries.
Speaker 1: That's what we're that's what I've proposed. Also, the commercial creditors,
Speaker 1: the G twenties already asked them to do comparable treatment,
Speaker 1: meaning they would be reducing the net present value of
Speaker 1: the of the of their loans or of what's owed
Speaker 1: to them we're talking about, remember, the poorest countries. So
Speaker 1: given the pandemic, it doesn't make much sense for the
Speaker 1: wealthier countries and creditors to get back all of their
Speaker 1: money from the poorest countries and the people in those countries.
Speaker 1: We could just as well be talking about Europe, but
Speaker 1: we're talking about much much poorer countries. David, of course,
Speaker 1: and you have a lot of empathy for what they're
Speaker 1: going through right now, and I can sense that when
Speaker 1: you send this message to the Chinese Communist Party, how
Speaker 1: receptive are they? Yeah, They're They're receptive. President She has
Speaker 1: said he wants to fully participate and he wants all
Speaker 1: Chinese agencies to put fully participate in the suspension initiative.
Speaker 1: Then that gets into the details of what that means.
Speaker 1: So that's why what I've tried to do in the
Speaker 1: G seven meetings last Monday a week ago, and in
Speaker 1: the G twenty on Saturday, is be very specific about
Speaker 1: the need for the transparency. I'll give you one example.
Speaker 1: Central banks have been making deposits into other central banks
Speaker 1: and not not labeling it alone, so you make you know,
Speaker 1: I'll just put money in your bank account, but it's
Speaker 1: really still my money. But it's not alone to you
Speaker 1: that that needs to have more transparency on that practice,
Speaker 1: so that others when they're lending or giving grants to
Speaker 1: these countries know what the totality of the debt is.
Speaker 1: So a lot of the work that we're doing this
Speaker 1: month and next month, what the World Bank is, what
Speaker 1: I've had people doing is put on the websites all
Speaker 1: the information that we have and then invite more information.
Speaker 1: We can shine shine a lot of light on this
Speaker 1: and make progress. The reason it's so important is countries
Speaker 1: can then invite investment into their countries with the knowledge
Speaker 1: that it's that it's transparent, that the investor the new
Speaker 1: money coming in knows what it's getting. Devin mouth Pass
Speaker 1: fantastic to catch obvious, incredible inside and got to get
Speaker 1: you back on the program soon, Tavid mouth Pass there
Speaker 1: the World Bank President Casta nicol to now Intelligence Deputy
Speaker 1: director of research constant great to catch up and you
Speaker 1: just want me through that. Have we got an agreement
Speaker 1: on size and what does the discussion around strings attached
Speaker 1: sound like? Going into this evening, it seems that we
Speaker 1: have made some progress on the size of the actual
Speaker 1: recovery funds with these three nine billion in grants being
Speaker 1: proposed to by Chean Michel, the Council President. But as
Speaker 1: you just outlined, I think the question of kind of scrutiny,
Speaker 1: let's say, for you know, economic reforms on the ground,
Speaker 1: as well as the question of the rule of law
Speaker 1: when we're looking at the overall budget for Europe that
Speaker 1: is obviously still very much in the open and I
Speaker 1: think that's what we should be focusing on in the
Speaker 1: in the coming hours. Dr Nichol. There are there been
Speaker 1: changes since World War Two and how Europe does business,
Speaker 1: how Europe gets along. Is this one of those changes
Speaker 1: or is that asking too much? I think I think
Speaker 1: that's a good way of looking at it to be,
Speaker 1: to be honest, because this is politically transformative. What what
Speaker 1: what leaders are trying to couple together here. Let's make
Speaker 1: no mistake in terms of the overall size of the
Speaker 1: money that we're looking at, it probably won't be enough,
Speaker 1: So we'll be back to to to this point what
Speaker 1: in a couple of months, in a in a year
Speaker 1: or two from now. But I think the politically transformative
Speaker 1: moment is this idea of going to the to the
Speaker 1: market together as the European Union showing solidarity and also
Speaker 1: applying greater scrutiny for economic reform in those in those
Speaker 1: member states that are receiving the funds. So I think
Speaker 1: we shouldn't underestimate the political importance of what's going on
Speaker 1: here right now. That seems to be the argument from
Speaker 1: market participants as well, casting that it's not about size,
Speaker 1: it's about signal. And if this isn't enough, we've got
Speaker 1: a mechanism to come back and do it again. That's
Speaker 1: the takeaway. Overwhelmingly, that's the consensus. Custon. Do you believe
Speaker 1: that's the case. Is there any reason to believe that
Speaker 1: this is just a one off? No? No, I think
Speaker 1: that is the case, because you know, setting precedent in
Speaker 1: the in the process of European integration, if you look
Speaker 1: at it historically, UM, it has has always been very important.
Speaker 1: That of course, doesn't mean and I think that's the
Speaker 1: warning sign. That doesn't mean that the next round and
Speaker 1: the next steps that are still ahead of us will
Speaker 1: happen without conflict. Right So it doesn't mean that we're
Speaker 1: getting a deal today that basically sorts everything out going forward. Um.
Speaker 1: The closer we integrate, the more political conflict will play
Speaker 1: out on the European stage, and I think we're getting
Speaker 1: a first stage, the first taste of that already in
Speaker 1: these negotiations right now, of via concept tom politically transformative
Speaker 1: another way of saying, is it a Hamiltonian moment and
Speaker 1: the question of the frugal four and how they really
Speaker 1: feel towards the Southern states. Have there been any material
Speaker 1: concessions on the part of their attitude toward some of
Speaker 1: the southern states, and talking about Italy and Spain that
Speaker 1: are transformative in these negotiations, Carson, I think what is
Speaker 1: transformative here is the fact that even from the Bastian Cooks,
Speaker 1: the chancel of Austriy Mascult to the Prime Minister of
Speaker 1: the Netherlands, nobody has ever questioned the very idea of
Speaker 1: a recovery fund. That to me is the main, the
Speaker 1: main movement. We're fighting over, you know, five billion in
Speaker 1: Grandson in grants, we're fighting over the exact level of
Speaker 1: scrutiny and the government's mechanism to I'm sure that that's
Speaker 1: all good, that's that's all fine, But the very idea
Speaker 1: that in this exceptional situation the North of Europe that
Speaker 1: depends so heavily on the Single Market has to show
Speaker 1: solidarity with itself that had never really been questioned. And
Speaker 1: I think that to me is the is the change here,
Speaker 1: But Carson, this is important. Is Brussels changed by this
Speaker 1: or is another bare way until the next meeting. I
Speaker 1: think the most important thing that's changing is members states politics,
Speaker 1: domestic politics and the member states. And we've seen that
Speaker 1: over the last five to ten years everywhere across Europe.
Speaker 1: Were usually focused on the bad news, the rise of
Speaker 1: populism and so on and so forth, but you've also
Speaker 1: seen I mean, if you look at France, for instance,
Speaker 1: the emergence you know of of a staunchly pro European
Speaker 1: leader like like McCall, the change of heart that we've
Speaker 1: seen from Angela Machael in Germany on the last meters
Speaker 1: of her chansonship, that is, that is encouraging news. And
Speaker 1: so to me, the most important thing is what happened,
Speaker 1: is what's happening in the party systems of the most
Speaker 1: important member states, and they're indeed things have been happening.
Speaker 1: Cars and I hear you. The debate is about the
Speaker 1: size of this is not about the concept, and just
Speaker 1: by the very nature of the conversation right now. That
Speaker 1: is progress for the Europeans. On the final question though
Speaker 1: about the s evening, this has to be ratified at
Speaker 1: home for Prime Minister Rutter. How hard is he going
Speaker 1: to be this evening when it comes to strings attached
Speaker 1: to the grants they'll hand out. Yeah, I think that
Speaker 1: will be. That will be the key thing, of course,
Speaker 1: because he needs to be able to go home to
Speaker 1: the Netherlands and remember that we're going into an election
Speaker 1: year the marche Um and he's under massive pressure, of
Speaker 1: course from from the populist power right at home. So
Speaker 1: he needs to be able to go home and say
Speaker 1: we're not just putting money on the table, but we're
Speaker 1: actually gaining influence in the direction of better and more
Speaker 1: sustainable economic policies in the South. And if you can
Speaker 1: say that, then I think that's the pathway to would
Speaker 1: deal casta Nicol that's and no Intelligence Deputy Director of
Speaker 1: RESET first all that Dr Furman could join us, uh
Speaker 1: this morning. There's never been an Act ten, whether you
Speaker 1: do it virtual or in class, Jason this fall that
Speaker 1: has the magnitude of the changes we're seeing. How will
Speaker 1: we come out of these magnitude of changes, the magnitude
Speaker 1: of fiscal policy, the magnitude of monetary intrusion into our system. Well,
Speaker 1: first of all, will come out a lot better if
Speaker 1: we have a big magnitude. Then if we don't have
Speaker 1: a big magnitude, all the evidence of the last experience
Speaker 1: we had was going early, going big. You don't regret that, Um,
Speaker 1: you never regret that. I think a second thing, Tom,
Speaker 1: is we have to admit we're just uncertain. We don't
Speaker 1: know the path this virus is going to take. We
Speaker 1: don't know you know, what the pace of the recovery
Speaker 1: is going to be. It's very different in different states,
Speaker 1: and you need to build that uncertainty into your policy.
Speaker 1: Have it just automatically based on economic condition. We have
Speaker 1: a labor economics. Dr Furman did his move from furlough
Speaker 1: to I think layoff to now outright firings give us
Speaker 1: the tone you see in the American labor economy in
Speaker 1: the coming months. Will there be a wave of terminations, yeah, Tom,
Speaker 1: I think there's two downturns. One is the temporary layoff
Speaker 1: downturn that's like a natural disaster, and that's been getting
Speaker 1: better quickly. There's a second downturn, though, which is people
Speaker 1: who have been fired, people whose businesses have gone bankrupt.
Speaker 1: That downturn is getting worse a little bit every month.
Speaker 1: The fact that we're still seeing two million people claiming
Speaker 1: unemployment insurance, including the pandemic unemployment insurance, every week months
Speaker 1: after the shutdown, is very worrying about that second recession,
Speaker 1: which is sort of a normal recession and one that
Speaker 1: won't solve itself very quickly. Jason, Given the fact that
Speaker 1: we do not seem to be having the virus fully
Speaker 1: under control in the United States, given the fact that
Speaker 1: we've seen record numbers of cases over the past few weeks,
Speaker 1: how concerned are you about also an accelerating wave of bankruptcies,
Speaker 1: because some people are suggesting perhaps we've seen the peak
Speaker 1: when it comes to default. I'm worried about I mean,
Speaker 1: I mean, look, first of all, ultimately, bankruptcies are one
Speaker 1: of the functional things in the American economic system. We're
Speaker 1: better at bankruptcies and other countries we're better at having
Speaker 1: companies operate within it um that being had. If a
Speaker 1: lot of companies go bankrupt at once, if they don't
Speaker 1: have the financing to get through the bankruptcy and continue operating,
Speaker 1: that's what I'm really worried about and so want this.
Speaker 1: You know, for some companies, maybe the airlines should go
Speaker 1: through bankruptcy. That might be the right way to handle
Speaker 1: um their situation, but it would need to be done
Speaker 1: in an orderly and managed way. And yes, I think
Speaker 1: there's a lot more of them ahead of us, Jason,
Speaker 1: can you link the extension of the six hundred dollars
Speaker 1: of enhanced unemployment benefits with the corporate health of America?
Speaker 1: This idea that corporate profitability has been bolstered by those
Speaker 1: enhancement employment benefits? How much could that be threatened if
Speaker 1: there isn't an extension A lot. This is an amazing
Speaker 1: downturn where there's a huge hit to the U s
Speaker 1: eCOM ME, but consumer spending is right back where it
Speaker 1: was twelve months ago. Why is that? That's because disposable
Speaker 1: personal income is right back where it was, if not
Speaker 1: a little bit higher than it was twelve months ago.
Speaker 1: Why has income not fallen because of those unemployment insurance benefits?
Speaker 1: So um, this is a recession completely unlike the last
Speaker 1: one where you saw a huge decline UM in consumer spending.
Speaker 1: Here we've had the v shaped recovering consumer spending. It's
Speaker 1: been supported by the unemployment benefits um If they went
Speaker 1: away right now, it would be a big blow to
Speaker 1: the economent Jason, what's so interesting here is if it's
Speaker 1: a natural disaster, and if we can be optimistic that
Speaker 1: there will be a cure, there will be a better America,
Speaker 1: there'll be a better health, etcetera. What portion of the
Speaker 1: slowdown is strictly exogenous and drifts away or is any
Speaker 1: of it indogenous? And we really have to worry about
Speaker 1: an effect, a permanent effect on the American economy. I
Speaker 1: am worried that that natural disaster covers part of what
Speaker 1: we're seeing, But then you get the additional induced sort
Speaker 1: of normal recession that that causes. And you know, I
Speaker 1: have in my head a model where we get back
Speaker 1: about half of what we lost or two thirds of
Speaker 1: what we lost relatively quickly, and then the rest of
Speaker 1: it is a slog that takes years. So you know,
Speaker 1: just six digits. I don't want to pin you down here,
Speaker 1: but how much stimulus do we need in the next
Speaker 1: couple of weeks. We've got an operative number of one trillion,
Speaker 1: maybe one and a half trillion. We see a deficit
Speaker 1: out to four trillion. I mean, of those good numbers
Speaker 1: to you, are we low ball in the need? You know,
Speaker 1: if you did a well designed piece of legislation, I
Speaker 1: think about one point five trillion would be sufficient. If
Speaker 1: you throw in a bunch of nonsense which is likely
Speaker 1: to happen in Congress, and then you probably need brilliant
Speaker 1: Did you see how the professor from Harvard demigrates our politicians,
Speaker 1: calling it in a bunch of nonsense that doesn't happen
Speaker 1: in the United Kingdom. Well, he's not in government anymore,
Speaker 1: so it doesn't have to be as diplomatic, does he
Speaker 1: Isn't that the cheap guy to all this? Once you leave,
Speaker 1: Tommy can say, Jason, carry on. Just to be clear,
Speaker 1: by the way, I think the bulk of what's going
Speaker 1: to be in there is gonna be good. Some other stuff,
Speaker 1: don't wait, Jason, if we quote you will put that
Speaker 1: on the end. We promise, just to wrap things up, Jason,
Speaker 1: the experience of the last ten years, the nature of
Speaker 1: that particular crisis was so different to the nature of
Speaker 1: this one. Are there any lessons learned from a very
Speaker 1: shallow recovery in the previous ten years? For the recovery
Speaker 1: we were about to endure the one in front of us. Now,
Speaker 1: there were some things we could have done, stating local
Speaker 1: governments continued to cut back, it took about half a
Speaker 1: point of growth. Need to make sure they continue to
Speaker 1: be supported. Left time the stimulus ended prematurely. Need to
Speaker 1: continue it as long as it needed. But you know,
Speaker 1: I think there may be some sort of speed limit
Speaker 1: to how quickly people can reconnect to jobs, even if
Speaker 1: you have a lot of demand. And so, you know,
Speaker 1: we just need to be prepared for a lengthy recovery process,
Speaker 1: but do our best to speed it. One final question.
Speaker 1: You know the work of Jared Bernstein and others assisting
Speaker 1: Vice President Biden. His Vice President Biden called upon you
Speaker 1: for analysis of his new economic policy. I'm certainly in
Speaker 1: touch with people in the Biden camp, but um, you know,
Speaker 1: they think they have a lot of good ideas. You
Speaker 1: didn't tell him it was a bunch of nonsense. Uh,
Speaker 1: you know, like like everything, there are things I like,
Speaker 1: what I like, parts they don't like. Jason will let
Speaker 1: you go. It's always great to catch you with the
Speaker 1: Jayson firm and that of the Hobbit Kennedy School. Daniel lives.
Speaker 1: These would Wedbush Securities, and as you know, folks has
Speaker 1: been quite optimistic. You know, it's by the dip, Dan,
Speaker 1: It's all there is to it. Where do you buy
Speaker 1: a dip? How do you judge that? As a fundamental analyst, Yeah,
Speaker 1: it's a great question. And I fundamentally view that the
Speaker 1: stocks in terms of fang and tech, there's still a
Speaker 1: twenty plus move higher over the next six to nine months.
Speaker 1: It looks at the secular growth stories and right now,
Speaker 1: if you look at cloud, e commerce and some other
Speaker 1: areas of tech, you're really seeing a lot of these
Speaker 1: growth stories accelerated by twelve et months and in my opinion,
Speaker 1: the rereading protect is still in the middle innings. So Dan,
Speaker 1: let's go exactly the are to a cloud computing is
Speaker 1: that the main driver of some of the gains to
Speaker 1: come that you're expecting. And of course this comes ahead
Speaker 1: of IBM reporting earnings after the bell Microsoft Wednesday, and
Speaker 1: then the week after with Google and Amazon and the rest.
Speaker 1: I think right now the post of job for cloud
Speaker 1: continues to be in the Dell and Microsoft, and that's
Speaker 1: why I think that's a stock. Ultimately it's gonna be
Speaker 1: two trillion as we go into next year. You look
Speaker 1: what's happening in terms of growth, the only of workwords
Speaker 1: from the cloud today that's going to next two years
Speaker 1: getting accelerated because of the COVID pandemic. You look at Microsoft,
Speaker 1: the a wuspiece for Amazon, look at GCP for Google.
Speaker 1: These are keys to some of the reratings on valuations
Speaker 1: of big tech, and it speaks to a broader theme.
Speaker 1: There's a lack of secular growth stories out there, and
Speaker 1: that's why, in my opinion, tech the path still much
Speaker 1: higher even despite some of these speed bumps, and of
Speaker 1: course the haters will continue to hate the route. Dan
Speaker 1: some people saying that Amazon's growth leaves it out of
Speaker 1: path to be bigger than the entire global retail sector combined.
Speaker 1: Question is this a retail company or is this a
Speaker 1: cloud computing company? Given where its profits are coming from.
Speaker 1: I mean, from a profit it's obviously cloud. Uh. You know,
Speaker 1: of course e commerce and claud that's been one two
Speaker 1: punch and that's why what's made them so unique and
Speaker 1: obviously will be a focus next week where when they're
Speaker 1: in front of Congress. But I think if you look
Speaker 1: at the next leg of the story, and I think
Speaker 1: part of the rerating. It's not just the e commerce,
Speaker 1: it is cloud in terms of on the A w
Speaker 1: S side, we believe a trillion hours is going to
Speaker 1: be spending cloud over the next decade. And that's why
Speaker 1: you're seeing not just Microsoft AWS, but the whole work
Speaker 1: from home space and a lot even cybersecurity memes that
Speaker 1: continue to see all time hives here, Dann, I look
Speaker 1: at Apple, but I know they each got their own story.
Speaker 1: Are these companies under owned or over owned by institutions?
Speaker 1: I think institutionally speaking, it's still a bit under own.
Speaker 1: I think many have been skeptical of the rallies, and
Speaker 1: I think when I look at Apple, I think that
Speaker 1: is the next leg because when you go into iPhone twelve,
Speaker 1: but I still think the super psycho and extended one.
Speaker 1: I ultimately think from a rerating perspective, that's something where
Speaker 1: both case were at five five on Apple, and I
Speaker 1: think institutionally you're starting to start seem more buying as
Speaker 1: you get some of these quarters. Let's stop here. This
Speaker 1: is really important. Dan I has explained to our audience
Speaker 1: the pressure to own a given stay how blue chip
Speaker 1: company et cetera, like Apple, whatever, the pressure to own
Speaker 1: it if you're an institution, how does that work on
Speaker 1: June thirty, September thirty or twelve thirty one? Yeah, I
Speaker 1: mean especially look so much waiting on the index, you underperform,
Speaker 1: and if you make the bet going against some of
Speaker 1: these names, which has been the wrong bet. Ultimately, as
Speaker 1: a fund manager, you're trying to figure out what fond
Speaker 1: you're using on your resume. So I think that's been
Speaker 1: the issue here, is that the path continues to be
Speaker 1: higher even though the valuation during a new stratosphere. It
Speaker 1: comes down to this is really a new age for technology,
Speaker 1: and that's why you're seeing the strong get stronger in
Speaker 1: terms of the fang names, strong and stronger and a
Speaker 1: lot bigger. At what point does regulatory risk return? And
Speaker 1: I think that's the drum rollings next week when you
Speaker 1: have appearing in front of Congress with Cook, Bezos and
Speaker 1: the others. And I do think that drummill starts to
Speaker 1: increase going into the fall right now streaks you and
Speaker 1: his background noise, but a lot that's also going to
Speaker 1: be the political makeup if you have a Biden presidency
Speaker 1: and the Democratic controlled Senate, that starts to become more
Speaker 1: of a risk right now a background risk because of
Speaker 1: fines that I think next week we'll get a better
Speaker 1: sense in terms of how sharp teeth are in terms
Speaker 1: of pressing this issue. And Dan, we've heard about regulatory
Speaker 1: risk for a long time and it hasn't come to
Speaker 1: the fore in any real policy, certainly not in the
Speaker 1: United States. Which company do you think is most susceptible
Speaker 1: to actual regulatory risk in the next year? Well, I
Speaker 1: think right now it is Amazon and Google. I mean
Speaker 1: those are the one front and center. Of course Apple
Speaker 1: been on the App Store, but especially also what's happening
Speaker 1: in terms of the EU, because it's on both sides
Speaker 1: of the pond in terms of the threats. And I
Speaker 1: think that's also why preemptively you're going to see these
Speaker 1: CEOs get in front of Congress, because I think they
Speaker 1: will be ending a lot of time physically, as was
Speaker 1: virtually in the two or two area code, over the
Speaker 1: next three or six months. Jana, I have thank you
Speaker 1: so much. Thanks for listening to the Bloomberg Surveillance podcast.
Speaker 1: Subscribe and listen to interviews on Apple Podcasts, SoundCloud, or
Speaker 1: whichever podcast platform you prefer. I'm on Twitter at Tom Keane.
Speaker 1: Before the podcast you can always catch us worldwide. I'm
Speaker 1: Bloomberg Radio.