WEBVTT - Surveillance: Davos Day 2 0:00:09.880 --> 0:00:13.800 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane Jay Lee. 0:00:13.960 --> 0:00:17.560 We bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.480 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.600 --> 0:00:27.200 Bloomberg dot Com, and of course, on the Bloomberg Now. 0:00:27.200 --> 0:00:29.720 Presidents Evanuel and mccohan Donald Trump have agreed to a 0:00:29.800 --> 0:00:33.479 truth in their dispute over digital taxes. This will prevent 0:00:33.520 --> 0:00:35.919 any punitive tariffs through the end of the year. Now 0:00:36.120 --> 0:00:40.240 is the agreement lasting or merely delaying an inevitable conflict? 0:00:40.280 --> 0:00:41.839 While joining us now and delighted to say, is the 0:00:41.840 --> 0:00:46.559 French finance minister his he is is holding talks this 0:00:46.640 --> 0:00:49.080 afternoon also with Steve Nuchen and the o c D 0:00:49.159 --> 0:00:52.040 Secretary General. So Minister, thank you for joining us. How 0:00:52.040 --> 0:00:56.240 would you describe the current relationship between Europe, France specifically 0:00:56.280 --> 0:00:59.840 and the US. I think that due to d for 0:01:00.080 --> 0:01:03.960 a good phone call between Prisident Trump and President mcn 0:01:04.640 --> 0:01:07.800 we are now in a good mood, a good mood 0:01:07.880 --> 0:01:12.880 for negotiating and try to find a compromise between the 0:01:13.000 --> 0:01:16.000 US and France, Between the US and Europe, I think 0:01:16.000 --> 0:01:18.920 that the choice is quite clear. Either we go the 0:01:18.959 --> 0:01:23.400 way of having many national taxes everywhere in the world, 0:01:23.760 --> 0:01:27.320 especially in Europe. You already have the French national taxation 0:01:27.760 --> 0:01:31.920 on digital activities, but you also have the British, the Italian, Spanish, 0:01:32.000 --> 0:01:36.640 the Australian thinking about that possibility, or having also decided 0:01:36.920 --> 0:01:40.240 a national taxation. H you go the way of an 0:01:40.280 --> 0:01:43.280 international solution. And I really think that this is in 0:01:43.319 --> 0:01:47.560 the interest of both the United States and Europe to 0:01:47.680 --> 0:01:50.880 pay the way for a compromise to decide about an 0:01:50.880 --> 0:01:56.240 international digital taxation by the end of twenty because it 0:01:56.240 --> 0:01:59.040 would be far more efficient and it would be fairer. 0:01:59.440 --> 0:02:01.040 But I mean, it's do you think you will get 0:02:01.240 --> 0:02:04.880 digital tax resolution and agreement whatever we call it this afternoon, 0:02:05.360 --> 0:02:07.720 and will that avoid a trade war? Is it a 0:02:07.840 --> 0:02:10.480 you know, we either get an agreement or actually it's 0:02:10.520 --> 0:02:14.480 going to be a tough, tough environment between the EU 0:02:14.600 --> 0:02:18.280 and the US. We are working on an agreement with 0:02:18.600 --> 0:02:22.399 Stephen Menuchin. We have an excellent relationship with Stephen Menuchin, 0:02:22.480 --> 0:02:25.720 and I hope that we can get a compromise in 0:02:25.720 --> 0:02:28.680 in a few hours and turning into a trade war 0:02:29.080 --> 0:02:33.280 between the US and Europe would be foolish. It would 0:02:33.280 --> 0:02:36.720 be a stupidity, both from an economic and a political 0:02:36.800 --> 0:02:40.040 point of view. So everyone is trying to make a 0:02:40.040 --> 0:02:43.360 move in the direction of the other for the sake 0:02:43.440 --> 0:02:46.920 of finding a compromise, working on an international solution and 0:02:46.960 --> 0:02:49.880 avoiding a trade war. Nobody wants a trade war between 0:02:49.919 --> 0:02:52.760 the US and Europe. Okay, But has France agreed to 0:02:52.800 --> 0:02:55.560 suspend digital tax until the end of the year. France 0:02:55.720 --> 0:02:59.040 has agreed on one single thing. We have a national taxation. 0:02:59.560 --> 0:03:03.560 Under the national taxation on digital activities, all the companies, 0:03:03.560 --> 0:03:06.760 either the American but the European or the Chinese ones 0:03:07.160 --> 0:03:12.440 have to pre pay in April and in November. We 0:03:12.480 --> 0:03:16.120 are ready to postpone the pre payment of April and 0:03:16.360 --> 0:03:19.640 November till the end of the year with the view 0:03:19.800 --> 0:03:22.480 of finding an international solution. And either there is an 0:03:22.480 --> 0:03:25.880 international solution at the end of in that case we 0:03:25.919 --> 0:03:29.959 would get read of the national taxation and replaced the 0:03:30.040 --> 0:03:33.960 national taxation by the international solution. The ministers is to 0:03:34.080 --> 0:03:37.720 avoid tariffs that President Trump has said he wouldn't pose 0:03:37.760 --> 0:03:40.080 on France and on Europe. And if it is, it 0:03:40.120 --> 0:03:42.920 is a message we're sending that actually tariffs work. The 0:03:43.000 --> 0:03:45.480 threat of tariffs from the U s work. It would 0:03:45.480 --> 0:03:47.720 be the case if we would have decided to withdraw 0:03:47.800 --> 0:03:50.960 all taxation, but we have not decided to withdraw all taxation. 0:03:51.360 --> 0:03:55.240 We have just proposed not to have the pre payment 0:03:55.440 --> 0:03:58.840 of April, not to have the pre payment of November, 0:03:59.240 --> 0:04:03.160 and post owner all the payment till the end of December, 0:04:03.920 --> 0:04:08.480 with clearly the purpose of having an international solution by 0:04:08.480 --> 0:04:11.520 the end of twenty And you can see that this 0:04:11.640 --> 0:04:14.200 is a fair compromise. This is a move in the 0:04:14.240 --> 0:04:18.599 direction of the US concern and this paves the way 0:04:18.720 --> 0:04:21.599 for a compromise at the o c D level. And 0:04:21.720 --> 0:04:24.520 if we are ready to go this way, we would 0:04:24.520 --> 0:04:29.600 have one single international taxation of all digital activities instead 0:04:29.600 --> 0:04:33.440 of having many national taxations all over the world. Minister, 0:04:33.560 --> 0:04:37.279 what will it take for the US to tax their companies, 0:04:37.400 --> 0:04:40.760 their tech companies fairly? But you know, this is one 0:04:41.120 --> 0:04:44.359 key point I want to make clear to our American 0:04:44.480 --> 0:04:49.080 friends that the national French taxation is not a discriminatory one. 0:04:49.440 --> 0:04:54.159 It's not against the US companies. It's a taxation on 0:04:54.279 --> 0:04:58.640 digital activities. Because the digital companies are making huge profits 0:04:58.720 --> 0:05:02.400 and paying less TA. Nobody can accept that. But you 0:05:02.520 --> 0:05:05.480 have in the scope of the French taxation, American companies, 0:05:05.839 --> 0:05:10.080 European ones and Chinese ones. This is not a discriminary 0:05:10.160 --> 0:05:13.720 option to all countries in Europe need to spend more 0:05:13.760 --> 0:05:17.280 fiscally to get us out of this growth but slow 0:05:17.320 --> 0:05:19.680 growth that we're seeing for the trend to really take 0:05:19.720 --> 0:05:24.840 out slow glow, slow growth and the slowdown in the 0:05:24.839 --> 0:05:28.560 Eurozona is a failure for all of us. Nobody can 0:05:28.640 --> 0:05:32.200 be satisfied with a nerverwage level of growth of around 0:05:32.320 --> 0:05:35.320 one one point two. This is not enough. It is 0:05:35.360 --> 0:05:39.440 not enough to fund the fight against climate change. This 0:05:39.600 --> 0:05:42.960 is not enough to ensure prosperity for our citizens and 0:05:43.040 --> 0:05:46.440 to create new jobs. So once again I'm calling to 0:05:46.960 --> 0:05:52.279 support the monetary policy by a more ambitious fiscal policy 0:05:52.720 --> 0:05:55.279 in all the countries that do have the fiscal space 0:05:55.320 --> 0:05:57.320 to do so. This is the case for Germany, and 0:05:57.360 --> 0:06:00.680 I've been discussing the point with my friend or have shorts, 0:06:00.839 --> 0:06:03.279 the German finance minister many times. We have the next 0:06:03.279 --> 0:06:06.560 tent relationship. But on this very specific point, I'm just 0:06:06.760 --> 0:06:10.720 asking Germany to spend more public money because they do 0:06:10.880 --> 0:06:16.880 have the fiscal space. When France is taking very difficult 0:06:16.920 --> 0:06:21.040 decisions to improve its economic situation and to improve its 0:06:21.080 --> 0:06:24.440 economic model. I think that's also a fair and balanced dealer. 0:06:24.680 --> 0:06:27.080 On the one hand, those who do have the fiscal 0:06:27.160 --> 0:06:31.080 space should invest more, and France that have that has 0:06:31.120 --> 0:06:36.440 to introduce strong reforms, will continue to introduce very strong reforms. 0:06:36.560 --> 0:06:38.480 But do you believe Germany will do so. When you 0:06:38.520 --> 0:06:41.000 speak to German officials, they say, well, we're already doing 0:06:41.040 --> 0:06:43.599 a lot in green barns, so they feel at this 0:06:43.640 --> 0:06:46.880 point they've done enough. I fully recognize that they have 0:06:47.040 --> 0:06:50.839 done more, and I take that into account. Of course, 0:06:51.160 --> 0:06:54.960 this is the truth. The German government has decided to 0:06:55.000 --> 0:06:59.000 spend some more money and deeply convinced that they can 0:06:59.040 --> 0:07:02.120 do more and that it would be better for growth 0:07:02.160 --> 0:07:05.840 in Germany and growth within the Eurozone. When I'm talking 0:07:05.880 --> 0:07:10.000 to the CEOs of German companies, I think that the 0:07:10.040 --> 0:07:13.720 CEOs of German companies, many of them are waiting also 0:07:13.880 --> 0:07:17.840 for more investments from the German government. Well, when you 0:07:17.880 --> 0:07:22.000 look at Europe and France, a lot of international investors 0:07:22.000 --> 0:07:24.120 look at the strikes that have been going on. Once 0:07:24.160 --> 0:07:27.760 the pension reform is actually dealt with, what comes next, 0:07:27.800 --> 0:07:30.920 and know you're worried that actually frances is not ready 0:07:30.960 --> 0:07:34.280 to be fully reformed. I'm not true. I think that 0:07:34.400 --> 0:07:37.280 we are on the right track. Of course, we are 0:07:37.320 --> 0:07:40.840 facing difficulties, but we are facing difficulties because we are 0:07:40.840 --> 0:07:45.800 introducing strong reforms. We have already we formed the taxation 0:07:45.840 --> 0:07:48.240 system in France with a total of the whole of 0:07:48.280 --> 0:07:51.080 the French taxation system for the sake of having more 0:07:51.120 --> 0:07:54.920 money for innovation and investments. We have also introduced a 0:07:55.000 --> 0:07:58.920 very important reform on the labor market, and now this 0:07:59.080 --> 0:08:02.800 is time to have a full of a whole and 0:08:02.880 --> 0:08:07.160 we foundation of the French pension system, which is based 0:08:07.200 --> 0:08:12.320 on solidarity. We will stick to that reform and stick 0:08:12.400 --> 0:08:15.320 to that willingness, because this is a matter of justice. 0:08:15.760 --> 0:08:19.440 You know, in our reform, all the people that are 0:08:19.520 --> 0:08:23.440 less paid will have better pensions, and that's exactly the 0:08:23.480 --> 0:08:27.960 purpose of this reform. We are facing social difficulties, we 0:08:28.040 --> 0:08:32.120 are facing strikes, but you know, we will not spare 0:08:32.400 --> 0:08:37.000 efforts to convince the French people that this reform is 0:08:37.080 --> 0:08:40.760 a fair one and a necessary one. Can France benefit 0:08:41.000 --> 0:08:44.640 from Brexit? Have you seen? You know an attraction of 0:08:44.679 --> 0:08:47.400 talent to Paris and else west of all fronts will 0:08:47.440 --> 0:08:51.880 benefit and is already benefiting from its reforms. When you're 0:08:51.920 --> 0:08:54.160 looking at the situation, we have one of the best 0:08:54.200 --> 0:08:56.480 level of growth within the yours on one point three. 0:08:56.600 --> 0:08:59.040 This is not enough, but we are in the right direction. 0:08:59.480 --> 0:09:01.880 We are in jobs. This is also a very good 0:09:01.920 --> 0:09:05.400 result coming from the decisions taken by President Macon and 0:09:05.600 --> 0:09:09.880 taken by the government. As far as the Brexity is concerned, 0:09:10.480 --> 0:09:13.640 we want to keep a very strong and positive political 0:09:13.720 --> 0:09:17.120 relationship with the UK. I deeply regret the decision taken 0:09:17.120 --> 0:09:20.240 by the UK to go out of the EU, but 0:09:20.400 --> 0:09:24.160 on one very specific point, which is finance or strategic 0:09:24.200 --> 0:09:28.600 purpose is to become within the euro Zone the first 0:09:28.640 --> 0:09:32.360 financial center. We want to be very attractive. And when 0:09:32.360 --> 0:09:35.160 you're looking at the very last decision of many important 0:09:35.160 --> 0:09:39.320 banks like Jippy Morgan, the fact that they're putting some 0:09:39.400 --> 0:09:43.160 new jobs four hundred fifty for Gippy Morgan in Paris 0:09:43.360 --> 0:09:45.840 is very good news for France. But what if the 0:09:45.960 --> 0:09:49.319 UK don't follow the European regulation and you know we're 0:09:49.360 --> 0:09:51.240 going to start into this debate, but what if you 0:09:51.320 --> 0:09:55.679 if you have huge competition Course Wolls, and I've been 0:09:55.720 --> 0:10:00.120 explaining that to the Chancellor of the Exchequare. We have 0:10:00.400 --> 0:10:03.120 once again a very good relationship. We want to be 0:10:03.280 --> 0:10:06.080 in a positive matter of the future between the UK 0:10:06.160 --> 0:10:09.360 and Phone, the UK and Europe. But everybody can understand 0:10:09.760 --> 0:10:12.679 that's the holds of the Single Market will remain the 0:10:12.679 --> 0:10:14.800 holds of the Single Market and we do not want 0:10:14.800 --> 0:10:18.559 to take any kind of decision that might jibiodize or 0:10:18.840 --> 0:10:21.800 weaken the rules of the Single market. Minister, thanks so 0:10:21.880 --> 0:10:24.280 much for your very thoughtful analysis on some of these 0:10:24.280 --> 0:10:38.600 points were in finance, Mr Bruno. It has become an 0:10:38.640 --> 0:10:40.880 annual visitor Davos, and of course you're doing this to 0:10:40.960 --> 0:10:43.920 the President. Scheduled to have a press conference here, I'm 0:10:43.920 --> 0:10:46.280 gonna say forty five minutes, maybe a little bit longer 0:10:46.280 --> 0:10:49.400 than that. Scheduled to leave here in the New York 0:10:49.480 --> 0:10:51.880 six o'clock hour, but I'm told that may be delayed 0:10:51.880 --> 0:10:54.680 because the lane child has to get from our set back. 0:10:54.720 --> 0:10:56.840 To be sure. The President cats on Air Force one 0:10:57.400 --> 0:11:00.560 with Grace Secretary. Thank you so that you for joining 0:11:00.600 --> 0:11:02.480 us again to be here. We have a three hour 0:11:02.559 --> 0:11:04.640 conversation with you that we're going to cram into a 0:11:04.679 --> 0:11:07.120 generous two blocks as well. I do want to speak 0:11:07.440 --> 0:11:10.280 on your Taiwan. You are the great voice of the 0:11:10.280 --> 0:11:13.880 Thai when he's in America. I want to go right 0:11:13.920 --> 0:11:17.959 now with Viviana just mentioning Boeing to the reality I 0:11:18.200 --> 0:11:23.320 and all Americans saw. This is the reality. Major US newspaper, 0:11:23.679 --> 0:11:26.520 small little article I'm going to pick on American airlines 0:11:26.679 --> 0:11:29.839 make at the airline wrong. The stewardess is a flight attendance? 0:11:29.880 --> 0:11:33.160 Are afraid to get on a seven thirty seven Max? 0:11:33.520 --> 0:11:38.160 Did blowing? Did bowing blow it? Because they didn't realize 0:11:38.360 --> 0:11:42.400 dat emotion in that newspaper. Our concern at the Department 0:11:42.400 --> 0:11:47.000 of Transportation is always safety. Safety is number one. So 0:11:47.040 --> 0:11:50.439 when this seven thirties seven Max plane was grounded on 0:11:50.559 --> 0:11:56.040 March uh, the f a A is a data based organization, 0:11:56.760 --> 0:12:01.320 and their data showed that it as necessary to ground 0:12:01.360 --> 0:12:05.480 that plane. To restore ground in ungrounding rights to this 0:12:05.559 --> 0:12:10.160 plane requires a great deal of preparation for us at 0:12:10.160 --> 0:12:13.079 the Department of Transportation and at the f a A. 0:12:13.200 --> 0:12:17.760 There's no timetable. The first and foremost concern always is safety. 0:12:17.800 --> 0:12:21.319 And I'll explain why because they're too What you mentioned 0:12:21.400 --> 0:12:25.439 is very important. If the consuming public, if the passenger 0:12:25.600 --> 0:12:29.920 it's there, yeah, does not have confidence in this plane, 0:12:30.280 --> 0:12:37.680 they will not go all your conversation. Let me just finished, continued, No, 0:12:37.840 --> 0:12:40.400 let me this is important because we need to This 0:12:40.440 --> 0:12:43.600 needs to be a collaborative effort. We are working with 0:12:43.760 --> 0:12:48.280 international aviation authorities. They need to work with us. We 0:12:48.360 --> 0:12:52.640 need to work with them because if other aviation authorities 0:12:52.880 --> 0:12:56.600 don't have the confidence and don't allow the bowing seven 0:12:57.000 --> 0:13:02.439 seven fly, then we cannot fly. Boeing cannot bowing amount 0:13:02.440 --> 0:13:07.719 of Secretary, did Boeing misjudge the American public? I think 0:13:07.760 --> 0:13:12.840 it's always always important to understand your customer. And so 0:13:12.960 --> 0:13:16.080 again I'm just gonna say, from our point of view, 0:13:16.400 --> 0:13:19.719 safety is number one. There's no timetable. We want this 0:13:19.760 --> 0:13:24.800 plane to be safe, and the issue here is safety. Secretary. 0:13:24.880 --> 0:13:26.800 I mean, we have this bizarre situation where we have 0:13:26.840 --> 0:13:28.880 the f A A saying that actually the plane will 0:13:28.880 --> 0:13:30.640 be ready to fly, and we have no The f 0:13:30.800 --> 0:13:33.319 A has never said that. Now, the f A has 0:13:33.360 --> 0:13:36.199 never said that. We have a new f A administrator. 0:13:36.960 --> 0:13:39.800 He's just come on board in August twelve of this year. 0:13:40.240 --> 0:13:47.240 He's a very experienced pilot and he ran aviation operations 0:13:47.240 --> 0:13:50.240 for major airline. So you're right, let me rephrase it. 0:13:50.280 --> 0:13:52.200 So their countries that came out and saying even if 0:13:52.240 --> 0:13:54.800 the f a A A lets this plane fly, they may 0:13:54.800 --> 0:13:59.480 not follow suit. We understand that which has lost credibility 0:14:00.080 --> 0:14:03.280 I had other regulators, I hope not. We work. The 0:14:03.360 --> 0:14:07.320 f a A works very, very hard to still remain 0:14:07.720 --> 0:14:11.400 the gold standard of aviation safety. You know, the FAA 0:14:11.640 --> 0:14:14.960 has traditioned been a leader and in fact, it through 0:14:15.000 --> 0:14:19.240 its practices, lifted up the record and the standard for 0:14:19.280 --> 0:14:23.840 aviation safety throughout the world. So they are very cognizant 0:14:23.880 --> 0:14:27.480 of their leadership role. And we want to work. We 0:14:27.600 --> 0:14:30.120 meaning the U. S. Department of Transportation and the f 0:14:30.200 --> 0:14:33.480 a A, want to work with our international partners because 0:14:33.520 --> 0:14:37.360 their trust, their confidence is very critical. Secretary, Has the 0:14:37.360 --> 0:14:39.920 FAA become too differential, too many I don't think so. 0:14:40.560 --> 0:14:42.080 I don't think so. I think if you look at 0:14:42.120 --> 0:14:45.120 the raft of emails that have come out, which are 0:14:45.120 --> 0:14:51.600 actually quite disturbing, quite uncomplimentary, Yes, they show a derisive 0:14:52.120 --> 0:14:55.840 factor disdaining for the regulators, which I think is a problem. 0:14:56.000 --> 0:14:57.520 And then I don't want to talk about the dinner 0:14:57.520 --> 0:14:59.480 table the Senate Majority leader, but I do want to 0:14:59.520 --> 0:15:03.000 speak ab what you, as a Washington pro are hearing 0:15:03.080 --> 0:15:07.480 from our legislators about giving up the great American franchise 0:15:07.560 --> 0:15:10.440 of engineering, which is the bowing of Seattle, whole debate 0:15:10.440 --> 0:15:12.920 whether they should have moved to Chicago. Are we at 0:15:13.040 --> 0:15:18.600 risk of sacrificing engineering trust to air Bus? Absolutely not. 0:15:19.520 --> 0:15:24.080 I think most airline airliners would like to have more 0:15:24.120 --> 0:15:29.720 than one airline manufacturer number one, number two. Uh. You know, 0:15:29.760 --> 0:15:34.160 Airbus has a full backlog of orders. If you wanted 0:15:34.200 --> 0:15:36.720 to order a plane today, you would have to wait 0:15:36.760 --> 0:15:40.280 four years, and so the backlock is quite extensive. So 0:15:40.360 --> 0:15:43.120 I think we're not at that stage. We are working 0:15:43.160 --> 0:15:48.240 with the international aviation authorities and the communities, we know 0:15:48.400 --> 0:15:51.400 their opinions being a lot. I want Secretary Child to 0:15:51.440 --> 0:15:53.240 be sure that we never get rid of the Boeing 0:15:53.360 --> 0:15:56.120 seven seven. That's her major. Don't get rid of the 0:15:56.240 --> 0:16:00.240 glorious old planes. But how close is the max? You know, 0:16:00.760 --> 0:16:02.440 when is it going to be cleared to flag? And 0:16:02.440 --> 0:16:05.040 how close are we to that? Well, again, we're not 0:16:05.200 --> 0:16:09.560 making any predictions. We're not having any timetables because again, 0:16:09.600 --> 0:16:12.800 to us, safety is number one, and the families of 0:16:12.880 --> 0:16:17.200 those who loved lost loved ones they deserve that. Have 0:16:17.320 --> 0:16:19.520 you spoken to Elon Musk about his projects. When it 0:16:19.520 --> 0:16:22.280 comes to Hyperlie, I've talked to Elon mus about many 0:16:22.280 --> 0:16:26.600 other projects. He's very interesting. So he's talked about like 0:16:26.720 --> 0:16:30.120 flying cars, for example. I've talked to him about that. 0:16:30.440 --> 0:16:33.400 You know, he is so prescient and so far sided. 0:16:33.640 --> 0:16:38.040 He's talking about a vision that I couldn't even imagine. 0:16:38.040 --> 0:16:40.720 When we're done with the interim, guy will come back 0:16:40.720 --> 0:16:43.200 to you. Let's very important. I can talk more about 0:16:43.240 --> 0:16:45.000 that if you want. We're gonna come back here and 0:16:45.040 --> 0:16:48.000 talk about so many other important topics including tell me 0:16:48.040 --> 0:16:49.400 what we're gonna do is go to break and I 0:16:49.520 --> 0:16:50.880 do want to come back to you and talk about 0:16:50.880 --> 0:16:54.720 transportation and particularly railroads, and also of course what we 0:16:54.840 --> 0:16:57.880 see in China. The Secretary Child, thank you so much 0:16:57.920 --> 0:17:00.360 for joining us here at Thank you to it is 0:17:00.440 --> 0:17:16.800 all very wonderful John Para and Tom Keenan. We're here 0:17:16.840 --> 0:17:20.040 with David Rubinstein as well. Much much going on. We 0:17:20.119 --> 0:17:22.359 welcome all eve this morning, of course recovering from a 0:17:22.720 --> 0:17:25.680 length to presidential press conference. A lot of different topics here. 0:17:25.720 --> 0:17:28.640 We'll touch on that with David Rubenstein and the Carlisle 0:17:28.720 --> 0:17:31.600 Group as well, co founder and co chairman, but far 0:17:31.720 --> 0:17:34.919 more media tycoon with this peer to peer which has 0:17:34.920 --> 0:17:37.920 been on Bloomberg here it's a great success, is well, 0:17:38.320 --> 0:17:41.439 this is an interesting valley. Who in the valley is 0:17:41.480 --> 0:17:45.199 on the Rubinstein wish list of peer to peer? And 0:17:45.240 --> 0:17:47.080 so I know you want to talk to Gretta. Everybody 0:17:47.080 --> 0:17:50.720 else does well, but who's the dream interview for Rubinstein 0:17:50.840 --> 0:17:54.000 in Happy Valley? I've never interviewed you. I think that 0:17:54.000 --> 0:17:57.359 would that would be it could be a change and 0:17:57.359 --> 0:18:00.240 I'd like to interview you. So, um, you know have 0:18:00.359 --> 0:18:03.480 some questions. Uh so does some other people you know 0:18:03.560 --> 0:18:06.480 the line? So uh, there are a lot of interesting 0:18:06.560 --> 0:18:09.040 CEOs and heads of state here. Some of them do interviews, 0:18:09.040 --> 0:18:11.960 some don't do interviews. So uh, you know we've had 0:18:12.000 --> 0:18:16.600 I think here there's several British Prime ministers. Boris Johnson's here, Um, 0:18:16.640 --> 0:18:20.400 I think THREESA A is here, Tony Blair is here, Uh, 0:18:20.560 --> 0:18:22.719 David Cameron's here. So it'd be interesting to get all 0:18:22.720 --> 0:18:24.359 four of them on a panel, wouldn't I want to 0:18:24.359 --> 0:18:26.600 talk about a panel I would have with you right now, 0:18:26.680 --> 0:18:29.480 maybe a few others within the Carlisle world. And that 0:18:29.720 --> 0:18:33.960 is this strange words. Scale. Where is scale going within 0:18:34.000 --> 0:18:39.960 our transactions and our combinations. Well, scale has UH. For 0:18:40.000 --> 0:18:42.720 a while. Before the Great Recession buy out, the sizes 0:18:42.760 --> 0:18:44.880 were fairly big, and some of those didn't work out. 0:18:44.880 --> 0:18:46.919 The biggest ones that we went to the recession, and 0:18:47.000 --> 0:18:50.360 people have been nervous about doing too large a pure buyout. 0:18:50.800 --> 0:18:53.239 Though the biggest buyouts have ever done, some of them 0:18:53.280 --> 0:18:55.639 have worked out. Mike saw Michael Dwll he's here and 0:18:55.680 --> 0:18:57.600 he did maybe the biggest buyout, maybe one of the 0:18:57.600 --> 0:19:01.680 most successful ever. But generally buyouts have been recent years 0:19:01.680 --> 0:19:03.639 and the big ones have been in the five to 0:19:03.760 --> 0:19:06.560 ten billion dollar range. There have been very few fifteen 0:19:06.600 --> 0:19:09.400 twenty billion dollar one. Some are now reported to be 0:19:09.400 --> 0:19:13.560 being considered. But uh, it's harder to do a billion 0:19:13.560 --> 0:19:15.520 dollar buyout. And it talked to me about how much 0:19:15.520 --> 0:19:17.520 things have changed over the last several decades and got 0:19:17.520 --> 0:19:18.960 back to when you started and what it was like. 0:19:19.640 --> 0:19:23.399 There's more firms with more money doing more of the 0:19:23.440 --> 0:19:26.200 things that you've always been doing. Does that make it harder? Well, 0:19:26.200 --> 0:19:29.640 if there's a bifurcation there when I started, Carl twovate 0:19:29.680 --> 0:19:31.840 equi firms in the world. Now they're eight thousand, five hundred, 0:19:32.080 --> 0:19:34.080 but there are three or four that are really at 0:19:34.080 --> 0:19:36.840 the very largest size, and there maybe another ten that 0:19:36.880 --> 0:19:39.240 can do very large deals as well, and so those 0:19:39.280 --> 0:19:41.560 are seeing the biggest deals and getting the best financing 0:19:41.560 --> 0:19:44.400 and so forth. So it's different. The biggest changes since 0:19:44.440 --> 0:19:47.920 I started Carlisle with others is one, they're more investors 0:19:47.960 --> 0:19:50.440 interested in this retail as well as sovereign wealth funds, 0:19:50.480 --> 0:19:53.840 which didn't really exist that much before. Secondly, the large 0:19:53.840 --> 0:19:56.560 private equity firms are now publicly traded and so they 0:19:56.600 --> 0:19:59.879 have their own um public uh you know. Following you 0:20:00.000 --> 0:20:02.600 also see the large private infirms doing more than private equity, 0:20:02.760 --> 0:20:05.920 private credit, infrastructure, real estate, so they're diversified a fair 0:20:05.920 --> 0:20:08.840 a bit. And those are some of the biggest changes. 0:20:08.960 --> 0:20:11.720 But also rates of return have come down. It used 0:20:11.720 --> 0:20:13.800 to be in private equity people want to net internal 0:20:13.840 --> 0:20:16.520 rates return. Today if you can get a net internal 0:20:16.560 --> 0:20:19.280 rates return of for Adam, people were happy with that 0:20:19.320 --> 0:20:21.439 because interest rates are so low. I'm told now that 0:20:21.520 --> 0:20:24.000 rising capital is the easy part. Deploying it is a 0:20:24.000 --> 0:20:25.960 whole lot tougher. Is that the right way thinking about 0:20:25.960 --> 0:20:28.760 things at the moment. Well, the people that have to 0:20:28.880 --> 0:20:31.840 raise the money don't say it's easy, but it's not 0:20:31.920 --> 0:20:35.119 as hard as it has been historically. Because private equity 0:20:35.160 --> 0:20:38.119 has now been accepted as a real asset, avansis not alternative. 0:20:38.280 --> 0:20:41.560 It's mainstream in many ways. And also the sovereign wealth 0:20:41.560 --> 0:20:43.600 funds and the US public pension must have so much 0:20:43.640 --> 0:20:46.600 money and they've made so much money on public equity 0:20:46.600 --> 0:20:48.879 returns and also private equity returns, they have to deploy it, 0:20:49.000 --> 0:20:51.080 and they're giving it to private equity firms in part 0:20:51.119 --> 0:20:53.200 because you see it as a hedge against the recession 0:20:53.320 --> 0:20:55.800 if it ever happens. People think that private firms can 0:20:55.800 --> 0:20:58.440 work through the recession the way they did last time reasonably. Well, 0:20:58.680 --> 0:21:01.919 what is your counsel to the successful tech firms? You're 0:21:01.960 --> 0:21:05.639 wonderful interview a few years ago with Jeff Bezos and others. 0:21:05.680 --> 0:21:08.600 They have an immense challenge of ample free cash flow, 0:21:09.200 --> 0:21:12.560 above average revenue growth. As a general statement as well, 0:21:13.000 --> 0:21:16.200 what is the Rubens thing to do list for them 0:21:16.280 --> 0:21:20.320 strategically to get out ten years? Well, it's amazing what 0:21:20.359 --> 0:21:23.480 the tech companies have done. Um, just take Tim Cook 0:21:23.760 --> 0:21:26.520 when he took over, was about a three billion dollar 0:21:26.560 --> 0:21:29.040 market cap. It's now about one point three trillion, more 0:21:29.080 --> 0:21:31.520 or less. I was adding a hundred billion a week 0:21:32.600 --> 0:21:35.800 Sadella when he took over, maybe market cap at three 0:21:35.840 --> 0:21:38.600 fifty to four hundred billion, now about one point two 0:21:38.680 --> 0:21:42.360 or three trillion UM. These sizes are just staggering. And 0:21:42.560 --> 0:21:46.560 uh of Herbstein, the famous member of the US Council 0:21:46.600 --> 0:21:49.680 Economic Advisor under President Nixon one, said if something can't 0:21:49.800 --> 0:21:52.919 keep going on forever, it won't. So at some point, 0:21:53.040 --> 0:21:55.439 at some point, I don't know when, h it probably 0:21:55.480 --> 0:21:58.119 can't keep going on at this size. Generally, when you 0:21:58.160 --> 0:22:00.639 have something something this big, and you have it this 0:22:00.680 --> 0:22:03.719 is profitable, usually the US government comes along and says, hey, 0:22:03.760 --> 0:22:05.480 you're having too much fun here. We need to do 0:22:05.560 --> 0:22:07.760 something about that. But that doesn't seem to be happening 0:22:07.840 --> 0:22:09.720 right now. Let's talk about what has happened over the 0:22:09.760 --> 0:22:12.399 last year. Some red flags coming out of private markets 0:22:12.400 --> 0:22:14.680 as they looked become public, and the biggest one was 0:22:14.760 --> 0:22:18.720 way work lessons learned from last year? What aren't they? Well? 0:22:18.760 --> 0:22:21.320 I think when you have a fund that is very 0:22:21.400 --> 0:22:24.440 very very big UM like the Soft Bank Fund, the 0:22:24.640 --> 0:22:27.600 Vision Fund UM, you have to deploy large amounts of 0:22:27.640 --> 0:22:30.119 capital and you can probably put too much money into 0:22:30.200 --> 0:22:32.240 one deal. And I think in that particular case it 0:22:32.280 --> 0:22:34.920 appears that a lot of money was put in at 0:22:35.000 --> 0:22:37.480 probably a higher valuation should be the case. And then 0:22:37.480 --> 0:22:40.520 there were other concerns as well about corporate governance and 0:22:40.560 --> 0:22:42.600 so forth. But you know, they're mistakes that are made 0:22:42.600 --> 0:22:44.600 in every generation. That this wasn't the first time this 0:22:44.640 --> 0:22:46.359 kind of thing has ever happened. It won't be the last. 0:22:46.600 --> 0:22:48.120 But I think a lot of people have learned something 0:22:48.119 --> 0:22:51.040 from that deal. David Ruinstein, you are a great student 0:22:51.160 --> 0:22:54.480 of this nation's history. We had an extraordinary press conference 0:22:54.520 --> 0:22:58.679 in the president United States today. You've contributed to Ford's Theater, 0:22:58.840 --> 0:23:02.280 to the wonderful museum next to it. You've greatly contributed 0:23:02.600 --> 0:23:05.359 to our Library of Congress as well. What is your 0:23:05.400 --> 0:23:11.680 study about this nation moves forward from the process of impeachment. Well, 0:23:11.720 --> 0:23:14.840