WEBVTT - Bloomberg Wall Street Week - September 29th, 2023 0:00:00.240 --> 0:00:02.920 This is Bloomberg Wall Street Week. I mean may not 0:00:03.040 --> 0:00:05.280 have an overall recession, We're having a rolling recession. To 0:00:05.360 --> 0:00:07.040 kind of roll looks pretty strongly it is when it 0:00:07.080 --> 0:00:07.680 comes to jobs. 0:00:07.720 --> 0:00:09.840 The financial stories that shape our world. 0:00:09.960 --> 0:00:13.640 Three major regional bank failures send shockwaves through the banking system. 0:00:13.680 --> 0:00:15.440 We're all trying to figure out what to make of 0:00:15.600 --> 0:00:17.000 generative AI. 0:00:16.920 --> 0:00:19.320 Through the eyes of the most influential voices. 0:00:19.440 --> 0:00:22.400 Welcome down, Doctor Paul Krugman, Ryan moynihan, a Bank of America, 0:00:22.560 --> 0:00:25.279 deebro Lair of the Paulson Institute, well Then Hubbard of 0:00:25.280 --> 0:00:26.280 the Columbia Business School. 0:00:26.280 --> 0:00:30.120 Bloomberg Wall Street Week with David Weston from Bloomberg Radio. 0:00:30.320 --> 0:00:33.159 Fed up with an auto industry not sharing enough of 0:00:33.200 --> 0:00:36.000 its profits, with a government that keeps spending money like 0:00:36.040 --> 0:00:39.199 a drunken sailor, and with an internet retailer that's just 0:00:39.320 --> 0:00:42.239 too big for the government's comfort. This is Bloomberg Wall 0:00:42.240 --> 0:00:45.960 Street Week. I'm David Weston. This week is Zanny Minton 0:00:46.040 --> 0:00:48.800 Vedows of the Economists. I'm getting the best out of 0:00:48.840 --> 0:00:51.960 technology without losing too many workers along the way. 0:00:52.159 --> 0:00:54.200 With unions, there's a bit of a sense of let's 0:00:54.200 --> 0:00:56.000 stop history. I want to get off and that's the 0:00:56.000 --> 0:00:56.560 worrying thing. 0:00:56.800 --> 0:01:01.120 Portiamopori of HPS Investments on what higher rates and yields 0:01:01.120 --> 0:01:03.760 mean for the world of credit. And Usher Sharma of 0:01:03.840 --> 0:01:07.080 Rockefeller International on whether the US is running out of 0:01:07.080 --> 0:01:09.760 fiscal steam and what that means for the rest of 0:01:09.800 --> 0:01:10.240 the world. 0:01:10.440 --> 0:01:13.000 Because for fifty years we have run these deficits, the 0:01:13.080 --> 0:01:15.839 attitude has come to be a policy makers of deficits. 0:01:15.920 --> 0:01:30.959 Going backive Global Wall Street spent some time this week 0:01:31.040 --> 0:01:34.199 watching a range of people who felt things had gone 0:01:34.280 --> 0:01:37.840 far enough. President Biden and former President Trump tried to 0:01:37.920 --> 0:01:41.200 outdo one another in traveling to Detroit with the message 0:01:41.200 --> 0:01:43.920 that the auto companies needed to step up and share 0:01:43.959 --> 0:01:45.840 their profits with the American workers. 0:01:46.840 --> 0:01:49.640 Her what you've heard, you've heard a hell rot more. 0:01:49.720 --> 0:01:50.600 You're going to pray now. 0:01:50.840 --> 0:01:53.840 You built this country, you love this country. 0:01:53.880 --> 0:01:56.640 And you are the ones that make our country run. 0:01:56.880 --> 0:02:00.360 And the UAW responded on Friday by expanding its strike 0:02:00.440 --> 0:02:04.280 even further. The studios apparently decided that the writer's strike 0:02:04.360 --> 0:02:07.880 had gone on long enough, so it's settled with a WGA. 0:02:08.120 --> 0:02:10.320 It is all at a divorce where you're like, whoever 0:02:10.360 --> 0:02:11.720 comes out of the room smiling. 0:02:11.880 --> 0:02:13.639 I felt like the dank a good one. 0:02:13.680 --> 0:02:16.320 Smiling well, the actors still have a way to go. 0:02:16.639 --> 0:02:20.160 The FTC decided that Amazon had grown more than enough, 0:02:20.440 --> 0:02:22.960 filing a lawsuit claiming that it had violated the anti 0:02:22.960 --> 0:02:26.080 trust laws by using anti competitive practices to build and 0:02:26.240 --> 0:02:29.320 hold its dominant position in online retailing. 0:02:29.480 --> 0:02:32.119 These there are a set of tactics, but ultimately Amazon 0:02:32.120 --> 0:02:36.760 has pursued them to deprive actual and potential competitors of 0:02:36.800 --> 0:02:40.160 the ability to gain the scale and momentum needed to 0:02:40.320 --> 0:02:42.200 effectively compete online. 0:02:42.320 --> 0:02:45.040 And the United States Congress, or at least some members 0:02:45.040 --> 0:02:47.720 of it, decided that the government had gone way too 0:02:47.760 --> 0:02:51.000 far in spending money, and so they moved toward shutting 0:02:51.080 --> 0:02:53.880 it all down, something that just about no one thought 0:02:54.160 --> 0:02:54.960 made any sense. 0:02:55.400 --> 0:02:59.760 The failure of House Republicans to act would hurt American 0:02:59.760 --> 0:03:04.959 FIS families, and because economic kid wins, the S and P. 0:03:05.040 --> 0:03:07.920 Five hundred didn't think much of all that disruption. This week, 0:03:08.040 --> 0:03:10.960 ending down another point seventy four percent, marking its longest 0:03:11.000 --> 0:03:14.080 losing street this year and moving further south through the 0:03:14.160 --> 0:03:17.160 median year end number. Our Bloomberg L's are projecting that's 0:03:17.240 --> 0:03:20.079 forty four to thirty five, while the nasdek eked out 0:03:20.120 --> 0:03:22.880 a positive result of point oh six percent. But the 0:03:22.919 --> 0:03:25.280 market story for the week really was in bonds, where 0:03:25.320 --> 0:03:28.480 the yield on the tenure was up almost fifteen basis points, 0:03:28.560 --> 0:03:31.200 all the way up to four point five eight. That's 0:03:31.240 --> 0:03:34.520 after touching your four point seven on Thursday. Take us 0:03:34.520 --> 0:03:37.080 through the week in the markets. Welcome back now, Rebecca Patterson, 0:03:37.120 --> 0:03:40.360 former chief investment strategist for Bridgewater, So welcome back, Rebecca. 0:03:40.400 --> 0:03:42.080 Always great to have you here. So I think a 0:03:42.120 --> 0:03:44.240 lot of us talk this week was about the yield 0:03:44.320 --> 0:03:47.360 on the tenure higher for longer The main thing not 0:03:47.440 --> 0:03:50.320 so much higher, but longer, How high and for how 0:03:50.320 --> 0:03:51.960 long do you think are we looking at? Well? 0:03:52.080 --> 0:03:53.080 The Fed put. 0:03:52.920 --> 0:03:56.400 In one more possible hike in its projections for this year, 0:03:56.800 --> 0:03:58.680 and I think it did that really to give itself 0:03:58.720 --> 0:04:02.840 optionality in case the consumers stronger than expected, wage inflation's 0:04:02.880 --> 0:04:05.680 higher than expected. But I think they also did that 0:04:05.760 --> 0:04:09.560 one extra dot, one extra possible hike, to prevent financial 0:04:09.560 --> 0:04:12.120 conditions from working against them. If they had given the 0:04:12.160 --> 0:04:15.400 all clear signal, we probably would have had marginally higher 0:04:15.440 --> 0:04:18.440 stock markets, lower yields as people priced in the easing 0:04:18.520 --> 0:04:21.200 to come, and that would have worked directly against the 0:04:21.240 --> 0:04:23.560 Fed's goal. And then for next year, and I think, 0:04:23.680 --> 0:04:26.760 to your point, this is the bigger deal. Next year. 0:04:26.800 --> 0:04:29.359 The FED went from projecting one hundred bases points of 0:04:29.400 --> 0:04:32.920 cuts to fifty, so definitely higher for longer than we 0:04:33.000 --> 0:04:35.160 had previously thought. And so part of what we saw 0:04:35.279 --> 0:04:37.839 in the market this week, particularly in the bond market, 0:04:38.400 --> 0:04:41.120 was an adjustment to this new FED expectation. 0:04:41.880 --> 0:04:44.080 Where are we inflation? What kind of inflation pressure we 0:04:44.160 --> 0:04:46.120 see right now? We obviously have gas prices really going 0:04:46.200 --> 0:04:49.680 up substantially, but inflation hasn't gone away, No, not at all. 0:04:49.720 --> 0:04:52.640 It's interesting. The market took a lot of solace today 0:04:52.800 --> 0:04:56.600 in that core PCE figure, the Fed's preferred inflation measure, 0:04:56.960 --> 0:04:59.080 because it came down as expected and the month on 0:04:59.200 --> 0:05:01.760 month number was just a little bit better than expected. 0:05:02.080 --> 0:05:04.120 But when you take a step back from that, right 0:05:04.160 --> 0:05:06.440 the FED is trying to get to two, we're still 0:05:06.480 --> 0:05:08.599 well over two. And to your point, you've got some 0:05:08.800 --> 0:05:11.880 risks out there, one from the service sector wages which 0:05:11.880 --> 0:05:14.359 are still rising, you know, depending on how you measure 0:05:14.400 --> 0:05:17.960 around five percent annually. The FED has suggested it that 0:05:18.000 --> 0:05:20.039 needs to get down around three to be in line 0:05:20.080 --> 0:05:23.200 with their target. And then to your point, commodities. You know, 0:05:23.240 --> 0:05:26.240 the FED tries to look through commodities in the short term, 0:05:26.560 --> 0:05:30.200 but oil and food especially have an outsized impact on 0:05:30.240 --> 0:05:32.599 the economy through the consumer. We spend so much of 0:05:32.640 --> 0:05:36.159 our disposable income on those things. And if oil keeps going, 0:05:36.200 --> 0:05:38.719 we're at ninety five ninety six dollars a barrel on 0:05:38.760 --> 0:05:41.479 Brent crude right now, we go to one hundred. Hold 0:05:41.520 --> 0:05:44.880 around those levels for a while. It hurts disposable income, 0:05:45.040 --> 0:05:49.080 it raises inflation and inflation expectations, and that again is 0:05:49.120 --> 0:05:51.000 going to work against what the Fed's hoping to do 0:05:51.080 --> 0:05:52.159 with its soft landing. 0:05:52.720 --> 0:05:53.880 So much of this has been tight up for the 0:05:53.960 --> 0:05:56.080 labor market, and we've heard repeatedly how tight the labor 0:05:56.080 --> 0:05:58.120 market is. Loosened up some, but it still is a 0:05:58.160 --> 0:06:00.720 fairly tight labor market. What do we need to see? 0:06:00.760 --> 0:06:02.200 What does the FED need to see out of the 0:06:02.240 --> 0:06:04.960 labor market first to have that proverbial soft landing. 0:06:05.160 --> 0:06:07.440 Yeah, so, you know, the soft landing, the idea that 0:06:07.440 --> 0:06:10.400 we can get inflation back down closer to two percent 0:06:10.760 --> 0:06:13.880 without a recession. That was what the FED projected last week. 0:06:14.200 --> 0:06:17.160 I think you need to see labor market normalization that 0:06:17.240 --> 0:06:21.400 comes mainly through a reduction of openings and increase in participation, 0:06:21.960 --> 0:06:25.000 with very few layoffs. Now to the Feds, no one 0:06:25.200 --> 0:06:27.000 that's off the Fed's credit. They didn't do this, but 0:06:27.120 --> 0:06:29.960 so far that is kind of what's happening. Participation has 0:06:30.000 --> 0:06:33.600 inched a little bit higher. Job openings had been twelve million, 0:06:33.640 --> 0:06:36.599 We're down to about nine. We get another report next week, 0:06:36.800 --> 0:06:40.240 it'll probably be around eight or nine. But pre pandemic, 0:06:40.279 --> 0:06:43.560 those openings were closer to five million, So we still 0:06:43.600 --> 0:06:46.599 have a long way to go if that happens. Think 0:06:46.600 --> 0:06:49.880 about it. If we just reduce openings, it reduces competition 0:06:50.000 --> 0:06:52.760 for workers, reduces wage inflation, but everyone who has a 0:06:52.839 --> 0:06:56.400 job and income keeps it. That's their soft landing scenario. 0:06:56.920 --> 0:06:59.599 But what's probably more reasonable is you get some of 0:06:59.640 --> 0:07:02.920 that and some job layoffs. And layoffs have been very, 0:07:03.040 --> 0:07:07.360 very modest so far, but we're seeing consumers get more cautious, 0:07:07.360 --> 0:07:10.680 We're seeing companies get more cautious and business sentiment surveys. 0:07:10.880 --> 0:07:14.440 If that translates into more layoffs going forward, then it's 0:07:14.440 --> 0:07:16.120 going to be harder for the FED to get that 0:07:16.240 --> 0:07:19.560 soft landing it'll be a greater risk that companies consumers 0:07:19.640 --> 0:07:22.400 keep pulling back and we have probably a modest recession 0:07:22.640 --> 0:07:24.480 at some point in the year ahead. That would probably 0:07:24.520 --> 0:07:26.240 be my base case, but I think it's going to 0:07:26.280 --> 0:07:27.000 be a close call. 0:07:27.200 --> 0:07:28.960 Rebecca. It's always such a treat to heavy with us. 0:07:28.960 --> 0:07:31.440 Thank you for being here this, Rebecca Patterson. The market 0:07:31.480 --> 0:07:33.480 spent much of the week trying to come to terms 0:07:33.520 --> 0:07:35.440 with higher rates that may well be with us for 0:07:35.480 --> 0:07:37.520 a good long time. To give us a sense of 0:07:37.560 --> 0:07:39.680 how that may affect the credit world, we welcome to 0:07:39.680 --> 0:07:43.720 down Purntum a poori HPS Investment Partners, governing partner and 0:07:43.880 --> 0:07:46.680 head of Liquid Credits. So great to have you here 0:07:46.720 --> 0:07:48.800 in person. We've talked in remote but not in person. 0:07:48.840 --> 0:07:51.200 Wonderfully have you here, so so give us your sense 0:07:51.200 --> 0:07:54.760 about if we have rates that go up, and if 0:07:54.800 --> 0:07:56.360 they stay there for a long time, what does it 0:07:56.400 --> 0:07:58.160 do the world of credit? And which is more important 0:07:58.200 --> 0:07:59.640 how high it is or how long it is. 0:08:00.840 --> 0:08:02.560 So that's a good question. I think I think what's 0:08:02.560 --> 0:08:04.160 more important is how long it is in terms of 0:08:04.200 --> 0:08:06.160 the impact of credit. So a couple of things. One is, 0:08:06.920 --> 0:08:09.480 you know, I I think the world's changed its narrative 0:08:09.680 --> 0:08:12.680 in instead of whether or not rates go up, it's 0:08:12.680 --> 0:08:16.800 how long rates stay up. And for corporate credit balance sheets, 0:08:16.800 --> 0:08:18.680 I think there's two things that are happening. The first 0:08:18.720 --> 0:08:22.440 is that there's a lot of investment grade and high 0:08:22.520 --> 0:08:26.040 yield and loans that will reprice over the course of 0:08:26.120 --> 0:08:29.880 time to into this higher rate environment. So that's one thing. 0:08:30.160 --> 0:08:32.600 And two is companies are living in this higher rate environment, 0:08:32.640 --> 0:08:34.800 which means they're getting cash flow squeezed a little bit 0:08:34.840 --> 0:08:37.640 as they're repricing their debt, and you'll see that across 0:08:37.679 --> 0:08:39.600 investment grade. I think you'll see it across high yield. 0:08:39.640 --> 0:08:42.400 Now the loan market's floating rate, so they're participating in 0:08:42.440 --> 0:08:44.880 the rate move. Uh, you know, they participate in the 0:08:44.920 --> 0:08:47.120 last year and are continuing to participate. But really it's 0:08:47.200 --> 0:08:49.719 high yield and investment grade and fixed rate assets that 0:08:49.760 --> 0:08:51.800 are starting to to reprice and you're going to start 0:08:51.840 --> 0:08:52.600 to see the impact. 0:08:52.679 --> 0:08:55.560 So interestation we're really low for a long time. To 0:08:55.559 --> 0:08:57.920 what extent did the corporations go and say, let's lock 0:08:58.000 --> 0:09:00.800 in a lot of long term debt really low rates, 0:09:00.840 --> 0:09:02.720 and so they're protected. I guess it's for some period 0:09:02.760 --> 0:09:03.520 of time to come. 0:09:03.640 --> 0:09:05.480 A lot of them did it, and they are protected 0:09:05.520 --> 0:09:07.560 and there is a you know, you'll hear the words 0:09:07.600 --> 0:09:10.160 maturity wall, but you're certainly starting to see that cliff 0:09:10.200 --> 0:09:13.400 come into play, not necessarily in twenty twenty four, but 0:09:13.440 --> 0:09:15.760 in twenty five and twenty six. And mind you that 0:09:15.920 --> 0:09:18.720 most companies don't wait until the maturity to refinance they're dead. 0:09:18.880 --> 0:09:22.320 So oftentimes you're seeing companies refinance twelve months inside, eighteen 0:09:22.320 --> 0:09:24.920 months inside. So the numbers are pretty big in that. 0:09:25.080 --> 0:09:27.400 In that, you know, the estimates are anywhere from thirty 0:09:27.440 --> 0:09:30.319 to forty percent of investment grade and high yield repricing 0:09:30.360 --> 0:09:32.760 into this higher rate environment over the next call it, 0:09:33.120 --> 0:09:34.240 you know, eighteen months plus. 0:09:34.280 --> 0:09:35.920 Remind us, so, what are. 0:09:35.920 --> 0:09:38.680 The most active parts of your business right now? In credit, 0:09:39.360 --> 0:09:40.679 where's the most activity. 0:09:41.400 --> 0:09:43.439 There's a lot of activity in the private credit world. 0:09:44.280 --> 0:09:46.079 I think you've probably read a lot about that also, 0:09:46.840 --> 0:09:49.840 but you know, that's a very very active world right now, 0:09:50.200 --> 0:09:50.960 the private credit. 0:09:51.160 --> 0:09:51.319 Look. 0:09:51.360 --> 0:09:53.320 Private credit has been around for a long time, and 0:09:53.400 --> 0:09:55.920 private credit has taken share from the banks and they're 0:09:55.920 --> 0:09:58.559 taking share from the syndicated markets. So there's a ton 0:09:58.600 --> 0:10:02.400 of activity there up and down the capital structure and 0:10:02.679 --> 0:10:06.320 I would say there's more interest and activity across corporate credit. 0:10:06.920 --> 0:10:10.400 Certainly when you look at equities versus credit, there's been 0:10:10.559 --> 0:10:13.160 a veer towards credit because number one, the base rate 0:10:13.280 --> 0:10:16.720 environment is so high it's likely to stay high. And 0:10:16.800 --> 0:10:20.400 number two, they're spread across the market. Now, spread's not 0:10:20.480 --> 0:10:23.000 terribly attractive in and of itself, but yields are so 0:10:23.360 --> 0:10:25.959 investment grade, high yield levered loans. There's you know, the 0:10:26.320 --> 0:10:28.200 high old markets training at you know, four twenty four 0:10:28.240 --> 0:10:30.480 to thirty over in the loan market just around five 0:10:30.480 --> 0:10:32.240 point fifty over. So you're looking at eight to ten 0:10:32.280 --> 0:10:34.560 percent yields and high yield and loans, and in the 0:10:34.559 --> 0:10:37.439 private world, you know, it's it's a couple hundred basis points. 0:10:37.480 --> 0:10:38.000 On top of that. 0:10:38.160 --> 0:10:39.599 Thank you so much, really great to have you with 0:10:39.640 --> 0:10:44.800 this plano. It's pretty much POORI of HPS investments coming up, 0:10:44.880 --> 0:10:47.800 the summer of strikes turns into the autumn of strikes. 0:10:48.000 --> 0:10:51.120 We talk with Zanni mitten Vettos of the Economists about 0:10:51.160 --> 0:10:54.360 whether there's more at stake this time. That's next on 0:10:54.400 --> 0:10:55.920 Wall Street Week on Bloomberg. 0:10:57.960 --> 0:11:03.400 This is Bloomberg Wall Street Week with David Weston from Bloomberg. 0:11:02.920 --> 0:11:15.360 Radio workers on the March. 0:11:15.679 --> 0:11:18.600 The US has just been through the summer of strikes. 0:11:19.320 --> 0:11:22.559 We're hopeful, we're hearing good things that they're making progress, 0:11:22.760 --> 0:11:26.200 but the UAW is at the table bargaining in good faith. 0:11:26.600 --> 0:11:29.760 This could end today, it could end a few months 0:11:29.760 --> 0:11:30.600 from now. 0:11:30.760 --> 0:11:33.440 And we're not out of it yet. The Writer's Guild 0:11:33.480 --> 0:11:35.439 has apparently come to terms with the studios. 0:11:35.559 --> 0:11:37.680 They got what they wanted basically, which is that the 0:11:37.679 --> 0:11:41.000 Hollywood studios agreed that they're not going to you know, 0:11:41.080 --> 0:11:44.439 feed of Bunshow's scripts into the AI machine and come 0:11:44.480 --> 0:11:46.920 back and credit a movie to an AI. 0:11:47.480 --> 0:11:51.480 But the actors are still out. Let's get it done. 0:11:51.800 --> 0:11:54.040 Unions haven't been sexy for a really long time, but 0:11:54.080 --> 0:11:56.760 I've always considered it a privilege to be part of 0:11:56.800 --> 0:11:57.520 this union. 0:11:58.120 --> 0:12:00.800 And the auto workers look to be ramped things up 0:12:00.960 --> 0:12:03.800 rather than down, as we've now seen both a sitting 0:12:03.800 --> 0:12:06.439 president and a former president make trips to Detroit to 0:12:06.480 --> 0:12:10.080 show their support. Wall Street did norma country, the middle class, 0:12:10.080 --> 0:12:10.960 PILMA count. 0:12:13.920 --> 0:12:14.479 Class. 0:12:15.640 --> 0:12:18.480 I side with the Auto Workers of American with those 0:12:18.520 --> 0:12:20.880 who want to make America great again. 0:12:20.720 --> 0:12:25.079 And I always will, but this time may truly be different. Sure, 0:12:25.200 --> 0:12:28.000 it's about wages and benefits, but it's also about the 0:12:28.040 --> 0:12:30.800 future and the worker's place in a world that technology 0:12:30.840 --> 0:12:34.680 is transforming faster than we may know. From writers concerned 0:12:34.679 --> 0:12:37.760 about artificial intelligence taking their jobs, the. 0:12:37.800 --> 0:12:41.280 Clash that you're seeing with the writers. 0:12:40.960 --> 0:12:43.240 And the actors is that, of course that means the 0:12:43.280 --> 0:12:48.000 studios and networks may require fewer people to auto workers 0:12:48.000 --> 0:12:50.720 who know that those electric vehicles won't need as many 0:12:50.760 --> 0:12:52.679 of them on the job as before. 0:12:53.200 --> 0:12:58.960 I fear that between the fact that electric vehicles take 0:12:59.360 --> 0:13:03.560 about four two percent fewer workers per automobile and the 0:13:03.600 --> 0:13:06.080 fact that a large part of the action in the 0:13:06.120 --> 0:13:11.319 automobile industry is moving to the southern part of our country, 0:13:11.679 --> 0:13:16.319 the industrial belt part of the country is gonna shrink 0:13:16.679 --> 0:13:17.520 no matter. 0:13:17.280 --> 0:13:21.000 What, leaving us wondering whether this time we can embrace 0:13:21.040 --> 0:13:24.840 all that technology offers without leaving workers behind. 0:13:25.200 --> 0:13:28.959 Looking out into the future, we're starting to ask ourselves, 0:13:29.280 --> 0:13:32.120 when are these computers going to be as smart as 0:13:32.160 --> 0:13:33.960 we are? 0:13:32.960 --> 0:13:37.440 And to take us through what is going on with 0:13:37.520 --> 0:13:39.719 the labor markets, particularly in the United States. Welcome now 0:13:39.840 --> 0:13:42.720 back Zanni Mintenbto. She is the editor in chief of 0:13:42.760 --> 0:13:44.520 the Economist Danny. Great to have you back on Wall 0:13:44.520 --> 0:13:46.800 Street week. Thank you. So what are we seeing here? 0:13:46.800 --> 0:13:49.000 It has been a summer of strikes, We're not done 0:13:49.040 --> 0:13:51.400 even as we go into the autumn. But how much 0:13:51.400 --> 0:13:53.080 of this do you think is because of a basic 0:13:53.160 --> 0:13:55.800 shift in power toward labor. How much of it is 0:13:55.880 --> 0:13:57.440 new technology on the horizon. 0:13:57.720 --> 0:13:59.560 Well, Fasiva, it is great to be back here with you. 0:14:00.120 --> 0:14:02.520 I think it's a bit of both. I think there 0:14:02.600 --> 0:14:05.200 is definitely a sense that, you know, labor is in 0:14:05.240 --> 0:14:07.400 a stronger position than it has been for much of 0:14:07.400 --> 0:14:11.160 the past few decades. Unemployment is very low, the economy 0:14:11.200 --> 0:14:13.000 is very strong, there's the shortage of labor. The labor 0:14:13.040 --> 0:14:15.440 market has changed after the pandemic, and so there's a 0:14:15.480 --> 0:14:18.000 sense that labor is in a stronger position. But I 0:14:18.040 --> 0:14:21.760 think part of the motivation is also a concern about 0:14:21.840 --> 0:14:25.360 what the next wave of technology means, whether it's you know, 0:14:25.440 --> 0:14:28.360 with the UAW, whether it's EVS and the shift in 0:14:28.400 --> 0:14:31.760 the nature of car manufacturing, whether it's AI. All these 0:14:31.800 --> 0:14:35.120 technologies on the horizon, and there's a sense of concern 0:14:35.160 --> 0:14:37.600 about that change and a kind of grabbing of the 0:14:37.640 --> 0:14:40.720 gains while you can, and perhaps also as so often. 0:14:41.240 --> 0:14:44.440 Unfortunately with unions, there's a bit of a sense of stop, 0:14:44.520 --> 0:14:45.400 let's stop history. 0:14:45.440 --> 0:14:46.120 I want to get off. 0:14:46.160 --> 0:14:47.200 And that's the worrying bit. 0:14:47.520 --> 0:14:50.240 We lost out, particularly manufacturing jobs in the United States 0:14:50.240 --> 0:14:53.320 of America. Is there anything that can be done by corporations, 0:14:53.320 --> 0:14:55.880 by the government to try to avoid the problem that 0:14:55.880 --> 0:14:56.640 we had last time? 0:14:57.200 --> 0:14:59.720 Absolutely there is. But first I think it's understanding what 0:14:59.840 --> 0:15:02.200 is going on right now. And you're right that in 0:15:02.240 --> 0:15:04.840 the past few decades two things were happening. There was 0:15:04.880 --> 0:15:08.440 a bunch of technological change, and there was globalization. There 0:15:08.480 --> 0:15:09.720 was competition from abroad. 0:15:10.040 --> 0:15:10.800 And what we're. 0:15:10.600 --> 0:15:14.200 Seeing now in the kind of backlash against globalization in 0:15:14.200 --> 0:15:16.560 the US, and we're seeing it in both parties, is 0:15:16.640 --> 0:15:19.480 a much greater focus on protectionism. And if you look 0:15:19.520 --> 0:15:22.640 at Bidenomics, if you will, one of the problems with 0:15:22.680 --> 0:15:26.240 the president's policy is that they're conflating a whole bunch 0:15:26.280 --> 0:15:29.440 of things. There's a lot of subsidies to accelerate the 0:15:29.480 --> 0:15:33.040 green transition, to accelerate the shift to electrification. At the 0:15:33.080 --> 0:15:35.640 same time, there's quite a lot of protectionism in there, 0:15:35.640 --> 0:15:40.080 which is of course works at odds with the attempt 0:15:40.120 --> 0:15:43.040 to accelerate that transition. So what I think is important 0:15:43.120 --> 0:15:46.640 is to separate this out. I'm a free trader at heart, 0:15:46.640 --> 0:15:48.560 always have been. That's what we fought for for one 0:15:48.640 --> 0:15:52.400 hundred and eighty years. I don't think protectionism and tariffs 0:15:52.840 --> 0:15:56.200 is a sensible medium or indeed long term strategy for 0:15:56.280 --> 0:15:59.040 helping US workers. I think the goal needs to be 0:15:59.600 --> 0:16:03.560 how to to prepare workers to enable them to take 0:16:03.600 --> 0:16:07.000 advantage of new technologies. And so that's easily said, and 0:16:07.080 --> 0:16:08.800 you know, it's easy to say, well, yeah, yeah, yeah, 0:16:08.800 --> 0:16:11.160 you know you need to retrain, but you do need 0:16:11.200 --> 0:16:13.440 to work out what are the skills that people will 0:16:13.520 --> 0:16:15.880 need to thrive in the new economy and kind of 0:16:16.160 --> 0:16:20.640 stopping technology from being adopted is a very short sided solution. 0:16:21.040 --> 0:16:23.240 So I think that the challenge now, and we didn't 0:16:23.240 --> 0:16:26.280 get it right in the nineties. In the two thousands, 0:16:26.280 --> 0:16:30.080 we definitely didn't do enough to equip workers for new technologies. 0:16:30.080 --> 0:16:33.400 To think about from the education system, to the training system, 0:16:33.640 --> 0:16:35.680 to the kind of adoption and the factory, what is 0:16:35.720 --> 0:16:38.800 it that needs to be done to ensure that we 0:16:38.920 --> 0:16:40.960 have the workforce as needed. And to put this in 0:16:41.080 --> 0:16:44.280 very concretely, the context right now, if you look at 0:16:44.520 --> 0:16:48.000 the ambitions of the IRA, the ambitions of the elect 0:16:48.040 --> 0:16:50.240 for the electrification of this country. There are a huge 0:16:50.360 --> 0:16:52.720 number of jobs that are going to be created, whether 0:16:52.720 --> 0:16:55.640 it's in building the factories, whether it's then in actually 0:16:55.680 --> 0:16:58.360 manning the factories, and at the moment, the concerns are 0:16:58.440 --> 0:17:01.560 where will those people come from? And so rather than 0:17:01.600 --> 0:17:04.560 trying to stop that shift, I think the challenge for 0:17:04.680 --> 0:17:08.159 both unions and for companies is how do we ensure 0:17:08.160 --> 0:17:10.080 that we've got the right workers with the right skills 0:17:10.119 --> 0:17:12.399 that we will need, so that we aren't slowed in 0:17:12.480 --> 0:17:14.960 that transition by not having the right kind of people. 0:17:15.119 --> 0:17:16.879 So come back to something you talked about, and that 0:17:17.000 --> 0:17:20.160 is President Biden's plan and Inflation Reduction Act. They're moving 0:17:20.160 --> 0:17:23.360 towards so called green He has caught a little bit 0:17:23.440 --> 0:17:25.600 between two stools here. On the one hand, he wants 0:17:25.600 --> 0:17:28.200 to go to electric vehicles really fast. On the other hand, 0:17:28.200 --> 0:17:30.440 people tell us they probably will need something like forty 0:17:30.480 --> 0:17:34.159 percent fewer workers. Is that as zero sum game? Is 0:17:34.160 --> 0:17:37.560 there a way to have both workers getting good wages, 0:17:37.720 --> 0:17:41.199 having good jobs, and moved to electric vehicles? 0:17:40.960 --> 0:17:44.040 The OGS answer is yes, of course, because there will 0:17:44.040 --> 0:17:46.400 be demand for workers. They may just be doing different jobs. 0:17:46.440 --> 0:17:48.480 They maybe even be in different industries. But I think 0:17:48.520 --> 0:17:51.520 will you put your finger on a challenge that President 0:17:51.520 --> 0:17:56.760 Biden has because he has wrapped his push to green 0:17:56.880 --> 0:17:59.920 vehicles and his green transition in the Inflation Reduction Act 0:18:00.440 --> 0:18:02.639 in a kind of context of this is good for 0:18:02.680 --> 0:18:04.399 the American worker, and not just it's good for the 0:18:04.400 --> 0:18:07.000 American worker, it's good for the union worker and good 0:18:07.000 --> 0:18:10.800 for union jobs. And so he's that's where he's caught 0:18:10.840 --> 0:18:13.280 in a bit of a bind because he's trying to 0:18:13.320 --> 0:18:16.840 say that one policy is great for today's union jobs 0:18:17.080 --> 0:18:19.399 and is going to accelerate the green transition, and there 0:18:19.440 --> 0:18:21.320 really is a bit of a trade off there. I 0:18:21.359 --> 0:18:26.359 think the importance of accelerating the green transition means there 0:18:26.440 --> 0:18:29.480 will be good jobs in the future. The US will 0:18:29.520 --> 0:18:32.720 be greener, cleaner, and will be a stronger twenty first 0:18:32.720 --> 0:18:35.840 century economy, but it doesn't mean that the exact jobs 0:18:35.880 --> 0:18:37.560 that we have today will still be the jobs that 0:18:37.600 --> 0:18:38.280 are there tomorrow. 0:18:38.400 --> 0:18:41.399 Artificial intelligence, at least has the potential to disrupt a 0:18:41.480 --> 0:18:44.040 very different part of the labor force. People who are 0:18:44.119 --> 0:18:46.000 much more trained, a lot of people who are college 0:18:46.119 --> 0:18:49.440 educated and who could really lose their jobs because it's 0:18:49.480 --> 0:18:53.320 being done by generative AI. How do we address that 0:18:53.440 --> 0:18:56.119 problem because you may have a different segment of society 0:18:56.280 --> 0:18:58.439 that is dislocated in the next ten years. 0:18:58.520 --> 0:19:01.840 Absolutely, and the answer, I think the answer is that 0:19:01.880 --> 0:19:04.919 we don't know quite how big that group will be 0:19:05.080 --> 0:19:07.320