Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along
Speaker 1: with Jonathan Ferrell and Lisa Brownwitz Jailey. We bring you
Speaker 1: insight from the best and economics, finance, investment, and international relations.
Speaker 1: Find Bloomberg Surveillance on Apple podcast, SoundCloud, Bloomberg dot com,
Speaker 1: and of course on the Bloomberg terminal in Glasgow at
Speaker 1: CUP twenty six. There are people that have parachuted into
Speaker 1: climate change that could not be said of the former
Speaker 1: Vice President of the United States, and with that there's
Speaker 1: no need to mention his name. Francine Lacroix with a
Speaker 1: gentleman from Tennessee. Yeah, thank you so much, Tom John
Speaker 1: and Lisa. I am delighted to be speaking to al
Speaker 1: Gore were the the original proponent of sustainability and climate
Speaker 1: change through for years and decades, has been trying to
Speaker 1: make this a reality of Vice President growth. You so
Speaker 1: much for joining us. Thank you. Today's Climate Finance, it's
Speaker 1: we're focusing on the funding, on the finance, on how
Speaker 1: we transition better. I want to ask about your investment firm.
Speaker 1: This is something with the joint ventures with Golden Saxon,
Speaker 1: you're basically only targeting assets that are decarbonizing, which means
Speaker 1: that all the portfolios are well below the one point
Speaker 1: five degrees. Is this how you do it? Right? Yeah? Well,
Speaker 1: Generation Investment Management was one of the small group that
Speaker 1: convened this net zero Asset Managers initiative, and it's now
Speaker 1: up to this incredibly large number of fifty two trillion
Speaker 1: dollars and it's part of the larger package that Mark
Speaker 1: Arney talked about. The rules of the road are are
Speaker 1: still being worked out in great detail. Uh. For for
Speaker 1: our part, we are actually committed to net zero, real
Speaker 1: net nead zero. Uh. Some who have made this commitment
Speaker 1: are still working toward that man maximum goal. And I
Speaker 1: think what you're seeing here in this conference overall is
Speaker 1: a big wheel turning slowly. I think the world is
Speaker 1: awakening to the dire danger our civilization is in. And
Speaker 1: I won't go into all that, but obviously Mother Nature
Speaker 1: is making the point very powerfully and people are now responding,
Speaker 1: and in the finance sector they are now saying, look,
Speaker 1: we got to be part of the solution, and we
Speaker 1: got to stop funding the problem. How do we turn
Speaker 1: the wheel faster? So, if you're an investor today, how
Speaker 1: do you avoid greenwashing? How do you avoid making the
Speaker 1: mistakes that then leads to probe saying your financial product
Speaker 1: is not s G enough. Well, in its essence, screenwashing
Speaker 1: is just a cheap trick that people are beginning to
Speaker 1: see through. Uh. It won't work for long. Uh. In
Speaker 1: the age of the Internet, people are ferretting out what's
Speaker 1: real and what's not it. It will take a little time.
Speaker 1: But you know, society as a whole is now insisting
Speaker 1: that all of the institute usians of our civilization begin
Speaker 1: to respond to this with the sense of urgency that
Speaker 1: that's appropriate. And that's why you've seen this wave of
Speaker 1: E s G investing, albeit with a lot of greenwashing. Uh.
Speaker 1: And and as people begin to focus more intently, they're
Speaker 1: going to insist that they do it for real and
Speaker 1: get rid of this greenwashing. How do you measure success
Speaker 1: if you look at some of the things, for example,
Speaker 1: investment products. I know we're waiting for a common language,
Speaker 1: we're waiting for taxonomy, we're waiting for a price on carbon.
Speaker 1: But how do you make sure that investors don't walk
Speaker 1: away from cop with a pat on the vaccine? We've
Speaker 1: done the job, but let's go back to business. The
Speaker 1: old way. Yeah, I don't think that they're going to
Speaker 1: be able to do that because a lot of the
Speaker 1: large asset owners, including pension funds, are are saying, you know,
Speaker 1: we we want to go with managers that are actually
Speaker 1: committed for real and not just to pretend commitment. Um.
Speaker 1: And I don't think that there's gonna be a letdown
Speaker 1: after this. I think the pressure is on. Uh. This,
Speaker 1: this conference or cop process includes fifty thousand people, and
Speaker 1: a lot of the major commitments and progress that's being
Speaker 1: made take place outside of this plinary hall, take place
Speaker 1: outside of the negotiating sessions, but actually involved people who
Speaker 1: are in finance in who are CEOs of businesses and
Speaker 1: they're hearing from their customers. But how much of a
Speaker 1: problem is that private money, as you say, is going
Speaker 1: faster than public money. And what can we do to
Speaker 1: change that to at least align them. Well, we need
Speaker 1: reform of the multilateral development banks, for sure. The World
Speaker 1: Bank is not yet on side. Uh. And the head
Speaker 1: of the World Bank is a perfectly nice guy appointed
Speaker 1: by the previous US president, chosen by him. Uh. The
Speaker 1: staff is actually very good. They're in my opinion, but
Speaker 1: they're not yet really committed to helping as they should.
Speaker 1: There is a tremen into amount of work going on
Speaker 1: to try to come up with sensible reforms, not only
Speaker 1: at the World Bank Group, but Crystal linea George Eva,
Speaker 1: I think is a real champion here uh and and
Speaker 1: she is pushing hard to get these reforms in place.
Speaker 1: And then there are a whole group of other multilateral
Speaker 1: development banks, regional banks, national banks. There's a general awakening
Speaker 1: among all of them. Here's an example, what francing. Uh
Speaker 1: If if you're a business in Nigeria and you want
Speaker 1: to build a wind farm, your interest rate is seven
Speaker 1: times higher than it is if you're in an O
Speaker 1: E C D country. That's insane. Obviously the market is
Speaker 1: perceiving risk of various kinds there. But that's what these
Speaker 1: publicly funded the multilateral development banks should be doing, taking
Speaker 1: that first level of risk off of the table and
Speaker 1: speaking for society as a whole and saying it's in
Speaker 1: our public interests to make this transition faster. Why is
Speaker 1: it us not doing? I know we have an agreement
Speaker 1: on methane, but at the same time President Biden has
Speaker 1: been hamstrong with some of the politics back home. Why
Speaker 1: is this happening now, well, we still have a political
Speaker 1: battle to win in the US. UH, and it's a
Speaker 1: divided UH politics in the US, and UH the narrowest
Speaker 1: possible majority in the Senate. So President Biden, I think
Speaker 1: he did a fantastic job with his two days here UH.
Speaker 1: And I think he's done a fantastic job in proposing
Speaker 1: a really meaningful climate package. But it's very tough when
Speaker 1: you have a fifty fifty Senate and a couple of
Speaker 1: the Democratic senators are not yet on board one for
Speaker 1: McCole state, so it's a challenge. I do think that
Speaker 1: in another couple of weeks, I think before the end
Speaker 1: of the year, certainly this package will be passed. It
Speaker 1: may be modified again, but I think it. I think
Speaker 1: it will be passed. We will that help with convincing
Speaker 1: China to come on board or is it about including China? Well, yes,
Speaker 1: I think it has to help and bringing China on board. Yes,
Speaker 1: if if China can say you're preaching temperance from from
Speaker 1: a bar stool, as they say, then it lets them
Speaker 1: off the hook of it. But but I'm convinced that
Speaker 1: China is a serious about making its transition. They're building
Speaker 1: more solar panels and wind farms and the rest of
Speaker 1: the world put together. They're still burning more coal than
Speaker 1: the rest of the world put together, and that has
Speaker 1: to be transitioned away much faster, and they can save
Speaker 1: money by doing it so, But the coal industry in
Speaker 1: China is as powerful as the coal industry in the US,
Speaker 1: and so it obviously is taking some time to make
Speaker 1: that transition. There's an old Chinese proverb I'm told that
Speaker 1: says the mountain is high and the emperor is far away.
Speaker 1: I think that some of the regional governments in China
Speaker 1: have close ties with coal and coal related industrial opera rations,
Speaker 1: and it takes it's taking them some time to get
Speaker 1: them on board. But they've introduced carbon pricing in a
Speaker 1: in a chunk of their society. It's due to expand
Speaker 1: they have put out a net zero goal. It's far
Speaker 1: farther out than I would like it to be, but
Speaker 1: they plan their work and work their plan, and I
Speaker 1: think they're determined to do it. Vice President. When we
Speaker 1: see how much green finance there is out there, I
Speaker 1: had a chief executive calling it tsunami of green finance.
Speaker 1: What happens to the companies that are not working on
Speaker 1: their transition. Now, well, I think we're in the early
Speaker 1: stages of a sustainability revolution. That's the biggest investing and
Speaker 1: business opportunity in history. Uh. And those who don't recognize
Speaker 1: that and adapt to it are in commercial commercial risk
Speaker 1: of course, because they're they're going to be left behind.
Speaker 1: You remember the subprime mortgage of bubble that led to
Speaker 1: the Great Recession. We now have a sub prime carbon
Speaker 1: bubble of two trillion dollars based on an absurd assumption
Speaker 1: that all of that, all of those carbon fuels are
Speaker 1: going to be burned. They're not going to be. They
Speaker 1: cannot be, especially because the new renewable sources of electricity
Speaker 1: are much cheaper now and will be cheaper in the world,
Speaker 1: already in two thirds of the world. So that do
Speaker 1: you believe that once we have a carbon market, or
Speaker 1: proper carbon market functioning with prices, that it reprices private assets? Yeah,
Speaker 1: I mean I think that once carbon risk, the climate
Speaker 1: crisis risk is internalized, then yes, it's going to affect
Speaker 1: the value of all these assets. We've had this insane
Speaker 1: illusion that we can just ignore the impact of the
Speaker 1: climate crisis. But mother Nature is telling us no, not
Speaker 1: so fast. And these events are getting more extreme and
Speaker 1: more frequent, and people everywhere are recognizing it and they're
Speaker 1: demanding action. There's resistance, of course, and the legacy fossil
Speaker 1: fuel complex and the bankers that continue to invest hundreds
Speaker 1: of billions of dollars in it every year. They remind
Speaker 1: me of the old cartoon of wiley coyote running off
Speaker 1: the edge of the cliff and the legs keep moving
Speaker 1: until gravity takes hold. We're in that moment now, We're
Speaker 1: in a transition, and those who make the transition faster
Speaker 1: are going to do better as a result. Vice President Gore,
Speaker 1: thank you so much for your time on Bloomberg today,
Speaker 1: and with that, I'm going to send it back to
Speaker 1: you in New York, John, and we'll have plenty more
Speaker 1: from Glasgow. Cup twice France say thank you so much
Speaker 1: to you as well. Eric Adams is from Brooklyn. He
Speaker 1: joins us this morning. Congratulations, Eric Adams. I just mentioned
Speaker 1: you've done seventy two interviews this morning. How is your Wednesday? Look?
Speaker 1: Busy as you could expect, but exciting and I believe
Speaker 1: that Uh I want to be known as the g
Speaker 1: S D mayor get stuff done. Tram to really deal
Speaker 1: with the problems that we're facing in the city, and
Speaker 1: I'm excited about it. I'm sure you'll accept a congratulations
Speaker 1: call from Mr Jesse at Amazon or Mr Bezos of Amazon.
Speaker 1: I'm sure you will tell me you would not have
Speaker 1: lost Amazon out of Queen's Amazon looks to move to
Speaker 1: Jersey City or at the margin, moved to Jersey City.
Speaker 1: How do you keep tech jobs in the five boroughs
Speaker 1: by doing what I have been doing for the last
Speaker 1: three months now. I had been sitting down with tech
Speaker 1: leaders ms, several Israeli companies and other companies here in
Speaker 1: the city. Just two days ago I met with thirty
Speaker 1: a large tech startups and in the borough of Brooklyn
Speaker 1: we witnessed a three hundred and fifty six increase in
Speaker 1: tech startups in a tenure period. So this has been
Speaker 1: a place where I believe in technology and how we
Speaker 1: use technology to change the delivery of goods and services
Speaker 1: in this city. I'm not going to mince words, you know,
Speaker 1: it's a tough Bloomberg interview. That's what we do here.
Speaker 1: What is going to be here? Change process. In the
Speaker 1: first thirty days from the mayor, you replace a safety
Speaker 1: zero in on gun and gang violence. We have to
Speaker 1: deal with the actualization of fear and violence and the
Speaker 1: perception because they both become a reality to people. So
Speaker 1: I'm going to institute an anti gun plane closed unit,
Speaker 1: of which is similarly disbanded by the current mayor, and
Speaker 1: we're going to zero and gun violence. Okay, I don't
Speaker 1: interrupt here, but the news flow is so important Mayor
Speaker 1: that the district attorney elected maybe disagrees with you on
Speaker 1: the how do you put in process planes, closed officers
Speaker 1: to protect the citizens? What's how do you actually affect that? Well,
Speaker 1: some things. I'm won the distric attorney. He prosecute crimes.
Speaker 1: The police department. We arrest people that there is probable
Speaker 1: cause to believe they committed crime, and I'm not going
Speaker 1: to mix the two. I think right now we are
Speaker 1: debated with the laws we don't like in Albany. We
Speaker 1: don't like the way he prosecuted the prosecuting crimes. That's
Speaker 1: not our job. My job is to make sure if
Speaker 1: someone has probable cause to commit a crime. I'm in
Speaker 1: charge of the police department. I don't need approval to
Speaker 1: put in place a plain close anti gun unit. And
Speaker 1: we're going to do our job and let others do
Speaker 1: their jobs. We're speaking with Eric Adams, new York City
Speaker 1: mayor elect. Mr Adams. You know this is this is Bloomberg.
Speaker 1: We think about the markets, we think about um, you know,
Speaker 1: stock exchanges and and right now you know, as we know,
Speaker 1: New York City has been the global leader in global finance.
Speaker 1: I think that's still the case today. The future is
Speaker 1: going to be a little bit differently. We think about
Speaker 1: some things like crypto that is a big, big growth
Speaker 1: of business within the financial services industry and technology. How
Speaker 1: are you going to make New York City a crypto
Speaker 1: friendly city, a crypto leader? Uh? And how would that
Speaker 1: benefit the city? Well, part of the meetings I have
Speaker 1: been having UH is to bring together the whole big
Speaker 1: cooin industry, and we need to do several things with it.
Speaker 1: Number one, we need to look at what's prevented the
Speaker 1: growth of big coins and cryptocurrency in our city. What
Speaker 1: is it in the way of that. I met with
Speaker 1: the mayor of Miami and we're going to have a
Speaker 1: friendly competition. Uh. He's extremely inviting. He has a Miami
Speaker 1: Miami coin that is doing very well. We're going to
Speaker 1: look in the direction to carry that out. We're also
Speaker 1: going to do something else. We have to build out
Speaker 1: a pipeline of young people that can field these jobs
Speaker 1: and understand the new technology. Because we can't have a
Speaker 1: one sided city where certain groups and areas are doing
Speaker 1: well and those of the inner cities are not. I'm
Speaker 1: going to build the pipeline to success in the city.
Speaker 1: Mary Adams. Uh, we have to wrap this up as
Speaker 1: you go of Bloomberg Television to speak with John Farrell.
Speaker 1: Good luck with that. Uh. And I'm kidding, but but but,
Speaker 1: Mary Adams, you walked in once is a tough kid
Speaker 1: in Brooklyn to precinct. That's not tough, that's fancy Fort Green.
Speaker 1: I mean, you're living large in Fort Green. You've got
Speaker 1: to walk in to a fancy Ford Green or some
Speaker 1: of the toughest districts in this city. Is an ex
Speaker 1: cop with people who maybe didn't vote for you, maybe
Speaker 1: didn't get behind you because they have a more traditional view.
Speaker 1: How do you make peace with the line officers of
Speaker 1: the New York Police Department. Well, first, it's very important
Speaker 1: not to view geographical areas of the city during our
Speaker 1: current time. Yes, for Green is wonderful right now with
Speaker 1: multimillion dollar homes. But I was there when we were
Speaker 1: dealing with real robberies, real crimes. And I also controlled
Speaker 1: this city at the transit cop during the mid eighties
Speaker 1: Ryan and subway system with a radio that did not
Speaker 1: operate alone by myself. So we start talking about tough,
Speaker 1: That's what I know. It's tough getting off the flow
Speaker 1: of a police and after you are rested, tough in
Speaker 1: a dishwasher, going to school at night, surviving education with
Speaker 1: a learning disability that was undiagnosed. Tough is not something
Speaker 1: I'm afraid of, and tough is not something that New
Speaker 1: York is off radio. We're resilient and we're going to
Speaker 1: be fine. New York is bad. I'm Bloomberg Radio, Eric
Speaker 1: Adams with us. He will continue, I'm Bloomberg Television worldwide
Speaker 1: as well. Mayor Adams, congratulations and thank you so much
Speaker 1: for joining us as well. Boy Paul, is that a
Speaker 1: different tone from I mean, I'm not trying to get
Speaker 1: into the politics of it. I will state as a
Speaker 1: fact that's a different That is a different tone, and
Speaker 1: it's probably reflective of what a lot of folks in
Speaker 1: New York City you're feeling, which is we need to
Speaker 1: kind of get control back at this city here. Um.
Speaker 1: And so that's certainly been one of the messages from
Speaker 1: Mayor elect Adams. And so again he'll have a you know,
Speaker 1: as you mentioned in your question, you know that's those
Speaker 1: first thirty days. Boy, there's a lot to get done
Speaker 1: and and and setting the tone. I guess him longer
Speaker 1: than thirty days. But but to all of our audience
Speaker 1: worldwide and across this nation, unfortunately, what the mayor talks
Speaker 1: about on people's fears, it's true. It's across all income
Speaker 1: levels everyone. You just could feel it in the city. Ye.
Speaker 1: And it's tangible. Yeah. And if we've we've seen this
Speaker 1: before in New York City, and if you could if
Speaker 1: you can get that under control, if you can get
Speaker 1: that managed, and then a lot of other things fall
Speaker 1: into place, whether it's investment, whether it's tourism, um and um.
Speaker 1: But that we've seen this before, and we've seen we
Speaker 1: have a playbook, and you know certainly would need to
Speaker 1: be adjusted for the times presumably, but that will probably
Speaker 1: one of the, if not the leading job for the
Speaker 1: mayor elect on day one. You see how I behave myself? Yeah,
Speaker 1: very well, I said very well. I didn't say, Mr
Speaker 1: Mayor the pothole. If they haven't fourth Street, can we
Speaker 1: get that fixed? Exactly? I didn't bring up Street between
Speaker 1: six and exactly as we can do. We can rip
Speaker 1: up the script with Abby Joseph Coh and she has
Speaker 1: acclaimed at Golden Sax. She is one of the people
Speaker 1: that keeps the fearful in the market participating and David
Speaker 1: Costan's great bull market over at the Goldmen Sax shop.
Speaker 1: We're thrilled at the advisory director and senior investment strategist
Speaker 1: at Golden Sex joins us this morning. Abby, I'm going
Speaker 1: to rip up the script and I can do this
Speaker 1: for someone who wrote Aristotle on investment decision making in
Speaker 1: the Financial Analyst Journal a million years ago. Abby, we're
Speaker 1: all getting length here. We're all playing the parlor game
Speaker 1: of extending the X axis. We've been here before, haven't we.
Speaker 1: We certainly have Tom and it's a pleasure to be
Speaker 1: with you in the team. Another word we could use
Speaker 1: is protracted. Basically, there are several factors now behind the
Speaker 1: inflation that we're seeing globally. Some of these may prove
Speaker 1: to be transitory, yet protracted. That includes some of the
Speaker 1: supply chain issues but some of them do represent the
Speaker 1: sort of inflation that one gets during the course of
Speaker 1: an economic expansion, And the one that I'm looking at
Speaker 1: most closely has to do with wages. We have seen
Speaker 1: a notable pickup in average hourly earnings, and on the
Speaker 1: one hand, that's terrific because it says something about the
Speaker 1: ability of consumers to continue to spend, and it also
Speaker 1: tries to get across the idea that we did go
Speaker 1: through an extended period prior to the pandemic in which
Speaker 1: wages were not quite keeping up. However, if those wages
Speaker 1: get embedded um in the economy, what we do see
Speaker 1: is that core c P I and more importantly for
Speaker 1: the Fed core pc E UH moves up. But the
Speaker 1: expectation of my Goldman Sack economist colleagues is that we
Speaker 1: will start to see that calm down. One other point,
Speaker 1: if I may, and that is we're still in a
Speaker 1: period where you and your comparisons are really difficult to
Speaker 1: do because we are emerging from this extraordinary period. Now,
Speaker 1: a year ago, personal spending was negative UH. This year
Speaker 1: it's positive. So what do we think is going to happen?
Speaker 1: They're going to be some price pressures and they're going
Speaker 1: to be some supply chain pressures as well. I mean,
Speaker 1: let's do some Cornell mathematics here, and it's about the
Speaker 1: rates of change and the dynamics involved, and we can
Speaker 1: look at wage growth is I I agree with your
Speaker 1: core theme there is well. The gloom Crew speaks of
Speaker 1: abrupt They speak of gross second derivatives and even harmful
Speaker 1: first derivatives. Your shop says, calm down, state why we
Speaker 1: should calm down and avoid the fear of dynamics. I
Speaker 1: think we should calm down for a few reasons. Tom
Speaker 1: One is, as you point out, the mathematics, uh, the
Speaker 1: year in your comparisons are really fraught right now, and
Speaker 1: we'd much rather look at an extended period of what's
Speaker 1: happening and what's happening at the core level. The other
Speaker 1: thing we need to keep in mind is that there
Speaker 1: are several factors out there, three big ones that work
Speaker 1: in the opposite direction, that may suggest that economic growth
Speaker 1: will actually have the breaks somewhat applied, even if the
Speaker 1: FED doesn't do anything. What are they? Number one, we
Speaker 1: are seeing right now a change in fiscal policy, and
Speaker 1: I'm not talking about the packages that are stuck in Congress.
Speaker 1: What we're seeing is that the programs that were previously
Speaker 1: implemented are rolling off, and so the increase in federal spending,
Speaker 1: which was as you know, robust and equal to about
Speaker 1: nine percent of GDP earlier in the pandemic, is now
Speaker 1: going to be growing at about one percent, and if
Speaker 1: fiscal policy isn't changed, it will be down about two
Speaker 1: next year in two So that's a bit of a break. Uh.
Speaker 1: The other thing that we have to keep in mind
Speaker 1: is that we are not seeing of the sword of
Speaker 1: wrote rebound that many had expected in terms of employment.
Speaker 1: Not talking about the unemployment rate, I'm talking about the
Speaker 1: participation rate, where there are many groups of people who
Speaker 1: are saying either they don't want to come back into
Speaker 1: the workforce, where they don't want to do it now.
Speaker 1: So this includes working moms who are having a problem
Speaker 1: with childcare and their kids are not yet vaccinated. It
Speaker 1: includes retirees. Uh, the baby boom generation a very large
Speaker 1: cohort in the United States. UM. And let's not forget
Speaker 1: the missing immigrants. In the decade prior to the pandemic,
Speaker 1: about ten percent of the net growth in the US
Speaker 1: labor force was due to immigration, both at the lower
Speaker 1: end of the spectrum and at the high end very
Speaker 1: skilled people. We've seen that reduce one more factor, if
Speaker 1: I may, and that is while the US and many
Speaker 1: other nations are slowly now emerging from pandemic restrictions, China
Speaker 1: is extremely tough on these restrictions. And China has roughly
Speaker 1: of the world's global manufacturing capacity. If they tighten up
Speaker 1: or stay tight, that has implications for economic growth. Everyone's
Speaker 1: been focusing on the supply chain and the inflationary aspects.
Speaker 1: It also has impact on the growth abby. All of
Speaker 1: this sounds fairly negative. However, I wonder if the biggest
Speaker 1: pain trade in markets is not being bullish enough, because
Speaker 1: it's frankly supports the idea of real yields being as
Speaker 1: negative as they are, and they're being a supportive backdrop
Speaker 1: for risk at least been in monetary and fiscal policy standpoint.
Speaker 1: Do you agree that pain the pain trade is not
Speaker 1: being bullish enough, not necessarily being barished, potentially failing to
Speaker 1: be so. Yeah, you know, the the economics team that
Speaker 1: I work with does believe this will be a protracted
Speaker 1: process that the FED if it does announce this afternoon,
Speaker 1: as they have signaled that they're going to taper, they
Speaker 1: will taple taper very gradually, and that the rise in
Speaker 1: rates from the Fed funds level in any event could
Speaker 1: be a year off. But we've already seen, as you
Speaker 1: pointed out earlier, that interest rates have already risen in
Speaker 1: anticipation of this happening. And so the key for the
Speaker 1: stock market in particular will be economic growth and earnings growth.
Speaker 1: And here again I would urge people to recognize that
Speaker 1: those year on year comparisons are going to be very
Speaker 1: difficult to do, uh, simply because we're coming from a
Speaker 1: base that was so incredibly depressed in many industries that
Speaker 1: to talk about that growth rate decelerating, Still good, earning,
Speaker 1: still growing, but the growth rate decelerating, you know, as
Speaker 1: as Tom would put it, the second derivative is not
Speaker 1: like but it's still going to be a good number.
Speaker 1: And I think I've just got a final question to
Speaker 1: squeeze in. Are we doing the Tom Keane, Abby, Joseph
Speaker 1: coming Christmas mesh all this year? Is that happening some?
Speaker 1: It's up to Miss Joseph Cohen. Her people have not
Speaker 1: talked about can your talent sappy? Is it happening? I
Speaker 1: look forward to this every year? Are we doing it?
Speaker 1: I It will depend up on what Tom has to say. Okay, well,
Speaker 1: very good, whether I whether I get that invitation. I'm
Speaker 1: I'm I'm writing good Christians, John, Can I summarize that?
Speaker 1: I believe it was Joseph Cohen? Uh just predicted SPX
Speaker 1: six thousand. That's what they took out that your inte
Speaker 1: for the Christmas special next stage six un you know,
Speaker 1: I'm sorry, David, it won't happen again. It will never
Speaker 1: happen again, David, Thank you Joseph Cohen again. Happy Joseph
Speaker 1: khin there of government sacks on the secuity market, surveillance fact,
Speaker 1: John Farrell, Lisa Bramwits and I all at gunpoint had
Speaker 1: to read Dickens Tale of to City. He read it
Speaker 1: because he wanted to. Michael Gapon joins us on the
Speaker 1: tail of two tapers now chief US economist Barkley's investment Bank.
Speaker 1: How is a Treasury taper, Michael Gaping different from a
Speaker 1: FED taper? I think it's mainly because the Fed is
Speaker 1: a is a unique holder of treasury securities. Of course,
Speaker 1: they have different incentives, different holding periods, They're different actors.
Speaker 1: So I think it's it's more about yes on that
Speaker 1: these two things are generally canceling themselves out. But the
Speaker 1: feed is backing out of the market is a very
Speaker 1: unique buyer. I think that's still the the main message.
Speaker 1: So I wouldn't take the net the net comparison too far.
Speaker 1: I do think the big news is the Fed. The
Speaker 1: FED will be tapering. The big news is they'll be tapering,
Speaker 1: and they will be cautious and conservative. Is the August
Speaker 1: institution is in this November. How measured will Chairman Powell be?
Speaker 1: I think it'll be a fairly measured. Typically when the
Speaker 1: Fed it is tightening policy in some form, they like
Speaker 1: to offset it by giving you a little something on
Speaker 1: the other side. And and I don't think that's going
Speaker 1: to be a strong pushback against market pricing. I just
Speaker 1: think it will be an emphasis that the decision to
Speaker 1: taper and the decision to lift rates are two very
Speaker 1: different things. They have different criterion. The bar for lifting
Speaker 1: rates is higher, and that's a long way off. So
Speaker 1: I think that's that's going to be what he'll try
Speaker 1: to kind of soft pedal to taper message with yes,
Speaker 1: we're starting to taper, Yes we're still concerned about risk
Speaker 1: to the outlook for inflation next year. Yes, there's a
Speaker 1: risk management component to this decision, but you know, really
Speaker 1: don't push this too far. There are two separate decisions.
Speaker 1: I think that's where his cautious will will come in. Michael,
Speaker 1: do you expect him to say that we expect a
Speaker 1: lengthier transitory period going forward. I think that's so he
Speaker 1: were debating this in the last segment. It kind of
Speaker 1: has become a dirty word. Um, it wasn't in his
Speaker 1: press conference statement last time around. He didn't mention it
Speaker 1: in the press conference itself. That word trans the tory,
Speaker 1: it's in the statement. So yeah, I think that flavor
Speaker 1: of that has to stay. I still think in general,
Speaker 1: their forecasts are all consistent in ours are still very
Speaker 1: consistent with a you know, a transitory or temporary impulse.
Speaker 1: The duration of it is just longer than we than
Speaker 1: we thought. So I think they have to find a
Speaker 1: way to keep that flavor around, but maybe back away
Speaker 1: from the pure usage of of that word. What's the
Speaker 1: potential market reaction if fed share J. Powell does not
Speaker 1: push back significantly against the idea of one or even
Speaker 1: two rate hikes next year. Well, in the short run.
Speaker 1: It may mean that the market moves to to pricing
Speaker 1: more hikes, as they've done elsewhere. So and as certainly
Speaker 1: they did say immediately following Legard's press conference, uh, you
Speaker 1: know previously. So. But from the Fed's point of view,
Speaker 1: and I think they're right on this, it's a long
Speaker 1: way out for them. It's at least six months down
Speaker 1: the road for them. Given what they know today, they
Speaker 1: don't really have any incentive to push back strongly against
Speaker 1: market pricing or or confirm it. So, you know, I
Speaker 1: think on this point, it's get the taper decision done,
Speaker 1: communicate that there are two separate decisions in terms of
Speaker 1: tapering versus liftoff, and kind of let the markets have
Speaker 1: at it. Michael, frame for us the immovable force of
Speaker 1: gross excess savings or I should say excess gross savings
Speaker 1: and also the immovable forces everybody's moving their terminal values
Speaker 1: out to a lengthier out. Put those two together right now. Yeah.
Speaker 1: I think part of it is so there is this
Speaker 1: big pool of excess saving that's out there, and it's
Speaker 1: still we're just really now getting to the point whether
Speaker 1: we will know whether households are going to be drawing
Speaker 1: down on that pool of saving if if they do,
Speaker 1: because really right now it's government stimulus has faded out
Speaker 1: to the point where the personal savings rate is almost
Speaker 1: back to pre pandemic levels. So you could see a
Speaker 1: situation now where the saving rate goes below let's call
Speaker 1: it low single digits, and we'll see whether households draw
Speaker 1: down on that. If if they do, then that's a
Speaker 1: situation where you could come buying that with with federal
Speaker 1: spending or infrastructure spending, and you have a prolonged period
Speaker 1: of above trend growth in in the future. Uh, and
Speaker 1: depending on where inflation is, that could be a longer cycle.
Speaker 1: So I think that's how I would interpret it in
Speaker 1: terms of the contribution it could bring to demand, how
Speaker 1: long it keeps growth above trend, and therefore what it
Speaker 1: might mean for the duration of of the tightening cycle. Michael,
Speaker 1: have we reached the point where jobs markets, jobs data
Speaker 1: that we get as we're going to get on Friday,
Speaker 1: really do indicate a shift or something true or are
Speaker 1: we just still seeing the comeback of a market that
Speaker 1: was so severely distorted by the pandemic. I think it's
Speaker 1: the latter. I think this is you know, we've We've
Speaker 1: debated about forecasts and the accuracy of models and so forth,
Speaker 1: and you know, we can do that all day, but
Speaker 1: I think this is one point where we in the
Speaker 1: economist community, I think have been pretty consistent. We've said,
Speaker 1: I believe it's going to take twelve to twenty four
Speaker 1: to thirty six months to sort this all out. So
Speaker 1: I'm still in that camp. If you look at the
Speaker 1: at the data, for example, Bowl the data will tell
Speaker 1: you about four million people were out of the job
Speaker 1: market last month because either they had COVID or they
Speaker 1: were taking care of somebody who has COVID. So that's
Speaker 1: a huge number, and obviously that rotates over over time,
Speaker 1: and the in terms of who's been out of the
Speaker 1: labor force, it's it's mainly a married couple where financial
Speaker 1: resources generally can be shared. So one person is stepping
Speaker 1: out for one reason or another. There's a lot of
Speaker 1: room for that to heal over time. We're not going
Speaker 1: to know in the next two to three months whether
Speaker 1: that changes. It's likely to be a long process. So
Speaker 1: that's my view is it will come back more incrementally
Speaker 1: and it's going to take six to nine to twelve
Speaker 1: months to get a good idea of where that is, Michael.
Speaker 1: Thank you, sir, Michael, gap in there. I appreciate the
Speaker 1: sound of a busy office, a busy trading floor. Yes,
Speaker 1: it's going to have you back. Thank you, sir. That's
Speaker 1: always said the Glasgow, Scotland and catch up with Blimbergs
Speaker 1: trying in likewise, but we still morning, Francine, and we
Speaker 1: are still good morning John. I'm delighted actually to be
Speaker 1: here AT's a day four, because it started on Sunday
Speaker 1: a little bit quieter. I know there's a lot of
Speaker 1: noise behind me, just because there's a lot of the
Speaker 1: big Wall Street titans. I just saw very thing walks
Speaker 1: through the planary because today is finance Day. We also
Speaker 1: heard from Secretary yelling moments, oh go. I am delighted
Speaker 1: to be joined now by the astro Zenica chief executive
Speaker 1: officers that Pasca saw you to talk about all things sustainable,
Speaker 1: and we'll also talk about the vaccines she saw you.
Speaker 1: Thank you so much for joining us today. First of all,
Speaker 1: it's a little bit counterintuitive. I know astro Zenica has
Speaker 1: had some very good plans on Scope one, two and
Speaker 1: also three, but it's counterintuitive to look at the medicine
Speaker 1: industry and saying what you can do for sustainability Is
Speaker 1: it all about drug disposal? How much cloud do you
Speaker 1: think your industry has to actually make a real difference
Speaker 1: to e s g. I've been ring France and then
Speaker 1: thank you for having me the I think the pharmaceutical
Speaker 1: industry and the heavy scares sector as a whole can
Speaker 1: make a big impact. The heavy scares sector or globe
Speaker 1: or presents about four percent of carbon emissions, so it's
Speaker 1: quite substantial. And we can, of course as companies, work
Speaker 1: on our own emissions, which you know as a company
Speaker 1: we have a plan to do that by will be
Speaker 1: carbon zero. From that view point, we can work on
Speaker 1: our scopes three and our supply chain and we are
Speaker 1: doing this as a company and I'm also working with
Speaker 1: the rest of the industry to do that. And then
Speaker 1: importantly we can work with the healthcare sector as a whole,
Speaker 1: like the energys in the UK, to really make sure
Speaker 1: we reduce carbon emissions across the entire sector. So I
Speaker 1: guess the rest difficult thing is how do you dispose
Speaker 1: in this? How do you dispose of it in a
Speaker 1: safe way that's not damaging to the environment. How long
Speaker 1: a way. Do we have to go until most medicine
Speaker 1: ninety five percent of medicine or safe to dispose of? Well,
Speaker 1: a lot of work is being done on this two.
Speaker 1: But disposing of medicine is really a slightly different topic
Speaker 1: compared to the carbon emission reduction we are committing to.
Speaker 1: But a number of companies are really looking at how
Speaker 1: do we actually recycle or dispose of our packaging of
Speaker 1: our medicines and and recycle a lot of this in
Speaker 1: in an environmentally friendly manner. Do you think that these
Speaker 1: talks are we invigorating the infrasustainable? I mean, I mean
Speaker 1: Curry here is very energizing, I have to say, because
Speaker 1: I can sense the momentum is growing. Not only governments
Speaker 1: are really making commitments, and I know that we would
Speaker 1: always like to hear better, stronger commitments, but it goes
Speaker 1: in their own the right direction. And importantly, the private
Speaker 1: sector is not stepping up. Yeah, and now we need
Speaker 1: to look at the details and where the money is
Speaker 1: going and how you hold them accountable. But speaking of commitments,
Speaker 1: what's your commitment to vaccines? Our commitment to vaccine is
Speaker 1: really to bring this vaccine to as many people as
Speaker 1: possible around the world, and so far we have delivered
Speaker 1: one point at billion doses of vaccine globally, mostly to
Speaker 1: the low medi on income countries, and so we are
Speaker 1: very proud of this. Many people, thousands of people have
Speaker 1: worked day and night over the last few months to
Speaker 1: really deliver this vaccine that is making a huge difference
Speaker 1: in many countries around the world. Which actually, what do
Speaker 1: you make of the US of the new US pricing bill?
Speaker 1: Actually in drugs, it seems to penalize some of the
Speaker 1: smaller molecule drug development versus, for example, some of the biologics. Well,
Speaker 1: you know, I mean we it was clear that something
Speaker 1: has its clear something has to be done in the
Speaker 1: United States to help patients get access to their medicine
Speaker 1: at an affordable cost um. So we really welcome this
Speaker 1: proposal to introduce a cap of two thousand dollar cap
Speaker 1: of out of pocket costs for patients every year. That
Speaker 1: will really help them take their medicine with that, you know,
Speaker 1: the difficulties the face today, and we also understand that
Speaker 1: something has to be done, and it's a negotiation between
Speaker 1: industry and and all. The circle doesn't and I think
Speaker 1: we we have to do this without destroying innovation, which
Speaker 1: has been mostly in the US over the last number
Speaker 1: of years. Actually, I believe that what the discussion is
Speaker 1: going on today is really getting there. Actually, I understand
Speaker 1: you know that the new bill so removes incentives to
Speaker 1: test kids. What do you make about to test children? Um,
Speaker 1: this I'm not aware of. I have to say I'm
Speaker 1: sorry about this. But but the the discussion and the
Speaker 1: decision that has been communicated overnight. Um, he's really balancing
Speaker 1: quite well, reducing price, negotiating the price of sound drugs,
Speaker 1: but at the same time protecting innovation. I mean, is
Speaker 1: it you know, is there a danger that, because of
Speaker 1: the pandemic, which I know has put really health at
Speaker 1: the forefront, which means that a lot more people are
Speaker 1: engaged with your industry, that as you're dealing with the pandemic,
Speaker 1: it will not incentivize other companies, drug companies, healthcare companies
Speaker 1: to decarbonize. Oh, I think the whole industry is actually
Speaker 1: committed to committing not to the carbonizing. I you know,
Speaker 1: I'm part of the task force within the SMI, the
Speaker 1: Sustainable Market Initiatives launched by his oil hand as the
Speaker 1: Prince child and as an industry we're working together to
Speaker 1: the carbanas and reduce our carbon emissions in an accelerated manner.
Speaker 1: So it's really quite exciting to see the pharmaceutical companies
Speaker 1: coming together to work with our suppliers, but also to
Speaker 1: work with and A, chess and other health scare systems
Speaker 1: around the world so productively we can really reduce the
Speaker 1: footprints you thanks so much for joining us. He is,
Speaker 1: of course, the chief executive officer of astro Zeneca. Yeah,
Speaker 1: another important story developing through the week over in Glasgow, Scotland.
Speaker 1: Let's head back to catch up with Francine lay Friend. Hi, John,
Speaker 1: Thank you so much for that. I'm delighted to be
Speaker 1: joined by the President of Costa Rica, a President Alvarado,
Speaker 1: to talk a little bit about his country, some of
Speaker 1: the pledges here and of course what can be done
Speaker 1: to save the planet. President, thanks so much for joining
Speaker 1: us right here. Life on Bloomberg surveillance. Nearly a quarter
Speaker 1: of your landmasses under some sort of conservation. You're doing
Speaker 1: extremely well in terms of energy production electrifying into more
Speaker 1: renewable sources. The big concern is transportation. About fifty of
Speaker 1: your emissions come from transportation. That is still dirty. How
Speaker 1: can you make it cleaner? Well, thanks for the opportunity.
Speaker 1: It's a pleasure being with you in Bloomberg. Well, it's
Speaker 1: true that our main fund print and falsil carbon fruit
Speaker 1: print console transportation. Our electric grid. The electricity we produces
Speaker 1: nine clean and renewable. So our great opportunity is to
Speaker 1: electrify our transportation. So far, what we have done we
Speaker 1: have increased the number of electric vehicles in Costa Rica.
Speaker 1: We are the we have the highest per capita number
Speaker 1: of vehicles electric vehicles in the region. That's one and
Speaker 1: for that we have a tax relief on electric vehicles
Speaker 1: and also we multiply the stations to charge vehicles so
Speaker 1: you can go all across the country. Second, mass transportation,
Speaker 1: we're building an electric train for are the main cities
Speaker 1: eighty it's a project of eighty two kilometers and it's
Speaker 1: also an electric train from clean electricity. What kind of
Speaker 1: timeline can we actually see a meaningful difference? And we
Speaker 1: look at the cars, what's selling? What do people want
Speaker 1: to buy? Well, our timeline we launch it by February.
Speaker 1: We were the first to launch our decarbranization plan and
Speaker 1: we have a pathway from now to twenty fifty, but
Speaker 1: by twenty thirty, we have to see a strong progress
Speaker 1: in the electrification of our transportation to dramatically reduce our
Speaker 1: carbon footprint. And that's what we are I mean also
Speaker 1: with new schemes of public transportation, because we're not only
Speaker 1: targeting to private vehicles but also public transportation to cleaner,
Speaker 1: more efficient. The person talking to a little bit about
Speaker 1: carbon market, First of all, are you pushing for some
Speaker 1: kind of carbon markets offset? That will happen very quickly.
Speaker 1: I know Panama is getting involved in carbon you know
Speaker 1: we're going to have a price for carbon. Well, that's
Speaker 1: one of the big discussions, and actually that's the discussion
Speaker 1: our Article six that's going on in the negotiations during
Speaker 1: this cup. Yes, we're pushing for that, but I think
Speaker 1: one of the great discussions has to do with first
Speaker 1: with trust, trust in the developing word that we're going
Speaker 1: to implement the measures, and also trust from the developers
Speaker 1: that they're going to commit finance, both public and private.
Speaker 1: We have seen advancements and we have seen schemes, but
Speaker 1: there are still too frial. I was gonna say, have
Speaker 1: you seen enough? I mean, it's a billion enough yet?
Speaker 1: Right when will we see it, and how much pressure
Speaker 1: are you putting on some of the developing would be
Speaker 1: we're being very open. I mean whenever I address the
Speaker 1: floor a couple of times that I've done, I've been
Speaker 1: very open and frank, because you see, there's the discussion
Speaker 1: of the development countries are too risky. But here the
Speaker 1: only risk I see is that if we don't act there,
Speaker 1: there won't be any planet anymore. So I don't see
Speaker 1: any risk higher than that. One risk is a matter
Speaker 1: of u S measure also in time and framingess. And
Speaker 1: you feel cheated by some of the top of metters.
Speaker 1: I mean they also come from the developments of the word.
Speaker 1: I think we need to to go further in our commitments.
Speaker 1: I am confident because as as as humanity, I am optimistic.
Speaker 1: How must the meat on the table to be sure
Speaker 1: to implement some of the strategies that you have from
Speaker 1: developed economies? Well, for example, through our policies like the
Speaker 1: Hambition Coalition Forever Nature that is pushing to preserve thirty
Speaker 1: percent of oceans and forty percent of lands. So far
Speaker 1: we have we have we have gathered the support of
Speaker 1: five billion dollars through philanthropy and that's a great start. Yesterday, Colombia, Ecuador,
Speaker 1: Panama and Costa Rica were together announced the Protection of
Speaker 1: our Oceans area, which is going to be one of
Speaker 1: the largest in the Pacific and that support there also
Speaker 1: by philanthropy and by all the contributors. We're in conversation
Speaker 1: with the resident of Costa Rica when you look at
Speaker 1: some of the things that have been on the table
Speaker 1: and what more can we you know, can be done.
Speaker 1: You're still dealing with a pandemic. Costa Rica is an
Speaker 1: open economy. The pandemic and COVID nineteen is not out
Speaker 1: of control. Is there danger that it derails you and
Speaker 1: other countries actually in developing economies from reaching some of
Speaker 1: the sustainability targets. Well, that's one of the great risks.
Speaker 1: In our case. We have for the objective population twelve
Speaker 1: age and older, we have more than eight eighty six
Speaker 1: percent of a population with at least one doses, more
Speaker 1: than sixty with two doses. So we have advanced in
Speaker 1: that direction. But the fact, for example, that Africa's has
Speaker 1: just five percent of people backs in it is a
Speaker 1: great risk, not for Africa, for the rest of the world.
Speaker 1: So then we need to tackle that because a new
Speaker 1: variant can take us to the beginning. So we need
Speaker 1: to tackle that second grade risk. And this is for
Speaker 1: emergent economy, miss for the developing world, for Latin American
Speaker 1: and the Caribbean. We've seen an increase on our fiscal
Speaker 1: deficits because we have to increase expenditure to tackle the pandemic,
Speaker 1: also increase expenditure to tackle climate change. Extreme weathers demand
Speaker 1: governments to invest in emergencies, for example, and at the
Speaker 1: same time do pandemic. We have seen a decrease on
Speaker 1: the taxes we collect and those fiscal deficits are a
Speaker 1: new risk that we face. We are facing a dead
Speaker 1: risk throughout the region. All right, thank you so much.
Speaker 1: Is it nice being back in then here? You studied here, Yes,
Speaker 1: studied here. No, it's great. The only thing I didn't
Speaker 1: miss is how cold it is. But I know it is.
Speaker 1: It's freezing in Glasgow. Thank you so much. The President
Speaker 1: of Costa Rica. With that time, I'm going to hand
Speaker 1: it back to you. In New York, I imagine it's warmer.
Speaker 1: I'm I'm not sure. Here it is pretty cool even
Speaker 1: in the Congress Center France, saying I did not miss
Speaker 1: the weather dint I miss you, I don't miss the
Speaker 1: weather France, saying thank you very much from Glasgowscon. This
Speaker 1: is the Bloomberg Surveillance Podcast. Thanks for listening. Join us
Speaker 1: live weekdays from seven to ten am Eastern on Bloomberg
Speaker 1: Radio and on Bloomberg Television each day from six to
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Speaker 1: the terminal. I'm Tom keene In. This is Bloomberg