WEBVTT - Surveillance: Recession Risk With Blanchflower 0:00:05.120 --> 0:00:09.200 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along 0:00:09.240 --> 0:00:13.080 with Jonathan Ferrell and Lisa brown Witz Jailey, we bring 0:00:13.119 --> 0:00:17.159 you insight from the best and economics, finance, investment and 0:00:17.280 --> 0:00:23.280 international relations. Find Bloomberg Surveillance on Apple podcast, Suncloud, Bloomberg 0:00:23.360 --> 0:00:30.880 dot Com and of course on the Bloomberg terminal. Exceptionally 0:00:30.920 --> 0:00:34.080 important research by the gentleman from Dartmouth. David blanche Flower 0:00:34.159 --> 0:00:37.440 joins us now his public service to his United Kingdom, 0:00:37.479 --> 0:00:40.360 to his Wales, frankly, to his car to football team 0:00:40.400 --> 0:00:43.040 as well, and we're thrilled at Danny bluch Flower could 0:00:43.120 --> 0:00:45.720 join us this morning. Daddy, I'm gonna die good to see. 0:00:45.720 --> 0:00:47.800 I'm gonna digress here. I know John wants to drive 0:00:47.800 --> 0:00:51.360 in dive into this research. We are seeing big tech 0:00:51.440 --> 0:00:55.480 now show that David cart and Alan Krueger got it right. 0:00:55.720 --> 0:00:59.520 They nailed it on the minimum wage. Now we have 0:00:59.680 --> 0:01:04.640 big tech bidding up labor to seventeen eighteen dollars an 0:01:04.640 --> 0:01:08.200 hour across America. What is the effect of big tech 0:01:08.600 --> 0:01:15.400 and a minimum wage? Well, I I always living in Hannow, Hampshire. 0:01:15.440 --> 0:01:17.640 Tom My kids used to go and work at the 0:01:17.640 --> 0:01:20.440 local cinema and they'd work at ten bucks an hour, 0:01:21.280 --> 0:01:24.160 And obviously north of the northern part of the United States, 0:01:24.240 --> 0:01:26.680 the minimum wage didn't bind. But what we're seeing here 0:01:27.280 --> 0:01:30.880 is a labor market adjusting to a shock um and 0:01:30.880 --> 0:01:34.280 and basically firms having to pay the going price. The 0:01:34.360 --> 0:01:37.200 question would you guys are all thinking about, is does 0:01:37.280 --> 0:01:40.000 that continue in the future. Just because there's a once 0:01:40.080 --> 0:01:44.080 off rise in wages doesn't necessarily mean something going forward 0:01:44.480 --> 0:01:48.120 for us. Start with, this week announced three bonus for 0:01:48.160 --> 0:01:51.920 all its staff, but that lifts prices this year and 0:01:51.960 --> 0:01:54.720 does nothing next year. So the question is, you know 0:01:54.880 --> 0:01:58.560 we're we're emerging from a bottleneck. I don't see anything 0:01:58.680 --> 0:02:02.559 really actually suggests that prices in eighteen months will will 0:02:02.600 --> 0:02:05.000 continue to rise. This is a once off jump for 0:02:05.040 --> 0:02:07.920 an economy that's adjusting. Firms are having to pay for 0:02:07.960 --> 0:02:11.960 those shortages. But arise today doesn't mean arise tomorrow. Danny, 0:02:11.960 --> 0:02:13.720 I don't want to bury the lead here. You've got 0:02:13.760 --> 0:02:17.079 a recession call. A recession call when people are looking 0:02:17.080 --> 0:02:21.440 at four percent growth next year, what's the recession call about? Well, 0:02:21.560 --> 0:02:23.840 if you have a new paper coming out on Monday, 0:02:23.880 --> 0:02:27.120 if you and Dave Wilson Twitt put out the chart 0:02:27.240 --> 0:02:30.720 yesterday if you look at what predicts all six of 0:02:30.760 --> 0:02:36.639 the last six recessions, it's actually consumer sentiment, consumer expectations, 0:02:36.720 --> 0:02:38.920 and that if you look at the paper I have 0:02:39.000 --> 0:02:42.400 coming out that turned in the US around April May 0:02:42.520 --> 0:02:44.880 this year, it looks almost identical to what happened in 0:02:44.880 --> 0:02:47.400 two thousand and seven. And people can pooh pooh it, 0:02:47.680 --> 0:02:50.440 but these are the data. These data are precisely what 0:02:50.560 --> 0:02:54.040 explains six of the last six recession. Nothing else does, 0:02:54.560 --> 0:02:57.520 and there are no false calls. So the question is 0:02:57.560 --> 0:02:59.640 what's going on? And I think the answer is that 0:03:00.320 --> 0:03:03.000 it's about the spread of COVID we've seen and at 0:03:03.000 --> 0:03:06.120 the it's particularly amongst women who said they're fearful of 0:03:06.160 --> 0:03:08.680 going back to work, with seeing people withdrawing, and in 0:03:08.720 --> 0:03:11.400 the last month we sort of huge drop in the 0:03:11.440 --> 0:03:14.480 female participation rate of eighteen to twenty five year olds 0:03:14.480 --> 0:03:18.960 and and and sorry to thirty five year olds and 0:03:19.000 --> 0:03:21.359 thirty five to forty four year olds. So I think 0:03:21.400 --> 0:03:24.600 it's women being very fearful. Anxiety in the US has 0:03:24.639 --> 0:03:27.160 reason that suggests spending is going to pull back, and 0:03:27.200 --> 0:03:29.880 it would not be surprising consistent with that to see 0:03:29.919 --> 0:03:33.079 falls in retail trade. So I'm not saying this will happen, 0:03:33.160 --> 0:03:35.520 but all the other data is completely messed up. These 0:03:35.600 --> 0:03:38.040 data are the best you have, and it's rate, and 0:03:38.080 --> 0:03:40.839 it now is flashing rate. Danny. There's a lot here 0:03:40.920 --> 0:03:43.560 to pack to unpack. We've got the participation rate, We've 0:03:43.560 --> 0:03:45.520 got the labor market and the question over whether it's 0:03:45.520 --> 0:03:47.600 tight or loose. And then there's the issue of the 0:03:47.640 --> 0:03:50.920 importance of consumer sentiments surveys, which has been called into 0:03:51.000 --> 0:03:54.040 question by some people. Others would argue that if you 0:03:54.040 --> 0:03:56.720 look at other consumer sentiment surveys, like the Langer one, 0:03:56.920 --> 0:03:59.480 it shows a different picture of the University of Michigan survey. 0:03:59.520 --> 0:04:05.000 The basic this isn't clean either. How would you respond, Well, 0:04:05.040 --> 0:04:07.360 you know they can make stuff up. But the question 0:04:07.440 --> 0:04:09.920 is what does the data actually show. And so there's 0:04:10.200 --> 0:04:14.400 the set of econometrics, particularly show that these things predicted. 0:04:14.520 --> 0:04:17.360 So you you may not like it, but that's factually 0:04:17.400 --> 0:04:20.160 what it does. Particularly in these data we actually now 0:04:20.200 --> 0:04:22.719 have from the Center, from the Conference Board, we have 0:04:22.880 --> 0:04:25.560 data since two thousand and seven on the eight biggest 0:04:25.680 --> 0:04:31.080 states um and basically in the expectations induicries there predict 0:04:31.320 --> 0:04:34.279 behavior twelve months ahead, so people can pooh pooh, just 0:04:34.279 --> 0:04:36.479 go and look at the data, run it yourself. It's 0:04:36.480 --> 0:04:38.520 not the case that they don't like it because they're 0:04:38.560 --> 0:04:41.120 just making it up. The data shows that you can 0:04:41.160 --> 0:04:45.360 predict with exactly these data. The question is whether this 0:04:45.440 --> 0:04:48.200 is the this is the seventh of seven, and is 0:04:48.240 --> 0:04:50.960 this the one that gets it wrong? Um. I think 0:04:51.000 --> 0:04:53.560 the concern is that most of the other data looks 0:04:53.600 --> 0:04:55.320 to be crazy. I mean, if you look at Tom 0:04:55.320 --> 0:04:57.760 always asked me about the wage code, Well, for every 0:04:57.800 --> 0:04:59.920 recession I've ever seen in the world, as the unblow 0:05:00.120 --> 0:05:02.680 rate goes up, wage growth slows. Well, in this one, 0:05:02.720 --> 0:05:05.400 the opposite happens. The Phillips curve now slopes up, the 0:05:05.400 --> 0:05:08.159 wage curve slopes up. It's not clear that that's true. 0:05:08.240 --> 0:05:10.760 And most of the other day, I don't believe you 0:05:10.800 --> 0:05:13.599 asked me which day. I do believe it's these day too. 0:05:13.680 --> 0:05:16.440 So Danny, underlying this is the idea that you don't 0:05:16.440 --> 0:05:18.560 think that the labor market is as tight as other 0:05:18.600 --> 0:05:21.239 people think. That is sort of the presumption that seems 0:05:21.279 --> 0:05:24.279 to be baked in. Can you explain why that is 0:05:24.360 --> 0:05:26.040 at a time when you do see all of these 0:05:26.080 --> 0:05:28.880 job openings and you do see the wage hikes that 0:05:28.960 --> 0:05:31.800 we are seeing right now to entice people back into 0:05:31.839 --> 0:05:35.920 the labor force. Well, the best analogy is that this 0:05:36.000 --> 0:05:38.840 is like a hurricane hitting a place hitt and say that, 0:05:38.880 --> 0:05:41.720 I don't know that the coast of Florida. So presumably 0:05:41.720 --> 0:05:43.920 what happens is when that occurs, is the price of 0:05:44.040 --> 0:05:47.960 roofers and plumbers and gardeners rise as an economy adjusts. 0:05:48.400 --> 0:05:50.680 Just just go back to the fact that we had 0:05:50.720 --> 0:05:54.200 in April, the unemployment rate went from three and a 0:05:54.240 --> 0:05:57.640 half percent to when you calculated right to twenty and 0:05:57.720 --> 0:06:01.600 wage growth went from three to eight percent. Well, so 0:06:01.839 --> 0:06:05.240 unemployment rights like crazy. So what happened was the bottom 0:06:05.240 --> 0:06:08.240 part of the labor market drops out. There are certainly 0:06:08.360 --> 0:06:12.960 adjustment costs coming. People are withdrawing from particular kinds of 0:06:13.080 --> 0:06:16.680 goods for particular kinds of work, and firms are having 0:06:16.680 --> 0:06:18.360 to pay pe because they don't want to go and 0:06:18.440 --> 0:06:20.560 work in a school, they don't want to work in 0:06:20.920 --> 0:06:24.720 consumer facing places. And that's the surveys from Grant Thornton 0:06:24.760 --> 0:06:27.360 and the conference boards saying people if they're forced to 0:06:27.400 --> 0:06:29.160 go back to work, they're going to look for another 0:06:29.240 --> 0:06:32.280 job or quit. So we're seeing people retiring. So this 0:06:32.360 --> 0:06:35.120 is an adjustment of an economy that's been hit by 0:06:35.120 --> 0:06:37.760 this shock, and people are fearful, and all the evidences 0:06:37.839 --> 0:06:41.600 that fear rose dramatically around May of this year, and 0:06:41.640 --> 0:06:44.960 that it particularly is driven by women being fearful that 0:06:45.000 --> 0:06:47.279 they all got to work and bring something home to 0:06:47.320 --> 0:06:50.760 their families. That's consistent with the data. I mean, whether 0:06:50.960 --> 0:06:55.279 whether whether this is whether this is predictive, we will see, 0:06:55.560 --> 0:06:58.440 but be mindful that the people who guess have no 0:06:58.880 --> 0:07:01.239 no mechanism by which they can predict the last six 0:07:01.640 --> 0:07:04.520 and these days to predicted six of the last six, 0:07:04.960 --> 0:07:07.600 and so it's mindful to them to come up with, well, 0:07:07.640 --> 0:07:09.760 how do you predict the session with what you have 0:07:09.880 --> 0:07:11.640 been talking about? And the answer is they can't. They're 0:07:11.680 --> 0:07:13.880 just making it up. Nobody has a crystal ball, Danny. 0:07:13.920 --> 0:07:15.760 It's always going to catch up, sir, before you go. 0:07:16.320 --> 0:07:19.160 Before you go, an important note, we were all thinking 0:07:19.200 --> 0:07:21.920 of the late great Alan Krueger this week. I know 0:07:22.040 --> 0:07:25.720 you were too, sir. Your thoughts on that, buddy, Well, 0:07:25.800 --> 0:07:30.200 I'm so pleased that David Carden and Josh and Guido 0:07:30.400 --> 0:07:33.400 got this prize. But if you read, if you read 0:07:33.520 --> 0:07:36.000 the thing from the Nobel Prize. Most of this work 0:07:36.120 --> 0:07:39.760 was joined with Alan um Alan, our friend and colleague 0:07:39.800 --> 0:07:42.320 beyond Blumber for a really long time. So I was 0:07:42.400 --> 0:07:45.080 really pleased at the price came. But it was a 0:07:45.120 --> 0:07:46.920 sad day too. It was a great day for the 0:07:46.920 --> 0:07:49.320 work that he did. The guy was a shoe in 0:07:49.480 --> 0:07:51.960 for a Nobel and if you read it, I mean 0:07:52.000 --> 0:07:54.600 he should have been there on the stage. His work 0:07:54.720 --> 0:07:57.920 is was brilliant and wonderful and we miss him hugely. 0:07:57.960 --> 0:08:01.040 We don't understand why, lovely Danny, well, we all miss 0:08:01.120 --> 0:08:03.080 him this week. And Danny just finally, you've been saying 0:08:03.120 --> 0:08:05.600 for a long time, thinking about the work of An 0:08:05.720 --> 0:08:08.800 and Crewe ground others, that the Nobild Prize needed to change. 0:08:09.120 --> 0:08:10.920 We needed to get to award it to someone who's 0:08:10.920 --> 0:08:14.960 actually found something out that we can work with. I 0:08:15.000 --> 0:08:17.880 think that's right. And if you look the Economics Prize, 0:08:17.880 --> 0:08:21.560 a Young Prize, you award your awards stuff and methodology, um, 0:08:21.600 --> 0:08:24.840 and eventually you have to stop that and and actually 0:08:24.840 --> 0:08:27.360 it will start to award for people who found things. 0:08:27.720 --> 0:08:29.880 In essence, there was a prize to ago to the 0:08:29.880 --> 0:08:31.720 flow on a Husband and that was great, but in 0:08:32.200 --> 0:08:35.439 essence it probably should have come first, the Card and Kruger, 0:08:35.480 --> 0:08:37.160 and in fact, if it had come and Alan would 0:08:37.160 --> 0:08:39.560 have been alive. But I think what we're actually going 0:08:39.640 --> 0:08:41.200 to see, and you could look back on the prize 0:08:41.240 --> 0:08:44.040 in economics and say, what do these people find? It 0:08:44.120 --> 0:08:46.800 is what they actually wrote true, and the vast majority 0:08:46.800 --> 0:08:48.720 of the case we have no idea. So I think 0:08:48.760 --> 0:08:51.520 increasingly what we're hopefully going to see a prize is 0:08:51.559 --> 0:08:54.840 given to people who found stuff, And David Carter and 0:08:54.880 --> 0:08:57.840 Alan Kruger found stuff about the minimum wage. David worked 0:08:57.880 --> 0:09:01.160 on the Marial boatlift, and work on about immigration, and 0:09:01.559 --> 0:09:03.480 you know, the rate of return to schooling and all 0:09:03.520 --> 0:09:07.560 sorts of cool things. So I'm just really impressed with it. 0:09:07.720 --> 0:09:12.920 But John and and Tom, I mean, this guy was 0:09:12.960 --> 0:09:15.079 a great guy, and we've missed him in America, and 0:09:15.160 --> 0:09:18.400 the academic communities worse off for the loss of a group. 0:09:19.040 --> 0:09:22.400 Hey here, Danny, Hey here, a great man, Danny Plans, 0:09:22.720 --> 0:09:32.040 Thank you, sir. We finished strong here in this last 0:09:32.080 --> 0:09:35.800 half hour this morning with Jennifer Lee, senior economist at DEMO. 0:09:35.880 --> 0:09:38.400 Were thrilled that she could join us this morning. Jennifer, 0:09:38.440 --> 0:09:41.280 the arch debate right now is a consumer where the 0:09:41.320 --> 0:09:44.240 glass is half full, or a consumer where the glass 0:09:44.280 --> 0:09:48.600 is half empty. Which is it. I'm going to go 0:09:48.800 --> 0:09:52.439 with the glass is half full? Story Um, good morning everyone. 0:09:52.480 --> 0:09:54.839 I think if you heard a big five relief down 0:09:54.840 --> 0:09:56.760 to the studio is probably me when I when I 0:09:56.760 --> 0:09:59.559 saw the other headline numbers as Michael's just saying, you 0:09:59.600 --> 0:10:02.800 a very strong beat and strengths across the board. So 0:10:02.960 --> 0:10:06.120 weird results such as as you pointed up with the 0:10:06.160 --> 0:10:09.079 auto sector with stronger auto sales. But so I'll take 0:10:09.080 --> 0:10:10.360 it with a little bit of a grain of salt. 0:10:10.400 --> 0:10:13.520 Maybe they're trying to get a little bit of relief. 0:10:13.559 --> 0:10:16.000 I think, just getting some more chips out there and 0:10:16.040 --> 0:10:18.920 into the cars of awful lots. I think the most 0:10:18.920 --> 0:10:21.760 telling or the most interesting point, this is the one 0:10:21.800 --> 0:10:24.880 I always look at, is like the dining out just um. 0:10:24.920 --> 0:10:27.240 I think that speaks volumes about you know, where the 0:10:27.280 --> 0:10:29.720 consumer is apt these days and if they're still confident 0:10:29.840 --> 0:10:32.280 enough it's still comfortable enough to go out there and 0:10:32.440 --> 0:10:34.000 you know, have lunch or have a glass of wine 0:10:34.000 --> 0:10:36.240 on the patio. I think that's that's very positive news. 0:10:36.840 --> 0:10:39.960 Help us with the ambiguity of if rates go up, 0:10:40.000 --> 0:10:43.520 inflation and goes up, there's a better economy, etcetera. There's 0:10:43.520 --> 0:10:46.480 a group that says the ambiguity will tilt towards woe 0:10:46.600 --> 0:10:49.439 is me, do this do this worry and others saying 0:10:49.480 --> 0:10:52.480 this is every sign of a good economy, which is it? 0:10:53.840 --> 0:10:56.840 You know, obviously a lot of people if you're if 0:10:56.840 --> 0:10:59.439 you're a big borrower, you're not gonna want those higher rates. 0:10:59.480 --> 0:11:01.880 But um, you know, we don't want to see the 0:11:01.920 --> 0:11:05.080 FED or any central bank for that matter, staying on 0:11:05.080 --> 0:11:08.480 the sigline, staying in this emergency accommodative mold forever. I mean, 0:11:08.480 --> 0:11:10.880 that's obviously not good news, and there's not a good 0:11:10.920 --> 0:11:12.960 sign for the for the for any economy. So the 0:11:13.000 --> 0:11:16.000 fact that they are finally um you know, talking about 0:11:16.040 --> 0:11:18.240 not even talking about, they're actually gonna do it. Um, 0:11:18.400 --> 0:11:20.720 they're going to start tapering, you know, probably to make 0:11:20.840 --> 0:11:24.000 the announcement at the November meeting and probably kick it 0:11:24.000 --> 0:11:26.880 off before the end of the month or earlier or 0:11:27.160 --> 0:11:29.120 at the December meeting. You know. The fact that they're 0:11:29.120 --> 0:11:31.840 actually doing that, I think is speaks volumes for the 0:11:31.840 --> 0:11:34.319 economy and the fact that we are finally moving away 0:11:34.400 --> 0:11:38.040 from this emergency these emergency measures and trying to get 0:11:38.080 --> 0:11:41.560 back toward some semblance of normalcy. Jennifer, can you respond 0:11:41.559 --> 0:11:45.400 to Danny Blancheflower please, basically saying the consumer sentiment indications 0:11:45.640 --> 0:11:47.959 point to a very different story than some of these 0:11:48.040 --> 0:11:51.640 other indicators, and yet we are seeing ongoing strength. Can 0:11:51.679 --> 0:11:54.160 you sort of pair these differences as we wait for 0:11:54.160 --> 0:11:58.280 that ten am Eastern University of Michigan sentiment survey. So 0:11:58.360 --> 0:12:01.520 I think those the surveys are always interesting to look at, 0:12:01.559 --> 0:12:03.680 but you know, it's it depends on the timing of 0:12:03.679 --> 0:12:05.920 this survey. You know, when you're catching I mean I 0:12:05.960 --> 0:12:07.280 had to see it, but you know, your your mood 0:12:07.320 --> 0:12:09.640 could change. I think, you know, from from from from 0:12:09.720 --> 0:12:11.880 day to day. But you know, I think it's uh, 0:12:12.240 --> 0:12:14.360 it's it's the overall trend. Like right now, for example, 0:12:14.440 --> 0:12:17.200 the University of Michigan, Uh, we're waiting for at ten o'clock. 0:12:17.480 --> 0:12:20.720 The numbers have actually been been fairly low, the confidence levels, 0:12:20.760 --> 0:12:22.599 but they are off the bottom, which is which is 0:12:22.640 --> 0:12:24.959 a good sign. And so I sort of like I 0:12:25.080 --> 0:12:26.839 take it as a mix between what we're seeing for 0:12:26.920 --> 0:12:29.880 the Conference Board measure for example, and the University of Michigan. 0:12:30.240 --> 0:12:32.360 But overall, you know, if if think it all goes 0:12:32.440 --> 0:12:35.120 back to you know, the fundamentals. Uh, you know, whether 0:12:35.240 --> 0:12:37.960 or not there is a job out there for for 0:12:38.040 --> 0:12:40.120 the for the average American. And we all know that 0:12:40.120 --> 0:12:42.880 the john market is extremely tight right now with still 0:12:42.920 --> 0:12:45.920 almost eleven million jobs available out there, So the job 0:12:46.040 --> 0:12:49.640 market is strong, wages are rising, Uh, the household net 0:12:49.679 --> 0:12:51.480 worth I still I believe is at an all time 0:12:51.559 --> 0:12:54.840 high as well. All those are really strong sources of support. 0:12:55.120 --> 0:12:57.840 So yes, we'll get swayed by the day to day um. 0:12:57.880 --> 0:13:00.199 You know, um stories about you know about the Delta 0:13:00.280 --> 0:13:03.280 Varian or we know with all these supply issues and 0:13:03.320 --> 0:13:05.120 all that, um. But at the end of the day, 0:13:05.160 --> 0:13:07.720 just I think with the average consumer knowing that they 0:13:07.760 --> 0:13:10.400 have a city income, knowing that they have a strong network, 0:13:10.440 --> 0:13:13.079 I think speaks against six volumes. Jennifer, thank you for 0:13:13.160 --> 0:13:21.800 you want to get Steni Felida now a one hour 0:13:21.960 --> 0:13:25.120 conversation on Golden Sachs. Well, okay, we'll do it in 0:13:25.280 --> 0:13:28.000 less than one hour. Christian Balloo joins us with a 0:13:28.160 --> 0:13:31.800 really really important look at Golden Sex Senior analyst and 0:13:31.880 --> 0:13:35.160 Autonomous Research this morning, Christian, I'm gonna go retail and 0:13:35.240 --> 0:13:38.600 you Lisa's got some other thoughts on Marcus, which you 0:13:38.720 --> 0:13:42.640 say is grossly underestimated. I want to talk to you 0:13:42.800 --> 0:13:48.120 about Clay Christiansen and the classic innovator's dilemma and all 0:13:48.200 --> 0:13:52.840 of the major banks scared stiff of neo banks. How 0:13:52.960 --> 0:13:58.200 Solomon and Goldman Sachs doing on challenging the innovator's dilemma 0:13:58.600 --> 0:14:03.160 and doing neo bank right. It did a very good job. 0:14:03.200 --> 0:14:07.319 But I think they had very early insights in that 0:14:07.400 --> 0:14:11.319 you could essentially build a any type a bank essentially 0:14:11.679 --> 0:14:15.320 from scratchy don't have any legacy infrastructure, whether that be 0:14:15.559 --> 0:14:20.160 physical footprint or or a technology, and that allowed them 0:14:20.200 --> 0:14:23.600 to really create something interesting. It's not perfect. Um, they 0:14:23.640 --> 0:14:27.520 still don't have a robust check in feature or robust 0:14:28.080 --> 0:14:32.040 robust payment features. But I think I think the point 0:14:32.080 --> 0:14:34.640 here is I think they've been they're a very good job, 0:14:34.680 --> 0:14:36.600 and I think it's been someone on the look to 0:14:36.680 --> 0:14:39.040 think when you think about the partnership that if if, 0:14:39.160 --> 0:14:42.760 if they've they've acquired where it's Apple, et cetera. It 0:14:42.800 --> 0:14:47.080 does speak to the technology prowess of the Marcus Marcus franchise. 0:14:47.760 --> 0:14:52.000 Will the old banks build their neo banks like Goldman, 0:14:52.560 --> 0:14:57.360 or will they acquire their neo banks. That's an interesting question. 0:14:57.360 --> 0:14:59.240 I probably leave that one to my UM too much 0:14:59.280 --> 0:15:02.320 to my bank A. I think the issue acquisitions is, 0:15:02.520 --> 0:15:06.320 I mean these folks are expensive, right, UM, it would 0:15:06.320 --> 0:15:10.240 be probably pretty dilutive to go and require a decent 0:15:10.280 --> 0:15:13.160 sized new bank as so much suspicion is most of 0:15:13.200 --> 0:15:18.040 it will be done organically. Build up perspective, but again 0:15:18.520 --> 0:15:21.680 probably better for my band collects. Comment on that, Christian 0:15:21.840 --> 0:15:25.120 more broadly, why do you think the Goldman's access transformation 0:15:25.200 --> 0:15:29.680 has been underappreciated by other analysts? It's it's a great question. 0:15:29.760 --> 0:15:31.520 I think part of it is we are in a 0:15:31.760 --> 0:15:34.360 very robust part of the capital market cycle, as you 0:15:34.480 --> 0:15:37.520 just seen today. Um, they could put keep putting out 0:15:37.640 --> 0:15:39.800 blowout results of the blow out results, a lot of 0:15:39.800 --> 0:15:43.280 it driven by a traditional goldmen you know, strong m 0:15:43.320 --> 0:15:46.520 and a strong Equitti's trading things that were you know 0:15:46.560 --> 0:15:49.800 that people are traditionally who don't know goldmen traditionally four 0:15:50.160 --> 0:15:53.480 And I think it's it's really um if you like 0:15:53.680 --> 0:15:59.440 masked the broader transformation, particularly a Marcus and also very 0:15:59.440 --> 0:16:04.680 important on alternative UM, the alternative asset manager remember uh 0:16:04.720 --> 0:16:07.240 at this by our analysis Goldman is probably the fastest 0:16:07.240 --> 0:16:11.000 growing skills alternative asset manager out there. That is not 0:16:11.080 --> 0:16:14.520 an easy feats giving um, you know, the competitive landscaping 0:16:14.560 --> 0:16:17.640 that business. So there's been a lot of really good 0:16:17.720 --> 0:16:21.320 stuff going underneath. But the reality is, you know, you know, 0:16:21.440 --> 0:16:25.960 results just dominated by absolutely awesome investment bank that's doing 0:16:26.400 --> 0:16:28.760 that is probably a tole cycle. Well that's that's where 0:16:28.800 --> 0:16:30.240 I wanted to go with this. I mean, because if 0:16:30.240 --> 0:16:32.000 you actually look at asset management, there was a slight 0:16:32.120 --> 0:16:34.680 miss there, but really it's the investment banking, the trading 0:16:34.760 --> 0:16:36.960 that came in one and a half a billion dollars 0:16:37.000 --> 0:16:40.320 in revenue above what the expectation was. I mean, it 0:16:40.480 --> 0:16:43.960 was a blowout quarter. Is this the cycle peak or 0:16:44.200 --> 0:16:47.160 is this Goldman Sachs gaining share from others gaining share 0:16:47.240 --> 0:16:51.600 particularly from the European peers. A good question. It's always 0:16:51.640 --> 0:16:53.040 had to call it peak, so I'm not going to 0:16:53.120 --> 0:16:56.480 exactly call the peak, but we are somewhere around. UM 0:16:56.680 --> 0:16:58.880 and when we're some way in the mountain top right, 0:16:59.160 --> 0:17:01.440 and you already begins is some businesses rule of us. 0:17:01.480 --> 0:17:04.800 So fixed income has always started to slow down, Equities 0:17:04.920 --> 0:17:07.800 still growing m and a still growing uh, but but 0:17:07.960 --> 0:17:11.120 clearly we are we are very strong here at twenty 0:17:11.240 --> 0:17:14.840 twenty and twenty one will be the best here's for 0:17:15.040 --> 0:17:19.879 investment banking since two thousand and nine, right, so you 0:17:19.920 --> 0:17:22.000 know we know what happened after two nine. Um So, 0:17:22.160 --> 0:17:25.280 so I do think we are we are close to 0:17:25.720 --> 0:17:29.800 um something that feels h near a peak. That said, though, 0:17:30.080 --> 0:17:32.440 that's that's the Goldman. It's very important to remember that 0:17:32.480 --> 0:17:35.639 the game market share, so in fixed income share has 0:17:35.680 --> 0:17:39.760 almost doubled by our analysis, from seven percent in twenty seventeen, 0:17:40.000 --> 0:17:43.840 it's about twelve thirteen percent today. In equities, they've been 0:17:43.840 --> 0:17:46.000 getting about a hundred based points of market share every 0:17:46.080 --> 0:17:49.520 year since twenty seventeen as well, So you have seen 0:17:49.600 --> 0:17:52.639 market share growth of Goldman UM. So it's a combination 0:17:52.760 --> 0:17:56.560 of strong markets and market share games. We compare Goldman, 0:17:56.600 --> 0:17:59.439 Sachs and Morgan Stanley frequently. Who's winning in your opinion? 0:18:01.400 --> 0:18:03.680 That's it's a it's a really good question. Look, I 0:18:03.760 --> 0:18:07.200 think when you think about strategic evolution, it's very clear 0:18:07.240 --> 0:18:10.399 that Morgan Stanley is ahead, right. They they've been on 0:18:10.480 --> 0:18:13.480 a longer path and arguably kind of in a steady 0:18:13.520 --> 0:18:16.440 state now with a new business model right, it's basically 0:18:16.520 --> 0:18:19.800 a wealth and as a manager they had their growth 0:18:19.960 --> 0:18:22.720 rates are comparable to anybody in the industry, best in 0:18:22.800 --> 0:18:26.080 class organic growth rates of almost ten percent. That's comparable 0:18:26.119 --> 0:18:28.159 to again best in class, like a show up, So 0:18:28.240 --> 0:18:31.360 they really have you know, they're there. They figured out 0:18:32.000 --> 0:18:34.800 the strategy and there there. I think they're there. And 0:18:34.840 --> 0:18:37.560 then Goldman is motivate process. We're still in the middle 0:18:37.560 --> 0:18:40.320 of the transition here. Uh, and so there's still an 0:18:40.359 --> 0:18:42.600 execution to go. So if you want to ask me 0:18:43.160 --> 0:18:47.800 in terms of a UM strategic transformation, timeline of Morgan 0:18:47.840 --> 0:18:51.639 Stanley is clearly ahead. Is there an urge to merge? 0:18:51.680 --> 0:18:55.680 I mean I mentioned scale earlier. Is there a frenzy 0:18:56.080 --> 0:18:59.560 where we are in the interest rate environment or maybe 0:18:59.600 --> 0:19:04.440 the death acquiring environment to do transactions, to do can 0:19:04.880 --> 0:19:10.320 combinations to generate scale? I think so. I think Morgan 0:19:10.359 --> 0:19:12.040 Stanley has been a post a child of how to 0:19:12.160 --> 0:19:14.960 do this right. You know, you figure out a strategy 0:19:15.600 --> 0:19:18.560 and essentially take advantage of um UM you know, very 0:19:18.600 --> 0:19:21.720 accommodating markets to what an accelerate and strategy by M 0:19:21.800 --> 0:19:24.560 and A. But it's advanced a fast forward as a 0:19:24.600 --> 0:19:27.359 manager and the bot you trade to really posted the 0:19:27.400 --> 0:19:30.800 wealth management franchise and it's it's not one of us. 0:19:30.800 --> 0:19:35.320 They've actually had multiple expansion on buying. Essentially, do companies 0:19:35.320 --> 0:19:38.240 that would do need to taxical book which you probably 0:19:38.280 --> 0:19:40.680 wouldn't have happened a couple of years ago. So so 0:19:41.119 --> 0:19:44.119 I certainly am one that believes that clever M and 0:19:44.200 --> 0:19:48.760 A UM in this environment where innovation is happening very quickly, 0:19:49.440 --> 0:19:53.360 UM and and and and financing is you know, very 0:19:53.440 --> 0:19:55.640 available and EM and it makes a lot of sense 0:19:55.760 --> 0:19:58.960 to U to to to accelerate code. You gotta leave 0:19:58.960 --> 0:20:00.960 it there, Christian Bolder, thing for for the brief with 0:20:01.080 --> 0:20:04.760 autonomous research today on not Global Wall Street, but well 0:20:04.800 --> 0:20:07.240 they are global, but let's call it American Wall Street. 0:20:07.560 --> 0:20:15.240 As well as we spoke to Adam Posing and this 0:20:15.359 --> 0:20:18.600 allusion to the research of Olivier Blanchard. We now speak 0:20:18.640 --> 0:20:22.680 with John Lipsky. He's a former first deputy Managing director 0:20:22.800 --> 0:20:26.119 and interimanaging director of a tumultuous I m F. And 0:20:26.200 --> 0:20:28.840 what is so important about John Lipsky's work now at 0:20:28.920 --> 0:20:32.360 Johns Hopkins is not his public service but the when 0:20:32.440 --> 0:20:35.080 of it. He was in the crucible of the financial 0:20:35.160 --> 0:20:38.280 crisis of oh seven, oh eight and oh nine with 0:20:38.400 --> 0:20:40.800 his service at the i m F. John, we have 0:20:40.920 --> 0:20:44.280 so little time and too many questions with the uproar 0:20:44.400 --> 0:20:47.639 now on data integrity. When you were at the i 0:20:47.880 --> 0:20:50.879 m F, did you always and in each instant see 0:20:51.240 --> 0:20:56.920 data integrity? Absolutely, it's completely important and central to the 0:20:57.040 --> 0:20:59.720 I m F s being able to conduct it said, 0:21:00.000 --> 0:21:05.280 it's work in an authoritative and uh comprehensive way. It's 0:21:05.480 --> 0:21:07.719 absolutely critical. And you know the i m F over 0:21:07.800 --> 0:21:12.119 the years has made great efforts in conjunction working together 0:21:12.200 --> 0:21:15.639 with its member countries to improve the production of data, 0:21:16.280 --> 0:21:19.639 to improve the quality, and that that goes on. I 0:21:19.680 --> 0:21:22.159 think in the current context, the i m F is 0:21:22.200 --> 0:21:26.920 going to redouble efforts to create confidence in their data. 0:21:27.840 --> 0:21:30.800 John Letsky, my memory serves me you gave a landmark 0:21:30.840 --> 0:21:34.440 speech in Hanoi a few years ago in Vietnam, and 0:21:34.720 --> 0:21:39.360