WEBVTT - Bloomberg Wall Street Week: Bryant, Perry, Greene 0:00:00.160 --> 0:00:03.360 This is Bloomberg Wall Street Week. What's the state of 0:00:03.400 --> 0:00:06.360 corporate governance? The deficit is a real issue. The US 0:00:06.400 --> 0:00:09.880 economy continues to send mixed signals. The financial stories that 0:00:10.039 --> 0:00:13.000 cheap our world fed action to con concerns over dollar 0:00:13.039 --> 0:00:16.520 liquidity and encouraging China data. The five hundred wealthiest people 0:00:16.520 --> 0:00:19.160 in the world. Through the eyes of the most influential 0:00:19.239 --> 0:00:22.880 voices Larry Summers, the former Treasury Secretary, START CEO, Kevin 0:00:22.960 --> 0:00:26.640 Johnson sec Chairman j Clayton. Bloomberg wool Street Week with 0:00:26.760 --> 0:00:30.840 David Weston from Bloomberg Radio. The new year stumbles out 0:00:30.880 --> 0:00:33.400 of the gate, but the markets take it in stride. 0:00:33.960 --> 0:00:37.519 This is Bloomberg Wall Street Week. I'm David Weston. Riots 0:00:37.560 --> 0:00:40.040 broke out on Capitol Hill this week as a mob 0:00:40.200 --> 0:00:43.199 stormed the Capitol to disrupt the counting of the Electoral 0:00:43.200 --> 0:00:46.240 College votes, driving the House and the Senate from their 0:00:46.240 --> 0:00:50.400 respective chambers and delaying the proceedings. It was history being made, 0:00:50.440 --> 0:00:54.040 and not in a good way. As political scientists Barbara 0:00:54.040 --> 0:00:57.320 Anne Perry of the University of Virginia's Miller Center explained, 0:00:57.720 --> 0:01:01.800 If you take exactly what happened, and that is a mobocracy, 0:01:01.840 --> 0:01:07.000 attempting to foment a coup and break into the precincts 0:01:07.040 --> 0:01:11.440 of power, into the very Houses of Congress, into their chambers, 0:01:11.480 --> 0:01:15.400 their inner sanctum. Uh, nothing like that has happened in 0:01:15.400 --> 0:01:17.920 this kind of context when the Senate and the House 0:01:17.959 --> 0:01:23.039 were attempting to engage in their constitutional, statutory ministerial duties 0:01:23.280 --> 0:01:27.520 to certify the electoral college winner of the election. Now, 0:01:27.800 --> 0:01:29.880 people will go all the way back to eighteen fourteen, 0:01:30.000 --> 0:01:31.920 and you know, during the War of eighteen twelve, a 0:01:32.040 --> 0:01:36.080 foreign power, the British, came and invaded Washington, and they 0:01:36.200 --> 0:01:38.440 burned the Capitol, and they burned the White House as 0:01:38.560 --> 0:01:41.200 James Madison and Dolly Madison had to run for their 0:01:41.240 --> 0:01:45.399 lives from the Executive Mansion. But in this context, in 0:01:45.440 --> 0:01:47.560 a word, no, nothing like that has ever happened in 0:01:47.560 --> 0:01:50.960 our history. It's all confess. I was not around in 0:01:51.000 --> 0:01:55.160 eighteen fourteen, but I was around as a fairly young man. Uh, 0:01:55.200 --> 0:01:58.320 in the nineteen sixties when we did have marches, very 0:01:58.400 --> 0:02:01.120 large marches across the country, particularly in Washington. I remember 0:02:01.200 --> 0:02:03.560 Richard Nixon hold up in the White House. Is there 0:02:03.600 --> 0:02:06.920 some parallel with that? Oh? Absolutely, Uh, And we haven't 0:02:06.920 --> 0:02:10.320 even mentioned eighteen sixty eighteen sixty one when in response 0:02:10.400 --> 0:02:13.560 to a presidential election that is of Lincoln. Uh, you 0:02:13.680 --> 0:02:16.600 had to begin with seven states secede from the Union 0:02:16.600 --> 0:02:19.320 in a total of eleven to form a whole holy 0:02:19.360 --> 0:02:22.760 new nation within the United States, the Confederacy. So yes, 0:02:22.840 --> 0:02:25.600 we've had that in nine eight I do as well 0:02:25.680 --> 0:02:30.520 remembered as a young person. Uh awful, awful think of Chicago. Uh, 0:02:30.680 --> 0:02:33.040 think of the Democratic Convention that year's think of the 0:02:33.080 --> 0:02:36.280 assassinations of Robert Kennedy and Martin Luther King. So are 0:02:36.360 --> 0:02:39.680 our leaders being gunned down? Uh? And yes, the the 0:02:39.800 --> 0:02:43.639 uprisings of the race riots, the student uprisings. Uh. So 0:02:43.760 --> 0:02:45.960 it's not as though we've never been through this. But 0:02:46.120 --> 0:02:49.680 when I'm asked about context again, the Senate and the 0:02:49.680 --> 0:02:53.880 House attempting to do their constitutional statutory duties in the 0:02:54.000 --> 0:02:57.680 role of presidential election. No, we've never had that. And 0:02:57.720 --> 0:03:00.800 we've never had a mob um again, short of the 0:03:00.800 --> 0:03:05.240 British of Horn Invader break into the Congress and attempt 0:03:05.280 --> 0:03:08.880 to take in effect take power. Before the riots, we 0:03:08.960 --> 0:03:11.800 had Donald Trump Jr. The son of the President, basically 0:03:11.800 --> 0:03:15.040 speaking to that crowd on the ellipse and saying, this 0:03:15.080 --> 0:03:16.679 isn't the Republican Party at all. This is what he 0:03:16.760 --> 0:03:22.600 said in part. The people who did nothing to stop 0:03:22.680 --> 0:03:29.600 this deal, this gathering should send a message to them. 0:03:30.120 --> 0:03:38.560 This isn't their Republican party anymore. This is Donald Trump's 0:03:38.600 --> 0:03:42.920 Republican Party. So, Barbara, amongst so many extraordinary things, I 0:03:42.960 --> 0:03:45.560 found that extraordinary with the son of the president saying 0:03:45.560 --> 0:03:48.160 this is not the Republican Party, this is Donald Trump's party. 0:03:48.280 --> 0:03:50.400 Do we have parallels to that, I mean, maybe Bull 0:03:50.440 --> 0:03:53.240 Moose under Teddy Roosevelt or something. Sure, we've had these 0:03:53.280 --> 0:03:57.400 splinter groups, but particularly nineteen twelve, where you have the 0:03:57.440 --> 0:04:00.720 former president Teddy Roosevelt, who decided he wants to run 0:04:00.720 --> 0:04:03.960 again and and can constitutionally at that point, wants to 0:04:04.040 --> 0:04:07.760 run again. Uh. He is his protege, William Howard Tapped 0:04:07.840 --> 0:04:10.880 is the incumbent president. But Teddy doesn't like the way 0:04:10.920 --> 0:04:14.200 he's going because he's not progressive enough, so he splits 0:04:14.240 --> 0:04:17.560 his own party into forms the Bull Moose Party, the 0:04:17.640 --> 0:04:21.440 third Party, the Progressive Party. Uh, and therefore causes Democrat 0:04:21.520 --> 0:04:25.479 Woodrow Wilson to win the nineteen election. So careful when 0:04:25.520 --> 0:04:29.400 you split off from your party. Third parties or splinter parties, 0:04:29.720 --> 0:04:32.440 uh tend not to work very well. They haven't since 0:04:32.480 --> 0:04:35.800 the GOP was formed back in the late eighteen sixties 0:04:35.839 --> 0:04:38.839 because of slavery. Um. So it's not as though we 0:04:38.880 --> 0:04:41.240 haven't had split parties. We're just used to our parties 0:04:41.320 --> 0:04:44.440 becoming as they have in this time of polarization so monolithic. 0:04:44.720 --> 0:04:48.120 But think of the New Deal period up through the 0:04:48.200 --> 0:04:52.440 nineteen seventies when all the Democratic Southerners became Republicans. So 0:04:52.520 --> 0:04:57.480 you had Fdr Truman, Kennedy Johnson having to deal with 0:04:57.520 --> 0:05:02.599 a split party of segregate shist white Southern uh, white 0:05:02.600 --> 0:05:05.640 supremacists in the South who had all the power in Congress. 0:05:05.800 --> 0:05:09.400 And then people like Hubert Humphrey in a Midwestern Northeastern 0:05:09.480 --> 0:05:13.880 Liberals or even the Republicans as recently as before. You know, 0:05:13.960 --> 0:05:17.400 we're split between the Nelson Rockefeller Liberals and the Ronald 0:05:17.400 --> 0:05:21.280 Reagan on the scene coming out along very gold Water Conservatives. 0:05:21.400 --> 0:05:24.080 And even George H. W. Bush faced this, you know, 0:05:24.120 --> 0:05:26.160 he he sort of lost the Reagan wing of the 0:05:26.160 --> 0:05:29.559 party and then it became really the Reagan Republican Party 0:05:29.640 --> 0:05:32.240 until it became now the Trump Party. So it remains 0:05:32.240 --> 0:05:35.039 to be seen do they splinter off. Do they try 0:05:35.080 --> 0:05:37.839 to find any kind of common ground. Let's talk about 0:05:37.880 --> 0:05:40.800 the twenty FI Amendment, that provision in the Constitution that 0:05:40.880 --> 0:05:43.400 allows in one section for the vice president with his 0:05:43.520 --> 0:05:46.279 ironsmand at the majority of the cabinet basically certified the 0:05:46.279 --> 0:05:49.400 President pro tempore up in the House that the president 0:05:49.440 --> 0:05:51.640 is not confident. Is there any realistic prospect of this? 0:05:51.680 --> 0:05:54.599 Is has ever been considered, much less used before? Well, 0:05:54.640 --> 0:05:59.839 certainly not considered for a president who's been being viewed 0:06:00.000 --> 0:06:02.560 as having as if I can put it in a 0:06:02.600 --> 0:06:05.760 pedestrian way, lost as marbles close, if we could get 0:06:05.800 --> 0:06:08.040 to that, of course, would be Richard Nixon, who was 0:06:08.400 --> 0:06:12.039 seemingly becoming mentally unhinged towards the end and prior to 0:06:12.120 --> 0:06:16.160 his resignation. But the process of impeachment was so underway 0:06:16.200 --> 0:06:18.560 that you had members of his own party, leaders of 0:06:18.600 --> 0:06:21.560 his own party, led by very Goldwater, going down to 0:06:21.600 --> 0:06:24.440 the White House to say, after the Supreme Court's decision 0:06:24.480 --> 0:06:27.279 in the Watergate tapes case, Mr President, if you do 0:06:27.360 --> 0:06:30.840 not resign, you will be impeached and you will be convicted, 0:06:30.880 --> 0:06:33.080 and you don't even have our votes, members of your 0:06:33.080 --> 0:06:35.719 own party. So no, we haven't had to consider it 0:06:35.800 --> 0:06:39.080 really for physical or mental and capacity on the part 0:06:39.080 --> 0:06:41.560 of the president since that became part of the constitution 0:06:41.560 --> 0:06:44.320 in the mid nineteen That was Barbara and Perry of 0:06:44.440 --> 0:06:48.920 Uvier's Miller Center coming up the historic Senate runoff elections 0:06:48.920 --> 0:06:52.000 in Georgia and what John Hope Bryant says they could 0:06:52.040 --> 0:06:55.760 mean for small business as the driver for economic justice. 0:06:56.120 --> 0:07:03.360 That's next on Wall Street Week on Bloomberg. Yeah, this 0:07:03.680 --> 0:07:08.200 is Bloomberg Wall Street Week with David Weston from Bloomberg Radio. 0:07:08.839 --> 0:07:11.280 Control of the Senate hung in the balance this week, 0:07:11.360 --> 0:07:14.520 and to the surprise of many, the two Democratic challengers 0:07:14.600 --> 0:07:18.360 won both of the runoff elections, giving President Like Biden 0:07:18.400 --> 0:07:21.280 a razor thin margin in the Senate and sending the 0:07:21.360 --> 0:07:25.680 first black Senator to Washington from Georgia. But John Hope Bryant, 0:07:25.760 --> 0:07:28.600 founder of Operation Hope, says that when it comes to 0:07:28.760 --> 0:07:33.720 civil rights, the key is economic opportunity. I think that 0:07:33.800 --> 0:07:39.040 we felt massively disrespected by our some of our national 0:07:39.160 --> 0:07:46.120 leadership in the last four years. Um really felt dehumanized, 0:07:46.360 --> 0:07:49.800 and given the history of this country, where one could 0:07:49.880 --> 0:07:53.480 argue the largest reverse transfer of wealth happened with African 0:07:53.520 --> 0:07:57.000 Americans building the core of this country's wealth in the 0:07:57.480 --> 0:08:01.720 sixteen seventeen hundreds with slavery and free labor. Uh. And 0:08:01.840 --> 0:08:05.040 we couldn't create capital because we were capital. Uh. We 0:08:05.160 --> 0:08:10.000 thought that was a particular disrespect um, the lack of empathy, 0:08:10.000 --> 0:08:14.520 of understanding the role that we played and uh and 0:08:14.760 --> 0:08:16.920 the role of public officials to care after the lease 0:08:16.920 --> 0:08:19.559 of these God's children, which, by the way, often become 0:08:19.640 --> 0:08:23.000 the primary assets. You know. Sam Walton had a high 0:08:23.040 --> 0:08:26.520 school education, as you know, David, but is now the 0:08:26.520 --> 0:08:29.120 respective responsible to the largest retailer in the world. That's 0:08:29.160 --> 0:08:31.880 what happens when you invest at the bottom of the pyramids. 0:08:31.920 --> 0:08:34.240 So I think that you had people turn out in 0:08:34.400 --> 0:08:38.720 mass because they felt, uh they were given uh. You know, 0:08:40.400 --> 0:08:42.440 I can't say on your program, they were given a 0:08:42.520 --> 0:08:49.079 massive disrespect uh by our by some of our elective officials. 0:08:49.080 --> 0:08:51.040 And we wanted to send a message. And I think 0:08:51.120 --> 0:08:56.520 we've done that brilliantly. Something else is very interesting, David. Um. 0:08:56.640 --> 0:08:59.520 The place where in the sixties you had Dr King led, 0:08:59.760 --> 0:09:03.160 you know, lead a movement of social justice, uh, which 0:09:03.200 --> 0:09:07.559 was backed by primarily African Americans and Jewish brothers and sisters, 0:09:08.400 --> 0:09:11.080 now has a U. S. Senator from that same place. 0:09:11.800 --> 0:09:16.120 That's an African American and one of our Jewish brothers. Um. 0:09:16.400 --> 0:09:19.319 And it was a coalition of the willing. Yes, Blacks 0:09:19.640 --> 0:09:22.800 were decisive in the presidential election and this one, but 0:09:22.840 --> 0:09:25.640 we couldn't have done it alone. You have really all 0:09:25.760 --> 0:09:29.800 races who said, knock it off, America, it is time 0:09:29.840 --> 0:09:33.079 to get back to business, and uh, let's make American 0:09:33.120 --> 0:09:37.280 normal again. But let's rebuild her with the best of 0:09:37.280 --> 0:09:40.680 her bones, which all which includes all of her economic levels. 0:09:40.920 --> 0:09:43.280 You make a very important point for the distinction. They're 0:09:43.440 --> 0:09:46.800 making America normal again in some respects will not do it. 0:09:46.840 --> 0:09:49.400 As you point out, there's four hundred years now of 0:09:49.480 --> 0:09:52.720 basically building America on the backs of people who were 0:09:52.880 --> 0:09:55.760 not equally treated, who did not have the ability to 0:09:55.800 --> 0:09:59.760 earn the money and amass the capital. What realistically can 0:09:59.800 --> 0:10:03.280 the black community expect from a President Biden when he 0:10:03.320 --> 0:10:07.400 takes over to start to change that phenomenon. Well, uh, 0:10:07.520 --> 0:10:10.960 and by the way, it's interesting, uh that Reverend Warnock, 0:10:10.960 --> 0:10:13.839 who had Operations Award in the background when you did 0:10:13.880 --> 0:10:16.520 his acceptance speech, we we knowed that we we we 0:10:16.600 --> 0:10:18.920 actually asked me to put a hope inside location at 0:10:18.960 --> 0:10:24.200 Ebenezer Church, Dr. King's Church about eight years ago. Uh. 0:10:24.240 --> 0:10:27.280 And so this concept of civil rights and civil rights, 0:10:27.400 --> 0:10:29.400 that the real color is green, and that we need 0:10:29.440 --> 0:10:33.080 to provide social justice through economic empowerment through homeownership and 0:10:33.080 --> 0:10:35.640 small business creation and wealth creation is something not foreign 0:10:35.960 --> 0:10:37.640 to Reverend Warknock. And you'll see, I think you'll start 0:10:37.679 --> 0:10:41.080 to see a moderation of him, a moderating leadership from 0:10:41.120 --> 0:10:43.800 him that I think most people will appreciate. I think likewise, 0:10:44.200 --> 0:10:46.839 and I've been contracted by the bid the administration transition team. 0:10:46.840 --> 0:10:49.720 You're gonna see, I think a focus on small business, 0:10:50.120 --> 0:10:53.160 which is the right place to start. That's where most 0:10:53.200 --> 0:10:56.320 wealth creation from my white counterparts came from. And and 0:10:56.360 --> 0:10:59.760 it's almost it's almost, uh was it ninety eight trillion 0:10:59.800 --> 0:11:02.240 dollar layers? I believe is a number of my white 0:11:02.280 --> 0:11:05.080 counterparts that they are not even sent of all equities 0:11:05.080 --> 0:11:07.079 and all wealth in this country. That comes a lot 0:11:07.120 --> 0:11:10.400 from small business. That's where jobs coming from. The three 0:11:10.400 --> 0:11:13.000 percent of all jobs in this country, your employers with 0:11:13.280 --> 0:11:17.840 the employees are less. Uh. Conversely, half of black businesses 0:11:17.920 --> 0:11:23.120 or sidelined in in the coronavirus and of all black businesses, 0:11:23.160 --> 0:11:25.720 as you know, David, don't have an employee. I'm gonna 0:11:25.720 --> 0:11:29.839 repeat that, of all the businesses in this country are 0:11:29.920 --> 0:11:32.679 sober prietorships with no employees. So how do you create wealth? 0:11:33.040 --> 0:11:35.800 How do you create jobs when you don't have, uh, 0:11:35.920 --> 0:11:39.640 the mechanism to do so. So so so I think 0:11:39.640 --> 0:11:43.439 you can see a massive focus on not just some 0:11:43.679 --> 0:11:46.480 raw stimulus that's not enough, that that that is actually 0:11:46.720 --> 0:11:49.080 can be negative. If that's all you do. You have 0:11:49.080 --> 0:11:51.280 to turn the stimulus into an investment. You're gonna see 0:11:51.280 --> 0:11:53.319 that in I think small business, and I think you 0:11:53.360 --> 0:11:56.160 have to see it in massive internship programs map to 0:11:56.200 --> 0:11:59.280 my millions of internships, not hundreds of thousands. So there 0:11:59.280 --> 0:12:01.640 there you're talking to private sector as well as public sector. 0:12:01.640 --> 0:12:04.000 And we have seen some big private companies start to 0:12:04.000 --> 0:12:06.560 do some of that investment, particularly in the financial services area, 0:12:06.559 --> 0:12:09.040 which you know so terribly well. Yeah, when you know, 0:12:09.240 --> 0:12:11.680 once again it was the private sector, David, in the 0:12:11.760 --> 0:12:15.320 nineteen sixties that led the effort to desegregate the South 0:12:15.360 --> 0:12:17.880 because it was bad for business. Very few people know this, 0:12:18.440 --> 0:12:20.960 but it was not the government that integrated the South. 0:12:21.000 --> 0:12:23.320 The government, the governor was set staying in the door, 0:12:23.440 --> 0:12:26.920 saying over my dead body, oftentimes sounding like what some 0:12:27.040 --> 0:12:30.000 of our federal leaderships are signing like today. It was 0:12:30.040 --> 0:12:32.600 the private sector who said, and knock it off. This 0:12:32.679 --> 0:12:34.480 is bad for business. Whether your black or white, we 0:12:34.520 --> 0:12:37.160 need some more green. That's takedown. The whites only signs 0:12:37.160 --> 0:12:40.199 from the soda shops, the department stores, et cetera. Let's 0:12:40.240 --> 0:12:43.800 integrate these places where blacks are coming in to buy. That. 0:12:43.920 --> 0:12:46.640 It was the private sector once again, David. You have 0:12:46.679 --> 0:12:49.559 the private sector that's made a three billion dollar investment 0:12:49.600 --> 0:12:55.000 in alone on social uh justice to economic empowerment. Companies 0:12:55.040 --> 0:12:58.520 like uh Shopify, where I partnered with the creative melion 0:12:58.559 --> 0:13:04.080 black businesses. UH. Companies like JP Morgan, Well it's Fargo, Uh, 0:13:04.080 --> 0:13:08.960 oh my god, met is it? PayPal? All these companies, Twitter, etcetera. 0:13:09.160 --> 0:13:12.360 Who stepped up, uh into this gap. I think the 0:13:12.400 --> 0:13:14.760 private sector, you know not you said, of all jobs, David, 0:13:14.800 --> 0:13:17.760 as you know, come from the private sector. Most legitimate 0:13:17.800 --> 0:13:21.000 wealth comes from the private sector. We have the fortune 0:13:21.040 --> 0:13:23.480 here is at the bottom of this pyramid, and the 0:13:23.520 --> 0:13:26.880 private sector understands they can't get there without black and 0:13:26.920 --> 0:13:32.240 brown customers. UH. Diverse companies and diverse geographies win. That 0:13:32.400 --> 0:13:35.200 is a fat I like math because it's not having 0:13:35.160 --> 0:13:38.160 an opinion. Uh, that is that that is a winning 0:13:38.160 --> 0:13:40.080 formula and the government needs to follow that lead. So 0:13:40.080 --> 0:13:43.120 the government should be the stimulus for the private sector. 0:13:43.400 --> 0:13:46.760 I talk about massive internships state massive. I'm talking about 0:13:46.760 --> 0:13:49.920 millions of young people who know that they can the 0:13:50.000 --> 0:13:54.000 latter is repaired, including my white brothers, and by the way, 0:13:54.080 --> 0:13:56.439 to get that opportunity for the future. Does this make 0:13:56.480 --> 0:14:00.320 the Small Business Administration administrator a critical position and the 0:14:00.360 --> 0:14:04.640 Biden administration, I do believe it does. It's been a 0:14:04.679 --> 0:14:06.960 tetular member of the cabinet in the past, but I 0:14:07.000 --> 0:14:10.000 believe now, Uh, small business has proven in the pandemic 0:14:10.040 --> 0:14:12.600 to be uh, well we what you And I've always 0:14:12.600 --> 0:14:16.920 known the basebone, the backbone of this economy and of jobs. 0:14:16.960 --> 0:14:20.360 And I think that's gonna get special recognition, uh in 0:14:20.360 --> 0:14:22.320 the next couple of years. I think that people are 0:14:22.320 --> 0:14:24.360 gonna be pleasantly surprised. Think you're seeing it in the 0:14:24.440 --> 0:14:27.640 in the way the markets are responding. Seeing I had 0:14:27.640 --> 0:14:29.560 a billionaire friend of mine texting me and say, well, 0:14:30.080 --> 0:14:32.200 I guess my taxes are going up for good reason. 0:14:32.600 --> 0:14:36.080 I mean, so he was he was like, look, I 0:14:36.120 --> 0:14:38.320 don't mind it if they go they go up, and 0:14:38.360 --> 0:14:41.680 we're talking about social justice through economic empowerment and uplift 0:14:41.720 --> 0:14:45.360 and smart smart taxation, where all both rise, you're gonna 0:14:45.360 --> 0:14:50.320 have more GDP. This economic That was John Hope Bryant, founder, 0:14:50.480 --> 0:14:54.440 chairman and CEO of Operation Hope coming up. The Federal 0:14:54.480 --> 0:14:58.360 Reserve stays on course, but Megan Green at Harvard explains 0:14:58.400 --> 0:15:02.360 why that doesn't mean they're optimistic about the economy. That's 0:15:02.400 --> 0:15:10.920 next on Wall Street Week on Bloombero. This is Bloomberg 0:15:10.960 --> 0:15:15.040 Wall Street Week with David Weston from Bloomberg Radio. This 0:15:15.080 --> 0:15:17.240 week we got to see the minutes of the Federal 0:15:17.320 --> 0:15:20.120 Reserves meetings at the end of last year, and f 0:15:20.200 --> 0:15:23.040 o MC members for the most part, seemed pretty happy 0:15:23.080 --> 0:15:25.920 with where they are, though Megan Green of Harvard's Kennedy 0:15:25.960 --> 0:15:28.800 School did go through the risk the FED maybe facing 0:15:30.440 --> 0:15:32.840 This wasn't the most earth shattering FED minutes, but there 0:15:32.840 --> 0:15:35.560 were a few things in there for starters. They changed 0:15:35.600 --> 0:15:39.800 their language around continuing bond purchases, so instead of saying 0:15:39.840 --> 0:15:42.960 they'll continue for coming months, they said they'd continue until 0:15:43.000 --> 0:15:47.040 they'd reached sufficient progress on hitting their targets, but they 0:15:47.040 --> 0:15:49.520 were also pretty careful to say that those targets wouldn't 0:15:49.520 --> 0:15:52.440 be quantitative, they'd be qualitative. So if that feels kind 0:15:52.480 --> 0:15:56.640 of frustrating in vague, it is, and it's intentionally so. UM. 0:15:56.680 --> 0:16:01.560 There was widespread expectations in early December UM market participants 0:16:01.600 --> 0:16:04.280 that the FED might actually try to extend the duration 0:16:04.440 --> 0:16:06.920 on their bond purchases to keep the long end of 0:16:06.960 --> 0:16:09.320 the yield curve down, and there was very little appetite 0:16:09.360 --> 0:16:12.000 for that in the FED minutes. That, of course was 0:16:12.040 --> 0:16:15.560 before the ten year yield started creeping up in recent days, 0:16:15.640 --> 0:16:18.800 so that that might have changed already since mid December 0:16:18.840 --> 0:16:22.360 when these FED minutes UM were recorded. And then finally 0:16:22.360 --> 0:16:24.600 the FED talked a little bit about their outlook, and 0:16:24.800 --> 0:16:28.800 you know, in mind with expectations, they're pretty pessimistic about 0:16:28.840 --> 0:16:30.720 the upcoming months. It's going to be a hard winter, 0:16:30.880 --> 0:16:34.480 but they're hoping that a vaccine will result in a 0:16:34.560 --> 0:16:36.680 release the pent up demand and a recovery in the 0:16:36.720 --> 0:16:39.040 second half of this year. So they were much more optimistic, 0:16:39.080 --> 0:16:41.800 but there's so many risks around that view. I think 0:16:41.800 --> 0:16:44.360 that's worth keeping in mind. Well, it's interesting, as I 0:16:44.440 --> 0:16:46.120 understand it, what they said is on the question of 0:16:46.160 --> 0:16:48.920 inflation specifically, the risk was the downside, that is to say, 0:16:48.920 --> 0:16:51.400 we undershoot rather than overshoot. But this, of course was 0:16:51.480 --> 0:16:55.560 before we had those two seats go to Democrats in Georgia. 0:16:55.560 --> 0:16:57.240 Do you think it's a different world for the Fed 0:16:57.320 --> 0:17:00.240 today than it was just two days ago? Well, so 0:17:00.320 --> 0:17:02.760 a lot has happened since the Sped minutes, even just 0:17:02.800 --> 0:17:05.440 a couple of weeks ago. Um, And I actually don't 0:17:05.440 --> 0:17:07.119 think that we're in a different world, but I do 0:17:07.200 --> 0:17:09.760 think that the market seemed to be expecting that we are, 0:17:09.800 --> 0:17:11.840 and that that might be a risk. So I mentioned 0:17:11.840 --> 0:17:15.040 the tenure yield was up, particularly off the back of 0:17:15.119 --> 0:17:18.800 yesterday's Georgia's Senate results, and that's on the basis that 0:17:18.840 --> 0:17:21.399 will probably get some kind of stimulus out of this 0:17:21.520 --> 0:17:24.200 government with the Democrats in control of the Senate, and 0:17:24.200 --> 0:17:27.439 and that's probably right, but it is worth considering that 0:17:27.520 --> 0:17:30.200 might not be a linear process. It will require absolute 0:17:30.280 --> 0:17:32.639 unity amongst the Democrats in the House and the Senate 0:17:32.680 --> 0:17:36.320 to get significant fiscal measures passed, and so I think 0:17:36.359 --> 0:17:39.600 we might see wallboles along in the process. Um. These 0:17:39.640 --> 0:17:42.320 minutes also happened before there was a new variant, a 0:17:42.320 --> 0:17:46.359 new contagious variant of COVID nineteen which we've seen ripping 0:17:46.359 --> 0:17:49.240 through southeast England, and so I do think that, you know, 0:17:49.240 --> 0:17:51.919 the FED said that they were optimistic that a widely 0:17:51.960 --> 0:17:55.719 distributed vaccine would really lead to a rebound and that 0:17:55.760 --> 0:17:58.719 could feed into inflation, but actually with this new variant, 0:17:58.800 --> 0:18:01.480 I think there's a risk there. Of course, our vaccine 0:18:01.560 --> 0:18:04.520 rollout has been pretty slerotic. Hopefully we'll get better at 0:18:04.560 --> 0:18:07.639 that um, but right now it's not looking great for 0:18:07.680 --> 0:18:10.280 a massive rebound because it's not looking like we're getting 0:18:10.359 --> 0:18:13.800 vaccines and arms quickly enough. And then finally, it's worth 0:18:13.800 --> 0:18:16.400 pointing out that we've we've run an experiment where we've 0:18:16.400 --> 0:18:20.159 had massive amounts of stimulus before recently in ten and 0:18:20.200 --> 0:18:23.280 if we learned one thing from the Trump administration, it's 0:18:23.320 --> 0:18:26.480 that you can go ahead and provide significant stimulus when 0:18:26.520 --> 0:18:29.320 the economy is running pretty hot, it's really taking along, 0:18:29.680 --> 0:18:33.280 and not generate significant inflation. So I really question, even 0:18:33.320 --> 0:18:35.440 if we got the stimulus the markets are hoping for, 0:18:35.800 --> 0:18:37.720 I question whether we're going to generate a lot of 0:18:37.720 --> 0:18:40.560 inflation without a lot of sustained inflation with that, when 0:18:40.560 --> 0:18:43.520 the economy is still in a hole. The FETE has 0:18:43.600 --> 0:18:45.560 made no serious fact that they really conserve out jobs 0:18:45.560 --> 0:18:47.840 as part of their mandate. They also talked about maybe 0:18:47.880 --> 0:18:50.879 income inequality, wealth inequality. Is there anything they can do 0:18:50.920 --> 0:18:55.280 at this point beyond what they've done to improve that situation. Yeah, So, 0:18:55.600 --> 0:18:57.920 as someone who's looking a lot at income and wealth 0:18:57.960 --> 0:19:00.359 in equality, I wish I could say that the could 0:19:00.359 --> 0:19:03.280 do anything about it. They're clearly aware that that they've 0:19:03.280 --> 0:19:07.080 contributed to it um by you know, resulting in a 0:19:07.160 --> 0:19:11.440 in a bowl market and most asset holders are are wealthy. Um. 0:19:11.520 --> 0:19:15.520 But unfortunately, other than kind of running the economy hots, 0:19:15.760 --> 0:19:19.520 letting inflation come down, trying to pull in workers marginal 0:19:19.560 --> 0:19:21.880 workers from the sidelines, there's really not a whole lot 0:19:21.960 --> 0:19:24.320 that the FIG can do about it. That's much more 0:19:24.480 --> 0:19:27.719 up to fistical authorities. And that's partly why J. Powell 0:19:27.760 --> 0:19:30.520 has been pretty outspoken, and he's not the only Central 0:19:30.880 --> 0:19:34.840 Bank chair to to be outspoken about how fistical authorities 0:19:34.880 --> 0:19:36.760 really need to step in and do their job. Mag 0:19:36.840 --> 0:19:39.320 when you talk about helping individuals, as you know, Larry 0:19:39.359 --> 0:19:42.840 Summer's got a lot of attention by saying two thousand 0:19:42.880 --> 0:19:44.399 dollars a person is not the way to go. The 0:19:44.520 --> 0:19:46.400 fact a lot of people will just save that money. 0:19:46.400 --> 0:19:48.639 They can't spend it effectively. We need to target it 0:19:48.680 --> 0:19:52.240 other ways, such as state and local assistance. Is he right? Yeah? So, 0:19:52.400 --> 0:19:54.679 and Larry is not the only one saying that, you know, 0:19:54.720 --> 0:19:57.280 there's a better allocation of that money. Will they be able? 0:19:57.280 --> 0:19:59.159 And Shark came out and said the same and also 0:19:59.240 --> 0:20:01.159 got a lot of for it. I think that is 0:20:01.280 --> 0:20:03.959 right though. That dispersing checks, you know, they say when 0:20:03.960 --> 0:20:06.240 you're coming up with the ideal fiscal policy, it needs 0:20:06.240 --> 0:20:10.480 to be targeted timely and temporary. UM Dispersing two thousand 0:20:10.520 --> 0:20:13.640 dollar checks isn't particularly targeted, And so I do think 0:20:13.720 --> 0:20:19.480 things like allocating money to local UM officials who are 0:20:19.520 --> 0:20:21.560 on the front lines and can go ahead and figure 0:20:21.560 --> 0:20:25.119 out how to plow that into education versus vaccine distribution, 0:20:25.560 --> 0:20:29.000 UM and local services is probably a more effective way 0:20:29.240 --> 0:20:32.879 of supporting community. That was Megan Green of Harvard's Kennedy School. 0:20:33.520 --> 0:20:35.520 Coming up, we wrap up the week with our special 0:20:35.520 --> 0:20:39.440 contributor Larry Summers of Harvard. That's next on Wall Street 0:20:39.440 --> 0:20:48.239 Week on Bloomberg. This is Bloomberg Wall Street Week with 0:20:48.320 --> 0:20:51.760 David Weston from Bloomberg Radio. We're gonna end the week 0:20:51.800 --> 0:20:54.320 as we do every week, with our special contributor Larry 0:20:54.400 --> 0:20:58.359 Summers of Harvard. He is, of course, former Treasury secretary Larry. 0:20:58.400 --> 0:21:00.560 Welcome back. Let's start with the end of the week, 0:21:00.600 --> 0:21:03.320 if we can. With the jobs numbers. We lost a 0:21:03.400 --> 0:21:07.120 hundred forty jobs. Although last month's numbers were revised up somewhat, 0:21:07.400 --> 0:21:09.959 people thought that it might be bad. The markets actually 0:21:10.000 --> 0:21:12.520 seem to think maybe this makes them that's more likely. 0:21:12.800 --> 0:21:15.239 Were you surprised by the numbers and what do they 0:21:15.280 --> 0:21:18.720 tell us, if anything about the economy. I wasn't amazed 0:21:18.800 --> 0:21:21.600 by the numbers. I think they tell us that we 0:21:21.640 --> 0:21:24.480 need to get COVID in the rear view mirror. I 0:21:24.480 --> 0:21:26.679 think they tell us that there's a limit to what 0:21:26.800 --> 0:21:31.480 kind of recovery we can have when UH people are 0:21:31.600 --> 0:21:37.239 fearful of going outside and getting more fearful. And so 0:21:37.280 --> 0:21:41.000 I think the number one message from this statistic is 0:21:41.080 --> 0:21:45.840 the importance of doing vaccinating better than we did testing, 0:21:46.320 --> 0:21:48.560 and it doesn't look like so far we're doing a 0:21:48.680 --> 0:21:52.480 very good job of that. That's got to be priority one, 0:21:53.240 --> 0:21:57.639 um priority two, and priority three for the new administration 0:21:58.600 --> 0:22:00.920 and how much of that, Larry will require some very 0:22:00.960 --> 0:22:03.199 targeted stimulus, because one of the things that we hear 0:22:03.240 --> 0:22:05.359 from a lot of people is small business is is 0:22:05.400 --> 0:22:07.840 what it's all about, particularly when it comes to job creation, 0:22:07.960 --> 0:22:09.760 and obviously a lot of those small businesses are and 0:22:09.880 --> 0:22:16.080