1 00:00:00,040 --> 00:00:02,640 Speaker 1: Who you put your trust in matters. Investors have put 2 00:00:02,680 --> 00:00:07,040 Speaker 1: their trust and independent registered investment advisors to the two 3 00:00:07,040 --> 00:00:10,680 Speaker 1: and four trillion dollars. Why learn more and find your 4 00:00:10,760 --> 00:00:26,360 Speaker 1: independent advisor dot com. Welcome to the Bloomberg Surveillance Podcast. 5 00:00:26,760 --> 00:00:30,480 Speaker 1: I'm Tom Keene with David Gura. Daily we bring you 6 00:00:30,520 --> 00:00:35,560 Speaker 1: insight from the best in economics, finance, investment, and international relations. 7 00:00:35,960 --> 00:00:40,559 Speaker 1: Find Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg dot com, and 8 00:00:40,640 --> 00:00:47,479 Speaker 1: of course, on the Bloomberg. At the end of two 9 00:00:47,479 --> 00:00:49,159 Speaker 1: thousand sixteen, a good time to look back on the 10 00:00:49,240 --> 00:00:51,120 Speaker 1: year that was, and I had to two thousand seventeen. 11 00:00:51,120 --> 00:00:53,159 Speaker 1: And we begin today with EM and A joining us 12 00:00:53,159 --> 00:00:55,440 Speaker 1: now as Peter Taky's co head of M and A 13 00:00:55,440 --> 00:00:56,920 Speaker 1: at City Group, and great to have you with us 14 00:00:56,920 --> 00:01:00,400 Speaker 1: here in New York. Let's let's start with how you 15 00:01:00,440 --> 00:01:03,760 Speaker 1: measure the health of the M and A marketplace. We'll 16 00:01:03,760 --> 00:01:05,720 Speaker 1: look back on two thousand sixteen. How was it and 17 00:01:05,959 --> 00:01:08,119 Speaker 1: how do you assess how good it was? We had 18 00:01:08,120 --> 00:01:11,840 Speaker 1: a we had a very strong um. It wasn't as 19 00:01:11,920 --> 00:01:14,479 Speaker 1: it wasn't as strong as twenty fifteen, which was which 20 00:01:14,560 --> 00:01:19,360 Speaker 1: was a record. But we're down about from that level roughly, UM, 21 00:01:19,400 --> 00:01:22,200 Speaker 1: but it's still second best, second best M M and 22 00:01:22,280 --> 00:01:24,679 Speaker 1: A year since the financial crisis? What was leading it 23 00:01:24,680 --> 00:01:26,720 Speaker 1: on sort of sector by by sector basis? Where did 24 00:01:26,720 --> 00:01:28,720 Speaker 1: you see the most growth, the most movement. We saw 25 00:01:28,720 --> 00:01:31,920 Speaker 1: an awful lot of movement in technology, awful lot of 26 00:01:31,959 --> 00:01:35,360 Speaker 1: movement in the industrial space. It was a relatively a 27 00:01:35,440 --> 00:01:38,720 Speaker 1: relatively light year for industrial M and A in and 28 00:01:38,760 --> 00:01:42,040 Speaker 1: we saw a bounce back on that, and so those 29 00:01:42,080 --> 00:01:45,000 Speaker 1: two sectors saw significant increases. We saw a little bit 30 00:01:45,080 --> 00:01:46,720 Speaker 1: less in the way of telecoms, for instance, in a 31 00:01:46,760 --> 00:01:49,520 Speaker 1: little bit less relative to pharma than we had in 32 00:01:49,520 --> 00:01:51,560 Speaker 1: in the prior year. What what is driving it at 33 00:01:51,600 --> 00:01:54,320 Speaker 1: this point? Is it complimentarity, is it? Is it something else? 34 00:01:54,320 --> 00:01:57,760 Speaker 1: How are these companies coming together? I think I think 35 00:01:58,880 --> 00:02:01,080 Speaker 1: and and Tom Keene made this point a little earlier 36 00:02:01,080 --> 00:02:03,960 Speaker 1: this morning. I think the focus now is much more 37 00:02:04,000 --> 00:02:09,679 Speaker 1: on on strategic combinations and what I would call intelligent dealmaking. UM, 38 00:02:09,800 --> 00:02:12,280 Speaker 1: it's a it's a challenging world environment, it's a risky 39 00:02:12,280 --> 00:02:16,080 Speaker 1: world environment. In that environment, I think the investors have 40 00:02:16,200 --> 00:02:20,080 Speaker 1: become more discerning as to what types of transactions really 41 00:02:20,080 --> 00:02:23,239 Speaker 1: makes sense. There was a period of time from sort 42 00:02:23,280 --> 00:02:26,240 Speaker 1: of eleven to halfway through fifteen, where pretty much em 43 00:02:26,320 --> 00:02:29,000 Speaker 1: Andy any M and A activity was greeted with applause 44 00:02:29,200 --> 00:02:33,400 Speaker 1: from the investor community. And that has definitely become what 45 00:02:33,440 --> 00:02:35,560 Speaker 1: I would call it's returned to the norm in terms 46 00:02:35,639 --> 00:02:38,440 Speaker 1: of in terms of the types of responsiveness that the 47 00:02:38,560 --> 00:02:41,000 Speaker 1: investors have, and they've become more thoughtful about what's a 48 00:02:41,000 --> 00:02:42,560 Speaker 1: good deal and what's not a good deal. How are 49 00:02:42,600 --> 00:02:46,400 Speaker 1: your clients, How are people who are weighing mergers dealing 50 00:02:46,440 --> 00:02:48,200 Speaker 1: with the uncertainty? I think about how in the I 51 00:02:48,320 --> 00:02:50,200 Speaker 1: P O space there's been a tendency here here to 52 00:02:50,280 --> 00:02:53,200 Speaker 1: sort of stop and wait, perhaps wait out whatever uncertainty 53 00:02:53,200 --> 00:02:54,960 Speaker 1: there there is. Are you seeing that in the M 54 00:02:54,960 --> 00:02:56,960 Speaker 1: and A space as well? What are clients saying to you? 55 00:02:57,600 --> 00:03:00,360 Speaker 1: I think I think that the there's going to be 56 00:03:00,360 --> 00:03:03,600 Speaker 1: a bit of a pause perhaps, uh in certain sectors 57 00:03:03,600 --> 00:03:07,960 Speaker 1: that are gonna be potentially very impacted by UM, by 58 00:03:07,960 --> 00:03:10,360 Speaker 1: their new administration and some of the changes that have 59 00:03:10,480 --> 00:03:14,760 Speaker 1: been at least vocalized H An example is healthcare UM. 60 00:03:14,800 --> 00:03:17,919 Speaker 1: I think there's there's been enough noise around the Affordable 61 00:03:17,960 --> 00:03:20,080 Speaker 1: Care Act that that we might see a bit of 62 00:03:20,080 --> 00:03:23,639 Speaker 1: a pause within that space as as companies try to 63 00:03:23,639 --> 00:03:26,800 Speaker 1: figure out what the policies really are. UM, there has 64 00:03:26,840 --> 00:03:28,880 Speaker 1: been an awful lot of talk, but not an awful 65 00:03:28,919 --> 00:03:31,880 Speaker 1: lot of of really concrete policy making. And of course 66 00:03:32,160 --> 00:03:35,000 Speaker 1: that's still is subject to a congressional process, which is 67 00:03:35,640 --> 00:03:40,520 Speaker 1: which is difficult to day. How much does does regulation 68 00:03:40,640 --> 00:03:42,760 Speaker 1: tend to change from from term to term? You have 69 00:03:43,280 --> 00:03:45,280 Speaker 1: staff appointments in the Justice Department, for instance, you have 70 00:03:45,320 --> 00:03:48,000 Speaker 1: people who are our career public servants. Do do the 71 00:03:48,120 --> 00:03:51,160 Speaker 1: do the metrics by which they gauge judge these deals 72 00:03:51,280 --> 00:03:54,800 Speaker 1: change every four years? That's a good question. UM. I 73 00:03:54,800 --> 00:03:57,760 Speaker 1: don't think the metrics change. I think there can definitely 74 00:03:57,800 --> 00:04:02,680 Speaker 1: be UM leanings in terms of the way that the 75 00:04:02,680 --> 00:04:06,040 Speaker 1: way a particular administration or a particular a particular official 76 00:04:06,360 --> 00:04:09,520 Speaker 1: interprets that data. We have definitely seen in the last 77 00:04:09,720 --> 00:04:12,360 Speaker 1: couple of years, UM. Which is interesting, is it it 78 00:04:12,720 --> 00:04:16,520 Speaker 1: certainly wasn't necessarily representative of the full eight years of 79 00:04:16,680 --> 00:04:19,640 Speaker 1: the prior administration. UM. We've seen in the last couple 80 00:04:19,640 --> 00:04:23,240 Speaker 1: of years that there has been a more hawkish tone 81 00:04:23,680 --> 00:04:25,840 Speaker 1: coming out of the regulators in terms of their reaction 82 00:04:25,880 --> 00:04:30,720 Speaker 1: to transactions. UM. Whether or not that will change dramatically 83 00:04:30,960 --> 00:04:33,520 Speaker 1: or whether it will change slowly. I think it's difficult 84 00:04:33,560 --> 00:04:36,440 Speaker 1: to It's difficult to call, but I would argue that 85 00:04:36,480 --> 00:04:39,240 Speaker 1: there's likely to be changed, and I think we're going 86 00:04:39,279 --> 00:04:43,440 Speaker 1: to see an environment which, again, UM, I can only 87 00:04:43,480 --> 00:04:47,040 Speaker 1: respond to what our president elects commentary has been. There 88 00:04:47,040 --> 00:04:50,000 Speaker 1: seems to be a bias towards towards a slightly looser 89 00:04:50,040 --> 00:04:52,919 Speaker 1: regulatory environment. And what if you heard from him about 90 00:04:53,000 --> 00:04:55,560 Speaker 1: deal making? It talks. He talks about that deal making 91 00:04:55,600 --> 00:04:57,360 Speaker 1: a lot. It sort of in sort of grand terms, 92 00:04:57,360 --> 00:04:59,800 Speaker 1: in large terms, but with your kind of deal making. 93 00:05:00,400 --> 00:05:01,680 Speaker 1: Was there a lot of rhetoric about it, a lot 94 00:05:01,720 --> 00:05:03,720 Speaker 1: of clarity about what his policy positions would be. The 95 00:05:03,720 --> 00:05:06,680 Speaker 1: answer is not much. UM. I think I think we've 96 00:05:06,680 --> 00:05:09,960 Speaker 1: heard some things from from the President elect that definitely 97 00:05:10,000 --> 00:05:15,400 Speaker 1: will affect deal making. UM. Stimulus spending UM makes It 98 00:05:15,560 --> 00:05:18,480 Speaker 1: makes a difference to how economy, how companies feel about 99 00:05:18,760 --> 00:05:22,760 Speaker 1: the broad economic environment. Regulation makes a difference as to 100 00:05:23,040 --> 00:05:26,080 Speaker 1: their optimism or lack of optimism around whether deals get done. 101 00:05:26,440 --> 00:05:29,479 Speaker 1: And taxation can make a significant difference in terms of 102 00:05:29,520 --> 00:05:32,040 Speaker 1: both the cost of capital and UH and the ability 103 00:05:32,080 --> 00:05:35,400 Speaker 1: to pullut. What do clients do amid the political noise 104 00:05:35,440 --> 00:05:37,520 Speaker 1: that follows the announcement of these these big deals. I 105 00:05:37,520 --> 00:05:41,480 Speaker 1: think if the big agribusiness deals, for instance, and Christmas, 106 00:05:43,080 --> 00:05:45,560 Speaker 1: that's what I'm doing today. There you go, That's what 107 00:05:45,560 --> 00:05:48,119 Speaker 1: what client is doing here. But how do they filter 108 00:05:48,200 --> 00:05:50,080 Speaker 1: that out? How do your clients pay much attention to 109 00:05:50,160 --> 00:05:52,320 Speaker 1: sort of that or is the focus much more here 110 00:05:52,360 --> 00:05:54,800 Speaker 1: on on the regulatory side? Do you mean, how how 111 00:05:54,839 --> 00:05:57,880 Speaker 1: are the companies reacting to exactly the political noise or 112 00:05:57,880 --> 00:06:02,440 Speaker 1: political Yeah, well, I think I think a company, uh, 113 00:06:02,640 --> 00:06:05,760 Speaker 1: particularly we're talking about large companies that are affected by 114 00:06:05,760 --> 00:06:08,680 Speaker 1: the political environment. They're not blind to it and uh, 115 00:06:08,680 --> 00:06:11,680 Speaker 1: and they need to be thoughtful about a political reaction 116 00:06:11,800 --> 00:06:14,120 Speaker 1: and whether or not that can make a difference to 117 00:06:14,120 --> 00:06:17,320 Speaker 1: the rest of their business. But I would argue that 118 00:06:17,320 --> 00:06:19,680 Speaker 1: that most of that thinking goes in prior to the 119 00:06:19,680 --> 00:06:23,919 Speaker 1: announcement of the transaction, um as opposed to the follow 120 00:06:24,000 --> 00:06:27,559 Speaker 1: through hopefully should be the execution around a well thought 121 00:06:27,560 --> 00:06:30,920 Speaker 1: out strategy that was developed prior to the announcement of 122 00:06:30,960 --> 00:06:33,920 Speaker 1: the transaction. Let me mind the global nous of your title, 123 00:06:33,960 --> 00:06:36,440 Speaker 1: your head of co heead of Global Deals. We we've 124 00:06:36,440 --> 00:06:38,560 Speaker 1: heard so much from our colleage Jeff McCracken and others 125 00:06:38,600 --> 00:06:42,279 Speaker 1: about Chinese interest in getting into mergers and acquisitions around 126 00:06:42,320 --> 00:06:45,240 Speaker 1: the world. What's been motivating that? What motivates China's interest 127 00:06:45,320 --> 00:06:47,760 Speaker 1: here to to merge with companies outside Well, I think 128 00:06:47,760 --> 00:06:50,720 Speaker 1: there's I think there's a couple of things. Um. The 129 00:06:51,440 --> 00:06:55,800 Speaker 1: Chinese have definitely been much more aggressive about about deal 130 00:06:55,839 --> 00:06:58,840 Speaker 1: making on a cross border basis. UM. I think that's 131 00:06:58,880 --> 00:07:02,799 Speaker 1: driven by a desire to access technology. It's a driven 132 00:07:02,800 --> 00:07:06,440 Speaker 1: by a desire to access commodities. UH, it's a driven 133 00:07:06,480 --> 00:07:10,440 Speaker 1: in some cases by a desire potentially to offshore capital. UM. 134 00:07:10,480 --> 00:07:14,640 Speaker 1: I think those motivations, they can be difficult to discern. 135 00:07:16,720 --> 00:07:20,400 Speaker 1: The fact is that in certain in certain sensitive areas, 136 00:07:21,080 --> 00:07:24,600 Speaker 1: I think the Chinese companies, in particularly state owned companies, 137 00:07:24,640 --> 00:07:26,520 Speaker 1: have started to hit some roadblocks in terms of their 138 00:07:26,560 --> 00:07:30,120 Speaker 1: ability to execute on that strategy. And therefore there's perhaps 139 00:07:30,120 --> 00:07:34,440 Speaker 1: some more some more caution around around the level of activity. 140 00:07:34,920 --> 00:07:38,840 Speaker 1: Peter teg with us, we've been talking about the cards 141 00:07:39,160 --> 00:07:42,400 Speaker 1: you are dealt. Does a guy like you care about 142 00:07:42,480 --> 00:07:45,280 Speaker 1: interest rates or is that just the myth that that 143 00:07:45,360 --> 00:07:48,400 Speaker 1: there's so much money slashing around that on a day 144 00:07:48,440 --> 00:07:52,920 Speaker 1: to day basis combination people are actually immune to interest 145 00:07:53,000 --> 00:07:57,320 Speaker 1: rate dynamics. I I think the short answer is we're 146 00:07:57,320 --> 00:08:01,320 Speaker 1: not paying much attention to it right now. Now I've 147 00:08:01,320 --> 00:08:03,800 Speaker 1: been I've been doing this for long enough to certainly 148 00:08:03,800 --> 00:08:06,240 Speaker 1: have seen environments where it mattered a great deal. But 149 00:08:06,280 --> 00:08:08,840 Speaker 1: I would say we're nowhere near that. We're nowhere near that. 150 00:08:08,920 --> 00:08:12,760 Speaker 1: Right this week we've been modeling well. One one I 151 00:08:12,800 --> 00:08:15,520 Speaker 1: think it's Craig Bishop with o RBC Capital Markets made 152 00:08:15,600 --> 00:08:18,400 Speaker 1: very clear nothing happened till the ten year prince three percent. 153 00:08:19,080 --> 00:08:21,920 Speaker 1: He says, that's sort of a huge emotional hurdle or 154 00:08:21,960 --> 00:08:25,120 Speaker 1: nowhere near that. Yeah, I'm not sure I'm prepared to 155 00:08:25,120 --> 00:08:26,840 Speaker 1: put a number on it, but I I certainly would 156 00:08:26,840 --> 00:08:29,920 Speaker 1: tell you that a twenty five basis point rise in rates, 157 00:08:30,200 --> 00:08:32,160 Speaker 1: or for that matter of fifty basis point right or 158 00:08:32,320 --> 00:08:36,200 Speaker 1: seventy basis point rise, I would actually argue that that 159 00:08:36,280 --> 00:08:39,480 Speaker 1: arise indicates optimism, and optimism might be a good thing. 160 00:08:40,360 --> 00:08:42,520 Speaker 1: David Garrl please make a note to Mr Carbett, who 161 00:08:42,520 --> 00:08:44,880 Speaker 1: I'm sure listening, that we did not put a number 162 00:08:44,920 --> 00:08:50,040 Speaker 1: on industrates this morning. It was very good off. Uh. 163 00:08:50,200 --> 00:08:52,920 Speaker 1: You know when when you look at uh just sort 164 00:08:52,960 --> 00:08:54,640 Speaker 1: of the we hear a lot about mergers in the 165 00:08:54,720 --> 00:08:56,880 Speaker 1: energy space. Is that going to be a ripe sector 166 00:08:56,920 --> 00:08:59,839 Speaker 1: for opportunity in two thousand seventeen. Do you think it's 167 00:08:59,840 --> 00:09:03,920 Speaker 1: a good question the the energy sector M. We've looked 168 00:09:03,920 --> 00:09:06,160 Speaker 1: at two different types of when we think about the 169 00:09:06,200 --> 00:09:08,040 Speaker 1: energy sector. I think we need to bifurcated. I think 170 00:09:08,040 --> 00:09:11,160 Speaker 1: there's the upstream space, which tends to be the very 171 00:09:12,240 --> 00:09:14,400 Speaker 1: what people think of when they think about energy. There 172 00:09:14,400 --> 00:09:17,040 Speaker 1: has been a huge amount of activity in the midstream space, 173 00:09:17,080 --> 00:09:20,880 Speaker 1: the infrastructure around energy um, which has has really been 174 00:09:20,960 --> 00:09:24,120 Speaker 1: quite constant over the last the last several years, particularly 175 00:09:24,120 --> 00:09:29,160 Speaker 1: around the master limited partnership sector. But on the upstream side, UH, 176 00:09:29,280 --> 00:09:32,520 Speaker 1: the volatility in the underlying crude price has made it 177 00:09:32,640 --> 00:09:36,440 Speaker 1: very difficult to cross the trade um. When buyers and 178 00:09:36,520 --> 00:09:42,240 Speaker 1: sellers disagree or at least have a lack of congruity 179 00:09:42,280 --> 00:09:44,520 Speaker 1: in terms of what the outlook for the crude prices, 180 00:09:44,920 --> 00:09:47,360 Speaker 1: it can be quite difficult to get those two buy 181 00:09:47,520 --> 00:09:50,080 Speaker 1: those two sides too to come together on price. I 182 00:09:50,240 --> 00:09:53,520 Speaker 1: was talking Peter about synergy and paradigm because you really 183 00:09:53,559 --> 00:09:58,120 Speaker 1: represent the antithesis of this M and a jargon malarkey 184 00:09:58,240 --> 00:10:01,080 Speaker 1: it's out there, you stud I mean, first of all, 185 00:10:01,520 --> 00:10:03,720 Speaker 1: we just heard in our New York weather report it's 186 00:10:03,760 --> 00:10:06,760 Speaker 1: cold in New York. Might I point out we have 187 00:10:06,760 --> 00:10:08,880 Speaker 1: a guy, we have a guy in here from Ithaca, 188 00:10:08,920 --> 00:10:11,120 Speaker 1: New York, a guy in here from Clinton, New York, 189 00:10:11,400 --> 00:10:13,840 Speaker 1: and a guy in here from Rochester. These New York 190 00:10:13,840 --> 00:10:17,360 Speaker 1: City people, Peter, they have no clue cold can get it? 191 00:10:17,440 --> 00:10:23,120 Speaker 1: Hamilton's College nothing, They have no clue. What they just 192 00:10:23,200 --> 00:10:27,480 Speaker 1: you know, in Clinton, New York, there's there's winter, late 193 00:10:27,520 --> 00:10:29,440 Speaker 1: winter in the fourth of July. And that's all there is. 194 00:10:29,960 --> 00:10:33,080 Speaker 1: There's to it. You spoke at Hamilton College at while back, 195 00:10:33,360 --> 00:10:35,360 Speaker 1: and I mean I mean as seriously, and that you 196 00:10:35,400 --> 00:10:38,400 Speaker 1: represent an M and A. We just go out talk 197 00:10:38,480 --> 00:10:41,960 Speaker 1: to the client. No financial energy engineering, none of the 198 00:10:42,000 --> 00:10:44,839 Speaker 1: bladder of M and A. You learn that tending bar 199 00:10:44,960 --> 00:10:47,920 Speaker 1: in London. What did you learn tending bar in London 200 00:10:48,200 --> 00:10:50,679 Speaker 1: that you drag over to Corbett's M and A shop? 201 00:10:52,080 --> 00:10:55,199 Speaker 1: I think, I'm I think tending bar in London is 202 00:10:55,240 --> 00:10:57,319 Speaker 1: a good lesson both in work ethic and in talking 203 00:10:57,320 --> 00:11:01,840 Speaker 1: to people, um and listening. That's what you do as 204 00:11:01,840 --> 00:11:04,080 Speaker 1: a bar tender, presides figure out whether to use olives 205 00:11:04,160 --> 00:11:06,800 Speaker 1: or lemon. Right, Well, yeah, and the bar I worked 206 00:11:06,800 --> 00:11:09,080 Speaker 1: in that no one was ordering anything that had olives 207 00:11:09,160 --> 00:11:15,520 Speaker 1: or lemons, And let me ask you about bearing them. 208 00:11:15,559 --> 00:11:17,480 Speaker 1: You probably want to talk to any any companies in specific. 209 00:11:17,600 --> 00:11:20,400 Speaker 1: Let's let let let me introduce the latest news here 210 00:11:20,400 --> 00:11:22,760 Speaker 1: about Yahoo and Verizon. Just ask you how companies approach 211 00:11:22,840 --> 00:11:25,920 Speaker 1: something like that. When you when you're mid deal and 212 00:11:25,960 --> 00:11:27,920 Speaker 1: you have a big eventuality like that, how how did 213 00:11:28,120 --> 00:11:30,880 Speaker 1: the parties to that deal broke or some sort of 214 00:11:30,920 --> 00:11:33,280 Speaker 1: agreement or figure out what to do next. Here we 215 00:11:33,360 --> 00:11:35,680 Speaker 1: have a Verizon dealing with the fact that Yahoo announced 216 00:11:35,720 --> 00:11:38,360 Speaker 1: a one billion uses. Information was compromised back in two 217 00:11:38,400 --> 00:11:40,720 Speaker 1: thousand and thirteen. So I imagine the impulse at this 218 00:11:40,720 --> 00:11:42,880 Speaker 1: point is to find out why it took so long 219 00:11:42,920 --> 00:11:44,480 Speaker 1: for for a company to find that out. But how 220 00:11:44,720 --> 00:11:48,800 Speaker 1: do companies reevaluate a deal like that mid stream? Obviously 221 00:11:48,880 --> 00:11:51,680 Speaker 1: there's gonna be uh, there's gonna be a deep dive 222 00:11:51,760 --> 00:11:54,240 Speaker 1: done in terms of in terms of the substance of it. 223 00:11:54,280 --> 00:11:56,960 Speaker 1: What's what are the facts? Um? What are the fact 224 00:11:57,080 --> 00:12:01,439 Speaker 1: mean for the relative value? What is to the contractual agreement? 225 00:12:01,440 --> 00:12:05,040 Speaker 1: Tell you that you have to do um, it's it's 226 00:12:05,400 --> 00:12:08,400 Speaker 1: it's going to be entirely facts and circumstances specific but 227 00:12:08,440 --> 00:12:10,559 Speaker 1: obviously a whole lot of people are gonna be working 228 00:12:10,760 --> 00:12:14,880 Speaker 1: very very hard to to try to turn a and 229 00:12:15,520 --> 00:12:21,240 Speaker 1: unexpected and undesirable fact pattern and translate that into the 230 00:12:21,679 --> 00:12:26,640 Speaker 1: realities of a transaction that's already out there. UH. The 231 00:12:26,760 --> 00:12:30,240 Speaker 1: discount rate at which the present value of an investment's 232 00:12:30,280 --> 00:12:33,760 Speaker 1: future cash flow equals the cost of investment when the 233 00:12:34,040 --> 00:12:37,120 Speaker 1: I are are of an investment is greater than the 234 00:12:37,200 --> 00:12:41,240 Speaker 1: required return Peter Tag makes a paycheck. That's the definition 235 00:12:41,280 --> 00:12:44,480 Speaker 1: off the Bloomberg. Is Mr Trump gonna raise I r 236 00:12:44,559 --> 00:12:49,839 Speaker 1: are for Global Wall Street? For Global Wall Street, I 237 00:12:49,880 --> 00:12:51,839 Speaker 1: guess there's a question about what is what is Mr 238 00:12:51,840 --> 00:12:54,960 Speaker 1: Trump going to do? UH? In terms of the overall 239 00:12:55,280 --> 00:12:58,800 Speaker 1: the overall economy? I think a combination of stimulus, a 240 00:12:58,840 --> 00:13:03,000 Speaker 1: little less regulation and UH and lower tax rates certainly, 241 00:13:03,760 --> 00:13:07,000 Speaker 1: certainly to the extent that all three of those can argue, 242 00:13:07,160 --> 00:13:11,040 Speaker 1: can arguably be a net benefit to our clients. One 243 00:13:11,040 --> 00:13:14,320 Speaker 1: would hope that that translates through to net benefits. To 244 00:13:14,360 --> 00:13:16,560 Speaker 1: make this more sophisticated and to get you into a 245 00:13:16,559 --> 00:13:19,559 Speaker 1: bigger set of troubles At Citigroup, Villain Bowder in his 246 00:13:19,679 --> 00:13:25,000 Speaker 1: economic team believes in lower terminal values. Trump is pushing 247 00:13:25,040 --> 00:13:29,000 Speaker 1: against that with a reflation. Are you managing for this year, 248 00:13:29,120 --> 00:13:33,280 Speaker 1: next year, five years out based on Bowder's lower terminal 249 00:13:33,400 --> 00:13:37,360 Speaker 1: values or can you see truly a paradigm shift. I'm 250 00:13:37,400 --> 00:13:41,200 Speaker 1: talking against myself here, a paradigm shift towards a higher 251 00:13:41,240 --> 00:13:46,240 Speaker 1: I R R well UH reflation UM and the extent 252 00:13:46,280 --> 00:13:49,040 Speaker 1: to which that translates through, certainly in the near term 253 00:13:49,120 --> 00:13:51,600 Speaker 1: to UH, to higher growth and a higher top line 254 00:13:51,679 --> 00:13:57,200 Speaker 1: is is a net positive. Of course, inflation eventually catches 255 00:13:57,280 --> 00:14:01,720 Speaker 1: up to you and it starts moving through costs as well. UM. Ultimately, 256 00:14:01,880 --> 00:14:04,040 Speaker 1: I think terminal values are a function of what do 257 00:14:04,080 --> 00:14:06,360 Speaker 1: you see your discount rate at and a lower tax rate, 258 00:14:06,440 --> 00:14:09,360 Speaker 1: for example, is got to be agree with you with 259 00:14:09,400 --> 00:14:11,400 Speaker 1: the one off of a tax rate and the structural change, 260 00:14:11,520 --> 00:14:15,080 Speaker 1: But you just nailed it. Guys like you in Industrial 261 00:14:15,120 --> 00:14:19,720 Speaker 1: America work in a nominal rate space. They sort of 262 00:14:19,760 --> 00:14:23,360 Speaker 1: like inflation. Unlike everybody listening to this program, it's got 263 00:14:23,360 --> 00:14:27,840 Speaker 1: a uh frankly dealing in inflation adjusted space. I think 264 00:14:28,160 --> 00:14:31,440 Speaker 1: as I say, I think inflation aff inflation eventually gets 265 00:14:31,440 --> 00:14:34,320 Speaker 1: to both the costs and the top line UM. I 266 00:14:34,360 --> 00:14:37,280 Speaker 1: think how that translates to value is going to be 267 00:14:37,320 --> 00:14:40,320 Speaker 1: specific to an industry. You know, whether we're talking about 268 00:14:40,320 --> 00:14:44,880 Speaker 1: technology or whether we're talking about the old rust belt economy, 269 00:14:44,960 --> 00:14:47,520 Speaker 1: it's a different ends. This has been great, Peter take 270 00:14:47,600 --> 00:14:49,680 Speaker 1: Thank you so much. It's three below in the Hamilton 271 00:14:49,840 --> 00:15:08,000 Speaker 1: College right now. Thank you so much. Jeffrey Rosenberg is 272 00:15:08,000 --> 00:15:11,120 Speaker 1: out of Carnegie. Melody brings a serious quat chop to 273 00:15:11,200 --> 00:15:14,000 Speaker 1: the whole idea of strategy. Jeffrey, let me give you 274 00:15:14,000 --> 00:15:17,160 Speaker 1: the Friday open question. What will you write about for 275 00:15:17,240 --> 00:15:23,800 Speaker 1: consumption Monday morning. Well, the consumption outlook is being bolstered 276 00:15:23,920 --> 00:15:29,640 Speaker 1: Tom by rising wages. The most important driver of consumption 277 00:15:29,800 --> 00:15:32,480 Speaker 1: is real income growth. Then what you've seen is wage 278 00:15:32,480 --> 00:15:38,840 Speaker 1: inflation accelerating faster than inflation, and so that's the fundamental 279 00:15:38,880 --> 00:15:41,960 Speaker 1: support for the consumption outlook. The fundamental chart I had 280 00:15:42,000 --> 00:15:43,880 Speaker 1: earlier this week was a ten year yield with a 281 00:15:43,920 --> 00:15:46,880 Speaker 1: Trump reflection. And we go on two sixty. Now I 282 00:15:46,960 --> 00:15:50,440 Speaker 1: get that there are three vectors, Jeffrey Rosenberg. One is okay, 283 00:15:50,440 --> 00:15:52,840 Speaker 1: this is great, and then we roll over to where 284 00:15:52,840 --> 00:15:56,200 Speaker 1: we were before in some way or it's a jump condition, 285 00:15:56,720 --> 00:16:00,080 Speaker 1: and we level out here or were we jump as 286 00:16:00,160 --> 00:16:04,000 Speaker 1: we have and then we build upon this out our 287 00:16:04,120 --> 00:16:07,400 Speaker 1: year or two. Where are you? Where's black Rock? Well, 288 00:16:07,440 --> 00:16:09,960 Speaker 1: you know we're more in the optimistic camp that we 289 00:16:10,000 --> 00:16:13,120 Speaker 1: can build on this, and it's a outlook in two 290 00:16:13,160 --> 00:16:15,760 Speaker 1: thousand and seventeen for rising rates. That doesn't mean that 291 00:16:15,800 --> 00:16:19,080 Speaker 1: it's going to go in one direction. I don't mean 292 00:16:19,120 --> 00:16:26,280 Speaker 1: a boy band reference there. Uh sorry, it's a Friday, Um, Jeffrey, 293 00:16:26,440 --> 00:16:32,360 Speaker 1: you're absolutely perfect. Oh I've heard it. How many times? 294 00:16:32,360 --> 00:16:39,600 Speaker 1: Have I heard it at home? Five times? I think 295 00:16:40,680 --> 00:16:42,200 Speaker 1: I mean what I meant to say. That doesn't It 296 00:16:42,240 --> 00:16:44,920 Speaker 1: doesn't mean it's going to go in a straight line upward. 297 00:16:44,960 --> 00:16:48,400 Speaker 1: There's gonna be uh pullbacks, and most importantly, you know 298 00:16:48,480 --> 00:16:51,640 Speaker 1: there's there's some challenges. Tom. The most important thing you 299 00:16:51,680 --> 00:16:54,800 Speaker 1: said in the opening where all those currencies are related 300 00:16:54,840 --> 00:16:58,280 Speaker 1: to China, the Asian currency declines that you're talking about 301 00:16:58,280 --> 00:17:01,960 Speaker 1: are really because the Chinese currente's declining. It's it's one 302 00:17:02,000 --> 00:17:04,920 Speaker 1: of the downside risks. We have to to consider the 303 00:17:05,040 --> 00:17:06,879 Speaker 1: front page of the Wall Street Journal this morning. I 304 00:17:06,880 --> 00:17:09,959 Speaker 1: think everybody knows the story. But when we have an 305 00:17:10,000 --> 00:17:13,200 Speaker 1: optimistic outlook, as we do for two thousand seventeen, we 306 00:17:13,200 --> 00:17:15,159 Speaker 1: we it's not saying it's going to go in a 307 00:17:15,200 --> 00:17:17,560 Speaker 1: straight line, and that the risks aren't going to show up. 308 00:17:17,600 --> 00:17:19,840 Speaker 1: That can push yields lower if some of these concerns 309 00:17:19,880 --> 00:17:25,399 Speaker 1: come back, But overall, the growth outlook is is going 310 00:17:25,440 --> 00:17:28,400 Speaker 1: to be pushing rates higher. We think in seventeen if 311 00:17:28,400 --> 00:17:30,399 Speaker 1: it feels like ancient history now, but if we go 312 00:17:30,480 --> 00:17:33,080 Speaker 1: back to January and February, all the trouble that we 313 00:17:33,119 --> 00:17:36,040 Speaker 1: saw with China and its reserves and the currency that 314 00:17:36,160 --> 00:17:37,919 Speaker 1: subside as we moved on to Brexit in the U 315 00:17:37,960 --> 00:17:41,480 Speaker 1: s president presidential election, all of that. But what is 316 00:17:41,480 --> 00:17:43,840 Speaker 1: your outlook for the Chinese currency going forward in the 317 00:17:43,840 --> 00:17:45,760 Speaker 1: new year. Could we have a reprisal of what we 318 00:17:45,800 --> 00:17:49,480 Speaker 1: saw almost a year ago today? Well, you know, I 319 00:17:49,520 --> 00:17:54,120 Speaker 1: don't have to forecast it, um, we're saying it right now. 320 00:17:54,560 --> 00:17:56,679 Speaker 1: If you look at some of what's going on in 321 00:17:56,800 --> 00:17:59,200 Speaker 1: terms of the inner bank lending rates, the Hong Kong 322 00:17:59,240 --> 00:18:02,000 Speaker 1: overnight rates, what's going on in just in terms of 323 00:18:02,080 --> 00:18:05,880 Speaker 1: the currency levels itself, you see a very similar pattern 324 00:18:06,280 --> 00:18:09,119 Speaker 1: to the pressures that we saw a year ago. I 325 00:18:09,119 --> 00:18:11,560 Speaker 1: don't think there's nearly the same degree of focus on 326 00:18:11,600 --> 00:18:15,840 Speaker 1: it because we're focused on the growth story and there's 327 00:18:15,880 --> 00:18:19,960 Speaker 1: two ways of kind of interpret interpreting the currency moves. 328 00:18:20,080 --> 00:18:25,600 Speaker 1: One is, excuse me, from the positive side of the 329 00:18:25,680 --> 00:18:30,120 Speaker 1: growth and this is dollar strength as opposed to Chinese weakness. 330 00:18:30,160 --> 00:18:35,280 Speaker 1: Remember last year it was about commodity prices and credit concerns, 331 00:18:35,560 --> 00:18:38,120 Speaker 1: and you don't have those concerns at the same time. 332 00:18:38,200 --> 00:18:41,800 Speaker 1: Right our commodity story is much more stable, uh to positive. 333 00:18:42,160 --> 00:18:44,639 Speaker 1: So one of the things that's easing some of the 334 00:18:44,680 --> 00:18:48,840 Speaker 1: concerns from a macro perspective is maybe this is us 335 00:18:49,000 --> 00:18:53,120 Speaker 1: growth lead and therefore that can be overwhelming or more 336 00:18:53,160 --> 00:18:57,240 Speaker 1: positive to the negative side. Seth masters at Bernstein, Jeff 337 00:18:57,320 --> 00:19:00,959 Speaker 1: Rosenberg gave a beautiful dissertation this more earning of the 338 00:19:01,040 --> 00:19:06,720 Speaker 1: conflict between higher yields, meaning a yield pick up, and 339 00:19:06,800 --> 00:19:11,159 Speaker 1: you can extrapolate it over to equities versus price decline, 340 00:19:12,119 --> 00:19:15,320 Speaker 1: which will be to our advantage in the first quarter 341 00:19:15,359 --> 00:19:21,040 Speaker 1: of next year. Are we advantaged by rising yields overcoming 342 00:19:21,119 --> 00:19:25,720 Speaker 1: price decline or will we be disadvantaged? Well, I think 343 00:19:26,040 --> 00:19:28,000 Speaker 1: it goes back to what I was saying before. There's 344 00:19:28,040 --> 00:19:30,919 Speaker 1: there's there's sort of good increases in interest rates, and 345 00:19:30,960 --> 00:19:33,600 Speaker 1: then there can be bad increases in interest rates. And 346 00:19:33,680 --> 00:19:37,000 Speaker 1: clearly as we see the equity market reaction to the 347 00:19:37,160 --> 00:19:41,320 Speaker 1: to the shock upward in in an interest rates. This 348 00:19:41,400 --> 00:19:45,400 Speaker 1: is from the good perspective because it's driven by growth 349 00:19:45,720 --> 00:19:48,359 Speaker 1: and inflationary expectations. One of the ways in which we 350 00:19:48,440 --> 00:19:51,760 Speaker 1: see that in the bond market is the breakdown between 351 00:19:52,200 --> 00:19:57,439 Speaker 1: increases and interest rates, between inflation expectations and increases in 352 00:19:57,440 --> 00:20:00,560 Speaker 1: interest rates from what are called real interest rating races. 353 00:20:00,720 --> 00:20:04,440 Speaker 1: Real interesting great increases can be bad in the sense 354 00:20:04,520 --> 00:20:07,480 Speaker 1: that they tighten financial conditions. They put a lot of 355 00:20:07,520 --> 00:20:11,679 Speaker 1: pressure on currencies. Inflationary increases. Now, we've gotta be careful here, Tom, 356 00:20:11,720 --> 00:20:14,520 Speaker 1: because we're talking about a good form of inflation. When 357 00:20:14,520 --> 00:20:19,680 Speaker 1: inflation expectations are going from deflationary concerns to inflationary concerns. 358 00:20:19,840 --> 00:20:21,800 Speaker 1: That's where I think we are in the first quarter. 359 00:20:22,320 --> 00:20:24,880 Speaker 1: If we get too far ahead in terms of inflation, 360 00:20:24,920 --> 00:20:26,600 Speaker 1: that will be something that we will have to worry 361 00:20:26,600 --> 00:20:28,840 Speaker 1: about it. That's not in our outlook for the first 362 00:20:28,840 --> 00:20:31,520 Speaker 1: part of two seventeen. Really for most of two seventeen, 363 00:20:31,560 --> 00:20:36,600 Speaker 1: this is reflationary outlook, where reflation is good for the economy, 364 00:20:36,600 --> 00:20:39,680 Speaker 1: it's good for financial markets. What did you make of 365 00:20:39,680 --> 00:20:42,760 Speaker 1: of of Yllen's commentary on the potential for for fiscal 366 00:20:43,200 --> 00:20:45,480 Speaker 1: She did speak about fiscal stimulus, if only briefly. She 367 00:20:45,560 --> 00:20:47,520 Speaker 1: was asked about and she said that she's of her colleagues, 368 00:20:47,920 --> 00:20:50,680 Speaker 1: noted her colleagues noted at the at the meeting, what 369 00:20:50,760 --> 00:20:53,520 Speaker 1: did you make what she had to say, Well, she's 370 00:20:53,560 --> 00:20:56,400 Speaker 1: in a very difficult position, and the SET has put 371 00:20:56,440 --> 00:21:00,320 Speaker 1: itself in a very difficult position by having moved to 372 00:21:00,480 --> 00:21:05,280 Speaker 1: a greater form of transparency. This is something unique, and 373 00:21:05,320 --> 00:21:07,040 Speaker 1: it's going to be the first time that the FED 374 00:21:07,119 --> 00:21:10,880 Speaker 1: finds itself in a position of publicly writing down its 375 00:21:10,920 --> 00:21:15,760 Speaker 1: forecast for economic growth in an environment where fiscal policy 376 00:21:15,960 --> 00:21:19,080 Speaker 1: is taking the mantle of leadership. This is about what 377 00:21:19,200 --> 00:21:22,520 Speaker 1: kind of expectations do we have on the impact of 378 00:21:22,520 --> 00:21:25,320 Speaker 1: these fiscal policies on our growth outook. The most remarkable 379 00:21:25,359 --> 00:21:29,680 Speaker 1: thing about the FMC meeting in December is that they 380 00:21:29,760 --> 00:21:32,439 Speaker 1: basically said there was no impact. If you look at 381 00:21:32,480 --> 00:21:37,320 Speaker 1: the SEP statement of Economic projections with regards to economic forecast, 382 00:21:37,600 --> 00:21:42,320 Speaker 1: virtually no change out for the long run. That is 383 00:21:42,359 --> 00:21:45,920 Speaker 1: a remarkable statement. It will be very hard if this 384 00:21:46,600 --> 00:21:52,639 Speaker 1: really big and important fundamental fiscal reform package that the 385 00:21:52,680 --> 00:21:55,520 Speaker 1: incoming administration is talking about comes to pass, they're going 386 00:21:55,560 --> 00:21:59,360 Speaker 1: to have to adjust those growth forecasts. So I think 387 00:21:59,440 --> 00:22:04,480 Speaker 1: that's going to be the focal point of the markets throughout. Agree. 388 00:22:04,520 --> 00:22:07,560 Speaker 1: But Jeffrey, by definition this is an ex post institution. 389 00:22:07,800 --> 00:22:10,440 Speaker 1: There's no way they can get out in front of legislation. 390 00:22:11,200 --> 00:22:13,919 Speaker 1: I don't see that in any of our history. They 391 00:22:14,000 --> 00:22:16,960 Speaker 1: can't get out in front of the legislation. But once 392 00:22:17,000 --> 00:22:20,120 Speaker 1: the legislation is out, and it's going to be out early, right, 393 00:22:20,160 --> 00:22:22,840 Speaker 1: this isn't the two thousand, eighteen or nineteen program. This 394 00:22:22,920 --> 00:22:26,880 Speaker 1: is the first year new administration economic program. There's going 395 00:22:26,920 --> 00:22:29,680 Speaker 1: to have to be some kind of The markets are 396 00:22:29,720 --> 00:22:32,480 Speaker 1: telling you that. Private economies, they're telling you that, and 397 00:22:32,520 --> 00:22:34,399 Speaker 1: so they're going to have to opine on. It's going 398 00:22:34,440 --> 00:22:36,560 Speaker 1: to put them in an awkward position because it's going 399 00:22:36,600 --> 00:22:39,159 Speaker 1: to be public and it's going to be transparent this 400 00:22:39,200 --> 00:22:43,760 Speaker 1: time around. But nevertheless it's affecting the growth outlook. Obviously, 401 00:22:43,840 --> 00:22:47,959 Speaker 1: today in December, it's too speculative, it's too uncertain. We 402 00:22:48,000 --> 00:22:50,960 Speaker 1: don't know. That's fine, but at some point we are 403 00:22:51,040 --> 00:22:54,879 Speaker 1: going to know. It's going to be in the legislative language. 404 00:22:55,080 --> 00:22:57,320 Speaker 1: So we're going to have to have more clarity as 405 00:22:57,359 --> 00:23:00,439 Speaker 1: to what we think it's impact is from our Central 406 00:23:00,480 --> 00:23:04,399 Speaker 1: Bank on the prospects for growth and therefore for the 407 00:23:04,440 --> 00:23:07,560 Speaker 1: path of monetary policy. Jeffrey Rosenberg with US black Rock. 408 00:23:08,359 --> 00:23:11,600 Speaker 1: As we look at the linkages of strategies here, Jeffrey, 409 00:23:11,640 --> 00:23:14,639 Speaker 1: are we correlated? What I've noticed sort of in the 410 00:23:14,720 --> 00:23:18,720 Speaker 1: pulsing last three four days X Yellen is some things 411 00:23:18,720 --> 00:23:21,439 Speaker 1: are correlated and then two hours later they drift away 412 00:23:21,720 --> 00:23:24,080 Speaker 1: and other things come to bear. What do you see 413 00:23:24,080 --> 00:23:27,320 Speaker 1: on the Bloomberg screen. Yeah, it is actually one of 414 00:23:27,320 --> 00:23:30,639 Speaker 1: our themes in our black Rock investment outlook that the 415 00:23:30,720 --> 00:23:36,080 Speaker 1: correlations that we've expected to see both across debt versus equity, 416 00:23:36,200 --> 00:23:40,840 Speaker 1: across em and currencies e M and commodities, a lot 417 00:23:40,880 --> 00:23:48,440 Speaker 1: of those correlations have displayed less certainty, less reliability than 418 00:23:48,600 --> 00:23:51,919 Speaker 1: than we've we've come to expect. I think on the 419 00:23:51,960 --> 00:23:55,120 Speaker 1: big one for investors portfolios, which is which is debt 420 00:23:55,119 --> 00:23:57,520 Speaker 1: and equity. We we've seen this a number of times. 421 00:23:57,560 --> 00:24:01,600 Speaker 1: This is when particularly bonds are going much higher, and 422 00:24:01,960 --> 00:24:05,720 Speaker 1: the fear that's driving them higher is not the most 423 00:24:05,720 --> 00:24:08,120 Speaker 1: recent move, not not the post election move. We saw 424 00:24:08,160 --> 00:24:12,080 Speaker 1: this earlier in September when rate moves were happening, and 425 00:24:12,080 --> 00:24:15,120 Speaker 1: it was causing some concern on equities. Bonds are going 426 00:24:15,160 --> 00:24:17,200 Speaker 1: down and stocks are going down at the same time. 427 00:24:17,960 --> 00:24:20,680 Speaker 1: We've seen a couple of episodes. Obviously two thirteen s 428 00:24:20,720 --> 00:24:23,439 Speaker 1: taper tantrum was it was a big example of that, 429 00:24:23,560 --> 00:24:26,919 Speaker 1: and this example of how putting portfolios together of stocks 430 00:24:26,920 --> 00:24:31,199 Speaker 1: and bonds. As we transition away from quantitative easing, it 431 00:24:31,240 --> 00:24:34,720 Speaker 1: gets more challenging. I mean, you say, we're transitioning away 432 00:24:34,720 --> 00:24:39,040 Speaker 1: from quantitative easing, are we? Oh? Absolutely, And it's important 433 00:24:39,040 --> 00:24:44,880 Speaker 1: to take the global perspective rate increase. Oh no, no, no, Tom, 434 00:24:44,920 --> 00:24:47,040 Speaker 1: it's not about the rate increases. Look at what the 435 00:24:47,080 --> 00:24:49,119 Speaker 1: Bank of Japan did. Look at what the e c 436 00:24:49,280 --> 00:24:54,560 Speaker 1: B signaled in terms of moving ever so slightly. I agree, 437 00:24:54,600 --> 00:24:57,320 Speaker 1: it's it's it's a bond geek here. So you know, 438 00:24:57,359 --> 00:24:59,760 Speaker 1: we're looking at the at the very small moves. But 439 00:25:00,080 --> 00:25:01,399 Speaker 1: yet if you go back to the Bank of Japan, 440 00:25:01,400 --> 00:25:04,879 Speaker 1: it wasn't small. They abandoned negative interest rate policy, they 441 00:25:04,920 --> 00:25:08,040 Speaker 1: recognized the limits to monetary policy. In the e c 442 00:25:08,200 --> 00:25:11,000 Speaker 1: B s case, they down shifted the size. Yes, they 443 00:25:11,000 --> 00:25:14,560 Speaker 1: extended the timing, but they down shifted the size. And 444 00:25:14,600 --> 00:25:17,200 Speaker 1: in the FEDS case in the US. Something for two 445 00:25:17,240 --> 00:25:19,560 Speaker 1: thousand seventeen that's going to get back on the radar 446 00:25:19,600 --> 00:25:21,680 Speaker 1: screen is what do they do about the size of 447 00:25:21,720 --> 00:25:24,600 Speaker 1: the balance sheet? And that's going to be a big 448 00:25:24,640 --> 00:25:28,720 Speaker 1: market story in two seventeen. We've kind of ignored the 449 00:25:28,760 --> 00:25:33,320 Speaker 1: reinvestment policy, but they said, once we get on with 450 00:25:33,960 --> 00:25:36,360 Speaker 1: increasing rates, and what they told us yesterday or two 451 00:25:36,400 --> 00:25:39,639 Speaker 1: days ago was we're going to be increasing the pace 452 00:25:39,720 --> 00:25:42,640 Speaker 1: to three hikes a year. Now people are gonna start asking, well, 453 00:25:42,760 --> 00:25:45,240 Speaker 1: you told us once you get on with normalization. The 454 00:25:45,280 --> 00:25:48,040 Speaker 1: next phase is going to be normalization. Normalization is about 455 00:25:48,160 --> 00:25:51,520 Speaker 1: moving even further away from quantitative easy. Jeffrey, you've written 456 00:25:51,520 --> 00:25:54,920 Speaker 1: about the potential populism. I asked you about how Janet 457 00:25:55,000 --> 00:25:56,960 Speaker 1: Yellen and her colleagues are wrestling with the prospects of 458 00:25:56,960 --> 00:25:59,679 Speaker 1: an infrastructure spending package. Did she miss an opportunity do 459 00:25:59,680 --> 00:26:01,360 Speaker 1: you think at the news conference this week to talk 460 00:26:01,400 --> 00:26:04,000 Speaker 1: about what could be a huge white here on the 461 00:26:04,000 --> 00:26:06,159 Speaker 1: economy when you look at the potential for for tariffs, 462 00:26:06,200 --> 00:26:10,600 Speaker 1: for instance, Well, it's not clear that the news conference 463 00:26:10,800 --> 00:26:14,800 Speaker 1: discussing the monetary policy decision of the FOMC is the 464 00:26:14,880 --> 00:26:17,240 Speaker 1: right form for that Now, interestingly, which is went on 465 00:26:17,280 --> 00:26:20,560 Speaker 1: the calendar is on Monday, She's going to be getting 466 00:26:20,560 --> 00:26:24,200 Speaker 1: a commencement speech, So it may be that the commencement 467 00:26:24,240 --> 00:26:27,560 Speaker 1: speeches the avenue through which she decides to address some 468 00:26:27,680 --> 00:26:30,240 Speaker 1: of these bigger issues. Now, the topic at the commencement 469 00:26:30,280 --> 00:26:33,480 Speaker 1: speech is not the infrastructure and the fiscal stimulats, but 470 00:26:33,720 --> 00:26:36,800 Speaker 1: rather its jobs. So it's not clear that will necessarily 471 00:26:36,800 --> 00:26:38,879 Speaker 1: be the title, but but that may be a better 472 00:26:39,000 --> 00:26:43,560 Speaker 1: forum for a more expansive discussion on some of those issues. 473 00:26:43,840 --> 00:26:47,120 Speaker 1: How is your your positioning changed here? I won't say 474 00:26:47,119 --> 00:26:49,320 Speaker 1: since the meeting, but surrounding the meeting? What what? What 475 00:26:49,400 --> 00:26:50,960 Speaker 1: changes have you made here over the last week or 476 00:26:51,000 --> 00:26:57,160 Speaker 1: so since the FMC met. Well, well, clearly, uh, this 477 00:26:57,200 --> 00:27:01,840 Speaker 1: has been a big shift regards to the performance of 478 00:27:01,920 --> 00:27:05,800 Speaker 1: interest rates along the maturity spectrum. The market going into 479 00:27:05,800 --> 00:27:09,159 Speaker 1: the meeting, ourselves going into the meeting did not expect 480 00:27:09,280 --> 00:27:13,680 Speaker 1: this communication. Now some may say it's an accidental communication, 481 00:27:13,680 --> 00:27:17,119 Speaker 1: but it's the communication nevertheless, through the dots plot signaling 482 00:27:17,240 --> 00:27:20,040 Speaker 1: three hikes rather than two hikes. So so the front 483 00:27:20,119 --> 00:27:23,280 Speaker 1: end of the curve certainly is being born the brunt 484 00:27:23,280 --> 00:27:26,679 Speaker 1: of that what of the curve is the perfect path 485 00:27:26,880 --> 00:27:29,640 Speaker 1: for banking. I can't figure it out. Do they want 486 00:27:29,640 --> 00:27:32,560 Speaker 1: to hide? Do they want to a much higher tenure 487 00:27:32,640 --> 00:27:35,439 Speaker 1: yielding a peg two year? Do they want what's the 488 00:27:35,520 --> 00:27:40,119 Speaker 1: perfect path? So so so the path for banking is 489 00:27:40,440 --> 00:27:44,280 Speaker 1: one in which interest rates are rising. The curve is steepening, 490 00:27:44,520 --> 00:27:47,000 Speaker 1: but the pace of the increase in interest rates is 491 00:27:47,040 --> 00:27:50,359 Speaker 1: not so large as to bring about a whole other 492 00:27:50,480 --> 00:27:53,720 Speaker 1: set of concerns. The concerns about, hey, we're moving too 493 00:27:53,720 --> 00:27:57,840 Speaker 1: far too fast. This is negative for growth, it's negative 494 00:27:58,080 --> 00:28:01,400 Speaker 1: for the stock market, it's negative for global growth because 495 00:28:01,400 --> 00:28:03,800 Speaker 1: of its impact on the dollar. And you bring about 496 00:28:03,880 --> 00:28:08,960 Speaker 1: some concerns again around financial conditions tightening. Jeffrey Rosenberg, you 497 00:28:08,960 --> 00:28:12,040 Speaker 1: have been absolutely perfect. Thank you so much. Jeff Rosenberg 498 00:28:12,080 --> 00:28:23,720 Speaker 1: with Black, thank you. Guys have a good who you 499 00:28:23,800 --> 00:28:27,280 Speaker 1: put your trust in matters. Investors have put their trust 500 00:28:27,320 --> 00:28:30,879 Speaker 1: in independent registered investment advisors to the two and of 501 00:28:30,960 --> 00:28:34,359 Speaker 1: four trillion dollars. Why they see their roles to serve, 502 00:28:34,640 --> 00:28:38,000 Speaker 1: not sell. That's why Charles Schwab is committed to the 503 00:28:38,080 --> 00:28:44,200 Speaker 1: success over seven thousand independent financial advisors who passionately dedicate 504 00:28:44,280 --> 00:28:49,040 Speaker 1: themselves to helping people achieve their financial goals. Learn more 505 00:28:49,560 --> 00:28:59,120 Speaker 1: and find your independent advisor dot com. One of the 506 00:28:59,160 --> 00:29:02,360 Speaker 1: great supporters of Bloombergunny Economy and Bloomberg Save Allence has 507 00:29:02,400 --> 00:29:06,320 Speaker 1: been John Taylor, Stanford University. Uh. He is without question 508 00:29:06,360 --> 00:29:09,880 Speaker 1: one of our great macro economists. Of course on rules 509 00:29:09,880 --> 00:29:14,000 Speaker 1: and discretion. He has immense authority and leans towards tilts 510 00:29:14,040 --> 00:29:19,440 Speaker 1: towards the advantages of rules, including his rule or the 511 00:29:19,520 --> 00:29:23,440 Speaker 1: amendments of his rule, the Taylor Rule. David Gurry goes 512 00:29:23,440 --> 00:29:27,000 Speaker 1: without saying that Mr Taylor's name is mentioned often across 513 00:29:27,040 --> 00:29:32,680 Speaker 1: the Bloomberg pat pipe has in the last number of days. Uh, 514 00:29:32,800 --> 00:29:35,480 Speaker 1: Professor Taylor. Wonderful to speak to you again. It's been way, 515 00:29:35,480 --> 00:29:40,600 Speaker 1: way too long, Um, John Taylor. Your name is out there. 516 00:29:40,720 --> 00:29:43,520 Speaker 1: It is always out there when we speak of chairman, 517 00:29:44,200 --> 00:29:48,680 Speaker 1: vice chairman, governors of our Central Bank, the Federal Reserve System. 518 00:29:48,760 --> 00:29:53,160 Speaker 1: Have you spoken with Mr Trump's transition team about their 519 00:29:53,240 --> 00:29:56,280 Speaker 1: economics and if you've spoken directly with the President elect 520 00:29:56,840 --> 00:30:02,160 Speaker 1: about a future job in Washington. There's always, as you saying, 521 00:30:02,200 --> 00:30:04,880 Speaker 1: by the way, great to be back, Tom. There's always 522 00:30:04,920 --> 00:30:08,040 Speaker 1: rumors about what's going on. And I've been interested in 523 00:30:08,040 --> 00:30:12,000 Speaker 1: this subject for so long. I really want to see 524 00:30:12,000 --> 00:30:14,520 Speaker 1: a ways which the FED can you improve get back 525 00:30:14,560 --> 00:30:17,360 Speaker 1: to policies that I think work better in the past. 526 00:30:17,400 --> 00:30:20,360 Speaker 1: That's what I'm talking about. And I think there's a 527 00:30:20,480 --> 00:30:23,400 Speaker 1: there's a lot going on with policy. I'm positive about 528 00:30:23,480 --> 00:30:27,960 Speaker 1: the possibility of tax reform, regulatory form, and there's last 529 00:30:27,960 --> 00:30:32,320 Speaker 1: week I testified and the Congress about possibility of monetary reform. 530 00:30:32,440 --> 00:30:34,959 Speaker 1: So it's it's it's good at this point, and I 531 00:30:35,000 --> 00:30:36,760 Speaker 1: think I just want to keep talking about that. Have 532 00:30:36,840 --> 00:30:40,120 Speaker 1: you testified at the Trump Tower or by telephone the 533 00:30:40,160 --> 00:30:44,240 Speaker 1: Trump Tower it was? Now I'm talking about testimony and 534 00:30:44,320 --> 00:30:48,080 Speaker 1: the House Financial Services Committee of the Monterrey Policy Committee, 535 00:30:48,120 --> 00:30:51,240 Speaker 1: which is a public for anybody to listen and including 536 00:30:51,560 --> 00:30:55,040 Speaker 1: people in the transition. Dr Taylor please comment on the 537 00:30:55,120 --> 00:30:58,760 Speaker 1: news that Lawrence Cudlow, formerly with bear Stearns and for 538 00:30:58,920 --> 00:31:01,960 Speaker 1: years visible and see NBC, that Larry Cudlow would be 539 00:31:02,080 --> 00:31:06,360 Speaker 1: a chairman of the President's Council of Economic Advisors. I 540 00:31:06,480 --> 00:31:08,959 Speaker 1: believe we go back to mc chesney Martin when there 541 00:31:09,080 --> 00:31:12,160 Speaker 1: was a a c E A had as a non PhD. 542 00:31:12,680 --> 00:31:16,800 Speaker 1: Is that a debate worth having or is Mr Cudlow qualified? Well? 543 00:31:17,360 --> 00:31:21,840 Speaker 1: Larry has been so outspoken in and good about taxtually 544 00:31:21,920 --> 00:31:26,880 Speaker 1: form and regulatory re form, you know, good market based policies, 545 00:31:27,600 --> 00:31:30,720 Speaker 1: and I think that's important to have someone like Larry. 546 00:31:31,000 --> 00:31:35,320 Speaker 1: They're doing it so there's different ways for people to 547 00:31:36,440 --> 00:31:38,960 Speaker 1: be qualified for things. But I think that's a really 548 00:31:39,040 --> 00:31:42,680 Speaker 1: important aspect that he's he's been out there, he's he's 549 00:31:43,440 --> 00:31:47,680 Speaker 1: got these strong principles and uh and you'll hear about 550 00:31:47,720 --> 00:31:50,840 Speaker 1: those if he takes that job. I think Professor Taylor there, 551 00:31:50,880 --> 00:31:52,720 Speaker 1: Tom was was saying he doesn't want to trade the 552 00:31:52,720 --> 00:31:56,160 Speaker 1: palm trees for the potomac earlier and answer to your question, 553 00:31:56,280 --> 00:31:59,200 Speaker 1: he did that with courage during and after nine eleven 554 00:31:59,280 --> 00:32:02,920 Speaker 1: and deserved arrest out west. There you go, John Taylor, 555 00:32:03,000 --> 00:32:05,320 Speaker 1: You know, I talking about Larry Cutler here. I wonder 556 00:32:05,360 --> 00:32:07,040 Speaker 1: if if you could give us some sense of how 557 00:32:07,120 --> 00:32:09,480 Speaker 1: he might shape that role if he does get the position. 558 00:32:09,560 --> 00:32:11,479 Speaker 1: I think a lot of us know the term Council 559 00:32:11,480 --> 00:32:14,240 Speaker 1: of Economic Advisors, have some familiarity with it. But what 560 00:32:14,400 --> 00:32:16,520 Speaker 1: what power does that body within the White House have 561 00:32:16,680 --> 00:32:20,400 Speaker 1: to shape economic policy? Well, first of all, it's it's 562 00:32:20,440 --> 00:32:25,160 Speaker 1: in the law. Women Act created it, three member council, 563 00:32:25,320 --> 00:32:28,680 Speaker 1: and it's had influenced in different ways over the years 564 00:32:28,920 --> 00:32:30,520 Speaker 1: in Green Spain was the chair for a while, or 565 00:32:30,560 --> 00:32:33,120 Speaker 1: the Burns was a chair for a while, and it's 566 00:32:33,440 --> 00:32:37,360 Speaker 1: it's continued. There's more economists now in Washington there and 567 00:32:37,400 --> 00:32:41,400 Speaker 1: there was back when it was set up in but 568 00:32:41,520 --> 00:32:44,000 Speaker 1: it's still very important. It is important for it to 569 00:32:44,080 --> 00:32:47,840 Speaker 1: have a good objective economic advice. It's not wedded to 570 00:32:47,920 --> 00:32:51,280 Speaker 1: a particular whether it's labor or business. It's really talking 571 00:32:51,320 --> 00:32:55,080 Speaker 1: about the good reasons to have a good economic policy. 572 00:32:55,120 --> 00:32:58,680 Speaker 1: So it is important and the president listens. You mentioned 573 00:32:58,720 --> 00:33:01,880 Speaker 1: that testimony that you gave before the Subcommittee on Monetary 574 00:33:01,920 --> 00:33:05,080 Speaker 1: Policy and Trade for the Committee on Financial Services at 575 00:33:05,120 --> 00:33:08,200 Speaker 1: the House. What what does a more transparent FED look 576 00:33:08,280 --> 00:33:10,400 Speaker 1: like to you? We can talk about your rule and 577 00:33:10,480 --> 00:33:13,120 Speaker 1: rules based fed FED reserve here in a minute, but 578 00:33:13,480 --> 00:33:15,640 Speaker 1: how more transparent should this FED get? What would that 579 00:33:15,680 --> 00:33:18,960 Speaker 1: transparency look like? Well, the main thing is for them 580 00:33:19,000 --> 00:33:22,920 Speaker 1: to outline their strategy. Sometimes it's called rule, but strategy 581 00:33:22,960 --> 00:33:25,800 Speaker 1: is a better word for setting the policy instrument the 582 00:33:25,880 --> 00:33:29,640 Speaker 1: interest rate. They do some of that internally. They simulate 583 00:33:29,840 --> 00:33:33,720 Speaker 1: and talk about policy rules, including the tailor rule, but 584 00:33:33,840 --> 00:33:35,920 Speaker 1: others as well. So the main thing is to be 585 00:33:36,080 --> 00:33:38,640 Speaker 1: transparent about that and that's really what some of the 586 00:33:38,720 --> 00:33:41,880 Speaker 1: legislation is asking to do. It. The FEDS job to 587 00:33:42,000 --> 00:33:48,080 Speaker 1: choose the strategy independent agency. But it is Professor and 588 00:33:48,240 --> 00:33:50,960 Speaker 1: pleased to tell you that the acclaimed tailor function on 589 00:33:51,040 --> 00:33:56,200 Speaker 1: the Bloomberg Professional Service now has an adjustment for policy inertia, 590 00:33:57,040 --> 00:34:00,560 Speaker 1: which is row times of previous federate plus one minus 591 00:34:00,680 --> 00:34:07,080 Speaker 1: row times John Taylor's Taylor estimate. This involves one, two, three, four, five, six, seven, 592 00:34:07,600 --> 00:34:11,000 Speaker 1: plug ins wandering over to a Phelpsie and the RU 593 00:34:11,160 --> 00:34:15,080 Speaker 1: minus unemployment on the right side of the equation. Professor 594 00:34:15,120 --> 00:34:17,960 Speaker 1: Taylor will be holding him pop quiz in our next segment, 595 00:34:18,400 --> 00:34:22,839 Speaker 1: David Gern Tom Keane with us John Taylor of Stanford University. 596 00:34:23,200 --> 00:34:25,560 Speaker 1: Professor Taylor, I know David wants to get back to 597 00:34:25,640 --> 00:34:29,000 Speaker 1: current events, but first I look at where we are, 598 00:34:29,160 --> 00:34:32,239 Speaker 1: where Chare Yelling is, where Governor Carney is, and we 599 00:34:32,400 --> 00:34:35,040 Speaker 1: fold into the world of John Taylor what we saw 600 00:34:35,560 --> 00:34:38,759 Speaker 1: from the late Thomas Shelling of Harvard and Maryland. I 601 00:34:38,880 --> 00:34:42,200 Speaker 1: go back to the Strategy of Conflict nineteen sixty Tom 602 00:34:42,320 --> 00:34:45,960 Speaker 1: Shelling and the idea within his early part of that 603 00:34:46,160 --> 00:34:52,399 Speaker 1: classic enforcement communication in strategic moves. Now the Taylor rule 604 00:34:52,800 --> 00:34:56,000 Speaker 1: and monetary theory. Isn't the courage at Tom shelling head 605 00:34:56,360 --> 00:34:59,759 Speaker 1: thinking about nuclear war. But when I look at enforcement 606 00:35:00,040 --> 00:35:04,760 Speaker 1: communication in strategic moves, what can we learn on rules 607 00:35:04,840 --> 00:35:09,480 Speaker 1: and discretion from UH Tom Shelling We can learn so 608 00:35:09,600 --> 00:35:14,200 Speaker 1: much about the commitment and about the predictability and so 609 00:35:14,480 --> 00:35:17,319 Speaker 1: you say what you're gonna do and follow through. Those 610 00:35:17,400 --> 00:35:22,520 Speaker 1: are very important lessons for monetary policymakers. It helps monetary 611 00:35:22,560 --> 00:35:26,120 Speaker 1: policy work more effectively. So I think it's important. It's 612 00:35:26,320 --> 00:35:30,239 Speaker 1: I look Professor Taylor at UH. The theories that are 613 00:35:30,320 --> 00:35:32,840 Speaker 1: out there now, and I would suggest from the media 614 00:35:33,520 --> 00:35:36,600 Speaker 1: and from all of our listeners were almost exhausted by 615 00:35:36,719 --> 00:35:40,640 Speaker 1: too much messaging is part of a shift away from 616 00:35:40,719 --> 00:35:46,680 Speaker 1: discretion towards the tailor FED rules less communication. I think, 617 00:35:46,760 --> 00:35:49,560 Speaker 1: what's the advantage of us having a strategy a rule. 618 00:35:49,640 --> 00:35:51,279 Speaker 1: You don't have to keep talking about it all the 619 00:35:51,360 --> 00:35:54,840 Speaker 1: time people begin to understand it. When Paul Wolker was 620 00:35:54,920 --> 00:35:56,879 Speaker 1: at the FED, he would go to the Jackson Old 621 00:35:56,880 --> 00:35:58,720 Speaker 1: meetings and wouldn't have to say much at all because 622 00:35:58,719 --> 00:36:01,359 Speaker 1: people kind of knew the policy. So I think you're right, Tom, 623 00:36:01,400 --> 00:36:05,399 Speaker 1: there's now there's so much talk it actually can reduce transparency, 624 00:36:07,200 --> 00:36:10,440 Speaker 1: Professor Taylor. The phone rings at the top of Hoover Tower. 625 00:36:11,760 --> 00:36:13,960 Speaker 1: It is one Donald Trump calling from what I assume 626 00:36:14,040 --> 00:36:16,359 Speaker 1: is a guilded phone on the floor of Trump Tower 627 00:36:16,400 --> 00:36:18,960 Speaker 1: here in New York. He should ask me. John Shauvin 628 00:36:19,000 --> 00:36:21,360 Speaker 1: has made sure that Professor Taylor will pick up a 629 00:36:21,400 --> 00:36:24,879 Speaker 1: gilded phone. There you go in Stanford Palla Alto. He's 630 00:36:24,920 --> 00:36:27,480 Speaker 1: got your number, he says, Professor Taylor. We have some 631 00:36:27,560 --> 00:36:29,520 Speaker 1: office space for you in the Equals Building. We'd like 632 00:36:29,560 --> 00:36:31,080 Speaker 1: you to sit at the head of the table. What 633 00:36:31,160 --> 00:36:34,560 Speaker 1: do you say this kind of you know again, just 634 00:36:34,880 --> 00:36:37,880 Speaker 1: answering Tom and you a little bit. What's important to 635 00:36:37,920 --> 00:36:41,399 Speaker 1: me is a good monetary policy, and so I write 636 00:36:41,400 --> 00:36:43,760 Speaker 1: about it, I talked about it. And there's always rumors 637 00:36:43,960 --> 00:36:46,960 Speaker 1: like this and always questions like this. But you know, seriously, 638 00:36:47,640 --> 00:36:51,080 Speaker 1: we have opportunities now I think that we hadn't had 639 00:36:51,160 --> 00:36:56,160 Speaker 1: before for some of the reforms that would avoid some 640 00:36:56,320 --> 00:36:58,839 Speaker 1: of the very serious problems we had in the Great 641 00:36:58,880 --> 00:37:02,360 Speaker 1: Recession and slow recovery. And that's what I want to 642 00:37:02,400 --> 00:37:04,560 Speaker 1: be focused on. Really. Well, if that's the case, let's 643 00:37:04,560 --> 00:37:08,680 Speaker 1: go there. Have you advised the transition team or the 644 00:37:08,800 --> 00:37:12,879 Speaker 1: President elect on appropriate names to be these governors, these 645 00:37:13,000 --> 00:37:17,640 Speaker 1: empty seats of governors all of us. Professor Taylor can agree, 646 00:37:17,719 --> 00:37:21,560 Speaker 1: that is most unfortunate. Yeah, I think they're going to 647 00:37:21,640 --> 00:37:24,400 Speaker 1: go ahead and uh fill these positions, a lot of 648 00:37:24,480 --> 00:37:28,279 Speaker 1: oak positions that have occurred because of the difficulty of 649 00:37:28,360 --> 00:37:30,640 Speaker 1: confirmation in agreement. I hope that we get past that. 650 00:37:31,120 --> 00:37:33,440 Speaker 1: I think there's a sort of reform on personnel and 651 00:37:34,040 --> 00:37:36,359 Speaker 1: how the White House is going to work. But it's 652 00:37:36,440 --> 00:37:39,040 Speaker 1: very important to do that. And uh, you know, the 653 00:37:39,160 --> 00:37:44,160 Speaker 1: principles of Monterrey policy are are there. It's it's not science, 654 00:37:44,239 --> 00:37:46,759 Speaker 1: but it's pretty well understood. Professor Taylor. I just want 655 00:37:46,800 --> 00:37:49,120 Speaker 1: to tell you people are listening. Coast to Coast. Rachel 656 00:37:49,160 --> 00:37:52,520 Speaker 1: from Lafya, Indiana emails in and says Professor Taylor is 657 00:37:52,560 --> 00:37:56,200 Speaker 1: not telling you anything about his future. I just want 658 00:37:56,280 --> 00:37:58,880 Speaker 1: you to know they're listening. Nick Coast to Coast, Professor 659 00:37:59,040 --> 00:38:05,759 Speaker 1: David rules, rules based policy. That's what I'm saying. Talk 660 00:38:05,800 --> 00:38:08,440 Speaker 1: about the path forward for reform here. You've testified, as 661 00:38:08,480 --> 00:38:12,120 Speaker 1: you said on Capitol Hill. People are talking more about this. 662 00:38:12,640 --> 00:38:15,360 Speaker 1: Do you see this as being at all collaborative between 663 00:38:15,440 --> 00:38:18,400 Speaker 1: Fed policymakers and and Congress In other words, Would it 664 00:38:18,440 --> 00:38:20,960 Speaker 1: be more palatable these reforms if there were if there 665 00:38:21,000 --> 00:38:23,480 Speaker 1: were more of a dialogue, more conversation between the Fed 666 00:38:23,560 --> 00:38:28,560 Speaker 1: and Capitol him. Absolutely, it's very important, and previous reforms 667 00:38:28,600 --> 00:38:32,160 Speaker 1: were that way. Actually, it's not uncommon for the Fed 668 00:38:32,280 --> 00:38:34,879 Speaker 1: to be resistant at the beginning, but then to say 669 00:38:35,040 --> 00:38:38,520 Speaker 1: this makes sense and then work with the legislative language 670 00:38:39,200 --> 00:38:41,520 Speaker 1: as something works. So I'm hopeful that will happen. I 671 00:38:41,600 --> 00:38:43,480 Speaker 1: think it's it's a very important part of how these 672 00:38:43,520 --> 00:38:46,840 Speaker 1: things get done. How have you amended and this is Fisher, 673 00:38:46,920 --> 00:38:50,400 Speaker 1: Phelps and Taylor all combined together, ages ago, How do 674 00:38:50,480 --> 00:38:56,000 Speaker 1: you amend Professor Taylor? Sticky wages and sticky prices? After 675 00:38:56,160 --> 00:38:59,760 Speaker 1: our great distortion in the financial repression we've all enjoyed? 676 00:39:00,560 --> 00:39:04,640 Speaker 1: Is the stickiness of those two important things? Is your 677 00:39:04,719 --> 00:39:10,040 Speaker 1: interpretation of it changed? I think those kinds of rigidities, 678 00:39:10,080 --> 00:39:13,360 Speaker 1: if you like, or institutional features are there. They change, 679 00:39:13,400 --> 00:39:16,000 Speaker 1: and you know you've got prices set on The Internet 680 00:39:16,239 --> 00:39:20,120 Speaker 1: goes very quickly. But but it's actually there's some commonalities. 681 00:39:20,360 --> 00:39:22,200 Speaker 1: I just did a paper for this new Handbook of 682 00:39:22,280 --> 00:39:27,200 Speaker 1: Macroeconomics that chased the development of these ideas, and they're 683 00:39:27,239 --> 00:39:30,120 Speaker 1: hanging together quite well. Are they modified with the change 684 00:39:30,160 --> 00:39:33,040 Speaker 1: in technology, But it's pretty remarkable how long they've been. 685 00:39:33,120 --> 00:39:35,960 Speaker 1: They've been going long, stained power. So if I go 686 00:39:36,080 --> 00:39:39,600 Speaker 1: to your to keep the shameless plug going, Professor Taylor, 687 00:39:40,160 --> 00:39:43,600 Speaker 1: if I go to your Economics one blog and folks, 688 00:39:43,680 --> 00:39:46,200 Speaker 1: I just sent out a World Cup in the Battle 689 00:39:46,239 --> 00:39:49,520 Speaker 1: of Ideas Bruno Meyer, Harold James, and Jean Pierre Londe, 690 00:39:49,680 --> 00:39:53,319 Speaker 1: which is a fabulous book. We interviewed Professor brune Meyer. Uh, 691 00:39:54,280 --> 00:39:56,960 Speaker 1: Professor Taylor of Princeton on that that's a school in 692 00:39:56,960 --> 00:40:01,680 Speaker 1: New Jersey. By the way, professor, but here you're flogging 693 00:40:01,800 --> 00:40:04,759 Speaker 1: a two volume book. Now tell us about your new 694 00:40:04,880 --> 00:40:08,960 Speaker 1: handbook of Macroeconomics. Well, it's great, there's lots of pages, 695 00:40:09,160 --> 00:40:13,319 Speaker 1: is a total of step having seventy two contributors. It's 696 00:40:13,880 --> 00:40:18,200 Speaker 1: really the state of thinking on macroeconomics. Uh, it's heavy 697 00:40:18,239 --> 00:40:20,239 Speaker 1: going for lots of people. Are you're gonna warn about 698 00:40:20,280 --> 00:40:22,880 Speaker 1: the map, that's for sure, But you know it's people 699 00:40:22,960 --> 00:40:26,759 Speaker 1: like Ed Prescott and Larce Hansen and Marcus Brunemeyer for 700 00:40:26,840 --> 00:40:29,640 Speaker 1: that matter, who have contributed a lot of time and 701 00:40:29,719 --> 00:40:33,160 Speaker 1: effort to put forth what their view is of things 702 00:40:33,200 --> 00:40:35,359 Speaker 1: that I think people be surprised. It's you know, there's 703 00:40:35,400 --> 00:40:37,680 Speaker 1: been work going on before the crisis, since the crisis, 704 00:40:38,440 --> 00:40:41,600 Speaker 1: and it's it's progress, real progress. We'll get it out. 705 00:40:41,680 --> 00:40:43,960 Speaker 1: Thank you so much, Professor Taylor. Thank you so much 706 00:40:44,040 --> 00:40:49,920 Speaker 1: for not answering our questions today. Taylor teaches, he teaches 707 00:40:50,080 --> 00:40:53,880 Speaker 1: at Stanford University, and Frankie teaches all of us as well. 708 00:40:53,880 --> 00:40:57,000 Speaker 1: I particularly enjoyed his comments on Mr Cudlum. I think 709 00:40:57,080 --> 00:40:59,200 Speaker 1: that's sort of in the weekend sitgeist. If you would, 710 00:41:06,600 --> 00:41:10,800 Speaker 1: thanks for listening to the Bloomberg Surveillance podcast. Subscribe and 711 00:41:11,040 --> 00:41:16,080 Speaker 1: listen to interviews on iTunes, SoundCloud, or whichever podcast platform 712 00:41:16,200 --> 00:41:19,719 Speaker 1: you prefer. I'm out on Twitter at Tom Keene. David 713 00:41:19,800 --> 00:41:23,440 Speaker 1: Gura is at David Gura. Before the podcast, you can 714 00:41:23,600 --> 00:41:39,680 Speaker 1: always catch us worldwide on Bloomberg Radio. Who you Put 715 00:41:39,760 --> 00:41:42,680 Speaker 1: your Trust in matters Investors have put their trust and 716 00:41:42,880 --> 00:41:47,480 Speaker 1: independent registered investment advisors to the two and four trillion dollars. 717 00:41:47,640 --> 00:41:52,120 Speaker 1: Why Learn more at find your Independent Advisor dot com.