1 00:00:00,080 --> 00:00:13,040 Speaker 1: Ye, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. 2 00:00:13,480 --> 00:00:17,560 Speaker 1: Daily we bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,480 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,600 --> 00:00:34,319 Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. The 5 00:00:34,320 --> 00:00:36,960 Speaker 1: thing that was interesting, and you I thought were really 6 00:00:37,000 --> 00:00:41,520 Speaker 1: on top of this was who will run the United Kingdom? 7 00:00:41,560 --> 00:00:44,559 Speaker 1: I mean, there's this whole pregnant issue of the when 8 00:00:44,680 --> 00:00:47,400 Speaker 1: of it and the who of it. I couldn't get 9 00:00:47,400 --> 00:00:50,680 Speaker 1: it now, I couldn't get a straight answer. And this 10 00:00:50,760 --> 00:00:53,800 Speaker 1: goes to the tension that Gideon Rose tries to find 11 00:00:53,800 --> 00:00:56,320 Speaker 1: in Foreign Affairs Magazine is all of you know, I'm 12 00:00:56,360 --> 00:01:00,160 Speaker 1: a huge fan of a print subscription too. Were in 13 00:01:00,400 --> 00:01:03,600 Speaker 1: fairs you throw it at every smart mouth college graduate 14 00:01:03,640 --> 00:01:05,880 Speaker 1: and says, shut up and read this, Gideon, who will 15 00:01:05,959 --> 00:01:08,600 Speaker 1: run the world? What did you find out? Well? Uh, 16 00:01:08,640 --> 00:01:10,560 Speaker 1: the it's an interesting question. And what I will say 17 00:01:10,680 --> 00:01:13,440 Speaker 1: is there's a big debate going on UM and it's 18 00:01:13,480 --> 00:01:17,080 Speaker 1: not just about whether China will overtake the US. It's 19 00:01:17,240 --> 00:01:20,360 Speaker 1: if the US UH can get its act together to 20 00:01:21,440 --> 00:01:26,600 Speaker 1: desire and reinvigorate its international leadership and there's everything there 21 00:01:26,840 --> 00:01:29,040 Speaker 1: from somebody who says the fight is over, China has 22 00:01:29,160 --> 00:01:33,440 Speaker 1: one to arguments saying no, the United States can reinvigorate 23 00:01:33,520 --> 00:01:36,720 Speaker 1: the liberal international order post Trump and keep it going, 24 00:01:37,200 --> 00:01:39,600 Speaker 1: and not all of us can be right. And the 25 00:01:39,680 --> 00:01:42,880 Speaker 1: really interesting question is, like those year end summaries about 26 00:01:42,880 --> 00:01:44,920 Speaker 1: what the market's gonna do, all you can do is 27 00:01:44,920 --> 00:01:47,440 Speaker 1: look at the logic and try past predictions or no, 28 00:01:47,680 --> 00:01:50,720 Speaker 1: and performance is no guarantee of future results. What's going 29 00:01:50,760 --> 00:01:53,680 Speaker 1: to happen in the forward looking balance of power? Is 30 00:01:53,800 --> 00:01:56,520 Speaker 1: anybody's game? Well, Gideon, I always think it's valuable to 31 00:01:56,560 --> 00:01:59,720 Speaker 1: talk to you into a distinction between ability and willingness. 32 00:01:59,840 --> 00:02:02,040 Speaker 1: The discussion that we often have about China and leading 33 00:02:02,040 --> 00:02:03,840 Speaker 1: the world, it's about their ability to do so. Do 34 00:02:03,920 --> 00:02:06,720 Speaker 1: they have the willingness to take a global leadership role? 35 00:02:07,160 --> 00:02:10,200 Speaker 1: Um no, Yes and no. So the interest that there's 36 00:02:10,240 --> 00:02:14,360 Speaker 1: a fascinating piece in the issue by um orienta mastro 37 00:02:14,720 --> 00:02:18,800 Speaker 1: American China expert arguing that what China is going for 38 00:02:19,000 --> 00:02:23,680 Speaker 1: and has already largely achieved, is essentially exclusive dominance in 39 00:02:23,680 --> 00:02:27,320 Speaker 1: its sphere in Asia and a contestation with the US 40 00:02:27,400 --> 00:02:31,919 Speaker 1: for global uh leadership and power. More there and so 41 00:02:32,200 --> 00:02:36,640 Speaker 1: the uh, they're playing a regional game and a domestic 42 00:02:36,680 --> 00:02:40,280 Speaker 1: economic and economic growth game as well as a global 43 00:02:40,320 --> 00:02:43,480 Speaker 1: leadership game. But in something like strategic affairs, they war 44 00:02:43,560 --> 00:02:45,960 Speaker 1: want to push us out of the Pacific than organize 45 00:02:45,960 --> 00:02:47,760 Speaker 1: an entire Okay, it just goes in my book of 46 00:02:47,800 --> 00:02:50,520 Speaker 1: the Summer, Robert Cappel and the Return of Marco Polo's World. 47 00:02:50,520 --> 00:02:53,360 Speaker 1: And one of your advertisers and foreign affairs is stravits 48 00:02:53,440 --> 00:02:56,760 Speaker 1: is Fletcher School as well. What's the Gideon Rose scorecard 49 00:02:57,120 --> 00:03:00,840 Speaker 1: on the South China Sea? Is it China one US zero? 50 00:03:01,000 --> 00:03:04,480 Speaker 1: This year? Uh, there's no question. Well, things are drifting 51 00:03:04,520 --> 00:03:08,359 Speaker 1: in China's favor. Essentially the United States with Brexit and Trump, 52 00:03:08,560 --> 00:03:11,239 Speaker 1: the anglosphere is taking itself out of the geopolitical game 53 00:03:11,440 --> 00:03:15,480 Speaker 1: and so essentially, uh, the normal operations of global order 54 00:03:15,520 --> 00:03:19,480 Speaker 1: maintenance continue, but nobody believes that anymore because the United 55 00:03:19,480 --> 00:03:21,480 Speaker 1: States really doesn't have his heart in it. But China 56 00:03:21,600 --> 00:03:25,000 Speaker 1: isn't actually taking advantage to make new moves forward, and 57 00:03:25,040 --> 00:03:28,360 Speaker 1: they're obviously weak and have been pushed back because of 58 00:03:28,360 --> 00:03:30,760 Speaker 1: the trade policies. The question is what's gonna happen next? 59 00:03:31,080 --> 00:03:34,960 Speaker 1: And that's anybody's investador Hosses. In the issue, Greg Mankeew 60 00:03:34,960 --> 00:03:37,920 Speaker 1: of Harvard Allen Blind to the former vice chairman at Princeton, 61 00:03:38,000 --> 00:03:40,120 Speaker 1: I'm gonna go to Senate Warren. Good Morning one or 62 00:03:40,120 --> 00:03:44,080 Speaker 1: six one FM Boston. Elizabeth Warren's strengthening democracy at home 63 00:03:44,120 --> 00:03:46,920 Speaker 1: and abroad, and she says the urgency of the moment 64 00:03:47,200 --> 00:03:49,840 Speaker 1: could not be overstated. It sounds like she's running for office. 65 00:03:49,840 --> 00:03:53,600 Speaker 1: So you can't have any other candidates. We would love 66 00:03:53,640 --> 00:03:56,000 Speaker 1: to feature all the major candidates in the next cycle. 67 00:03:56,040 --> 00:03:59,839 Speaker 1: We've already had. We've had John kay sick in, we've 68 00:03:59,880 --> 00:04:03,000 Speaker 1: had the president. What is a president written in? I 69 00:04:03,120 --> 00:04:06,320 Speaker 1: say for you, the president has not um a Secretary Pompeo, 70 00:04:06,800 --> 00:04:08,760 Speaker 1: where we love to have the administration and we we 71 00:04:08,800 --> 00:04:11,640 Speaker 1: pride ourselves on being open to all voices. Uh. And 72 00:04:11,680 --> 00:04:14,960 Speaker 1: we've had a Secretary Pompeo in last issue. So uh. 73 00:04:15,000 --> 00:04:17,400 Speaker 1: And we want the Republican candidates as well as the 74 00:04:17,440 --> 00:04:20,840 Speaker 1: democratic ones. Democracy is the new inWORD. You know, it's 75 00:04:20,880 --> 00:04:24,560 Speaker 1: like we're taking a journey. Okay, we're doing democracy. What 76 00:04:24,600 --> 00:04:26,800 Speaker 1: does democracy mean to Gideon Rose, Well, that's a great 77 00:04:26,839 --> 00:04:29,920 Speaker 1: question because there's no as people have been pointing out 78 00:04:29,960 --> 00:04:34,760 Speaker 1: in many respects, the populist movements are majoritarian democratic movements. 79 00:04:34,800 --> 00:04:37,640 Speaker 1: There's a real sense in many of the countries we're 80 00:04:37,640 --> 00:04:41,679 Speaker 1: talking about, from from Turkey and Russia all the way 81 00:04:41,720 --> 00:04:44,839 Speaker 1: to Eastern Europe and elsewhere. There's no question that there's 82 00:04:44,880 --> 00:04:47,640 Speaker 1: a lot of popular support for certain kinds of policies. 83 00:04:47,680 --> 00:04:50,760 Speaker 1: But that doesn't necessarily mean that the liberal democracy and 84 00:04:50,839 --> 00:04:53,160 Speaker 1: the rule of law and some of the things that 85 00:04:53,200 --> 00:04:57,320 Speaker 1: we think beyond simple majoritarian You get to decide what happens. 86 00:04:57,560 --> 00:04:59,840 Speaker 1: That stuff is under threat, and the really interesting question 87 00:05:00,160 --> 00:05:03,480 Speaker 1: forward is whether not democracy will succeed, but will liberal 88 00:05:03,520 --> 00:05:06,960 Speaker 1: democracy succeed? Gideon Rose, thank you so much, John Say 89 00:05:07,040 --> 00:05:09,279 Speaker 1: thirties six percent. You know they've got these little things 90 00:05:09,320 --> 00:05:12,040 Speaker 1: in the magazine, and the answer is for the price 91 00:05:12,080 --> 00:05:16,160 Speaker 1: of one point three six beverages of your choice at 92 00:05:16,279 --> 00:05:21,279 Speaker 1: Hemmingways at the in Paris, you you just get in 93 00:05:22,000 --> 00:05:26,520 Speaker 1: brilliance for Christmas? Is that think you know, human well, 94 00:05:26,560 --> 00:05:30,280 Speaker 1: that Bill's already got one you're going to get would 95 00:05:30,279 --> 00:05:31,560 Speaker 1: be that it's a small price to pay not just 96 00:05:31,600 --> 00:05:34,560 Speaker 1: for new information, but rather for the context that allows 97 00:05:34,560 --> 00:05:37,000 Speaker 1: you to organize the information you actually have. You got 98 00:05:37,040 --> 00:05:39,200 Speaker 1: a ton of data all the way through your terminals 99 00:05:39,200 --> 00:05:41,640 Speaker 1: through everything, and what we provide is a way to 100 00:05:41,680 --> 00:05:45,359 Speaker 1: contextualize that and fit all the data into some pattern 101 00:05:45,400 --> 00:05:52,200 Speaker 1: that is intellectually I think, yes, Gideon, Gideon, the Foreign 102 00:05:52,240 --> 00:05:56,320 Speaker 1: Affairs is thick and heavy. You throw it at the 103 00:05:56,360 --> 00:05:59,400 Speaker 1: smart mouth college kid and say shut up and read this. 104 00:05:59,520 --> 00:06:01,440 Speaker 1: So I actually have one of those smart math college 105 00:06:01,520 --> 00:06:04,760 Speaker 1: kids myself this year, and so I wrote the lead 106 00:06:04,800 --> 00:06:06,800 Speaker 1: issue because I felt like I needed to do the 107 00:06:06,800 --> 00:06:09,440 Speaker 1: next generation what to think, and I wasn't sure that 108 00:06:09,440 --> 00:06:10,800 Speaker 1: anybody else could do it. So I went out and 109 00:06:10,800 --> 00:06:13,800 Speaker 1: did it to my college kids son in the pages 110 00:06:13,839 --> 00:06:16,159 Speaker 1: of n Affairs. Gieon Roal, thank you so much. Foreign 111 00:06:16,160 --> 00:06:34,160 Speaker 1: Affairs at Magazine don't leave home without it. It's not 112 00:06:34,320 --> 00:06:37,159 Speaker 1: Joining us for a quick chat from London and Retail. 113 00:06:37,279 --> 00:06:40,799 Speaker 1: Andrew felstaed Uh joins us. Andrew, good morning. Your article 114 00:06:40,880 --> 00:06:44,400 Speaker 1: this morning is on the crushing disappointments of Brexit United 115 00:06:44,480 --> 00:06:48,760 Speaker 1: Kingdom Retail. Can you take it worldwide? Well? The interesting 116 00:06:48,920 --> 00:06:51,880 Speaker 1: thing was, I mean we were all expecting Christmas to 117 00:06:51,880 --> 00:06:54,359 Speaker 1: be bad in the UK because of the uncertainty of 118 00:06:54,360 --> 00:06:59,120 Speaker 1: a Brexit, asas also mentioned France and Germany and said, um, 119 00:06:59,120 --> 00:07:03,000 Speaker 1: things were quite tough there too. Well, things are quite 120 00:07:03,000 --> 00:07:06,640 Speaker 1: tough there too. I mean these are these are real drops, 121 00:07:06,800 --> 00:07:08,800 Speaker 1: aren't they. I mean, there's no other way to put it, 122 00:07:09,760 --> 00:07:13,720 Speaker 1: that's right. I mean we were all expecting, you know, 123 00:07:13,800 --> 00:07:18,560 Speaker 1: Christmas to be taff and Germany had quite a poor 124 00:07:18,920 --> 00:07:22,040 Speaker 1: autumn because it had really unseasonable weather. And I mean 125 00:07:22,080 --> 00:07:26,160 Speaker 1: retailers are always blaming the weather, but actually it does matter. 126 00:07:26,240 --> 00:07:29,480 Speaker 1: Because you have a hot spell in sort of September, Rocktome, 127 00:07:29,560 --> 00:07:31,560 Speaker 1: then no one actually wants to buy a coat coat. 128 00:07:31,680 --> 00:07:35,560 Speaker 1: So your high value items that you rely on bolstering 129 00:07:35,600 --> 00:07:38,080 Speaker 1: your profits, that's not happening. It's quite bad. New the 130 00:07:38,120 --> 00:07:40,239 Speaker 1: blur I saw. I mean, and I can't name Laura 131 00:07:40,280 --> 00:07:43,360 Speaker 1: Ashley since time begin with the X number of stores 132 00:07:43,400 --> 00:07:45,560 Speaker 1: are shutting down. I mean, come on, the one word 133 00:07:45,560 --> 00:07:49,440 Speaker 1: in your report, I mean Amazon is global and it's 134 00:07:49,480 --> 00:07:52,320 Speaker 1: beginning to have an effect across all retail, right, that's right. 135 00:07:52,320 --> 00:07:55,240 Speaker 1: But don't forget that a sauces online too. So if 136 00:07:55,280 --> 00:07:59,560 Speaker 1: anybody was supposed to be well set up to compete 137 00:07:59,600 --> 00:08:02,400 Speaker 1: with ours, and it's as Nasals often been touted as 138 00:08:02,440 --> 00:08:06,240 Speaker 1: an Amazon acquisition target because one thing that Amazon hasn't 139 00:08:06,240 --> 00:08:09,000 Speaker 1: really got right is fashion and whatever you say about 140 00:08:09,000 --> 00:08:12,080 Speaker 1: as it has got fashion right for the young shopper, 141 00:08:12,880 --> 00:08:14,600 Speaker 1: well are they going to take I mean it's they're 142 00:08:14,680 --> 00:08:18,400 Speaker 1: enjoying it. Our shares on sale today it reduced, I 143 00:08:18,400 --> 00:08:21,880 Speaker 1: mean exactly. I mean, are you announcing the effect of 144 00:08:21,920 --> 00:08:27,239 Speaker 1: this transaction? No? No, no, but but but Asace should 145 00:08:27,400 --> 00:08:30,760 Speaker 1: be a challenger to Amazon, the challenger for me is 146 00:08:30,800 --> 00:08:33,720 Speaker 1: your from me. He throw on, you're driving in and 147 00:08:33,760 --> 00:08:36,080 Speaker 1: they're on the right side as you quietly got by 148 00:08:36,200 --> 00:08:39,079 Speaker 1: his Herod's. And then there's Harvey Nichols and the rest 149 00:08:39,080 --> 00:08:42,240 Speaker 1: of it. What's the state of fancy London shopping? That's 150 00:08:42,240 --> 00:08:46,160 Speaker 1: so many of our listeners are aware of. Fancy London 151 00:08:46,200 --> 00:08:49,439 Speaker 1: shopping is doing pretty well because the pound is still weak, 152 00:08:49,520 --> 00:08:52,280 Speaker 1: We've still got lots of travelers. A fancy London shopping 153 00:08:52,320 --> 00:08:56,520 Speaker 1: shouldn't have any problem, and neither really should bargain basement 154 00:08:56,600 --> 00:08:59,480 Speaker 1: London shopping. You know, when we spend we all want 155 00:08:59,520 --> 00:09:03,040 Speaker 1: to barking. Where there is real trouble is this mid 156 00:09:03,120 --> 00:09:07,640 Speaker 1: market where they're not cheap and they're also not aspirational. 157 00:09:08,200 --> 00:09:10,319 Speaker 1: That's where the real trouble is. But I think fancy 158 00:09:10,360 --> 00:09:12,960 Speaker 1: London shopping no problem. Let me bring in my colleague 159 00:09:13,120 --> 00:09:16,640 Speaker 1: PIMPM and it's a real retail turm wail, whether it's 160 00:09:17,000 --> 00:09:18,640 Speaker 1: UK or here. Yeah. Well, I was just going to 161 00:09:18,760 --> 00:09:21,960 Speaker 1: go through the list of retailers that have actually shuttered 162 00:09:22,000 --> 00:09:25,320 Speaker 1: some of their operations. Debenham's, House of Phraser, Home Base, 163 00:09:25,720 --> 00:09:28,920 Speaker 1: Marks and Spencer New Look, John Lewis Patissary, Valerie, and 164 00:09:28,960 --> 00:09:31,920 Speaker 1: of course all the Toys r Us stores were forced 165 00:09:31,920 --> 00:09:34,880 Speaker 1: to close because of that. And I'm just wondering, does 166 00:09:34,920 --> 00:09:37,360 Speaker 1: this mean that there's going to be an excess of 167 00:09:37,440 --> 00:09:40,920 Speaker 1: real estate coming on the market. Yes, there will be. 168 00:09:40,960 --> 00:09:43,040 Speaker 1: The I mean the other thing, all those shops closing, 169 00:09:43,080 --> 00:09:46,120 Speaker 1: all things being equal, they should have started to benefit 170 00:09:46,240 --> 00:09:48,120 Speaker 1: the ones that are left. You get a last man 171 00:09:48,240 --> 00:09:51,680 Speaker 1: standing effect. But you know, the uncertainty over Brexit has 172 00:09:51,720 --> 00:09:54,840 Speaker 1: really overshadowed that, and it's also overshadowed the fact that 173 00:09:54,840 --> 00:09:57,520 Speaker 1: people actually have more money in their pocket. The fundamental 174 00:09:57,600 --> 00:10:00,560 Speaker 1: was a good it's just everybody's worried. You know, they 175 00:10:00,960 --> 00:10:03,800 Speaker 1: stopped spending because they're worried what's going to happen in March. 176 00:10:04,240 --> 00:10:06,600 Speaker 1: Do you believe also that there's gonna be a clamor 177 00:10:06,679 --> 00:10:09,080 Speaker 1: for staffing because many of the people that work in 178 00:10:09,240 --> 00:10:11,760 Speaker 1: retail and in many of those kinds of jobs on 179 00:10:11,800 --> 00:10:14,640 Speaker 1: the high Street, and indeed in logistics and so on. 180 00:10:14,880 --> 00:10:20,240 Speaker 1: They come from countries outside the United Kingdom. That is 181 00:10:20,320 --> 00:10:24,839 Speaker 1: certainly a problem that that retailers and and those restaurants 182 00:10:24,880 --> 00:10:27,400 Speaker 1: and coffee shops have all alluded to. So it depends 183 00:10:27,440 --> 00:10:30,920 Speaker 1: what happens in March, really, and also we've learned that drivers, 184 00:10:30,960 --> 00:10:32,920 Speaker 1: you know, just people that are driving the lorries the 185 00:10:33,000 --> 00:10:37,080 Speaker 1: trucks throughout the the United Kingdom, that there is a 186 00:10:37,160 --> 00:10:43,360 Speaker 1: shortage of over fifty thousand drivers because recruiters, well, new 187 00:10:43,360 --> 00:10:45,440 Speaker 1: immigration rules are going to make it more difficult for 188 00:10:45,480 --> 00:10:48,360 Speaker 1: them to get those people. And that's going to hit online. 189 00:10:48,440 --> 00:10:51,920 Speaker 1: That's another challenge to online if if things can't be delivered. 190 00:10:52,320 --> 00:10:54,680 Speaker 1: Do you get the sense that people are spending money 191 00:10:54,720 --> 00:10:57,840 Speaker 1: in order to stock up on food and essential items? 192 00:10:57,840 --> 00:11:00,640 Speaker 1: Those are reports that we've heard in the news meeting, No, 193 00:11:00,800 --> 00:11:05,080 Speaker 1: not at all. I get the sense that everybody is worried. 194 00:11:05,160 --> 00:11:07,840 Speaker 1: It's it's a bit like sort of two thousand and eight, 195 00:11:07,880 --> 00:11:11,280 Speaker 1: really two thousand and nine, when everyone was worried about 196 00:11:11,280 --> 00:11:14,319 Speaker 1: the financial crisis on what was going to happen, and 197 00:11:14,360 --> 00:11:18,160 Speaker 1: they held off from spending. One retailer said to me, 198 00:11:18,280 --> 00:11:21,320 Speaker 1: it's as if somebody switched the lights off in October. 199 00:11:21,800 --> 00:11:26,720 Speaker 1: Everybody I talked to says October November has been very difficult. 200 00:11:26,760 --> 00:11:30,520 Speaker 1: This is this isn't some excuse for portraying that this 201 00:11:30,640 --> 00:11:33,080 Speaker 1: mood on the high street is real? Do you find 202 00:11:33,080 --> 00:11:37,439 Speaker 1: it also that inventory levels stark scarcity has also been 203 00:11:37,480 --> 00:11:39,600 Speaker 1: a factor that they just don't have enough on the 204 00:11:39,679 --> 00:11:43,679 Speaker 1: shelves because of these issues. Well, no, not because of Brexit. 205 00:11:43,840 --> 00:11:47,440 Speaker 1: I think some retailers have bought very tightly because you know, 206 00:11:47,840 --> 00:11:50,440 Speaker 1: they knew things were going to be pretty tough, so 207 00:11:50,520 --> 00:11:54,199 Speaker 1: they've bought quite tightly, and actually Marks and Spencers had 208 00:11:54,200 --> 00:11:57,040 Speaker 1: the opposite effect. They've actually they've struggled with their fashion 209 00:11:57,160 --> 00:11:59,199 Speaker 1: views and they had some great fashion this season and 210 00:11:59,280 --> 00:12:01,480 Speaker 1: probably is it in are enough of it? So they 211 00:12:01,559 --> 00:12:04,600 Speaker 1: did have some shortages of the great stuff that they had. 212 00:12:04,760 --> 00:12:07,880 Speaker 1: I can tell you scientifically at the Keen household, this 213 00:12:07,920 --> 00:12:11,360 Speaker 1: is a great comment. They're sold out of everything, not 214 00:12:11,679 --> 00:12:15,280 Speaker 1: enough things to spend. Because you're a retailer, there aren't 215 00:12:15,320 --> 00:12:19,120 Speaker 1: any prizes for overstocking. You know, these retailers kind of 216 00:12:19,160 --> 00:12:21,760 Speaker 1: monitor consumers many they know things are going to be tough, 217 00:12:21,840 --> 00:12:24,600 Speaker 1: so they think, you know what, I'll just order in 218 00:12:24,679 --> 00:12:29,960 Speaker 1: a bit less. What's gonna be the global the global losses? 219 00:12:30,000 --> 00:12:33,240 Speaker 1: I mean, can you judge yet the margin compression that 220 00:12:33,280 --> 00:12:36,600 Speaker 1: we're going to see? Um, not yet. I mean one 221 00:12:36,679 --> 00:12:39,880 Speaker 1: thing that we will see. I mean was saying they 222 00:12:39,960 --> 00:12:44,360 Speaker 1: did off on Black Friday and that wasn't deep enough. 223 00:12:44,440 --> 00:12:47,559 Speaker 1: Other people have been doing much bigger savings. So if 224 00:12:47,600 --> 00:12:51,440 Speaker 1: people are discounting like crazy, that means margins will be hit. 225 00:12:51,520 --> 00:12:54,120 Speaker 1: So we know that, Um, what we don't know is 226 00:12:54,120 --> 00:12:57,319 Speaker 1: the extent yet. I gotta say a source shares right now, 227 00:12:57,360 --> 00:13:04,000 Speaker 1: the online retail are down near to day. One thing 228 00:13:04,000 --> 00:13:06,200 Speaker 1: about a SOOCE is it it's always been quite a 229 00:13:06,400 --> 00:13:09,480 Speaker 1: strong It's always had quite strong growth. It's always been 230 00:13:09,520 --> 00:13:11,960 Speaker 1: a bit of a market favorite. So you know, when 231 00:13:12,000 --> 00:13:14,600 Speaker 1: you do have bad news from a company like that, 232 00:13:15,640 --> 00:13:18,719 Speaker 1: it does become compounded because people have been used to 233 00:13:18,760 --> 00:13:20,960 Speaker 1: them performing and they stopped performing, and so there's an 234 00:13:21,000 --> 00:13:23,920 Speaker 1: outside effect. So it was always bound to be a 235 00:13:23,960 --> 00:13:26,760 Speaker 1: big hit for them. Andrew Felster, thank you so much, 236 00:13:26,800 --> 00:13:29,360 Speaker 1: greatly appreciated today. What do you see in the stock market? 237 00:13:29,960 --> 00:13:31,600 Speaker 1: I see that this is going to be a pretty 238 00:13:31,640 --> 00:13:34,400 Speaker 1: quiet week. One of the big issues to talk about 239 00:13:34,440 --> 00:13:37,440 Speaker 1: initial public offerings and is there enough money in order 240 00:13:37,480 --> 00:13:40,720 Speaker 1: to soak up all of the new issues that are 241 00:13:40,760 --> 00:13:43,240 Speaker 1: either scheduled to go out between now and the end 242 00:13:43,240 --> 00:13:46,559 Speaker 1: of the year and coming up a lot of money. 243 00:13:46,640 --> 00:13:50,080 Speaker 1: What I find extraordinary is besides the FED meeting, we're 244 00:13:50,120 --> 00:13:53,040 Speaker 1: in a holiday mode. I get that, except I'm seeing 245 00:13:53,040 --> 00:13:56,520 Speaker 1: a tape deteriorates for the morning. We started out FED 246 00:13:56,640 --> 00:13:59,880 Speaker 1: dead and all of a sudden negative futures through to 247 00:14:00,360 --> 00:14:02,559 Speaker 1: yields you know, coming you know, we're just sort of 248 00:14:02,880 --> 00:14:06,360 Speaker 1: it's a new g market into the FED meeting. Well, 249 00:14:06,440 --> 00:14:08,760 Speaker 1: I mean, I think there's also the issue, as I said, 250 00:14:09,040 --> 00:14:11,760 Speaker 1: of cash. Right, unless there's new cash that comes into 251 00:14:11,800 --> 00:14:15,320 Speaker 1: the market, you don't see stock prices move higher. And 252 00:14:15,360 --> 00:14:17,680 Speaker 1: if you take a look at the flows, particularly the 253 00:14:17,720 --> 00:14:21,680 Speaker 1: equity flows, you've seen people come out out exactly where 254 00:14:21,720 --> 00:14:23,840 Speaker 1: are they going? Just going to cash and people either 255 00:14:23,960 --> 00:14:26,440 Speaker 1: cash maybe or people got to spend it things, you know, 256 00:14:26,520 --> 00:14:30,280 Speaker 1: Despite the CPI numbers that come out on a regular basis, 257 00:14:30,480 --> 00:14:33,320 Speaker 1: I find that people tell me things are more expensive. 258 00:14:33,320 --> 00:14:36,680 Speaker 1: Insurance is more expensive, utilities and more expensive. Taxes are 259 00:14:36,720 --> 00:14:39,520 Speaker 1: going up, and many people have not necessarily saved for 260 00:14:39,560 --> 00:14:41,600 Speaker 1: the tax bill. It's going to come in twenty nine 261 00:14:42,440 --> 00:14:45,080 Speaker 1: when they find out that they're not able to deduct 262 00:14:45,160 --> 00:14:47,480 Speaker 1: all those property tax Well, that's a very New York 263 00:14:47,520 --> 00:14:50,120 Speaker 1: City kind of thing. No, no, no, sir, This is 264 00:14:50,200 --> 00:14:54,120 Speaker 1: this is California, New Jersey, Canna. This is everywhere. What 265 00:14:54,240 --> 00:14:58,000 Speaker 1: I'm hearing is the mystery about taxes for this year 266 00:14:59,240 --> 00:15:03,520 Speaker 1: is permanent. Throughout every accounting practice, every single customer, every 267 00:15:03,560 --> 00:15:07,240 Speaker 1: walk of life is in the same panic about Okay, 268 00:15:07,280 --> 00:15:10,000 Speaker 1: what what are my taxes really gonna look like? Well, 269 00:15:10,040 --> 00:15:12,640 Speaker 1: and also you end up figuring out that you work 270 00:15:13,200 --> 00:15:16,160 Speaker 1: more than half the year in order to pay your taxes. 271 00:15:16,840 --> 00:15:32,640 Speaker 1: Very good our interview already on this Monday or interview 272 00:15:32,680 --> 00:15:34,360 Speaker 1: of the week, and I would say, what a wonderful 273 00:15:34,360 --> 00:15:37,280 Speaker 1: way to set up two thousand nineteen for all Americans. 274 00:15:37,840 --> 00:15:42,720 Speaker 1: He is Paul Romer, He is out of Colorado. He 275 00:15:43,040 --> 00:15:46,240 Speaker 1: is someone who did mathiness at Chicago and then I 276 00:15:46,320 --> 00:15:49,840 Speaker 1: went on to an extinguished career in economics at a 277 00:15:49,920 --> 00:15:53,520 Speaker 1: number of institutions and the Laurea Jones. I can't remember 278 00:15:53,560 --> 00:15:55,960 Speaker 1: if I've spoken to you some Stockholm in the blur, 279 00:15:56,760 --> 00:15:59,840 Speaker 1: I can't remember it. All, what was it like? Is 280 00:15:59,840 --> 00:16:02,400 Speaker 1: it young Turk to work with George acre Love? If 281 00:16:02,400 --> 00:16:04,480 Speaker 1: you wrote a paper he did a co write with 282 00:16:04,600 --> 00:16:08,360 Speaker 1: acre Love, were you trembling as you did this? No, George, 283 00:16:08,400 --> 00:16:11,920 Speaker 1: George is a very modest guy. And Mr Yell I 284 00:16:12,320 --> 00:16:14,280 Speaker 1: I love. Yeah, Harry's married to Janet, you know, and 285 00:16:14,360 --> 00:16:17,240 Speaker 1: that's right, um, and Janet's great too. But George is 286 00:16:17,760 --> 00:16:20,120 Speaker 1: very easy to work with and it was just a 287 00:16:20,200 --> 00:16:23,760 Speaker 1: joy to write that paper with him. You came out 288 00:16:23,800 --> 00:16:27,600 Speaker 1: of Chicago already known there for just a complete ability 289 00:16:27,680 --> 00:16:31,800 Speaker 1: to grab the Mathew Nous of economics, and more than 290 00:16:31,840 --> 00:16:35,400 Speaker 1: anyone I know, you've somewhat stayed away from it. Are 291 00:16:35,440 --> 00:16:38,040 Speaker 1: we at a better point in Matthew Nous now where 292 00:16:38,040 --> 00:16:41,720 Speaker 1: we're not slaves to the model? You remember when Harry 293 00:16:41,760 --> 00:16:44,360 Speaker 1: Truman was reputed to have said I wanted one armed 294 00:16:44,360 --> 00:16:46,560 Speaker 1: economists because he gets sick of this. Well, on the 295 00:16:46,600 --> 00:16:50,200 Speaker 1: one hand, this and the other hand that. Unfortunately, with math, 296 00:16:50,240 --> 00:16:54,440 Speaker 1: that's a two handed problem. Some math can be very helpful, 297 00:16:54,440 --> 00:16:57,840 Speaker 1: it can really clarify our understanding, but too much of it, 298 00:16:57,920 --> 00:17:01,920 Speaker 1: or Matthews the wrong way, can confuses, can exclude. And 299 00:17:02,000 --> 00:17:03,440 Speaker 1: so what we need to do is get to that 300 00:17:03,520 --> 00:17:06,280 Speaker 1: Goldilocks use of just the right amount of masks to 301 00:17:06,400 --> 00:17:08,640 Speaker 1: zoom in on the things we really need to understand. 302 00:17:08,760 --> 00:17:11,800 Speaker 1: I want to talk about the path from nifty seven. 303 00:17:11,800 --> 00:17:15,200 Speaker 1: I mean the folks on the Modern Ears seven Samuelson 304 00:17:15,960 --> 00:17:19,840 Speaker 1: textbook The Clouds part for solo at M I T 305 00:17:20,040 --> 00:17:23,520 Speaker 1: and N seven ish, and then the entire issue of 306 00:17:23,600 --> 00:17:27,720 Speaker 1: how we grow moves forward and what you canonize is 307 00:17:27,880 --> 00:17:32,880 Speaker 1: innovation and folding it into what's called indogenous growth. How 308 00:17:32,880 --> 00:17:36,760 Speaker 1: are we doing? Are we growing within our system? Now? 309 00:17:36,800 --> 00:17:38,919 Speaker 1: Are we making it up? But actually, let me let 310 00:17:38,960 --> 00:17:40,639 Speaker 1: me tell you the story. When I tried to explain 311 00:17:40,680 --> 00:17:44,120 Speaker 1: to my son what I do at work, I said, well, 312 00:17:44,359 --> 00:17:47,879 Speaker 1: I'm trying to understand why it is that your grandparents, 313 00:17:47,920 --> 00:17:50,800 Speaker 1: when they were your age, didn't have these great things 314 00:17:50,840 --> 00:17:53,639 Speaker 1: like a video cassette recorder. He looked at me and 315 00:17:53,640 --> 00:17:57,760 Speaker 1: he said, Dad, that's obvious. When nanny and granddad were kids, 316 00:17:58,119 --> 00:18:01,720 Speaker 1: the VCR hadn't been invented yet. Is there anything else 317 00:18:01,760 --> 00:18:03,919 Speaker 1: with your work that I can help you with? No? 318 00:18:04,000 --> 00:18:06,159 Speaker 1: But but but the other place, it's sort of been 319 00:18:06,240 --> 00:18:10,280 Speaker 1: obvious to everybody that innovation is really what drives standards 320 00:18:10,280 --> 00:18:13,479 Speaker 1: of living, What and you know, Solo recognized this. What 321 00:18:13,560 --> 00:18:16,200 Speaker 1: I did, though, was say we can understand it. We 322 00:18:16,200 --> 00:18:18,840 Speaker 1: don't want to just say innovation happens. We need to 323 00:18:18,960 --> 00:18:22,199 Speaker 1: understand what causes it, and then what policies can we 324 00:18:22,359 --> 00:18:25,679 Speaker 1: use to increase the rate of innovation, to increase discoveries? 325 00:18:26,080 --> 00:18:29,720 Speaker 1: Raise is your Paul Romer is your world? The fault 326 00:18:29,880 --> 00:18:33,080 Speaker 1: of this gilded age in that we've applied the innovation 327 00:18:33,560 --> 00:18:37,040 Speaker 1: to the benefit game of a gain rather of a 328 00:18:37,080 --> 00:18:41,080 Speaker 1: modest or narrow segment of the American population, and everybody's 329 00:18:41,119 --> 00:18:45,199 Speaker 1: flat on their back and a luddite America because it 330 00:18:45,240 --> 00:18:48,280 Speaker 1: hasn't benefited that. Yeah, I think that, you know, people 331 00:18:48,320 --> 00:18:50,320 Speaker 1: like me who have been advocates for innovation really need 332 00:18:50,400 --> 00:18:52,679 Speaker 1: to be held to account. The first problem is it 333 00:18:52,760 --> 00:18:55,919 Speaker 1: doesn't seem like everybody's getting a share of the benefits. 334 00:18:55,960 --> 00:18:58,560 Speaker 1: And moreover, we're actually in a period where people have 335 00:18:58,720 --> 00:19:01,920 Speaker 1: less confidence in science then they used to have twenty 336 00:19:02,000 --> 00:19:04,919 Speaker 1: years ago. And that's the thing that troubles me the 337 00:19:04,920 --> 00:19:08,920 Speaker 1: most because science is the is the key to progress. 338 00:19:09,000 --> 00:19:11,800 Speaker 1: It's what it's the greatest thing humans have ever invented. 339 00:19:12,119 --> 00:19:14,560 Speaker 1: And if we lose our faith in science, you know, 340 00:19:14,560 --> 00:19:17,000 Speaker 1: where are we going to get the extensions of health 341 00:19:17,040 --> 00:19:20,040 Speaker 1: and life, and pim Fox has comes to American exceptionalism 342 00:19:20,040 --> 00:19:22,920 Speaker 1: and that that is is Professor Rohmer says that that 343 00:19:23,040 --> 00:19:26,920 Speaker 1: loss of confidence, Well, my question would be indeed art 344 00:19:26,960 --> 00:19:29,560 Speaker 1: if that loss of confidence exists, but you still have 345 00:19:29,680 --> 00:19:33,320 Speaker 1: a cadre of scientists and technicians that are able to 346 00:19:33,359 --> 00:19:37,240 Speaker 1: figure out what really goes on. But you have of 347 00:19:37,240 --> 00:19:40,679 Speaker 1: the population basically putting on the brakes and making it 348 00:19:40,760 --> 00:19:44,440 Speaker 1: more difficult for those innovations to reach the public. What 349 00:19:44,720 --> 00:19:48,760 Speaker 1: do you do. You've been involved in smart cities. What 350 00:19:48,960 --> 00:19:51,720 Speaker 1: can you physically do well. I think what would be 351 00:19:51,760 --> 00:19:54,639 Speaker 1: a terrible mistake is for the say the scientists, to 352 00:19:54,680 --> 00:19:57,800 Speaker 1: say we're smart. Just let us make all the decisions. 353 00:19:57,840 --> 00:20:01,600 Speaker 1: We're in control. Just just let us do our thing. Um, 354 00:20:01,720 --> 00:20:04,159 Speaker 1: people in science, people in the government. We need to 355 00:20:04,200 --> 00:20:07,400 Speaker 1: be accountable to the public. If the public doesn't understand 356 00:20:07,480 --> 00:20:10,200 Speaker 1: what we're doing, why we're doing it, that's on us, 357 00:20:10,560 --> 00:20:12,480 Speaker 1: and we need to do a better job of explaining 358 00:20:12,480 --> 00:20:15,199 Speaker 1: it and rebuilding that kind of faith in what we 359 00:20:15,280 --> 00:20:18,560 Speaker 1: do and belief in the idea that facts are our friends. 360 00:20:19,520 --> 00:20:21,560 Speaker 1: I think one of the mistakes that we have made 361 00:20:22,000 --> 00:20:25,440 Speaker 1: is we've fed this kind of doom and gloom scenario 362 00:20:25,760 --> 00:20:28,960 Speaker 1: that there's that there's no hope for the future. And 363 00:20:29,080 --> 00:20:32,280 Speaker 1: you know, for example, fun climate change. We can solve 364 00:20:32,320 --> 00:20:34,640 Speaker 1: climate change. We can manage that problem, just like we've 365 00:20:34,640 --> 00:20:36,960 Speaker 1: managed every other problem. The only question is how do 366 00:20:37,000 --> 00:20:40,520 Speaker 1: we decide to move forward. But we've got to be 367 00:20:40,560 --> 00:20:44,359 Speaker 1: careful not to make everybody so pessimistic and also make 368 00:20:44,359 --> 00:20:47,280 Speaker 1: sure that they see benefits in their own lives if 369 00:20:47,320 --> 00:20:50,959 Speaker 1: we want to keep this consensus for more discovery, more change, 370 00:20:51,160 --> 00:20:54,959 Speaker 1: more growth. Granted, but it reminds me of Daniel Patrick 371 00:20:55,080 --> 00:20:59,320 Speaker 1: moyna hands comment about people are entitled to their own opinions, 372 00:20:59,359 --> 00:21:02,600 Speaker 1: but they're not a title to their own facts. If not, 373 00:21:03,160 --> 00:21:05,359 Speaker 1: if we're not are all looking at the same fact 374 00:21:05,520 --> 00:21:09,719 Speaker 1: based situation, how do you even take that first step? 375 00:21:10,119 --> 00:21:12,000 Speaker 1: But one of the things I've been talking about recently 376 00:21:12,080 --> 00:21:15,840 Speaker 1: is having a sharper separation between the people who established 377 00:21:15,880 --> 00:21:18,200 Speaker 1: the facts and then the people who have to make 378 00:21:18,240 --> 00:21:22,760 Speaker 1: decisions based on those facts. And often those decisions involve compromise. 379 00:21:22,920 --> 00:21:25,400 Speaker 1: That's just the way of the world. The people who 380 00:21:25,400 --> 00:21:28,800 Speaker 1: are providing the facts should not be thinking about compromise. 381 00:21:29,000 --> 00:21:31,280 Speaker 1: They should not be thinking about who wins who loses. 382 00:21:31,520 --> 00:21:34,200 Speaker 1: They just need to say facts or facts here they are, 383 00:21:34,560 --> 00:21:37,280 Speaker 1: you figure out what to do with it. And sometimes frankly, 384 00:21:37,320 --> 00:21:40,639 Speaker 1: in the academic community we kind of pretend we're acting 385 00:21:40,680 --> 00:21:43,240 Speaker 1: like the facts people. But then we started staying you 386 00:21:43,280 --> 00:21:45,640 Speaker 1: should do this, you should do that, And that's that's 387 00:21:45,720 --> 00:21:47,760 Speaker 1: mixing the roles in a way that I think isn't helpful. 388 00:21:47,880 --> 00:21:51,240 Speaker 1: They celebrated Rome couple of years ago the and I 389 00:21:51,440 --> 00:21:56,000 Speaker 1: find him phenomenal Chad Jones explaining the growthiness in English. 390 00:21:56,520 --> 00:21:59,240 Speaker 1: Chad has done a great job. And he talked about 391 00:21:59,440 --> 00:22:03,640 Speaker 1: rival non rival products, which is fancy economic talk, which 392 00:22:03,680 --> 00:22:06,879 Speaker 1: is our thinking and our ideas are not the same 393 00:22:07,240 --> 00:22:11,560 Speaker 1: as accountable item like a pencil or a bow tie. Okay, fine, 394 00:22:12,040 --> 00:22:16,880 Speaker 1: help our audience with the threat that all this intellectual 395 00:22:16,960 --> 00:22:20,960 Speaker 1: mumbo jumbo is only the purview of the wealthy and 396 00:22:21,040 --> 00:22:24,520 Speaker 1: the haves. What do they have nots? Do ye? Well? First? 397 00:22:24,640 --> 00:22:26,760 Speaker 1: Um if I mean, they'll be put in a plug 398 00:22:26,800 --> 00:22:30,199 Speaker 1: for my lecture. And in Sweden, I actually avoided the 399 00:22:30,240 --> 00:22:32,240 Speaker 1: use of that term non rival because it's a little 400 00:22:32,240 --> 00:22:34,920 Speaker 1: too jargon e and really just try to explain what 401 00:22:35,080 --> 00:22:38,040 Speaker 1: we really mean, which is that when you codify knowledge 402 00:22:38,480 --> 00:22:41,400 Speaker 1: in a in words or in math, then you can 403 00:22:41,440 --> 00:22:44,719 Speaker 1: share it with everybody. So conified knowledge is very different 404 00:22:44,760 --> 00:22:47,800 Speaker 1: from like a pound of of copper, because you can't 405 00:22:47,800 --> 00:22:49,680 Speaker 1: all use the copper at the same time. You can 406 00:22:49,760 --> 00:22:52,320 Speaker 1: all use the knowledge at the same time. Now, on 407 00:22:52,440 --> 00:22:55,040 Speaker 1: this question of how everybody gets to share, we have 408 00:22:55,280 --> 00:22:59,040 Speaker 1: two very different systems for producing new codified knowledge. One 409 00:22:59,160 --> 00:23:03,800 Speaker 1: is the the system of science and open, transparent exchange 410 00:23:03,800 --> 00:23:06,000 Speaker 1: of ideas. The other is the market, where there's some 411 00:23:06,080 --> 00:23:09,520 Speaker 1: control a way to make money on ideas. We need 412 00:23:09,560 --> 00:23:12,240 Speaker 1: to decide as a society, where do we draw the line. 413 00:23:12,720 --> 00:23:15,000 Speaker 1: Where do we draw line between say that ni H 414 00:23:15,119 --> 00:23:18,320 Speaker 1: National Institutes of Health, which is fund discovering new farmancy coals, 415 00:23:18,440 --> 00:23:20,679 Speaker 1: Where do we give it over to the to the 416 00:23:20,720 --> 00:23:23,000 Speaker 1: pharmaceutical sector. And one of the things we can do 417 00:23:23,119 --> 00:23:25,440 Speaker 1: is if there are too many people capturing too much 418 00:23:25,440 --> 00:23:28,119 Speaker 1: of the profits is just used to Do you have 419 00:23:28,160 --> 00:23:30,800 Speaker 1: an optimism, professor rumor quickly, because we're gonna have to go, 420 00:23:30,840 --> 00:23:33,240 Speaker 1: Do you have an optimism that our political system could 421 00:23:33,240 --> 00:23:37,480 Speaker 1: clear this market and get to a better technological outcome. Yeah, 422 00:23:37,520 --> 00:23:42,399 Speaker 1: I'm I'm just a incorrigible optimists. So my view about 423 00:23:42,600 --> 00:23:46,280 Speaker 1: people is like Churchill's view about the US. They always 424 00:23:46,320 --> 00:23:49,600 Speaker 1: do the right thing after they exhaust all the alternatives. 425 00:23:49,680 --> 00:23:52,600 Speaker 1: So we'll eventually get back on track on these big challenges. 426 00:23:53,240 --> 00:23:58,040 Speaker 1: Thank you so much, and congratulations again on Well, it 427 00:23:58,160 --> 00:24:01,440 Speaker 1: was just assumed that work him Fox was so penetrating 428 00:24:02,280 --> 00:24:04,719 Speaker 1: decades ago that we almost take it for granted, this 429 00:24:04,760 --> 00:24:07,680 Speaker 1: idea of moving on from solo fifty seven to where 430 00:24:07,680 --> 00:24:11,280 Speaker 1: are we going and how do we grow? And that 431 00:24:11,320 --> 00:24:15,359 Speaker 1: was before the video cassette recorder or I was gonna say, 432 00:24:15,400 --> 00:24:20,359 Speaker 1: professor is optimistic for no other reason than he needs 433 00:24:20,359 --> 00:24:26,240 Speaker 1: congratulations for his marriage. It was a laureate marriage, right Sweden, 434 00:24:26,760 --> 00:24:29,439 Speaker 1: You didn't marry an Austrian economist. No, no, no, no, 435 00:24:29,480 --> 00:24:32,560 Speaker 1: I'm married a French literature professor. That's that's that's that's 436 00:24:32,600 --> 00:24:51,400 Speaker 1: why optimists. That's more rationalistic. Tell Mr mccron right now 437 00:24:52,000 --> 00:24:54,399 Speaker 1: on the markets, Douglas cast joins us. We're in our 438 00:24:54,400 --> 00:24:57,880 Speaker 1: Bloomberg Interactive Brooker Studios. Mr cass in Florida with Sea 439 00:24:57,880 --> 00:25:03,320 Speaker 1: Breeze Partners. Doug abut your positioning right now. First of all, 440 00:25:03,359 --> 00:25:07,240 Speaker 1: following Um Paul Roma a Nobel laureate, I am not 441 00:25:07,320 --> 00:25:15,200 Speaker 1: worthy Um, I would say I exist. I'm usually considered 442 00:25:15,880 --> 00:25:20,640 Speaker 1: something of a Cassandra tom And and Pim and I'm 443 00:25:20,680 --> 00:25:23,239 Speaker 1: following Paul Roma, who is, by his own admission and 444 00:25:23,240 --> 00:25:26,919 Speaker 1: incurable optimists. So I have no better person to quote 445 00:25:26,920 --> 00:25:29,359 Speaker 1: than Woody Allen, who may be the second most pessimistic 446 00:25:32,960 --> 00:25:34,879 Speaker 1: in terms of the state of the economy and the 447 00:25:34,880 --> 00:25:37,800 Speaker 1: state of the market. Um Woody Allen said something in 448 00:25:37,840 --> 00:25:39,840 Speaker 1: an op ed in The New York Times back in 449 00:25:40,000 --> 00:25:44,080 Speaker 1: nine It was entitled My Speech to the Year's Graduates, 450 00:25:44,080 --> 00:25:47,119 Speaker 1: in which he wrote, more than any other time in history, 451 00:25:47,200 --> 00:25:50,439 Speaker 1: mankind faces a crossroads. One path leads to despair, an 452 00:25:50,480 --> 00:25:54,560 Speaker 1: utter hopelessness, the other to total extinction. Let us pray 453 00:25:54,600 --> 00:25:56,639 Speaker 1: we have the wisdom to choose correctly. He went on 454 00:25:56,720 --> 00:25:59,679 Speaker 1: to write. The trouble is our leaders have not adequately 455 00:26:00,000 --> 00:26:04,400 Speaker 1: heratus with this mechanized society. Unfortunately, are politicians are either 456 00:26:04,440 --> 00:26:08,040 Speaker 1: incompetent or corrupt, sometimes both on the same day. So 457 00:26:08,960 --> 00:26:12,080 Speaker 1: that's where basically I spend clear markets. And there's a 458 00:26:12,080 --> 00:26:14,119 Speaker 1: fair amount of gloom out there right now with a 459 00:26:14,160 --> 00:26:18,320 Speaker 1: good correction as well. In your history, how do you 460 00:26:18,560 --> 00:26:23,120 Speaker 1: call bottom? How do you get back on board? If 461 00:26:23,160 --> 00:26:30,800 Speaker 1: you're cautious. My approaches us an old Ben Graham um 462 00:26:30,920 --> 00:26:35,440 Speaker 1: approach back in the nineties who wrote the book Security Analysis. 463 00:26:36,119 --> 00:26:39,679 Speaker 1: And I tie all my investment decisions, whether it's buying 464 00:26:39,840 --> 00:26:42,959 Speaker 1: or shorting a stock, or buying or shorting the indices 465 00:26:43,640 --> 00:26:47,280 Speaker 1: to the difference between the current share price UM and 466 00:26:47,400 --> 00:26:51,120 Speaker 1: the intrinsic value or private market value of a company, 467 00:26:51,280 --> 00:26:53,840 Speaker 1: or in my view, what the market is worth. And 468 00:26:53,880 --> 00:26:56,920 Speaker 1: that's how I do it. So when the prices UM 469 00:26:57,280 --> 00:27:00,560 Speaker 1: sell at a discount to intrinsic value of the buyer 470 00:27:00,560 --> 00:27:03,199 Speaker 1: and when they're at a premium to intrinsic value on 471 00:27:03,240 --> 00:27:07,679 Speaker 1: the seller and um UM today we have we have 472 00:27:08,280 --> 00:27:11,680 Speaker 1: a number of problems. John Farrow and the About an 473 00:27:11,680 --> 00:27:16,920 Speaker 1: hour ago mentioned that in the past we've had monetary options, 474 00:27:17,320 --> 00:27:20,359 Speaker 1: we've had a functioning G twenty. Today not so much. 475 00:27:21,080 --> 00:27:25,119 Speaker 1: And we're in a flat and increasingly an interconnected world. 476 00:27:25,440 --> 00:27:29,720 Speaker 1: It relies on coordination and cooperation. And although there are 477 00:27:29,760 --> 00:27:33,840 Speaker 1: still some living in the sixties and endorsing policies appropriate 478 00:27:33,840 --> 00:27:35,560 Speaker 1: for a day gone by, we do live in a 479 00:27:35,560 --> 00:27:39,240 Speaker 1: flat and interconnected world. And I've mentioned the past three 480 00:27:39,320 --> 00:27:42,840 Speaker 1: questions that keep me up at night. Um. Firstly, in 481 00:27:42,840 --> 00:27:46,320 Speaker 1: a paper listened cloudy world? Are investors and citizens as 482 00:27:46,359 --> 00:27:48,960 Speaker 1: safe as the markets assume? We are? A second in 483 00:27:49,000 --> 00:27:52,080 Speaker 1: a flat world? Is it even possible for America to 484 00:27:52,119 --> 00:27:55,199 Speaker 1: be an oasis of prosperity and a driver of engine 485 00:27:55,520 --> 00:27:58,720 Speaker 1: or engine of global economic growth? And finally three, with 486 00:27:58,840 --> 00:28:02,040 Speaker 1: the g H GEO political coordination and roll time low, 487 00:28:02,359 --> 00:28:05,119 Speaker 1: how slow and a nept will the reaction be if 488 00:28:05,160 --> 00:28:08,320 Speaker 1: the wheels do fall off? I think the reason I 489 00:28:08,359 --> 00:28:10,359 Speaker 1: want you to remember these questions is that the answers 490 00:28:10,440 --> 00:28:13,160 Speaker 1: might serve as a valuation buster in the full fullness 491 00:28:13,160 --> 00:28:15,720 Speaker 1: of time. We have this uh, We're living in a 492 00:28:16,080 --> 00:28:19,400 Speaker 1: connected world. We have lack of cooperation between the superpowers. 493 00:28:19,440 --> 00:28:22,720 Speaker 1: It's problematic and more impossible than any other time in 494 00:28:22,760 --> 00:28:26,520 Speaker 1: the past. My bottom line is, at best, we're in 495 00:28:26,560 --> 00:28:29,240 Speaker 1: a period of substandard returns, more likely a period of 496 00:28:29,240 --> 00:28:34,320 Speaker 1: steady strikeouts. By Ahead Doug cast, the SMP five hundred 497 00:28:34,560 --> 00:28:38,520 Speaker 1: is down more than eleven percent since the first of October. 498 00:28:38,880 --> 00:28:42,320 Speaker 1: Today we get a note that Goldman Sachs says they 499 00:28:42,360 --> 00:28:45,880 Speaker 1: have a solution to high uncertainty about the stock market 500 00:28:45,920 --> 00:28:49,840 Speaker 1: next year. Is that yeah? They say, now now is 501 00:28:49,880 --> 00:28:54,800 Speaker 1: the time to get defensive. After the markets down, still 502 00:28:54,880 --> 00:28:58,479 Speaker 1: plane dumb? So why do they bother? I mean like, 503 00:28:58,760 --> 00:29:01,160 Speaker 1: I mean, when does the does the emperor really have 504 00:29:01,240 --> 00:29:05,000 Speaker 1: no clothes? We all know the off repeated Buffet comment. 505 00:29:05,120 --> 00:29:07,600 Speaker 1: Be fearful when others are greedy, and greedy when others 506 00:29:07,680 --> 00:29:12,560 Speaker 1: is fearful. If you stick, if you rely on price momentum, 507 00:29:12,720 --> 00:29:16,200 Speaker 1: if you're a passive investor, you're in uh E T 508 00:29:16,600 --> 00:29:20,640 Speaker 1: S or risk parity quant strategies that are agnostic to 509 00:29:20,640 --> 00:29:24,400 Speaker 1: balance sheets, income statements, and intrinsic value. You will be 510 00:29:24,440 --> 00:29:28,120 Speaker 1: negative like oldman Sacks when prices are going down. I 511 00:29:28,160 --> 00:29:31,440 Speaker 1: always say the changing market structure has produced an environment 512 00:29:31,440 --> 00:29:36,200 Speaker 1: where sellers live lower and buyers live higher, which is 513 00:29:36,240 --> 00:29:41,120 Speaker 1: antithetical to Ben Graham and Dodd and Warren Buffet. And 514 00:29:41,160 --> 00:29:43,280 Speaker 1: I'll stick with those three because they've done pretty well 515 00:29:43,280 --> 00:29:48,440 Speaker 1: over time. Um So I have said for some time 516 00:29:48,520 --> 00:29:52,560 Speaker 1: that the markets are under pricing and underappreciating risks, and 517 00:29:52,800 --> 00:29:57,080 Speaker 1: that the markets would be ancuffed by a number of factors. 518 00:29:57,520 --> 00:29:59,360 Speaker 1: We're gonna run out of time. Let's let's come back 519 00:29:59,360 --> 00:30:01,520 Speaker 1: with Douglas asked. I want to talk to him about 520 00:30:01,520 --> 00:30:05,800 Speaker 1: some specific ideas, particularly his vocal, vocal statements on Twitter 521 00:30:06,560 --> 00:30:09,920 Speaker 1: through the years as well. Mr Cast of CBS Partners. 522 00:30:09,920 --> 00:30:12,040 Speaker 1: This will be out on our podcast with Paul Romer 523 00:30:12,320 --> 00:30:14,600 Speaker 1: as well. I think it's pretty cool Romer than casts 524 00:30:14,640 --> 00:30:18,640 Speaker 1: on your podcast. I mean, you know Romer and Cast. 525 00:30:18,760 --> 00:30:22,240 Speaker 1: I mean there's a certain balay to it. Paul Romer 526 00:30:22,360 --> 00:30:25,640 Speaker 1: and Doug cast back to back. Where else can you 527 00:30:25,720 --> 00:30:36,160 Speaker 1: do that? Thanks for listening to the Bloomberg Surveillance podcast. 528 00:30:36,520 --> 00:30:41,440 Speaker 1: Subscribe and listen to interviews on Apple Podcasts, SoundCloud, or 529 00:30:41,600 --> 00:30:45,920 Speaker 1: whichever podcast platform you prefer. I'm on Twitter at Tom 530 00:30:46,040 --> 00:30:49,920 Speaker 1: Keane before the podcast. You can always catch us worldwide. 531 00:30:50,360 --> 00:30:51,440 Speaker 1: I'm Bloomberg Radio.