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Speaker 1: Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane

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Speaker 1: Jay Lee. We bring you insight from the best in economics, finance, investment,

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Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,

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Speaker 1: Bloomberg dot Com, and of course, on the Bloomberg Now Perfect.

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Speaker 1: Guest Jonathan Golob Credit swas chief US equity strategist, joins

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Speaker 1: us on the year ahead. John, fantastic to catch up

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Speaker 1: with you against one and the Return to Normal. The

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Speaker 1: title of your research, sir, what is normal these days? Well,

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Speaker 1: first of all, we're trying to really look out and

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Speaker 1: push the horizon and say, you know, what does twenty

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Speaker 1: two look like? And the reason we're focused on on

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Speaker 1: that is if we're trying to forecast where markets are

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Speaker 1: at the end of twenty one, it's going to be

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Speaker 1: based on the way the world looks at the end

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Speaker 1: of twenty one peering into and at that point in time,

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Speaker 1: you're looking at not an economy that's bouncing off the

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Speaker 1: bottom with this discussion of cyclicals and low quality stocks.

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Speaker 1: You're looking at an economy that's probably growing GDP and

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Speaker 1: the low to mid threes, which will be very good,

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Speaker 1: but actually slowing because we're moving towards a mid cycle

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Speaker 1: kind of environment already. UM, interest rates will probably be

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Speaker 1: a little bit higher, but not dramatically higher. The surprise

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Speaker 1: will be the unemployment rate is expected, based on Bloomberg surveys. Um,

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Speaker 1: the unemployment rate will will be, you know, moving towards

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Speaker 1: five percent, towards full employment, because we're gonna find that

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Speaker 1: the people who have been unemployed are going to be

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Speaker 1: the easiest to put back to work. Johnny, let me

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Speaker 1: go to what you do best, and folk Collums reports

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Speaker 1: are exceptionally dense with ratios and margins and all that. Tiffany,

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Speaker 1: just as one example, hammered by this pandemic, just came

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Speaker 1: out with a two beat margin expansion. I don't know

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Speaker 1: if they go up or down today. I don't care,

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Speaker 1: John Gallub, is that the surprise of next year the

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Speaker 1: corporations adapt and margins are solid or even elevate. Um. Yeah, Tom,

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Speaker 1: I mean if you actually look historically, and I know

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Speaker 1: we're getting really in the weeds. Um. The the earnings

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Speaker 1: improvement is always on the marginal line. It's it's revenues

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Speaker 1: will be up you know a bit. This is obviously

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Speaker 1: allows a year revenues will be back. I don't know

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Speaker 1: five percent or something like that. But but if we're

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Speaker 1: expecting something closer to earnings growth, you've got to get

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Speaker 1: there on the margin line. And I don't know if

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Speaker 1: that's a surprise, it's pretty much what typically um, what

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Speaker 1: typically happens, Jonathan. I know that one of your sectors

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Speaker 1: that you like is financials, and we've seen a yield

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Speaker 1: curve that's tried to steep in and failed again and

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Speaker 1: again in some sort of sustained way. What's underpinning your

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Speaker 1: financial's call? And John Pharaoh has raised his points several times.

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Speaker 1: How much does it hange on the steepening of that

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Speaker 1: yield curve? Well, I think there's a half dozen things

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Speaker 1: that that are really working here. First of all, the

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Speaker 1: banks have reserved for substantial losses, so they're in very

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Speaker 1: good um situation with with their regulators um. Secondly, the

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Speaker 1: regulators have forced them to cut back on dividends and

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Speaker 1: buy backs, and that's most likely going to get released

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Speaker 1: in the second quarter. Because my third point is that

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Speaker 1: the loan losses are not getting worse and they've over reserved,

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Speaker 1: so you're gonna start to see probably around the second quarter,

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Speaker 1: maybe the third quarter that they're going to be um

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Speaker 1: giving more money back to shareholders, and that's gonna appear

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Speaker 1: to be a bit of a surprise from a valuation

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Speaker 1: perspective relative to you know, the way they normally trade.

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Speaker 1: The too cheapest sectors are financials and UM and healthcare.

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Speaker 1: So you have all of those things working for you

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Speaker 1: even if you didn't get any yelkur steepness. Now, if

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Speaker 1: you don't have at least flat to steeper yield curve,

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Speaker 1: the trade is not gonna work. But been five I

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Speaker 1: didn't say five. Fifteen basis points of steepening over the

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Speaker 1: next twelve months, along with those other positives is probably

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Speaker 1: all you need for it to be a leading sector. John,

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Speaker 1: We've got to talk about the regulatory backdrop as well.

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Speaker 1: So much discussions about chair yelling, monetary policy, fiscal policy.

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Speaker 1: The last act of the Fed on the chair yell

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Speaker 1: and wasn't a montory policy decision. It was a decision

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Speaker 1: to stick the boot in too. Wow'st fargo. John, do

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Speaker 1: you have a coal for next year? Your base case

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Speaker 1: on regulation around this administration? You know, it's it's a

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Speaker 1: good question, and I and we need to hear more

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Speaker 1: from regulators. I will tell you the question that we're

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Speaker 1: getting about Janet Yellen in the Treasury role is you know,

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Speaker 1: what is she going to do to monetary policy? And

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Speaker 1: is she going to do more queue? And the questions

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Speaker 1: are kind of bizarre because there really questions as if

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Speaker 1: she was being appointed to another term as FED chair,

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Speaker 1: not as Treasury Secretary. Her role is going to be different.

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Speaker 1: I I would assume that there's going to be some

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Speaker 1: real respect for her thinking on those issues given the

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Speaker 1: role she's been in, but she doesn't control that, and

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Speaker 1: she's gonna um so um. It'll be very interesting to

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Speaker 1: see which levers she um she looks to push. John,

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Speaker 1: what is your call on the banks on the financials, Yeah,

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Speaker 1: we're we're we're overweight financials. It's a we have a

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Speaker 1: very strange UM sector call, or at least historically strange.

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Speaker 1: We think that next year is gonna end up being

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Speaker 1: another tech and growth year, so we're overweight we call

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Speaker 1: tech plus, but we're also overweight UM financials. And it's

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Speaker 1: it's that we think the financials are in a much

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Speaker 1: healthier position or a much more advantageous position as compared

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Speaker 1: to energy materials industrials, traditional cyclicals that do really well.

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Speaker 1: As economies re accelerating, we think banks are gonna do

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Speaker 1: better because, as I mentioned before, your curve likely steeper

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Speaker 1: loan losses coming in less regulatory backdrop, we think will

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Speaker 1: be um reasonable. John Grant to catch out with you

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Speaker 1: said when he enjoined the research through the Yeah, and

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Speaker 1: especially having the last couple of weeks enjoy Thanksgiving me

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Speaker 1: we don't catch up. Jonathan gull of that at Credit Sway,

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Speaker 1: thank you sir. Now on New York state is a

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Speaker 1: proxy for American Why do I say that, Well, it's

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Speaker 1: not about say Tiffany and earnings today at Fifth Avenue

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Speaker 1: in fifty seven Street. It's maybe south of Buffalo, New York,

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Speaker 1: to Yorkville and over to Warsaw in the fields of

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Speaker 1: western New York. The pandemic is out of control. Kathy

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Speaker 1: Hokel knows his territory cold with Governor Cuomo. She is

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Speaker 1: a Lieutenant governor and has been a wonderful voice for

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Speaker 1: us over the recent weeks. Kathy, the Buffalo News has

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Speaker 1: my article of the day on the pandemic, and it's

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Speaker 1: real simple. It's not about the beds, It's about the

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Speaker 1: staff in the hospitals. How critical is hospital staffing in

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Speaker 1: the Empire State? Well, Tom, thank you, panning back on

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Speaker 1: the show again. And that is absolutely the situation should

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Speaker 1: we find ourselves in. I was just not a control

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Speaker 1: room call. With all the leaders of our hospitals as

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Speaker 1: well as with the leadership of our elected officials throughout

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Speaker 1: Western New York. We can put together as many beds

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Speaker 1: as necessary. We can fill a convention center. We have

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Speaker 1: plenty of PPE. The governor insisted that every hospital have

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Speaker 1: a three month supply of PPE before they could reopen.

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Speaker 1: Here's the situation. We don't have people coming from all

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Speaker 1: over the country to help save New York City and

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Speaker 1: New York State like we did in the spring we

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Speaker 1: had thirty thousand healthcare workers answer Governor culmost called for

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Speaker 1: help at our darkest hour. We don't have it anymore.

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Speaker 1: In fact, the people we have now, they're exhausted, they're

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Speaker 1: burned out, they're getting sick themselves, and they're pleading NonStop,

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Speaker 1: saying do this please, People follow follow for our own health.

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Speaker 1: And so it is. It is going to be a

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Speaker 1: crisis situation if the numbers continue on the path there

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Speaker 1: on and not about it and Lieutenant governor to bring

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Speaker 1: us back to Fifth Avenue. David Reich of Mount Sinai

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Speaker 1: saying much the same thing the other day. Okay, you've

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Speaker 1: got a Biden administration, there's change in the wind as well,

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Speaker 1: but you still need as a Democrat to deal with

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Speaker 1: the Republican Senate Exte Georgia vote that I know is

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Speaker 1: coming up. Do you see any greater of a chance

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Speaker 1: now of you getting the aid you the m t

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Speaker 1: A the governor need sooner. Well, the situation is is

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Speaker 1: that there are Republican senators who represent states that are

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Speaker 1: going through hell right now. I mean representatives from North Dakota,

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Speaker 1: South Dakota, Iowa, Idaho. They were not willing partners with

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Speaker 1: us in the spring when it was mostly the northeastern

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Speaker 1: states in California that were being hardest hit. Remember Mitch

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Speaker 1: McConnell said, no ballouts for the blue states. Well, my friend,

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Speaker 1: they are now red, white, and blue states. So it's

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Speaker 1: all over America. And I hope that that will shock

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Speaker 1: the consciousness of the senators as they listen to their

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Speaker 1: Republican governors who are desperate in need of money as

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Speaker 1: well to help compensate them for loss and venue for

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Speaker 1: the extraordinary costs they're incurring, having to pay so much

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Speaker 1: for extra overtime and health, all the health care workers

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Speaker 1: that need to be paid, and so there's I think

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Speaker 1: that that could create a different dynamics than we've seen before.

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Speaker 1: I hope it does. It should and Governor Cuomo, I know,

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Speaker 1: has a very strong relationship with President elect Buimness, as

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Speaker 1: I do from my time in Congress. So we know

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Speaker 1: that we'll get a good year out of the White House.

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Speaker 1: Certainly the House Representatives and the Senate will look really bad,

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Speaker 1: and they have elections coming yes in two years again already,

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Speaker 1: and they need to be cognizant of that this is

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Speaker 1: their time to stand up for their country and their states,

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Speaker 1: and they need to do it by making sure that

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Speaker 1: there's money for not just state and local governments. But

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Speaker 1: we need p p P again. We have businesses that

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Speaker 1: are being re shut down after reopening all across our state,

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Speaker 1: all across the country, and these poor businesses cannot survive

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Speaker 1: without federal assistance. Kathy. In the meantime, before we get

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Speaker 1: any fiscal support, we are going to will probably be

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Speaker 1: getting a vaccine, possibly in the next couple of weeks.

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Speaker 1: With emergency authorization. What's the plan? Who gets at first

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Speaker 1: to New York? How quickly will it get rolled out?

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Speaker 1: I think your last question is the most important. I

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Speaker 1: hope we reverse your question. I do hope we get

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Speaker 1: a stimulus plan before the vaccine is widely available. We

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Speaker 1: don't expect most there to be mass inoculation of New

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Speaker 1: Yorkers until six months from now. We will start with

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Speaker 1: the healthcare workers, the frontline workers, those who are vulnerable,

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Speaker 1: the senior citizens, communities of color that are having UH

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Speaker 1: infection rates that much higher than the national average for

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Speaker 1: for whites. The communities of color, black and brown are

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Speaker 1: really being harder hit. So we have a plan that

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Speaker 1: Governor Clomo and our team have been working on literally

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Speaker 1: since July. We have a Nobel Prize winner heading up

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Speaker 1: our efforts to ensure the safety of the vaccine, along

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Speaker 1: with what's going on at the federal government. But we

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Speaker 1: will get it out to New Yorkers as soon as

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Speaker 1: humanly possible the sector that's available. In fact, the Governor

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Speaker 1: has said we will have the most robust distribution plan

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Speaker 1: in America. That all being said, this is not to

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Speaker 1: save all. This does not allow you to go around

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Speaker 1: without a mask and say well, I'll get a vaccine.

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Speaker 1: I'll be fine. That vaccine is not going to be

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Speaker 1: widely available for months and so we're going to have

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Speaker 1: to adapt to it and we'll need that money before

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Speaker 1: that's available. So, Lieutenant Covernany, you've got a plan that

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Speaker 1: you've come up with the State of New York. Can

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Speaker 1: you walk me through whether it's a plan at a

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Speaker 1: federal level and what the discussions between the State of

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Speaker 1: New York the federal government actually look like right now? Well, yesterday, uh,

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Speaker 1: the Governor, I the governor has asked me to participate

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Speaker 1: in a call with the White House with other governors

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Speaker 1: and there was a very aggressive plan. We talked about

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Speaker 1: our role in that in terms of the distribution, and

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Speaker 1: they're working on this closely. So we are in partnership

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Speaker 1: with them. We have to be. You know, we're not

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Speaker 1: going to just because it's still the Trump administration not

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Speaker 1: work with them. Of course, we're going to work with them.

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Speaker 1: It's it's great to know that they're working a restively,

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Speaker 1: but we also know that as soon as Joe Biden

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Speaker 1: takes over January, I anticipate that there will be an

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Speaker 1: understanding that the Trump plan as it stands now is

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Speaker 1: focused on Yes, they've identified populations that should get it first,

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Speaker 1: but also their plan does not take into consideration the

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Speaker 1: fact that most people do not have a pharmacy or

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Speaker 1: a doctor readily available to them. Look at our most

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Speaker 1: densely populated urban areas. There's not a CBS, a right Ape,

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Speaker 1: or Walgreens on every corner. You see that in wealthier suburbs.

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Speaker 1: We don't have that in rural areas. So to expect

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Speaker 1: that people are being able to go to a doctor

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Speaker 1: easily and also be able to go to a pharmacy

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Speaker 1: to get it is barely on realistic. So in New York,

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Speaker 1: we're going to make sure that we engage the churches,

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Speaker 1: the community centers, the senior housing, the congregate setting site.

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Speaker 1: So we're gonna be even really even deeper down into

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Speaker 1: the distributions that is being offered by the federal government.

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Speaker 1: But are as I mentioned, our communication was as recently

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Speaker 1: as twenty four hours ago, so it's it's ongoing. Kathy,

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Speaker 1: We appreciate update. Thank you. Kathy how called New York's

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Speaker 1: Lieutenant governor. Right now. What we've tried to do is

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Speaker 1: people are conversations from yesterday afternoon with not only people

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Speaker 1: that know Janet Yellen have worked with Janet Yellen, but

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Speaker 1: understand the theories. In bringing the theories over to policy,

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Speaker 1: no one has done the movement of theory over to

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Speaker 1: policy like Frederick Michigan of Columbia University is textbooks are

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Speaker 1: definitive on this, and I might point out hugely accessible.

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Speaker 1: He is a former governor of the Federal Reserve system.

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Speaker 1: Rick Michigan, I want to go to chapter sixteen of

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Speaker 1: one of your books. I think it's a forty seventh edition.

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Speaker 1: I can't remember where. It's simple you talk about fiscal

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Speaker 1: policy and government budget. How far removed will that be

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Speaker 1: for a chair yelling from the every day of the

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Speaker 1: Federal Reserve. Well, that reserve is not supposed to focus

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Speaker 1: on the budget directly because that's not in their remat

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Speaker 1: but clearly it's very important in terms of the ability

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Speaker 1: for monitor policy to do its job, and also particularly

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Speaker 1: in the environment where now we're interest rates are near

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Speaker 1: zero and montor policy is less effective as a result,

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Speaker 1: fiscal polity policy really comes to the forefront. Janet understanges

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Speaker 1: very very well, uh that she's uh said the right things,

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Speaker 1: which as follows, which is that there really is a

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Speaker 1: need for for a fiscal expansion right now. There's also

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Speaker 1: very importantly in need for cooperation between the Federal Reserve

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Speaker 1: and the Treasury. You couldn't get it better than than

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Speaker 1: Janet interacting with with J. Powell. So that's very good,

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Speaker 1: but also very importantly which unforture politics is not doing enough.

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Speaker 1: Janet is emphasized it. Although right now we need very

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Speaker 1: expansionary fiscal policy, we have to worry about the long

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Speaker 1: run bunch of balance and that's something that that really

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Speaker 1: neither the Propolicans and Democrats have done. But Janet gets it.

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Speaker 1: Uh and uh she's She's really a terrific person for

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Speaker 1: this job. I couldn't think of a better choice for

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Speaker 1: this position. Right now, Professor Michigan, We've gone from Jacob Blue,

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Speaker 1: who I'm going to call a grizzled political wonk out

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Speaker 1: of Massachusetts, to Mr Minuan, who I'm going to call

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Speaker 1: a Wall Street Hollywood type with Mr Trump, and now

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Speaker 1: we go to a hardcore academic something you'd be familiar with.

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Speaker 1: Are we de Wall streeting the job? Are we moving

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Speaker 1: Treasury away from Wall Street? In this case? I think

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Speaker 1: that's true, But I think the real issue is getting

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Speaker 1: somebody who's competent. It's perfectly reasonable to have a Wall

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Speaker 1: Street person and Treasury if they're if they're really good

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Speaker 1: at understanding policy. Not that's not always the case. But

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Speaker 1: but one of the things that's key about Ring she's

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Speaker 1: not just an academic. This is somebody who's been involved

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Speaker 1: in policy work for a very very long time. Yes,

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Speaker 1: she was an academic for quite a while. I actually

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Speaker 1: I met Janet when she was an assistant professor at

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Speaker 1: Harvard well over forty years ago, when we became friends then.

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Speaker 1: So Janet has been in the trenches in almost all

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Speaker 1: the key policy jobs. Uh. That she was a governor

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Speaker 1: of the Fellow Reserve. Uh that she was Uh. Also

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Speaker 1: that a president's fellows are back in San Francisco, which

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Speaker 1: is when I interacted with quite a bit, because I

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Speaker 1: was a governor at the time, and we used to

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Speaker 1: to meet h periodic Actually before every R PHONEC meeting,

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Speaker 1: we'd always have a meeting there at Luxury Identity together. Uh.

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Speaker 1: And also the chair she was a chairman of a

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Speaker 1: chair person of the account of Economic Advantages. She really

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Speaker 1: understands policy. She's been involved in that world. Now are

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Speaker 1: really very very serious at the top levels for twenty years. UH.

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Speaker 1: Actually knows her stuff, and she's also not a Protestant

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Speaker 1: type person. Jannet. I have some different political views, uh

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Speaker 1: that she's to the left of where I am, but

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Speaker 1: actually on economics we really never had any big disagreements.

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Speaker 1: She does the analysis carefully, UH and thinks really hard

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Speaker 1: about it, and it's super well prepared, and that's exactly

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Speaker 1: what we really need right now. Clearly, one of the

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Speaker 1: things that's critical right now is to calm everything down,

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Speaker 1: to get some straight thinking on what to do about

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Speaker 1: the coronavirus pandemic and also how we can support the

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Speaker 1: economy during this next period in the next six months

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Speaker 1: or so. UH, and Janet is extremely highly qualified to

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Speaker 1: do that. The focus right now, Rick is on how

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Speaker 1: closely she'll work with a fellow reserve, and quite clearly

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Speaker 1: everyone says very closely. For you, how close is too close?

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Speaker 1: So too close is when the Treasury tries to dictate

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Speaker 1: to the fellow reserve and interfere with its independence. Janet

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Speaker 1: very much appreciates the independence of the fellow reserve, will

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Speaker 1: be strongly supportive of it. UH. And so in that sense,

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Speaker 1: there's no issue at all having a strong cooperation. It's

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Speaker 1: always been true. By the way, the Fiddle Reserve chair

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Speaker 1: and the Treasury Secretary meet periodically. I think they always

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Speaker 1: had a breakfast. I can't remember how often it was,

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Speaker 1: but I think at least once a month, maybe once

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Speaker 1: a month they would have a breakfast together. That's actually

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Speaker 1: critical because Monterey piscoal policy do interact. On the other hand,

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Speaker 1: which you don't want is where uh the Federal Reserve

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Speaker 1: independence is is uh is challenged. Now that's not going

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Speaker 1: to happen under a Biden administration. Trump was was really

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Speaker 1: awful on this. Uh that his criticisms Jay were just brutal. Uh,

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Speaker 1: you know, mean calling loco Sat Jay's an idiot and

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Speaker 1: so forth. That's done. Uh. Biden understands what was done

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Speaker 1: during the Obama administration, but also before that that the

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Speaker 1: FED works best and the economy works best when the

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Speaker 1: FED is independent of day to day interferenced by the politicians.

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Speaker 1: That will continue. Janet is somebody who strongly believes in

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Speaker 1: the independence. That she's not somebody who try to dictate

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Speaker 1: to j. Powell instead of what you'll have his cooperation,

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Speaker 1: which is exactly what's needed. Well, that you'd have to

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Speaker 1: say rick in the back end of and the President

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Speaker 1: might have had a point when it came to judge

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Speaker 1: it and fading out the market a little bit. We

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Speaker 1: can put that to one side and maybe touched on

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Speaker 1: that another day. I want to talk about policy to

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Speaker 1: con with. You want to jump in, go on, right place,

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Speaker 1: that place, Go on. You can be right that. Uh,

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Speaker 1: I actually advocate the easier policy uh during during during

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Speaker 1: this period than the was pursuing. But Uh, the issue

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Speaker 1: is not the policy, it's the issue of interference, which

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Speaker 1: then can actually cause problems. So uh, pushing the photos

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Speaker 1: to do expanially policy can lead to rise in inflation expectations,

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Speaker 1: which would be very damaging. So uh, the way you talk,

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Speaker 1: it's not just what you do, but the way you

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Speaker 1: talk and the pressure you put can actually be very damaging.

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Speaker 1: And in fact, most presents before Trump since, particularly since

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Speaker 1: the Clinton administration, have understood that it's including George W. Bush,

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Speaker 1: understood that leaving the FED alone actually helps promote a good,

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Speaker 1: strong economy. Uh. And uh, but that doesn't mean the

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Speaker 1: FED is always right. Uh. They do make mistakes. Uh.

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Speaker 1: And with the crystal ball, we could always do better.

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Speaker 1: But the key point is let them do their job.

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Speaker 1: They've got a job to do. Their technical people to

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Speaker 1: do it. Janet fully understands that Rick. When it comes

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Speaker 1: to making policy the Federal Reserve, those decisions are granted

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Speaker 1: in economics. When it comes to making policy in the Treasury,

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Speaker 1: it's economics and its politics too. And I just want

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Speaker 1: to Rick, when you start to think about trade, if

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Speaker 1: you have a position on trade in the Federal Reserve,

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Speaker 1: is your position on trade exactly the same when you

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Speaker 1: are running the Treasury. I think Janet's certainly is going

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Speaker 1: to be pro free trade in appropriate way. And particularly

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Speaker 1: very important is if somebody's not playing by the rules, Uh,

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Speaker 1: you want to be able to deal with them, but

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Speaker 1: you don't then abuse your allies in that process. So

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Speaker 1: if you really want to deal effectively with China, you

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Speaker 1: don't sleep crazy tariffs on the Europeans, which is what's

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Speaker 1: been done under under Trump, and this has been very

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Speaker 1: damaging to our ability to actually get a more even

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Speaker 1: handed trading situation that will be beneficial to the US

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Speaker 1: and particularly with China. So I don't think that the positions, Uh,

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Speaker 1: it's very true that that Treasury she's much more political,

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Speaker 1: and so you have to deal with those issues. But

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Speaker 1: on the other hand, UH, very almost all economists, by

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Speaker 1: the way, very few, and those are the few that

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Speaker 1: worked in the Trump administration. Very few think that the

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Speaker 1: trying to close down our boarders is a good idea.

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Speaker 1: Janet is very much the mainstream on that. I think

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Speaker 1: will be very helpful in crafting a much better trade

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Speaker 1: policy under the Biden administration. Meanwhile, Rick, on a domestic level,

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Speaker 1: there is a question of how she is willing to

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Speaker 1: run the economy hot in tandem with the federalers or

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Speaker 1: perhaps giving ammunition from the Treasury. And I'm wondering, from

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Speaker 1: your perspective, are you surprised that the market hasn't priced

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Speaker 1: in a higher longer term inflation rate on the heels

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Speaker 1: of Jenny Ellen's selection, based on what we know and

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Speaker 1: based on her comments. So I think the answer is,

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Speaker 1: h that happened, and I think there's good reasons not to.

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Speaker 1: Janet's very very good on this. I had a lot

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Speaker 1: of interaction with Janet when I was a governor at

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Speaker 1: the Feddle Reserve. Both of us were strong advocates of

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Speaker 1: controlling inflation and relation targeting. UH and UH that Janet

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Speaker 1: gets that The key issue is that right now when

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Speaker 1: in a very different environment. It's actually a remarkable environment

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Speaker 1: for somebody who has been been a professor for now

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Speaker 1: over forty years in the monetary economists, which is the

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Speaker 1: big problem of central banks is not that inflation is

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Speaker 1: too high, it's too low, and so this particular environment, uh,

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Speaker 1: it makes sense to pursue expansionary policy, both monetary and fiscal.

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Speaker 1: By there is a time and that could change, and

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Speaker 1: in fact, having a very strong commitment to keeping inflation

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Speaker 1: under control is important. I think that the Federal Reserve

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Speaker 1: has has moved to a procedure of so called average

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Speaker 1: inflation targeting, which could be beneficial, but has not been

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Speaker 1: articulated in a way that I think is as helpful

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Speaker 1: as needs to be to make sure that the commitment

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Speaker 1: is as strong as ever. But Janet has always had

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Speaker 1: a very strong commitment to controlling inflation. There's no doubt

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Speaker 1: about that her statements or policies when she was to

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Speaker 1: chair the Communications Committee at the Federal Reserve when I

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Speaker 1: was there. So uh, the issue here is not that

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Speaker 1: that should worry about two high inflation, but we do

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Speaker 1: want a place to get back up to two percent

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Speaker 1: and Janet understands that, and uh and uh. J. Powell

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Speaker 1: understands that. So that's why I don't think the Moneys

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Speaker 1: need to be afraid of janet Us right, come back.

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Speaker 1: So I always tried to catch up. Sir Frederick the

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Speaker 1: former Federal Commina, thank you, said, thank you very much.

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Speaker 1: I break a cardinal rule. I have a cardinal rule

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Speaker 1: that I never talked about a book until it's released.

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Speaker 1: I break that now. Kess Sunstein is at Harvard Law.

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Speaker 1: You know I loved his book Impeachment, which never once

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Speaker 1: mentioned Donald Trump. There is too much information, And yes

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Speaker 1: he writes for Blueberg Opinion. But there will be a

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Speaker 1: book next year. It's already must read and it's not

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Speaker 1: even written. The book is noise. With a gentleman from Princeton,

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Speaker 1: Mr Convin said the kiss Unstein kiss. Wonderful to hear

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Speaker 1: about this book of two thousand twenty one. How are

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Speaker 1: we going to get ourselves away from what we hear

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Speaker 1: at surveillance struggle with every day, our addiction to the noise.

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Speaker 1: How are we going to do that? Okay, well, let's

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Speaker 1: make a distinction. Shall weave between noise like high volume

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Speaker 1: lots of stuff? How do you sort it out. The

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Speaker 1: book that is out too much information is really about that. Yes,

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Speaker 1: the book noise is about signal versus noise, meaning there's

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Speaker 1: just so much variability. So if doctors are asked, do

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Speaker 1: you have COVID nineteen, one doctor will say yes. Another

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Speaker 1: doctor will say I don't think so. If you ask

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Speaker 1: one greater whether the paper gets an A the greater

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Speaker 1: the greater will say yes, and another will say no,

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Speaker 1: it's a B minus. That's the kind of noise that

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Speaker 1: we're worried about. And it's a source of pervasive unfairness

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Speaker 1: in the crimin little justice system, in the welfare system

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Speaker 1: with permits and licenses. It's also a source of really

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Speaker 1: high cost for companies when two people who are supposed

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Speaker 1: to make the same decision, one says yes, the other

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Speaker 1: says definitely. Know we cause so much of this is

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Speaker 1: about the strange word from another time in religion called grace,

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Speaker 1: and that grace is about uncertainty and understanding that we

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Speaker 1: live with an uncertainty anyone. Those that agree with Mr

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Speaker 1: Trump and disagree with Mr Trump would say he majored

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Speaker 1: in certitude. It was he knew what he was talking about.

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Speaker 1: How do we escape our certitudes that are wrapped around

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Speaker 1: too much information and our certitudes of noise. Well, there's

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Speaker 1: a great judge with a crazy name, A learned Hand.

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Speaker 1: Was this a frank by his parents who named him learned,

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Speaker 1: But he kind of fulfilled the prophecy of learnedness and

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Speaker 1: learned a lot, and Learned Hand said this during World

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Speaker 1: War Two. The spirit of lived it is that spirit

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Speaker 1: which is not too sure that it is right. And

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Speaker 1: that's kind of perfect because you can be sure that

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Speaker 1: you're right, as you know, Democrats and Republicans often are,

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Speaker 1: but they're sure, but things go sour if they're too

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Speaker 1: sure that they're right. So there should always be a

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Speaker 1: voice in a democratic society saying, you know what, the

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Speaker 1: people who consider the other side they might be right.

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Speaker 1: And if that voice you let in your head, you

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Speaker 1: become calmer, nicer, and that savage part of the human

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Speaker 1: spirit kind of dissipates. This makes sense, And at the

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Speaker 1: same time, you're walking a fine line as we sort

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Speaker 1: of infringe on the idea of freedom of speech and

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Speaker 1: freedom of decision making. And I think that there probably

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Speaker 1: would be a large swath of the nation that would

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Speaker 1: say this is the problem that academia, which tends to

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Speaker 1: be more liberal, wants to weed out things that's wrong

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Speaker 1: and not necessarily let people think their own thoughts. And

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Speaker 1: this is really brought to the four with Twitter and

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Speaker 1: Facebook's recent filters on President Trump's tweets as well as other,

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Speaker 1: uh certain information that's been disseminated. How do you walk

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Speaker 1: this line? How do you create a filter that is

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Speaker 1: fair and gives the impression of fairness to people looking

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Speaker 1: for independence and freedom. It's a great question. So let's

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Speaker 1: think of three different categories. One category which my too

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Speaker 1: Much Information book. That's not a very likely title for

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Speaker 1: a book, by the way, I'm not sure that's a

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Speaker 1: bestselling title. But the idea behind too Much Information is, first,

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Speaker 1: the government's taking too much information from us, so it

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Speaker 1: is imposing eleven billion annual hours and paperwork requirements on

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Speaker 1: the American people. It may be nurses and maybe doctors,

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Speaker 1: It might be patients, It might be people who want

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Speaker 1: to build things and they are being hammered by paperwork requirements.

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Speaker 1: This is especially bad in a period of COVID nineteen.

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Speaker 1: So that's not a free speech issue. It's an issue

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Speaker 1: of imposing burdens which are often like walls between the

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Speaker 1: American people and things that they have a right to.

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Speaker 1: The second thing is disclosure of information that's mandatory. So

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Speaker 1: if you get a medicine, it might have seven pages

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Speaker 1: of side effects information which you'll never read. Or if

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Speaker 1: you get a mortgage, you might be drowning in stuff,

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Speaker 1: or if you buy a product at the grocery store,

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Speaker 1: there might be a ton of things there which are

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Speaker 1: so complicated in terms of information mandates that you're not

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Speaker 1: going to benefit them. So information mandates is a second thing,

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Speaker 1: which is often excessive and often kind of clueless, and

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Speaker 1: that is not a free speech issue. Then there's a

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Speaker 1: third thing, which is you know, Twitter and Facebook having

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Speaker 1: warnings and disclosures as part of their product. That's actually

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Speaker 1: technically not a free speech issue. In fact, technically not

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Speaker 1: because Twitter and Facebook aren't governed by the First Amendment

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Speaker 1: because they're not government, and that's how our constitution was

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Speaker 1: set up itself a big positive in terms of freedom

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Speaker 1: that a private social media outlet doesn't have to worry

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Speaker 1: about the things the government has to worry about. Now,

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Speaker 1: having said that, there are free speech issues in the

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Speaker 1: non technical sense, that it's completely fair to discuss that

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Speaker 1: private actors often raise Kess Sunstein. Thank you so much,

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Speaker 1: just can't say enough about too much information and to

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Speaker 1: come next year with Professor khnan Of for Instant Noise

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Speaker 1: as well Kess Sunstein at Harvard Harvard Law. Thanks for

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Speaker 1: listening to the Bloomberg Surveillance podcast. Subscribe and listen to

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Speaker 1: interviews on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer.

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Speaker 1: I'm on Twitter at Tom Keane before the podcast. You

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Speaker 1: can always catch us worldwide. I'm Bloomberg Radio