1 00:00:00,160 --> 00:00:03,360 Speaker 1: This is Bloomberg Wall Street Week. What's the state of 2 00:00:03,400 --> 00:00:06,360 Speaker 1: corporate governance? The deficit is a real issue. The US 3 00:00:06,400 --> 00:00:09,920 Speaker 1: economy continues to send mixed signals. The financial stories that 4 00:00:10,039 --> 00:00:13,000 Speaker 1: cheap our world fed action to con concerns over dollar 5 00:00:13,039 --> 00:00:16,520 Speaker 1: liquidity and encouraging China data. The five hundred wealthiest people 6 00:00:16,520 --> 00:00:19,160 Speaker 1: in the world. Through the eyes of the most influential 7 00:00:19,239 --> 00:00:22,880 Speaker 1: voices Larry Summers, the former Treasury Secretary, Star CEO, Kevin 8 00:00:22,960 --> 00:00:26,640 Speaker 1: Johnson sec Chairman j Clayton. Bloomberg wool Street Week with 9 00:00:26,760 --> 00:00:31,479 Speaker 1: David Weston from Bloomberg Radio. Populism hits the financial markets. 10 00:00:31,760 --> 00:00:34,320 Speaker 1: Is it a fluke or does it point to something deeper? 11 00:00:34,720 --> 00:00:37,760 Speaker 1: This is Bloomberg Wall Street Week. I'm David Weston. A 12 00:00:37,880 --> 00:00:40,360 Speaker 1: video game store is at the heart of a titanic 13 00:00:40,400 --> 00:00:44,600 Speaker 1: struggle between short sellers and retail investors. Until recently, game 14 00:00:44,640 --> 00:00:47,800 Speaker 1: Stop was a company whose time seemed to have passed, 15 00:00:48,000 --> 00:00:50,640 Speaker 1: with serious gamers turning to the Internet, not the mall 16 00:00:50,760 --> 00:00:54,240 Speaker 1: to get their games. But then social media got involved, 17 00:00:54,280 --> 00:00:58,400 Speaker 1: starting a meteorc rise in game Stop stock after Reddit's 18 00:00:58,480 --> 00:01:01,800 Speaker 1: Wall Street bets forums pumping the stock to its three 19 00:01:01,920 --> 00:01:06,200 Speaker 1: million users. The army of social media empowered day traders 20 00:01:06,280 --> 00:01:10,000 Speaker 1: catapulted the former small caps market value beyond those of 21 00:01:10,080 --> 00:01:13,800 Speaker 1: even members of the SMP five hundred. Here's Bob Prince, 22 00:01:13,920 --> 00:01:17,080 Speaker 1: the co c i O of Bridgewater Associates. It just 23 00:01:17,160 --> 00:01:19,560 Speaker 1: reflects the liquidity that exists and the new players in 24 00:01:19,600 --> 00:01:22,600 Speaker 1: the markets. You know, historically, it's indicative of a bubble 25 00:01:22,600 --> 00:01:25,200 Speaker 1: type environment that you know to go for a long time. 26 00:01:25,400 --> 00:01:28,759 Speaker 1: The amateur day traders were targeting short positions held by 27 00:01:28,920 --> 00:01:34,199 Speaker 1: Gabe Plotkins, Melvin Capital, and Andrew Left Citron Research. Hedge 28 00:01:34,200 --> 00:01:37,320 Speaker 1: fund titans, Ken Griffin and Steve Cohen injected a total 29 00:01:37,360 --> 00:01:39,839 Speaker 1: of two and three quarters billion dollars in the Melvin 30 00:01:39,920 --> 00:01:43,320 Speaker 1: Capital amid the short squeezed distress. Here's the founder of 31 00:01:43,480 --> 00:01:46,959 Speaker 1: S three Partners, Bob Sloan. What's happening is that the 32 00:01:47,000 --> 00:01:50,080 Speaker 1: retail right now is stronger, but the short bets come 33 00:01:50,080 --> 00:01:52,240 Speaker 1: back and fill in. So it's it's just a battle 34 00:01:52,280 --> 00:01:54,480 Speaker 1: that's going to continue. Within a matter of days. The 35 00:01:54,560 --> 00:01:57,720 Speaker 1: Reddit army had pushed the rally so high that Melvin 36 00:01:57,800 --> 00:02:01,280 Speaker 1: Capital and Citron through in the towel on their short positions. 37 00:02:01,520 --> 00:02:04,920 Speaker 1: I'm just fine. Citron Capital is just fine. Cover the 38 00:02:04,960 --> 00:02:07,200 Speaker 1: majority of the short and the nineties at a loss 39 00:02:07,240 --> 00:02:10,200 Speaker 1: a hundred percent, have a small imaginable position, and I'll 40 00:02:10,280 --> 00:02:13,920 Speaker 1: let it go. That's Citron Research founder Andrew Left. The 41 00:02:14,000 --> 00:02:16,960 Speaker 1: Reddit Army of day traders also boosted. Other has been 42 00:02:17,080 --> 00:02:20,919 Speaker 1: including BlackBerry retailer Express and AMC, which is fighting to 43 00:02:20,960 --> 00:02:23,920 Speaker 1: safe off bankruptcy. Hedge funds are now on the hunt 44 00:02:23,919 --> 00:02:26,560 Speaker 1: for other companies that could end up on the Reddit 45 00:02:26,639 --> 00:02:31,000 Speaker 1: mob's radar. Here's Dennis Gartman. But this has wider implications 46 00:02:31,000 --> 00:02:32,720 Speaker 1: for the for the New York term. I think that this. 47 00:02:32,960 --> 00:02:34,480 Speaker 1: I think you're gonna see a number of hedge funds 48 00:02:34,520 --> 00:02:37,280 Speaker 1: and declared bankruptcy in the start next several days, online 49 00:02:37,280 --> 00:02:41,520 Speaker 1: brokerages reported service disruptions caused by the retail trading frenzy, 50 00:02:41,680 --> 00:02:43,919 Speaker 1: and a number of them, including Robin Hood, took the 51 00:02:44,040 --> 00:02:47,520 Speaker 1: rare step of limiting some transactions on shares of game stuff, 52 00:02:47,800 --> 00:02:51,720 Speaker 1: AMC and others. You're witnessing the French Revolution of finance, 53 00:02:51,760 --> 00:02:56,840 Speaker 1: where the proletari terriat is rising up to change the 54 00:02:57,000 --> 00:02:59,520 Speaker 1: order structure in finance, and they're able to do that 55 00:02:59,560 --> 00:03:04,519 Speaker 1: because have costless data, they have costless trading. That Skybridge 56 00:03:04,560 --> 00:03:07,960 Speaker 1: Capital founder Anthony Scaramucci. There has been a surge in 57 00:03:08,040 --> 00:03:12,200 Speaker 1: overall retail trading activity as people stuck at home try 58 00:03:12,280 --> 00:03:16,240 Speaker 1: their hands at trading. According to Bloomberg Intelligence, individual investors 59 00:03:16,280 --> 00:03:21,799 Speaker 1: accounted for almost of the trading volume. Here's Eileen Burbridge, 60 00:03:21,960 --> 00:03:26,520 Speaker 1: partner at Passion Capital Investments. The fact that retailed investors 61 00:03:26,520 --> 00:03:28,519 Speaker 1: are going to be able to communicate with one another, 62 00:03:28,760 --> 00:03:31,959 Speaker 1: that they can actually consolidate their buying power in such 63 00:03:32,000 --> 00:03:34,880 Speaker 1: a way and provide research data points for these large 64 00:03:34,920 --> 00:03:37,960 Speaker 1: institutional investors is something I don't think the regulars would 65 00:03:37,960 --> 00:03:41,960 Speaker 1: have anticipated even three years ago. So what caused the 66 00:03:42,040 --> 00:03:45,280 Speaker 1: perfect storm that some call a game stop? We asked 67 00:03:45,280 --> 00:03:48,720 Speaker 1: Peter Atwater, president of Financial Insights, and he said it 68 00:03:48,840 --> 00:03:51,520 Speaker 1: was something that had been in the works for some time. 69 00:03:51,920 --> 00:03:54,400 Speaker 1: So what we've seen over the past couple of years 70 00:03:54,480 --> 00:03:56,920 Speaker 1: have been these flash mobs with money, as I call it, 71 00:03:57,080 --> 00:04:01,280 Speaker 1: where investors, particularly using social do you get together and 72 00:04:02,440 --> 00:04:05,520 Speaker 1: aim at a single company. You saw this with Tilray, 73 00:04:05,560 --> 00:04:08,800 Speaker 1: Beyond Meat, just one after the other. And what we've 74 00:04:08,800 --> 00:04:12,080 Speaker 1: started to see is they move from moving shares to 75 00:04:12,240 --> 00:04:14,880 Speaker 1: buying options to now buying options and things that are 76 00:04:15,640 --> 00:04:19,240 Speaker 1: most shorted. And to me, this just reflects on the 77 00:04:20,160 --> 00:04:23,279 Speaker 1: confidence of the crowd. They've they've gotten much more strident, 78 00:04:23,760 --> 00:04:26,800 Speaker 1: much more aggressive, and and honestly they've succeeded at it 79 00:04:26,880 --> 00:04:31,040 Speaker 1: so so behaviorally, this looks very, very predictable, and it's 80 00:04:31,080 --> 00:04:33,320 Speaker 1: coming to a head. At the same time, was there 81 00:04:33,320 --> 00:04:35,120 Speaker 1: a reduction of the barriers to entry if I can 82 00:04:35,120 --> 00:04:37,600 Speaker 1: put it that way, that it's easier for retail traders 83 00:04:37,600 --> 00:04:39,359 Speaker 1: to get into things like call options. I mean, there 84 00:04:39,440 --> 00:04:41,440 Speaker 1: was a time that required some sophistication. You have to 85 00:04:41,480 --> 00:04:43,560 Speaker 1: go through brokers and things like that. Now I think 86 00:04:43,560 --> 00:04:45,840 Speaker 1: you can do it online, can't you sure? I mean 87 00:04:45,839 --> 00:04:49,040 Speaker 1: that the technology has moved with the crowd. But I mean, 88 00:04:49,120 --> 00:04:51,240 Speaker 1: let's let's be honest. This this has been going on 89 00:04:51,320 --> 00:04:53,159 Speaker 1: for a long time. You you go back and you 90 00:04:53,200 --> 00:04:55,520 Speaker 1: read financial history and they talk about, you know, the 91 00:04:55,880 --> 00:04:59,720 Speaker 1: telegraphs suddenly causing you the market to move more quickly. 92 00:04:59,760 --> 00:05:04,120 Speaker 1: This this is the same thing, but in a version 93 00:05:04,520 --> 00:05:09,360 Speaker 1: people are using accounts online with their iPhones and our 94 00:05:09,360 --> 00:05:11,919 Speaker 1: trading call options. It's we've taken it to an extreme. 95 00:05:12,040 --> 00:05:15,720 Speaker 1: Let's talk about regulation, because there's various discussion about whether 96 00:05:15,720 --> 00:05:18,200 Speaker 1: the SEC or someone else should be getting involved. Does 97 00:05:18,240 --> 00:05:21,359 Speaker 1: this potentially lie a foul of what's going on with 98 00:05:21,440 --> 00:05:25,159 Speaker 1: the SEC in terms of existing regulation. I don't know 99 00:05:25,200 --> 00:05:28,200 Speaker 1: if it runs a foul or not. But as a researcher, 100 00:05:28,320 --> 00:05:33,640 Speaker 1: I have found that regulators, when they act, react to sentiment, 101 00:05:34,200 --> 00:05:37,960 Speaker 1: and so I expect that if sentiment becomes to extreme 102 00:05:38,320 --> 00:05:42,159 Speaker 1: people become concerned about systemic safety, then you'll see the 103 00:05:42,200 --> 00:05:45,800 Speaker 1: regulators moving in force, and and you know, that's that's 104 00:05:45,839 --> 00:05:49,240 Speaker 1: what they do. They will close the barn doors at 105 00:05:49,320 --> 00:05:52,200 Speaker 1: the moment that the animals have already left. They're gonna 106 00:05:52,200 --> 00:05:56,080 Speaker 1: pour water on a fire that was already extinguishing. And 107 00:05:56,120 --> 00:05:57,880 Speaker 1: the question, at least in my mind, I think in 108 00:05:57,920 --> 00:06:01,840 Speaker 1: many people's minds, is do exist steam regulations really address this? 109 00:06:01,960 --> 00:06:03,799 Speaker 1: I mean people have talked about like pump and dump. 110 00:06:04,080 --> 00:06:06,520 Speaker 1: Certainly there are regulations about that. We really talking stop 111 00:06:06,839 --> 00:06:08,880 Speaker 1: stockps you can sell it? Or does there need to 112 00:06:08,920 --> 00:06:11,560 Speaker 1: be a whole new regulatory approach to this, if any 113 00:06:11,640 --> 00:06:15,520 Speaker 1: at all. So I I expect the regulators will respond 114 00:06:15,560 --> 00:06:19,200 Speaker 1: to this, you know, after the fact, with with regulations 115 00:06:19,240 --> 00:06:23,200 Speaker 1: that try to modernize um, you know, and and and 116 00:06:23,240 --> 00:06:26,360 Speaker 1: reflect truly what's in place today. But but I would 117 00:06:26,400 --> 00:06:30,000 Speaker 1: think about it almost like surveys Oxley. It will come 118 00:06:30,400 --> 00:06:33,719 Speaker 1: well after the crowd has dispersed. That was Peter Atwater, 119 00:06:33,839 --> 00:06:37,880 Speaker 1: president of Financial Insights and lecturer in economics, and William 120 00:06:37,880 --> 00:06:41,680 Speaker 1: and Mary coming up. Bank of America CEO Brian moynihan 121 00:06:42,040 --> 00:06:44,839 Speaker 1: on the rise of retail investors and what it means 122 00:06:44,920 --> 00:06:48,200 Speaker 1: for the markets. That's next on Wall Street Week on Bloomberg. 123 00:06:53,360 --> 00:06:57,320 Speaker 1: This is Bloomberg Wall Street Week with David Weston from 124 00:06:57,440 --> 00:07:00,920 Speaker 1: Bloomberg Radio. Brian moynihan, during his time as Chairman and 125 00:07:01,040 --> 00:07:03,640 Speaker 1: CEO of Bank of America, has emphasized the strategy of 126 00:07:03,680 --> 00:07:07,560 Speaker 1: responsible growth. What went on with Game Stop this week 127 00:07:07,640 --> 00:07:09,800 Speaker 1: seems like just the opposite of that, as some would 128 00:07:09,840 --> 00:07:13,800 Speaker 1: say was the earlier parabolic increase in bitcoin. But Brian 129 00:07:13,880 --> 00:07:17,000 Speaker 1: says that it's not a problem with the democratization of finance. 130 00:07:17,600 --> 00:07:21,680 Speaker 1: The forces are larger than that. It's already been pretty democratized. 131 00:07:21,720 --> 00:07:24,680 Speaker 1: We we ever, we talked about free trading. I think 132 00:07:25,240 --> 00:07:28,400 Speaker 1: somewhere in like two thousand seven or something like that, 133 00:07:28,440 --> 00:07:30,880 Speaker 1: I was riding around the hatt and on a double 134 00:07:30,880 --> 00:07:33,440 Speaker 1: decker bus was free trading on the side side of it. 135 00:07:33,920 --> 00:07:36,680 Speaker 1: From Bank of America. This is not a new concept, 136 00:07:36,720 --> 00:07:40,520 Speaker 1: and so you know we've seen growth and in our 137 00:07:41,160 --> 00:07:43,880 Speaker 1: balances for our our maryl edge, which is our more 138 00:07:43,920 --> 00:07:46,440 Speaker 1: affluent segment, we've seen a net growth of temper So 139 00:07:46,560 --> 00:07:50,000 Speaker 1: I think and and uh what you call sort of 140 00:07:50,080 --> 00:07:52,400 Speaker 1: digital broken accounts and stuff, and so it's it's good 141 00:07:52,480 --> 00:07:54,440 Speaker 1: people are investing. I think people have to be careful 142 00:07:54,480 --> 00:07:55,960 Speaker 1: and we all know that. But I think if you 143 00:07:56,000 --> 00:07:58,760 Speaker 1: look at it overall, if you look longer term, what 144 00:07:59,080 --> 00:08:01,840 Speaker 1: are the themes in finance services? More and more digital? 145 00:08:02,320 --> 00:08:05,040 Speaker 1: We saw were now of our direct consumer loans done 146 00:08:05,080 --> 00:08:08,640 Speaker 1: digitally up from the start three years ago. Uh, more 147 00:08:08,640 --> 00:08:11,520 Speaker 1: and more digital, more and more demand for I want 148 00:08:11,520 --> 00:08:14,160 Speaker 1: digital and I want high touch. I want the branches 149 00:08:14,200 --> 00:08:18,720 Speaker 1: and I want the digital. More and more artificial intelligence applied, 150 00:08:18,760 --> 00:08:21,920 Speaker 1: more and more operational excellence across all our platforms in 151 00:08:22,040 --> 00:08:25,160 Speaker 1: terms of process engineering and taking out paper and putting 152 00:08:25,160 --> 00:08:27,280 Speaker 1: in digital work. Those are the themes are just going 153 00:08:27,320 --> 00:08:32,640 Speaker 1: to be tremendous. Artificial intelligence, distributed networks, UM, data, information movement, 154 00:08:33,040 --> 00:08:36,480 Speaker 1: all those things are incredibly important. But those things have 155 00:08:36,520 --> 00:08:38,480 Speaker 1: been with us. Now the questions we may have made 156 00:08:38,480 --> 00:08:43,280 Speaker 1: a step change and we'll be after that. So yes, investors, yes, borrowers, Yes, 157 00:08:43,320 --> 00:08:45,760 Speaker 1: everything but it's really the digitalis in the news, not 158 00:08:45,840 --> 00:08:49,280 Speaker 1: as much as the underlying asset cost. So one more 159 00:08:49,320 --> 00:08:51,199 Speaker 1: try it. Maybe a change in the landscape, and that 160 00:08:51,360 --> 00:08:53,680 Speaker 1: is China. What are your competitors? Jamie Diamond over JP 161 00:08:53,760 --> 00:08:56,360 Speaker 1: Morgan says he's worried about the Chinese banks getting so big. 162 00:08:56,480 --> 00:08:58,440 Speaker 1: Do you see that as a potential risk for Bank 163 00:08:58,440 --> 00:09:01,199 Speaker 1: of America. We're not worried about getting big. They are big, 164 00:09:01,400 --> 00:09:04,840 Speaker 1: and so they earned a lot of money. They're already 165 00:09:04,880 --> 00:09:07,839 Speaker 1: various size institutions. The market in some ways is much 166 00:09:07,840 --> 00:09:09,839 Speaker 1: more consolidated in the hands of the four or five 167 00:09:09,920 --> 00:09:12,480 Speaker 1: seven major banks. If you look at the top ten, 168 00:09:12,600 --> 00:09:16,120 Speaker 1: you know earning banks JPN ourselves will be there, and 169 00:09:16,120 --> 00:09:19,760 Speaker 1: and and and and quickly it's all Chinese banks. I 170 00:09:19,760 --> 00:09:21,360 Speaker 1: think of the verse nine other than the two of us, 171 00:09:21,400 --> 00:09:25,000 Speaker 1: if I remember right, it's they're powerful, strong companies to 172 00:09:25,120 --> 00:09:26,800 Speaker 1: have the right to operate in the United States, that 173 00:09:26,920 --> 00:09:30,480 Speaker 1: they already have capabilities of nine states and other countries. 174 00:09:30,520 --> 00:09:33,440 Speaker 1: And and I don't know when they'll decide, but if 175 00:09:33,480 --> 00:09:35,400 Speaker 1: they decided to come outside that country. They are big, 176 00:09:35,480 --> 00:09:38,199 Speaker 1: powerful organizations earn forty billion dollars a year at three 177 00:09:38,240 --> 00:09:41,440 Speaker 1: trillion dollars in assets and and their own you know, 178 00:09:41,880 --> 00:09:44,599 Speaker 1: fifty six whatever percent by the government, so they have 179 00:09:44,679 --> 00:09:46,640 Speaker 1: the support to go out and drive. So yes, we 180 00:09:46,800 --> 00:09:48,920 Speaker 1: all have to be fearful that we actually had a 181 00:09:48,960 --> 00:09:51,440 Speaker 1: stake in one for a long time called CCB and 182 00:09:51,480 --> 00:09:54,839 Speaker 1: help them improve their operations based on the most barn things, 183 00:09:54,880 --> 00:09:56,440 Speaker 1: and they took it and took off with it and 184 00:09:56,480 --> 00:09:58,640 Speaker 1: did a great job. And so we all have a 185 00:09:58,760 --> 00:10:01,240 Speaker 1: right to be uh fearful of them, but not because 186 00:10:01,280 --> 00:10:02,959 Speaker 1: they're going to be big. They are big now, the 187 00:10:03,000 --> 00:10:04,880 Speaker 1: question is what they're gonna do. Are you concerned that, 188 00:10:04,920 --> 00:10:07,400 Speaker 1: in fact, because the liquidity that's been injected for good 189 00:10:07,440 --> 00:10:10,000 Speaker 1: and sufficient reason to help the economy, that we really 190 00:10:10,040 --> 00:10:13,280 Speaker 1: are risking ourselves in some places. I'll give you two examples. Bitcoin, 191 00:10:13,360 --> 00:10:15,600 Speaker 1: goodness knows, has gone all over the place and another 192 00:10:15,640 --> 00:10:18,240 Speaker 1: game stop right now that is really quite a phenomenon, 193 00:10:18,240 --> 00:10:19,960 Speaker 1: and it's not the only one right now that's really 194 00:10:19,960 --> 00:10:22,200 Speaker 1: getting bid way up. Should we be concerned that maybe 195 00:10:22,200 --> 00:10:24,000 Speaker 1: this is an indication that maybe we're getting a little 196 00:10:24,040 --> 00:10:26,840 Speaker 1: bit out over our skis. Those issues at the moment 197 00:10:27,120 --> 00:10:29,280 Speaker 1: happened at times, you know, in the ebbs and flows 198 00:10:29,280 --> 00:10:31,160 Speaker 1: in the market and then frankly, I don't have great 199 00:10:31,160 --> 00:10:34,840 Speaker 1: insight is to uh those things. We've been clear about 200 00:10:34,840 --> 00:10:37,280 Speaker 1: how we stand on bitcoin and versus blockchain, which is 201 00:10:37,320 --> 00:10:39,640 Speaker 1: a technology and stuff. But let me let me back 202 00:10:39,760 --> 00:10:42,679 Speaker 1: up in and and the question is when you look 203 00:10:42,679 --> 00:10:45,200 Speaker 1: at the economy and it's about as big as it 204 00:10:45,240 --> 00:10:48,040 Speaker 1: wasn't two thousand eighteen, the projections from our team are 205 00:10:48,080 --> 00:10:50,520 Speaker 1: offered to grow up five percent this year in twenty 206 00:10:50,520 --> 00:10:53,560 Speaker 1: one um last in two thousand eighteen. In the in 207 00:10:53,600 --> 00:10:55,800 Speaker 1: the second quarter, was the economy was this big? It 208 00:10:55,880 --> 00:10:57,280 Speaker 1: was projected to grow up like one and half to 209 00:10:57,320 --> 00:10:59,679 Speaker 1: two percent. In the interest rate environment a hundred a 210 00:10:59,760 --> 00:11:02,720 Speaker 1: hundred fifty basis points higher. And there wasn't all this 211 00:11:03,320 --> 00:11:05,600 Speaker 1: uh So, there wasn't interest rate accommodation, and it wasn't 212 00:11:05,600 --> 00:11:08,400 Speaker 1: fiscal stimulus out there. Now you have the same thing. 213 00:11:08,520 --> 00:11:10,920 Speaker 1: So the fiscal stimulus is needed to help people make 214 00:11:10,960 --> 00:11:14,120 Speaker 1: it across the river. Here you have six percent plus unemployment. 215 00:11:14,160 --> 00:11:16,000 Speaker 1: You have these companies haven't open. That's the p p 216 00:11:16,120 --> 00:11:19,280 Speaker 1: P program. You have holes and state budgets and and 217 00:11:19,360 --> 00:11:21,920 Speaker 1: that were created by the cost of paying for all 218 00:11:21,960 --> 00:11:25,079 Speaker 1: this work and maybe tax rough lost revenues and stuff 219 00:11:25,080 --> 00:11:27,000 Speaker 1: those ought to be dealt with, and I think if 220 00:11:27,040 --> 00:11:29,800 Speaker 1: we deal with that responsibly, then what happens. But the 221 00:11:29,840 --> 00:11:32,840 Speaker 1: possibility of overshooting here is real, and that's what you're hearing. 222 00:11:32,920 --> 00:11:35,640 Speaker 1: Less about the equity training value at the moment, but 223 00:11:35,679 --> 00:11:38,160 Speaker 1: more about the question when rates are one percent and 224 00:11:38,200 --> 00:11:39,920 Speaker 1: are going to stay there for a long time, it 225 00:11:39,920 --> 00:11:42,079 Speaker 1: will lead to risk and that could lead to bubbles. 226 00:11:42,120 --> 00:11:44,320 Speaker 1: But the real question that will be fundamentally bad for 227 00:11:44,360 --> 00:11:47,560 Speaker 1: everybody's if if we miss the inflation turn and it's 228 00:11:47,559 --> 00:11:49,800 Speaker 1: not there now. But that's one of the challenges that 229 00:11:50,280 --> 00:11:53,240 Speaker 1: you know, every chair pal and his colleagues have is 230 00:11:53,240 --> 00:11:55,280 Speaker 1: to is to really be watching this thing, and they 231 00:11:55,320 --> 00:11:58,240 Speaker 1: need to make sure this great economy grows again at 232 00:11:58,280 --> 00:12:00,640 Speaker 1: the right rate and above that right eight and there's 233 00:12:00,679 --> 00:12:02,960 Speaker 1: some inflation in order to make sure it doesn't go backwards. 234 00:12:02,960 --> 00:12:05,360 Speaker 1: But on the other hand, it's gonna be an interesting 235 00:12:05,720 --> 00:12:06,839 Speaker 1: you know, as we move through the end of this 236 00:12:06,920 --> 00:12:08,720 Speaker 1: year and the next year when this has all come true, 237 00:12:08,720 --> 00:12:10,599 Speaker 1: the vaccines out and stuff, it will be interesting to 238 00:12:10,600 --> 00:12:13,600 Speaker 1: see how they play through that. Well exactly, let's pursue 239 00:12:13,640 --> 00:12:15,880 Speaker 1: that just for a moment, because there's been a lot 240 00:12:15,880 --> 00:12:17,960 Speaker 1: of money given to a lot of people, again for 241 00:12:18,000 --> 00:12:21,040 Speaker 1: good and sufficient reason, they've needed it. But the indications 242 00:12:21,080 --> 00:12:23,000 Speaker 1: are a lot of is getting saved, it's not getting spent, 243 00:12:23,040 --> 00:12:24,800 Speaker 1: in part because they don't have a place to spend it, frankly, 244 00:12:24,800 --> 00:12:27,679 Speaker 1: because a lot of the economy shut down. How concerned 245 00:12:27,720 --> 00:12:29,600 Speaker 1: are you as you look at the economy, because you 246 00:12:29,640 --> 00:12:32,200 Speaker 1: have a real vantage point into the economy broadly, how 247 00:12:32,280 --> 00:12:34,000 Speaker 1: can you know that there might be a snap back 248 00:12:34,400 --> 00:12:37,040 Speaker 1: that might actually trigger believe it or not, inflation. We 249 00:12:37,040 --> 00:12:39,600 Speaker 1: haven't talked about it a long time. Well there's been. 250 00:12:39,640 --> 00:12:41,680 Speaker 1: I mean, it's kind of interesting. You trace last year 251 00:12:42,280 --> 00:12:44,800 Speaker 1: and we'll see what the fourth quarter all ends up. 252 00:12:44,840 --> 00:12:47,280 Speaker 1: Final But if you think about down thirty up, thirty 253 00:12:47,840 --> 00:12:50,400 Speaker 1: up a few three or four percentage point or whatever 254 00:12:50,400 --> 00:12:52,640 Speaker 1: it turns out to be, and then this quarter the 255 00:12:52,640 --> 00:12:54,720 Speaker 1: projections aren't may come down closer to flat. And that 256 00:12:54,760 --> 00:12:56,319 Speaker 1: has a little bit to do with the first quarter. 257 00:12:56,400 --> 00:12:58,520 Speaker 1: But if you actually doesn't pull out of fart and 258 00:12:58,559 --> 00:13:02,040 Speaker 1: look at our our consumer or what we call consumers 259 00:13:02,080 --> 00:13:05,000 Speaker 1: spending and so Devin and credit card spending one thing, 260 00:13:05,000 --> 00:13:06,800 Speaker 1: but this is around you know, people taking money out 261 00:13:06,800 --> 00:13:10,200 Speaker 1: of at ms and spending it writing checks for services, 262 00:13:10,679 --> 00:13:14,400 Speaker 1: P two P the zel product, which is huge right now. UM. 263 00:13:14,440 --> 00:13:17,600 Speaker 1: If you look at that spending through the first twenty 264 00:13:17,679 --> 00:13:20,280 Speaker 1: three days of January, it's up eight or nine percent 265 00:13:20,600 --> 00:13:23,360 Speaker 1: over last year's first twenty three days of January, which 266 00:13:23,440 --> 00:13:25,640 Speaker 1: was up nine percent over the year before. So it 267 00:13:25,760 --> 00:13:28,319 Speaker 1: is bigger and dollar amount it is growing faster than 268 00:13:28,320 --> 00:13:33,480 Speaker 1: it grew from UH from eight from nineteen to eighteen 269 00:13:33,480 --> 00:13:36,200 Speaker 1: to nineteen and as fast as nineteen to twenty. If 270 00:13:36,240 --> 00:13:38,280 Speaker 1: you look at the type customer obviously for the people 271 00:13:38,280 --> 00:13:40,240 Speaker 1: who are unemployed and can see them receiving on a 272 00:13:40,240 --> 00:13:42,320 Speaker 1: point benefits, they're using the money faster. If you look 273 00:13:42,320 --> 00:13:44,600 Speaker 1: at the rest of customers, they're using a discretionary retail, 274 00:13:44,679 --> 00:13:47,400 Speaker 1: not UH sustenance retailing not you know, so they they 275 00:13:47,520 --> 00:13:49,520 Speaker 1: are paying for their food because they're employed. And so 276 00:13:49,559 --> 00:13:52,679 Speaker 1: I think these stimulus dollars can be spent much more 277 00:13:52,720 --> 00:13:55,160 Speaker 1: precise than I think. The last case was a good one, 278 00:13:55,160 --> 00:13:57,720 Speaker 1: and that it went unemployment to the unemployment some supplement 279 00:13:57,760 --> 00:14:00,640 Speaker 1: there this six hundred dollars under seventy five thousand. Those 280 00:14:00,640 --> 00:14:02,719 Speaker 1: are those are good items in future similar sow to 281 00:14:02,760 --> 00:14:06,800 Speaker 1: be likewise geared because otherwise it gets diminishing returns, and 282 00:14:06,800 --> 00:14:08,240 Speaker 1: then you have the issue how you pay for it 283 00:14:08,280 --> 00:14:11,559 Speaker 1: long term and the issue of whether it creates inflation. 284 00:14:11,640 --> 00:14:13,760 Speaker 1: But there's a lot of pent up savings and we 285 00:14:13,760 --> 00:14:16,280 Speaker 1: would expect a good second half of the year. Now. 286 00:14:16,400 --> 00:14:19,000 Speaker 1: It's just the mistake everybody makes is they get talked 287 00:14:19,040 --> 00:14:21,560 Speaker 1: about all the economics and they forget there's one simple question, 288 00:14:22,080 --> 00:14:24,040 Speaker 1: which is we have to win the war on the virus. 289 00:14:24,720 --> 00:14:27,160 Speaker 1: And right now we're going in with a much better 290 00:14:28,520 --> 00:14:31,520 Speaker 1: situation from the fight, and that we have this vaccine 291 00:14:31,600 --> 00:14:34,120 Speaker 1: and this vaccine is going into people's arms, and that 292 00:14:34,160 --> 00:14:36,680 Speaker 1: then changes the course of this And yet that's still 293 00:14:36,720 --> 00:14:38,480 Speaker 1: out there. But that's a light the end of tunnel 294 00:14:38,480 --> 00:14:41,120 Speaker 1: that wasn't here this year. Last year in the summer, 295 00:14:41,480 --> 00:14:44,120 Speaker 1: that was Brian moynihan, Chairman and CEO of Bank of 296 00:14:44,160 --> 00:14:47,760 Speaker 1: America coming up working from home. Once it seemed to 297 00:14:47,760 --> 00:14:51,000 Speaker 1: be the bold new innovation, but now for many the 298 00:14:51,080 --> 00:14:54,160 Speaker 1: question is when can I come back to work? That's 299 00:14:54,200 --> 00:15:03,320 Speaker 1: next on Wall Street on Bloomberg. This is Bloomberg Wall 300 00:15:03,360 --> 00:15:07,600 Speaker 1: Street Week with David Weston from Bloomberg Radio. Wall Street 301 00:15:07,600 --> 00:15:09,600 Speaker 1: has joined so many others in figuring out how to 302 00:15:09,640 --> 00:15:13,920 Speaker 1: work from home efficiently. And effectively, but the appreciation for 303 00:15:13,960 --> 00:15:17,360 Speaker 1: all that added flexibility just maybe wearing off. You know, 304 00:15:17,400 --> 00:15:20,120 Speaker 1: we we have ten twelve cent back. We were bringing 305 00:15:20,160 --> 00:15:22,880 Speaker 1: some people back when the case count fell. The problem 306 00:15:22,920 --> 00:15:25,800 Speaker 1: is is that, you know, then the Thanksgiving came, Christmas came, 307 00:15:25,880 --> 00:15:28,360 Speaker 1: the whole thing sort of exploded again. So we stopped 308 00:15:28,360 --> 00:15:30,760 Speaker 1: all those initiatives. But where that was volunteer you can 309 00:15:30,800 --> 00:15:32,440 Speaker 1: come back. We weren't telling any they come back, but 310 00:15:32,480 --> 00:15:34,040 Speaker 1: a lot of people want to come back. That was 311 00:15:34,040 --> 00:15:37,600 Speaker 1: Brian moynihan, Chairman and CEO of Bank of America Related 312 00:15:37,640 --> 00:15:40,680 Speaker 1: Companies is the largest landlord in New York City and 313 00:15:40,720 --> 00:15:42,600 Speaker 1: one of the most important real estate developers in the 314 00:15:42,720 --> 00:15:46,120 Speaker 1: entire country. And we asked it's CEO, Jeff Blaw, what 315 00:15:46,200 --> 00:15:48,240 Speaker 1: it's going to take to get people back into the 316 00:15:48,320 --> 00:15:51,560 Speaker 1: office in New York. The two obvious answer answers are 317 00:15:51,880 --> 00:15:55,760 Speaker 1: vaccine rolled out, but probably even more critical right now 318 00:15:55,840 --> 00:15:58,640 Speaker 1: is testing. Um. You know, we all thought after New 319 00:15:58,720 --> 00:16:01,560 Speaker 1: Year's everyone would would return right back to the office. 320 00:16:01,680 --> 00:16:04,880 Speaker 1: But in an interesting twist, I have a feeling that 321 00:16:04,920 --> 00:16:09,040 Speaker 1: the vaccine announcement and the closeness of it has really 322 00:16:09,560 --> 00:16:11,680 Speaker 1: enabled companies to just say, you know, I'm gonna I'm 323 00:16:11,680 --> 00:16:13,920 Speaker 1: gonna just wait, it's so close. I'm not gonna pull 324 00:16:13,960 --> 00:16:16,800 Speaker 1: everyone back to the office yet. You know, unfortunately in 325 00:16:16,880 --> 00:16:21,120 Speaker 1: New York, um, you know, office actual occupancy people showing 326 00:16:21,200 --> 00:16:23,920 Speaker 1: up for at their desk every day is under ten 327 00:16:23,960 --> 00:16:27,800 Speaker 1: percent UM. And it's it's critical that we kind of 328 00:16:27,880 --> 00:16:32,400 Speaker 1: really push testing make people feel safe and comfortable until 329 00:16:32,440 --> 00:16:34,600 Speaker 1: they ultimately do get the vaccine so people come back 330 00:16:34,600 --> 00:16:36,480 Speaker 1: to the office. Of people don't come back to the office, 331 00:16:36,520 --> 00:16:39,640 Speaker 1: New York cannot recover. And that's really that's really the 332 00:16:39,680 --> 00:16:42,680 Speaker 1: sad thing that's happening now. Our restaurants are closing, small 333 00:16:42,720 --> 00:16:46,160 Speaker 1: businesses are closing, and and just if you walk around Midtown, 334 00:16:46,280 --> 00:16:49,320 Speaker 1: people aren't here, and so it is critical. Um. I 335 00:16:49,400 --> 00:16:53,800 Speaker 1: do think that the rapid test is getting cheaper and 336 00:16:53,960 --> 00:16:57,320 Speaker 1: more effective and so that will help, but I think 337 00:16:57,320 --> 00:16:59,440 Speaker 1: it's it's gonna be slow going until kind of a 338 00:16:59,480 --> 00:17:02,520 Speaker 1: real vac and roll out. What can people companies that 339 00:17:02,640 --> 00:17:05,920 Speaker 1: own and or manage these properties due to expedite that 340 00:17:06,040 --> 00:17:08,199 Speaker 1: I mean, for example, doesn't make sense for them to 341 00:17:08,200 --> 00:17:11,200 Speaker 1: put rapid testing in into their own buildings. So uh, 342 00:17:11,280 --> 00:17:14,879 Speaker 1: in in partnership with the governor, Governor Cuomo here in 343 00:17:14,880 --> 00:17:17,720 Speaker 1: New York, what we've done, and what he really put 344 00:17:17,760 --> 00:17:21,520 Speaker 1: out was every building, UM, well he wants to create 345 00:17:21,560 --> 00:17:24,880 Speaker 1: in effect COVID safe buildings UM. And So for example, 346 00:17:24,920 --> 00:17:28,040 Speaker 1: what we've done here at Hudson Yards is in partnership 347 00:17:28,040 --> 00:17:30,640 Speaker 1: with Mount Sinai, we've created a testing center. So every 348 00:17:30,640 --> 00:17:33,600 Speaker 1: one of our tenants has access to this testing center 349 00:17:34,280 --> 00:17:37,320 Speaker 1: or they can come onto uh AN employees employers own 350 00:17:37,520 --> 00:17:41,399 Speaker 1: its premises. That's what we do here. Related so every 351 00:17:41,400 --> 00:17:44,320 Speaker 1: week Mount Sinai comes in and every single employee gets 352 00:17:44,359 --> 00:17:47,880 Speaker 1: tested once a week UM. And in the buildings, any 353 00:17:47,920 --> 00:17:49,960 Speaker 1: guests that wants to come into the building goes through 354 00:17:49,960 --> 00:17:53,000 Speaker 1: a rapid test program. And so those two things will 355 00:17:53,160 --> 00:17:56,160 Speaker 1: enable us to call this a COVID safe place UM. 356 00:17:56,240 --> 00:17:59,159 Speaker 1: And so we we're managing We're managing it that way, 357 00:17:59,400 --> 00:18:02,040 Speaker 1: and I think more the more people can do that 358 00:18:02,080 --> 00:18:05,520 Speaker 1: and roll out that type of testing protocol, I think 359 00:18:05,680 --> 00:18:08,440 Speaker 1: people will feel safer and more comfortable about coming back 360 00:18:08,480 --> 00:18:11,359 Speaker 1: to work. And that's really what it's gonna take. One 361 00:18:11,400 --> 00:18:13,399 Speaker 1: of the things we're very conscious of in New York obviously, 362 00:18:13,400 --> 00:18:16,199 Speaker 1: are the financial organizations. Do you have a sense of 363 00:18:16,240 --> 00:18:19,080 Speaker 1: companies in in Wall Street how eager they are to 364 00:18:19,080 --> 00:18:21,560 Speaker 1: get their people back in. You know, I'd say it varies. 365 00:18:21,600 --> 00:18:24,800 Speaker 1: I mean, I'm sure you've heard David Salomon really encouraging 366 00:18:25,200 --> 00:18:29,160 Speaker 1: uh Goldman to encourage his employees to get back. Get 367 00:18:29,200 --> 00:18:32,920 Speaker 1: a very funny quote. He kind of said, well, sure, 368 00:18:33,000 --> 00:18:34,920 Speaker 1: you guys all want to work home from your living room, 369 00:18:34,920 --> 00:18:37,959 Speaker 1: and you can do that until your competitor shows up 370 00:18:37,960 --> 00:18:40,560 Speaker 1: in person and wins an assignment. You guys need to 371 00:18:40,560 --> 00:18:43,160 Speaker 1: get back to the office, right, So I do think 372 00:18:43,200 --> 00:18:46,920 Speaker 1: that there is pressure. Um, the market will ultimately bring 373 00:18:46,960 --> 00:18:49,320 Speaker 1: pressure for people to come back. You know, it's interesting 374 00:18:49,359 --> 00:18:52,840 Speaker 1: you hear a lot about tech tenants or ceo saying 375 00:18:53,400 --> 00:18:55,879 Speaker 1: I'm gonna let my employees just work from home until 376 00:18:56,119 --> 00:19:00,360 Speaker 1: June or December or forever in some cases. Um, And 377 00:19:00,440 --> 00:19:02,480 Speaker 1: yet behind the scenes, when you talk to them, and 378 00:19:02,560 --> 00:19:05,359 Speaker 1: I spent a lot of my time doing exactly that, 379 00:19:05,440 --> 00:19:09,280 Speaker 1: really trying to understand what their plans are, they realize 380 00:19:09,320 --> 00:19:12,479 Speaker 1: that this doesn't work from a long term perspective. They 381 00:19:12,560 --> 00:19:15,720 Speaker 1: realize that culture is not does not work. It is 382 00:19:15,720 --> 00:19:19,080 Speaker 1: not created over zoom. Interactions happen in the hallway and 383 00:19:19,160 --> 00:19:21,560 Speaker 1: you bump into each other. I know, certainly here it related. 384 00:19:21,600 --> 00:19:24,520 Speaker 1: That's how we work. It's a little bit less formal, 385 00:19:24,680 --> 00:19:27,639 Speaker 1: and our best meetings just occur when you walk down 386 00:19:27,680 --> 00:19:30,520 Speaker 1: the hall and see somebody, and it's it's hard to 387 00:19:30,640 --> 00:19:34,040 Speaker 1: create that on Zoom. You can't schedule that interaction. How 388 00:19:34,080 --> 00:19:36,960 Speaker 1: do you how do you train new people? You know, Uh, 389 00:19:37,440 --> 00:19:41,960 Speaker 1: you have an incoming class of analysts Goldman has new 390 00:19:42,280 --> 00:19:44,760 Speaker 1: analysts come in and what are they supposed to do 391 00:19:44,880 --> 00:19:48,119 Speaker 1: on Zoom? So I I ultimately do think UM, I 392 00:19:48,160 --> 00:19:51,960 Speaker 1: think the long run answer here is that there will 393 00:19:52,000 --> 00:19:55,320 Speaker 1: be more flexibility in the workplace. UM. I think that 394 00:19:55,720 --> 00:19:59,240 Speaker 1: employees value the ability to work from home a portion 395 00:19:59,280 --> 00:20:02,040 Speaker 1: of the time. If you divide a person's day into 396 00:20:02,240 --> 00:20:05,720 Speaker 1: the bump, into a law, an interactive meeting, and writing 397 00:20:06,040 --> 00:20:08,920 Speaker 1: an investment memo, which they can do by themselves, maybe 398 00:20:08,960 --> 00:20:11,680 Speaker 1: there's a way to divide that workout and the I'm 399 00:20:11,720 --> 00:20:15,159 Speaker 1: just using this investment memo writing actually happens, you know, 400 00:20:15,320 --> 00:20:18,439 Speaker 1: on Friday at home, um and the rest is But 401 00:20:18,520 --> 00:20:21,080 Speaker 1: it also needs to be a coordinated day because if 402 00:20:21,080 --> 00:20:23,600 Speaker 1: you have people randomly showing up and not showing up, 403 00:20:23,880 --> 00:20:26,960 Speaker 1: then that interaction doesn't happen either. So, in speaking to 404 00:20:27,040 --> 00:20:29,719 Speaker 1: some of the tech tunk companies. That's what I'm hearing 405 00:20:29,880 --> 00:20:32,080 Speaker 1: as a potential outcome of this. They might be that 406 00:20:32,600 --> 00:20:35,560 Speaker 1: this group says on Thursday, we're gonna have work from 407 00:20:35,560 --> 00:20:37,919 Speaker 1: home day, but everybody else and it has to be 408 00:20:37,960 --> 00:20:40,520 Speaker 1: the same day, so then everybody's out and then the 409 00:20:40,520 --> 00:20:43,200 Speaker 1: rest of the time everyone interacts together. So I really 410 00:20:43,200 --> 00:20:45,640 Speaker 1: do think people want to get back to the office 411 00:20:46,240 --> 00:20:50,960 Speaker 1: for culture, for training, um and quite honestly, for just socialization. 412 00:20:51,200 --> 00:20:54,080 Speaker 1: That was Jeff blou CEO of Related Companies at the 413 00:20:54,119 --> 00:20:57,600 Speaker 1: Bloomberg Year Ahead Summit. Coming up, we wrap up the 414 00:20:57,600 --> 00:21:00,879 Speaker 1: week as always with special contributor Larry Summers of Harvard. 415 00:21:01,240 --> 00:21:08,600 Speaker 1: That's next on Wall Street Week on Bloomberg. This is 416 00:21:08,640 --> 00:21:13,000 Speaker 1: Bloomberg Wall Street Week with David Weston from Bloomberg Radio. 417 00:21:13,320 --> 00:21:15,920 Speaker 1: We wrap up every week with our special contributor Larry 418 00:21:16,000 --> 00:21:18,400 Speaker 1: Summers of Harvard, and this week we have to get 419 00:21:18,480 --> 00:21:21,560 Speaker 1: Larry's thoughts on the phenomenon that is Game Stop and 420 00:21:21,600 --> 00:21:23,720 Speaker 1: what it may tell us about the state of our markets, 421 00:21:23,760 --> 00:21:28,200 Speaker 1: our economy, and maybe our politics. More broadly, I should say, Larry, 422 00:21:28,240 --> 00:21:30,280 Speaker 1: so thank you so much for being with us. You're 423 00:21:30,280 --> 00:21:32,720 Speaker 1: a macro economist, You're how to day trader that I'm 424 00:21:32,720 --> 00:21:35,000 Speaker 1: aware of. You're not a short seller that I'm aware of, 425 00:21:35,359 --> 00:21:37,639 Speaker 1: so I'm not asking about as a trader. But for 426 00:21:37,760 --> 00:21:40,600 Speaker 1: a macro perspective, is game stop let me put it 427 00:21:40,680 --> 00:21:44,080 Speaker 1: simply a fluke or a symptom. Think it's a bit 428 00:21:44,080 --> 00:21:48,399 Speaker 1: of both. I think it points up that there's a 429 00:21:48,400 --> 00:21:51,920 Speaker 1: lot of activity in finance and in financial markets that's 430 00:21:51,960 --> 00:21:56,760 Speaker 1: not necessarily particularly productive or particularly rational, and that there's 431 00:21:56,760 --> 00:22:02,440 Speaker 1: a need for adult supervision uh sometimes. Uh. I don't 432 00:22:02,480 --> 00:22:05,240 Speaker 1: think that this is something that's either gonna lift the 433 00:22:05,280 --> 00:22:10,520 Speaker 1: economy up or bring the america An economy uh down, 434 00:22:10,760 --> 00:22:15,080 Speaker 1: but it does seem like there's more risk uh than 435 00:22:15,160 --> 00:22:19,119 Speaker 1: there has to be born in a variety of directions. 436 00:22:19,200 --> 00:22:21,399 Speaker 1: So that's a question. Really, could this be a canary 437 00:22:21,480 --> 00:22:24,680 Speaker 1: in the mind chaff The economy is not gonna make 438 00:22:24,720 --> 00:22:27,200 Speaker 1: it or not make it based on game Stop? Goodness knows, 439 00:22:27,680 --> 00:22:30,399 Speaker 1: but it could be an indication. Couldn't it of of 440 00:22:30,400 --> 00:22:32,800 Speaker 1: of sort of froth or even more than fourth maybe 441 00:22:32,800 --> 00:22:35,040 Speaker 1: a bubble, as you know, Chair Polls asked about that 442 00:22:35,280 --> 00:22:38,920 Speaker 1: this week. Look, I think you've got to be concerned. 443 00:22:39,560 --> 00:22:44,280 Speaker 1: Game stop is one thing the ways in which I 444 00:22:44,400 --> 00:22:47,240 Speaker 1: p o s have popped by a factor of two 445 00:22:47,320 --> 00:22:55,000 Speaker 1: or three. The new financing vehicles associated with some of 446 00:22:55,119 --> 00:22:58,520 Speaker 1: what's happened in the SPAC sector, certainly not all of 447 00:22:58,560 --> 00:23:03,160 Speaker 1: what's happened in the spack sector. All of this has 448 00:23:03,240 --> 00:23:08,840 Speaker 1: a slight feeling of two thousand or nineteen nine UH 449 00:23:09,040 --> 00:23:12,240 Speaker 1: in UH the air. And so I think the idea 450 00:23:12,320 --> 00:23:15,119 Speaker 1: that we've got a new group of financial regulators coming 451 00:23:15,160 --> 00:23:20,600 Speaker 1: in who are more committed to regulation than the previous group, 452 00:23:21,160 --> 00:23:25,960 Speaker 1: I think that's all welcome. Whether that means that markets 453 00:23:26,080 --> 00:23:31,199 Speaker 1: or in some aggregate sense UH overvalued, UH, that's not 454 00:23:31,280 --> 00:23:35,800 Speaker 1: a judgment that I'd be prepared to reach UH certainly 455 00:23:35,800 --> 00:23:41,879 Speaker 1: with confidence. But I certainly think risks are in a 456 00:23:41,920 --> 00:23:47,280 Speaker 1: two way direction. But I also think David, that you 457 00:23:47,359 --> 00:23:51,280 Speaker 1: gotta look at both sideses. Yes, there is retail frauth. 458 00:23:52,040 --> 00:23:56,720 Speaker 1: Not everything that's done by short short sellers is especially 459 00:23:56,760 --> 00:24:01,159 Speaker 1: attractive either, And certainly there have been excesses of the 460 00:24:01,280 --> 00:24:07,399 Speaker 1: practice of short selling and then trying to disparage. And 461 00:24:07,840 --> 00:24:09,840 Speaker 1: so there are things that have gone on in the 462 00:24:09,920 --> 00:24:14,560 Speaker 1: hedge fund UH community that I think UH can at 463 00:24:14,640 --> 00:24:20,440 Speaker 1: least be questioned as well. And in general, the activity 464 00:24:20,480 --> 00:24:23,199 Speaker 1: of some people trying to shorten other people trying to 465 00:24:23,880 --> 00:24:28,240 Speaker 1: uh squeeze them, and people trying to create bandwagons to 466 00:24:28,400 --> 00:24:35,679 Speaker 1: the down to the downside. It's a pretty imperfect business, 467 00:24:35,800 --> 00:24:39,600 Speaker 1: and I don't think anybody can feel entirely comfortable about 468 00:24:39,640 --> 00:24:42,959 Speaker 1: what's there. I guess the other caution I'd want to 469 00:24:43,040 --> 00:24:49,440 Speaker 1: put is not all well intentioned regulation works out well. 470 00:24:50,440 --> 00:24:53,720 Speaker 1: And you know, it turned out that in their early incarnations, 471 00:24:53,840 --> 00:25:00,080 Speaker 1: certainly circuit breakers ended up exacerbating volatility because people start 472 00:25:00,080 --> 00:25:03,280 Speaker 1: it's selling when they were afraid the market might close. 473 00:25:04,119 --> 00:25:07,439 Speaker 1: In the incarnation that got put in, some of the 474 00:25:07,560 --> 00:25:11,639 Speaker 1: rules we had on money market funds actually made runs 475 00:25:11,680 --> 00:25:15,960 Speaker 1: on money market funds more likely, not less likely. So 476 00:25:16,440 --> 00:25:22,240 Speaker 1: indignation and dismay about the status quo maybe a necessary 477 00:25:22,320 --> 00:25:26,520 Speaker 1: condition for new regulation, but it's not a sufficient condition 478 00:25:26,960 --> 00:25:30,080 Speaker 1: for any kind of regulations. So I think we're gonna 479 00:25:30,359 --> 00:25:34,520 Speaker 1: need the people are with regula, story and responsibility to 480 00:25:34,600 --> 00:25:38,160 Speaker 1: sit down and consult with all the parties, reflect very 481 00:25:38,240 --> 00:25:43,000 Speaker 1: carefully on what's happened here and what its lessons are. 482 00:25:43,280 --> 00:25:45,320 Speaker 1: And it raises the question, does it not larry or 483 00:25:45,320 --> 00:25:47,879 Speaker 1: whether this is a matter of conduct of behavior that 484 00:25:47,920 --> 00:25:50,440 Speaker 1: you want to modify or whether there's a more structural 485 00:25:50,520 --> 00:25:53,040 Speaker 1: cause of it. And we've had a lot of easy 486 00:25:53,080 --> 00:25:55,800 Speaker 1: monetary policy for twelve years or so now, but even 487 00:25:55,840 --> 00:25:58,159 Speaker 1: more than that, we've had growing income and wealth in 488 00:25:58,240 --> 00:26:00,440 Speaker 1: equality long before we had the two as an eight 489 00:26:00,720 --> 00:26:03,080 Speaker 1: great financial crisis. How much of this is almost a 490 00:26:03,080 --> 00:26:07,399 Speaker 1: political expression rather the financial expression of dissatisfaction with the 491 00:26:07,440 --> 00:26:10,240 Speaker 1: way things are David I, I I think I would not 492 00:26:10,720 --> 00:26:17,680 Speaker 1: look to monetary policy or to um broad political forces 493 00:26:17,680 --> 00:26:21,280 Speaker 1: around inequality to explain what's happening at game stock. I 494 00:26:21,320 --> 00:26:27,640 Speaker 1: think that's more about technology transforming markets and the kind 495 00:26:27,680 --> 00:26:32,480 Speaker 1: of things that digitalization is permitting in terms of gamifying 496 00:26:33,080 --> 00:26:37,760 Speaker 1: a lot of U market type activities. It's got to 497 00:26:37,800 --> 00:26:41,000 Speaker 1: do with people's desire for thrills. After sitting at home 498 00:26:41,040 --> 00:26:46,600 Speaker 1: for twelve months UH with UH COVID, I wouldn't look 499 00:26:46,720 --> 00:26:51,480 Speaker 1: to read a macro economic moral into game stop, though 500 00:26:51,880 --> 00:26:57,560 Speaker 1: who knows about the overall UH overall level of markets. 501 00:26:57,920 --> 00:27:01,320 Speaker 1: I certainly do think there are various aspects of conduct, 502 00:27:01,400 --> 00:27:06,040 Speaker 1: but also aspects of UH structure, and we've just got 503 00:27:06,200 --> 00:27:11,680 Speaker 1: to think about when some of the natural inhibitors are 504 00:27:12,960 --> 00:27:16,960 Speaker 1: lost UH, you need to think about other things when 505 00:27:17,000 --> 00:27:20,080 Speaker 1: cars could only go forty miles an hour, there was 506 00:27:20,160 --> 00:27:23,680 Speaker 1: much less need for speed limits then when cars developed 507 00:27:23,680 --> 00:27:26,800 Speaker 1: a capacity to go a hundred uh miles an hour. 508 00:27:27,359 --> 00:27:31,720 Speaker 1: And that's the kind of issue that has presented itself 509 00:27:32,440 --> 00:27:36,880 Speaker 1: right now, you know, to take a uh public policy 510 00:27:36,960 --> 00:27:40,880 Speaker 1: that Wall Street doesn't like, uh really doesn't like at all. 511 00:27:41,600 --> 00:27:45,520 Speaker 1: You see the kind of volume in game Stop, and 512 00:27:45,760 --> 00:27:49,520 Speaker 1: you wonder whether if there was a small transactions tax, 513 00:27:50,240 --> 00:27:54,600 Speaker 1: even of ten or twenty basis points on each share traded, 514 00:27:55,119 --> 00:27:58,879 Speaker 1: whether you wouldn't contain a lot of that and in 515 00:27:58,920 --> 00:28:03,640 Speaker 1: the process can tain a lot of mania. And that's 516 00:28:03,680 --> 00:28:07,520 Speaker 1: a policy that would disproportionately fall on the affluent, but 517 00:28:07,640 --> 00:28:11,160 Speaker 1: would tend to be an inhibitor of this kind of activity. 518 00:28:11,200 --> 00:28:16,960 Speaker 1: And so I just what everyone thought about transactions taxes yesterday. 519 00:28:17,000 --> 00:28:19,560 Speaker 1: They look a little better as an idea today. That 520 00:28:19,640 --> 00:28:23,720 Speaker 1: doesn't mean we should rush out and uh implement them, 521 00:28:23,720 --> 00:28:28,560 Speaker 1: but I would be more looking to the changes associated 522 00:28:28,600 --> 00:28:33,480 Speaker 1: with it as a route here than I would too 523 00:28:33,680 --> 00:28:37,920 Speaker 1: easy monetary policy. Concerned as I am about the long 524 00:28:38,000 --> 00:28:41,720 Speaker 1: run consequences of easy monetary policy, where does this all lead? 525 00:28:41,800 --> 00:28:44,400 Speaker 1: I mean, this week we had the likes of Alexandria 526 00:28:44,560 --> 00:28:47,920 Speaker 1: Kazira Cortez joined together with Ted Cruz for goingness sake 527 00:28:48,040 --> 00:28:51,040 Speaker 1: to agree there's gotta be a congressional investigation. Where does 528 00:28:51,080 --> 00:28:54,400 Speaker 1: Washington take something like this look. I'd almost be prepared 529 00:28:54,480 --> 00:28:58,840 Speaker 1: to say that whenever ao C and take Cruise agree, 530 00:28:59,320 --> 00:29:05,080 Speaker 1: they're wrong, and that there's a general principle when a 531 00:29:05,320 --> 00:29:11,480 Speaker 1: cause attracts the attention of both extremes, you have to 532 00:29:11,560 --> 00:29:17,680 Speaker 1: worry a lot about that particular cause. And I think 533 00:29:17,760 --> 00:29:24,200 Speaker 1: the idea that somehow people who are involved in this 534 00:29:24,640 --> 00:29:29,440 Speaker 1: are really great social justice warriors um and that this 535 00:29:29,520 --> 00:29:32,720 Speaker 1: is an occasion to get the man. I don't think 536 00:29:32,720 --> 00:29:37,440 Speaker 1: it's a particularly fruitful way to think about policy. But 537 00:29:37,960 --> 00:29:41,000 Speaker 1: my guess is that two things are gonna happen. One 538 00:29:41,200 --> 00:29:45,640 Speaker 1: is this thing is gonna in some ways sitting it's 539 00:29:45,640 --> 00:29:48,800 Speaker 1: own undoing. They're gonna be some painful lessons learned. People 540 00:29:48,880 --> 00:29:52,480 Speaker 1: are gonna be more careful about shorts, about shorting because 541 00:29:52,480 --> 00:29:55,719 Speaker 1: they got squeezed and routed on the one side. And 542 00:29:56,080 --> 00:29:58,800 Speaker 1: people who are involved in pushing this stock up to 543 00:29:58,960 --> 00:30:01,400 Speaker 1: ludicrous levels or probably gonna end up losing a lot 544 00:30:01,440 --> 00:30:04,240 Speaker 1: of money and they're gonna learn a lesson from that too. 545 00:30:04,320 --> 00:30:06,880 Speaker 1: So to some extent, this thing is going to teach 546 00:30:06,920 --> 00:30:12,440 Speaker 1: its own lessons, and I think the dull work of government. 547 00:30:12,840 --> 00:30:16,440 Speaker 1: We're not going to have any instant legislation, but we're 548 00:30:16,480 --> 00:30:20,760 Speaker 1: gonna have committees formed to study various aspects of this 549 00:30:21,000 --> 00:30:25,240 Speaker 1: and to make recommendations that are then considered. Is actually 550 00:30:25,280 --> 00:30:28,920 Speaker 1: gonna probably lead us with better financial funk markets and 551 00:30:29,320 --> 00:30:34,000 Speaker 1: a better set of rules than the rules we have today. Larry, 552 00:30:34,040 --> 00:30:35,880 Speaker 1: it's always such a pleasure to deal with you every 553 00:30:35,880 --> 00:30:38,200 Speaker 1: single week. That is Special Wall Street. We contribute to 554 00:30:38,240 --> 00:30:42,840 Speaker 1: Larry Summers of Harvard. Finally, one more thought. The vaccination 555 00:30:42,880 --> 00:30:46,600 Speaker 1: side eight hundred years in the making. As we press 556 00:30:46,640 --> 00:30:50,600 Speaker 1: forward urgently, impatiently to get as many people vaccine as 557 00:30:50,680 --> 00:30:54,400 Speaker 1: soon as possible, we face a series of hurdles manufacturing 558 00:30:54,440 --> 00:30:57,600 Speaker 1: doses as fast as we can, testing and approving new vaccines, 559 00:30:57,800 --> 00:31:01,640 Speaker 1: getting the medicine distributed, cover the last mile, and getting 560 00:31:01,640 --> 00:31:04,720 Speaker 1: it into people's arms. But of all the problems we face, 561 00:31:05,080 --> 00:31:08,400 Speaker 1: real estate isn't really one of them. Google the term 562 00:31:08,640 --> 00:31:11,640 Speaker 1: mass vaccination sites and you get almost one and a 563 00:31:11,680 --> 00:31:16,640 Speaker 1: half million results, everything from pharmacies to hospitals to sports arenas. 564 00:31:16,800 --> 00:31:19,120 Speaker 1: But there's only one that has the highest spire in 565 00:31:19,160 --> 00:31:22,600 Speaker 1: all of England. The largest cathedral closed the largest cloister, 566 00:31:22,640 --> 00:31:25,840 Speaker 1: and that is the Cathedral of Salisbury, where, according to legend, 567 00:31:25,840 --> 00:31:28,400 Speaker 1: at least back in about twelve twenty or so, a 568 00:31:28,440 --> 00:31:31,240 Speaker 1: bishop shot an arrow into the air hit a deer, 569 00:31:31,360 --> 00:31:33,920 Speaker 1: and where the deer fell is where they built the cathedral. 570 00:31:34,120 --> 00:31:37,640 Speaker 1: And that cathedral now is a mass vaccination site. And 571 00:31:37,720 --> 00:31:40,440 Speaker 1: now the chapel of Saint Michael the archangel is filled 572 00:31:40,480 --> 00:31:43,920 Speaker 1: with refrigerators for the vaccine. The huge nave is full 573 00:31:43,960 --> 00:31:47,560 Speaker 1: of chairs rather than pused, and that's where the elderly 574 00:31:47,720 --> 00:31:50,120 Speaker 1: who have been inoculated wait to make sure they have 575 00:31:50,600 --> 00:31:55,400 Speaker 1: no allergic reaction, Wait while two church organists play soothing 576 00:31:55,480 --> 00:31:58,600 Speaker 1: music while they wait. You can call it san freud, 577 00:31:58,880 --> 00:32:00,760 Speaker 1: you can call it a stiff up a lip. But 578 00:32:00,880 --> 00:32:03,360 Speaker 1: as we all wait for the vaccine we believe will 579 00:32:03,400 --> 00:32:06,080 Speaker 1: save us, leave it to the Brits to do it 580 00:32:06,280 --> 00:32:09,600 Speaker 1: with class. That does it. For this episode of Wall 581 00:32:09,600 --> 00:32:12,600 Speaker 1: Street Week, I'm David Weston. This is Bloomberg. See you 582 00:32:12,600 --> 00:32:15,200 Speaker 1: next week. M