WEBVTT - Bloomberg Wall Street Week - January 27, 2023 0:00:00.520 --> 0:00:03.760 This is Bloomberg Wall Street Week. We turn our attention 0:00:03.840 --> 0:00:07.600 to the markets this week us CPI members reinforcing concerns 0:00:07.600 --> 0:00:10.800 about inflation. The financial stories that chief are worth a 0:00:10.840 --> 0:00:13.760 really different reaction to mark its more indications of just 0:00:13.960 --> 0:00:16.360 how hot the U. S economy really is. Through the 0:00:16.400 --> 0:00:19.799 eyes of the most influential voices Larry Summers, the former 0:00:19.800 --> 0:00:22.799 Treachery Secretary, Katherine Keating, CEO of v n y moin 0:00:22.960 --> 0:00:26.239 Sam's l Sharman and founder of Equatic Group Investment in 0:00:26.320 --> 0:00:31.400 Bloomberg Wall Street Week with David Weston from Bloomberg Radio. Inflation, 0:00:31.600 --> 0:00:34.320 a slowing economy, a climate on the brink, and a 0:00:34.320 --> 0:00:36.920 new world order in the making. But the great and 0:00:37.040 --> 0:00:39.880 the goods still find room for optimism as they gather 0:00:40.000 --> 0:00:43.240 in Switzerland. This is a special Davos edition of Wall 0:00:43.240 --> 0:00:46.680 Street Week. I'm David Weston. This week we talked with 0:00:46.760 --> 0:00:50.720 the leaders of Global Wall Street about the economy. Business 0:00:51.520 --> 0:00:54.280 is clear, evidence inflation has in fact PETE ten is 0:00:54.320 --> 0:00:56.639 coming down. It's a funny thing when people say inflation 0:00:56.680 --> 0:01:00.120 has peaked. Inflation is just going to grow slower, And 0:01:00.280 --> 0:01:05.160 why the big issues like inequality and climate and geopolitics 0:01:05.160 --> 0:01:08.120 matter for both of those. We were trying to address 0:01:08.160 --> 0:01:12.920 the misconceptions a transition has to always be fair and justice. Well, 0:01:12.959 --> 0:01:15.839 it's got a number of major transitions that we're going through. 0:01:16.040 --> 0:01:18.280 Our focus is trying to move the noise out the 0:01:18.280 --> 0:01:21.080 way and actually roll up our leaves and get on 0:01:21.319 --> 0:01:24.839 with the hard work. And we speak to our special 0:01:24.840 --> 0:01:29.080 contribual Larry Summers on the potential for default on the 0:01:29.160 --> 0:01:33.720 US debt. This is potential tragedy is far. It would 0:01:33.720 --> 0:01:40.560 be catastrophic and inconceivable for the United States to default. 0:01:54.280 --> 0:01:58.040 Every winter pandemic permitting. Global Wall Street makes the trek 0:01:58.080 --> 0:02:01.240 to the Swiss Alps for the World Economic Forum, an 0:02:01.320 --> 0:02:04.240 organization started forty two years ago by Swiss engineer and 0:02:04.280 --> 0:02:08.280 economist Claus Schwab to gather leaders of business, government and 0:02:08.360 --> 0:02:11.680 academia to, as he put it, improved the state of 0:02:11.720 --> 0:02:14.440 the world. He spoke at the beginning of the conference 0:02:14.480 --> 0:02:19.320 about some of the thorniest issues today hot spots of 0:02:19.440 --> 0:02:29.000 sicio economically modeling high inflation, inflation, increasing interest lates and 0:02:29.240 --> 0:02:38.799 going national debt. This is particularly hurting low income groups. 0:02:39.520 --> 0:02:46.120 It is ex somebodying societal fugmentation. As Klaus Schwab says, 0:02:46.160 --> 0:02:49.400 we have some global economic issues to deal with, starting 0:02:49.440 --> 0:02:52.240 with at least the possibility of a recession, something that 0:02:52.320 --> 0:02:55.840 City CEO Jane Fraser told us she anticipates, though it 0:02:55.919 --> 0:02:58.840 may not be a bad one. We do have we 0:02:58.880 --> 0:03:00.799 do what we all see as the ferent countries are 0:03:00.800 --> 0:03:04.520 a very different places, so you actually cannot speak in generalities. 0:03:04.919 --> 0:03:09.079 We expect to see a rolling series of country recessions, 0:03:09.120 --> 0:03:14.040 but short of anything crazy happening geopolitically, and this time 0:03:14.120 --> 0:03:18.240 last year we wouldn't have predicted what happened in the Ukraine. Um, 0:03:18.360 --> 0:03:20.640 you've seen the tales come in, so you've seen the 0:03:20.840 --> 0:03:25.280 over optimism from some about soft landings and the economy 0:03:25.360 --> 0:03:27.560 is doing well, but he gree you've seen the down 0:03:27.720 --> 0:03:31.520 the severe case downside also coming in. I think the 0:03:31.600 --> 0:03:34.200 general view in the States, certainly one we hold that 0:03:34.320 --> 0:03:38.640 city is we expect to see a mild recession UM, 0:03:38.720 --> 0:03:44.440 largely driven by the painfully persistent service inflation. UM. It's 0:03:44.480 --> 0:03:46.840 coming off, but it's still pretty high, and we do 0:03:46.920 --> 0:03:50.840 expect to see central banks continue tightening as a result. 0:03:52.000 --> 0:03:57.880 But the vulnerabilities that amplified previous recessions around the world 0:03:57.960 --> 0:04:01.320 are not present. No thanks are in very good shape. 0:04:01.360 --> 0:04:04.440 Consumer balance sheets are in good shape, corporate balance sheets 0:04:04.440 --> 0:04:07.800 are in good shape, and I think that omens well 0:04:08.360 --> 0:04:13.880 for a mild recessions when they come, rather than ones 0:04:13.960 --> 0:04:17.320 that we have to be worried about. Jane Fraser sees 0:04:17.320 --> 0:04:19.719 a rolling recession around the world, but maybe, just maybe 0:04:19.720 --> 0:04:23.080 it won't roll to Europe after all. After German Chancellor 0:04:23.120 --> 0:04:25.360 ol Of Schultz told our editor in chief John michaels 0:04:25.360 --> 0:04:28.200 Wade that he does not anticipate a recession in Germany 0:04:28.240 --> 0:04:31.600 this year, and Gary Cohne, he's now vice chair of IBM, 0:04:31.680 --> 0:04:35.160 agrees with him. I thought that the risk to Germany 0:04:35.279 --> 0:04:37.960 was really the energy situation going into the winter, to 0:04:38.040 --> 0:04:40.680 the extent that we had a very cold winter and 0:04:40.720 --> 0:04:43.839 they had to start rationing energy and they had to 0:04:43.839 --> 0:04:47.960 cut back industrial Germany to keep people warm. I felt 0:04:48.000 --> 0:04:51.080 that that was a really tough situation. Potentially, we're now 0:04:51.240 --> 0:04:52.719 deep enough into the winter and we sort of know 0:04:52.760 --> 0:04:55.280 where we are, we know what's in reserve and storage. 0:04:55.320 --> 0:04:57.160 I think Germany is gonna get through the winter very 0:04:57.200 --> 0:04:59.640 fairly easily with energy, and I think they're going to 0:04:59.680 --> 0:05:01.919 continue to power through this. So I'm in agreement with 0:05:01.920 --> 0:05:05.119 the Chancellor, all of which led to a somewhat more 0:05:05.160 --> 0:05:09.360 positive outlook at the World Economic Forum than some had anticipated. 0:05:09.680 --> 0:05:13.440 As observed by Mary Callahan Urdos, responsible for investing four 0:05:13.480 --> 0:05:17.400 point one trillion dollars at JP Morgan Asset and Wealth Management, 0:05:18.440 --> 0:05:20.760 I would say the tone here, having come here for 0:05:20.800 --> 0:05:24.919 the past decade, is less depressed than it than it 0:05:25.000 --> 0:05:27.839 often is, which is a good sign of hope of 0:05:27.880 --> 0:05:31.120 what's happening out there in the world. Having come off 0:05:31.160 --> 0:05:35.159 of the most difficult year for a balanced portfolio sixty forty, 0:05:35.200 --> 0:05:37.479 whether you were in stocks or bonds or anything in between, 0:05:37.800 --> 0:05:40.600 it was pretty rough sledding, and so I think everyone's 0:05:41.560 --> 0:05:44.000 happy that that's behind us and looking forward. And the 0:05:44.560 --> 0:05:46.680 job of what all of us at JP Morgan do 0:05:47.279 --> 0:05:49.479 is work on advising clients through the cycle. And so 0:05:49.520 --> 0:05:51.520 we're going to have lots of boom and bust cycles, 0:05:52.160 --> 0:05:54.480 and I think the most important thing is to stay 0:05:54.480 --> 0:05:58.440 focused on diversification opportunity, not getting wedded to any one 0:05:58.520 --> 0:06:00.080 thing that looks like it worked in the past that 0:06:00.160 --> 0:06:02.400 may not work in the future, and so we're spending 0:06:02.400 --> 0:06:04.040 we're spending a lot of time on that. I mean, 0:06:04.080 --> 0:06:07.919 one of the things that really manifested itself through COVID 0:06:08.160 --> 0:06:11.360 was the problem of home country bias, which creeps into 0:06:11.400 --> 0:06:14.760 almost everybody's portfolios. Uh, and you have to be very 0:06:14.800 --> 0:06:17.279 aware and conscious of of diversifying out of it. So 0:06:17.360 --> 0:06:19.520 not only home country bias in terms of the stocks 0:06:19.520 --> 0:06:21.839 in the bond you buy, but also the currency. And 0:06:21.880 --> 0:06:24.320 I think it's now a really important time that people 0:06:24.360 --> 0:06:27.840 think about how to get all of that the opportunities 0:06:27.839 --> 0:06:29.719 that they may have missed in other parts of the world, 0:06:30.279 --> 0:06:32.880 especially parts of the world that are reopening and making 0:06:32.920 --> 0:06:36.760 it very interesting. Morgan Stanley is James Gorman agreed that 0:06:36.800 --> 0:06:41.359 there is room for optimism, not least because of China. Well, 0:06:41.680 --> 0:06:43.640 you know, I've seen I've seen a lot of cycles 0:06:43.640 --> 0:06:47.599 in my career, and I've seen some really really dark periods. 0:06:47.640 --> 0:06:52.040 You know, the financial crisis have to September eleven, even 0:06:52.080 --> 0:06:54.080 though you know the early recessions in the US and 0:06:55.560 --> 0:06:57.680 the market bust and seven year I go back up 0:06:57.680 --> 0:06:59.840 a lot, you I go back a long way, and 0:07:01.120 --> 0:07:03.719 you know, I think what we've been through if you 0:07:03.800 --> 0:07:06.880 stack up the negative stuff that happened first lame we're 0:07:06.880 --> 0:07:09.720 in European seventy years, first global pandemic in a century 0:07:09.960 --> 0:07:14.680 and highest rate increase because of inflation in forty years. 0:07:14.960 --> 0:07:17.880 That's a lot to throw up people. And where are 0:07:17.920 --> 0:07:20.920 we now so bad? The debate is will it be 0:07:20.920 --> 0:07:23.560 a recession? Will it be shortened? Show nobody's saying we 0:07:23.680 --> 0:07:27.040 go into depression right, everybody's saying, we can kind of 0:07:27.080 --> 0:07:29.320 deal with this. And two things I think have changed 0:07:29.320 --> 0:07:33.240 in the last month which has caused this echo chamber 0:07:33.280 --> 0:07:36.080 we live in here and dove us where everybody's basically 0:07:36.080 --> 0:07:37.920 repeating back to each other what they've heard from the 0:07:38.000 --> 0:07:41.960 last person. Let's be honest. I'm not hopefully, but most 0:07:42.000 --> 0:07:46.680 people are. Is two things have changed. Number one, the 0:07:46.680 --> 0:07:50.040 inflation numbers are definitely there's clear evidence inflation has in 0:07:50.120 --> 0:07:53.800 fact peaked and is coming down right how quickly? Whether 0:07:53.800 --> 0:07:55.480 the Fed will get us to two percent and when 0:07:55.880 --> 0:07:58.960 remains the debate, but is clearly the slope of the 0:07:59.000 --> 0:08:01.800 line as positive is um to everybody's favorite. And the 0:08:01.840 --> 0:08:05.680 second is not just the opening up of China, but 0:08:05.920 --> 0:08:10.640 China has embraced the rest of the world more aggressively 0:08:10.800 --> 0:08:12.960 in the last few weeks, witnessed by the Vice Premier 0:08:13.080 --> 0:08:16.600 meeting with Treasury Secretary yelling Um in a way that 0:08:16.640 --> 0:08:19.320 we haven't seen for some time. So the big question 0:08:19.400 --> 0:08:23.200 coming out of the Party Congress and President she um 0:08:23.320 --> 0:08:27.320 uh you know, being real reelected by the Congress, was 0:08:27.440 --> 0:08:30.160 way does China go from here? Back of America Chief 0:08:30.280 --> 0:08:34.079 Brian moynihan agreed with others about the likelihood of recession, 0:08:34.280 --> 0:08:36.040 but at the same time and not being too severe 0:08:36.280 --> 0:08:39.000 be based on the strength of the consumer and also 0:08:39.120 --> 0:08:43.520 the strong labor market in the US. Our research team, 0:08:43.520 --> 0:08:45.720 which is the best in the business, has a mild 0:08:45.720 --> 0:08:48.440 recession predicted sort of mid this year. In the next year, 0:08:48.760 --> 0:08:50.880 they pushed that out, and so why they keep pushing 0:08:50.920 --> 0:08:52.679 out it's the strength of the US consumer. They have 0:08:52.720 --> 0:08:55.760 the FED getting over five five five and a quarter. 0:08:56.160 --> 0:08:59.160 Just this week they moved at the three basis point 0:08:59.240 --> 0:09:01.760 rate rises a phoe the fifty, meaning again the Fed 0:09:01.840 --> 0:09:03.600 can slow down a little bit because you see inflation 0:09:03.720 --> 0:09:05.920 go over um and so that's what you have. And 0:09:05.960 --> 0:09:07.880 so this year ends up being positive, next ye ends 0:09:07.920 --> 0:09:09.319 up being positive, but you have a little trough in 0:09:09.360 --> 0:09:11.920 the middle. Employment is still strong, people are working, they're 0:09:11.920 --> 0:09:13.959 getting paid more, but they've got to get to inflation. 0:09:14.000 --> 0:09:15.600 So they have to keep the rate structure up here 0:09:15.600 --> 0:09:17.480 for a fair amount of time until they get the 0:09:17.480 --> 0:09:21.120 services side inflation down and the market maybe mis reading 0:09:21.320 --> 0:09:23.280 how fast that will take. But on the other hand, 0:09:23.559 --> 0:09:24.840 we're a heck of a lot better shaped than all 0:09:24.840 --> 0:09:26.920 these other economies that I talked about it, that's for sure. 0:09:27.000 --> 0:09:29.480 So pushed out the possible recession your research team did, 0:09:30.080 --> 0:09:32.440 is it also looking shallower because the economy is more 0:09:32.480 --> 0:09:35.760 resilient than we thought it was. Well, the consumer is 0:09:35.840 --> 0:09:39.199 very resilient, and you look new claims from unemployment, we're 0:09:39.200 --> 0:09:42.559 down in the one nine thousand. Before the two thousands 0:09:42.960 --> 0:09:47.360 seven eight UH recession, Great recession, Financial crisis, they ran 0:09:47.440 --> 0:09:50.880 three D thirty thousand each posting. So to think about 0:09:50.920 --> 0:09:53.640 that difference in the workforce about bigger, These are down 0:09:53.679 --> 0:09:56.280 to numbers consistent where they were in you know, fifty 0:09:56.360 --> 0:09:58.120 years ago when the workforce was half as big. So 0:09:58.240 --> 0:10:00.839 the employment still strong. Now. Are all being more careful 0:10:00.840 --> 0:10:03.680 about higher we're all trimming our head count by attrition 0:10:03.760 --> 0:10:06.040 or we're all flatting out in some industries are actually 0:10:06.080 --> 0:10:08.080 taking head count down. So that may change. That hasn't 0:10:08.160 --> 0:10:10.319 changed yet. The money in our counts is still there 0:10:10.360 --> 0:10:12.480 from and it's come down a little bit they're starting 0:10:12.520 --> 0:10:14.360 to spend it. But on the other hand, it's multiples 0:10:14.400 --> 0:10:16.280 where it was pre pandemic. They have lots lots of 0:10:16.280 --> 0:10:21.920 barring capacity. Now what's going quickly stopping. Obviously mortgage has 0:10:21.920 --> 0:10:24.960 got expensive, in house purchases stop. But the dollar value 0:10:24.960 --> 0:10:28.880 of housing that went shot up after the recovery. Yes, 0:10:28.920 --> 0:10:30.599 it's come down, but still way above where it was 0:10:30.640 --> 0:10:33.720 in nineteen and so people have to think about this 0:10:33.760 --> 0:10:36.640 in the perspective long term growth rates that that fell 0:10:36.720 --> 0:10:39.080 and then shot up with all the stimulus, and now 0:10:39.080 --> 0:10:41.280 we're settling in and the ft has to bring inflation 0:10:41.320 --> 0:10:43.560 down because inflation will eat away purchasing power and that's 0:10:43.600 --> 0:10:48.400 really not good for especially media income household going up. 0:10:48.480 --> 0:10:51.240 We moved from the economy to another big topic for 0:10:51.280 --> 0:10:55.720 global Wall Street, geopolitics. That's next on this special edition 0:10:55.760 --> 0:11:07.120 of Bloomberg wall Stree Week from the World Economic Forum. 0:11:07.120 --> 0:11:09.200 This is a special edition of Wall Street Week from 0:11:09.200 --> 0:11:13.120 the World Economic Forum in Switzerland. I'm David Weston. Leaders 0:11:13.160 --> 0:11:15.800 gathered here this week against the backdrop of the largest 0:11:15.880 --> 0:11:19.079 ground war in Europe since World War Two, sanctions opposed 0:11:19.080 --> 0:11:21.960 on Russia for his invasion of Greek Crane prevented any 0:11:22.040 --> 0:11:25.079 Russians from actually attending, and China was represented by its 0:11:25.160 --> 0:11:28.319 Vice Premier to her, not its president. As a year's passed, 0:11:28.559 --> 0:11:31.800 but China nevertheless was very much a topic of conversation 0:11:32.000 --> 0:11:35.240 at the World Economic Forum. Ast Her actually left Davis 0:11:35.280 --> 0:11:37.439 to go over to Zurich to meet with Janet Jill 0:11:37.600 --> 0:11:40.640 and the U. S. Treasury Secretary, raising the prospect of 0:11:40.760 --> 0:11:44.000 maybe better relations between the United States and China. We 0:11:44.080 --> 0:11:48.200 asked US Trade Representative Catherine tie about her take on 0:11:48.320 --> 0:11:51.880 what was accomplished by that meeting with respect to trade. 0:11:52.200 --> 0:11:57.760 I think that expectations for everyone, UM, workers, families, businesses, 0:11:57.760 --> 0:12:01.320 in America, in China, around the world UM should be 0:12:01.559 --> 0:12:09.040 that President Biden is committed to bringing a thoughtful, deliberate, strategic, 0:12:09.360 --> 0:12:12.880 and ultimately effective approach to the challenges that we have 0:12:13.280 --> 0:12:15.160 as well as the opportunities that we have in this 0:12:15.520 --> 0:12:19.800 profoundly consequential trade relationship. W t O director and Gozi 0:12:19.920 --> 0:12:24.240 on koja O Wala is encouraged by possible thawing between 0:12:24.240 --> 0:12:27.960 the United States and China. There's quite a bit of 0:12:28.679 --> 0:12:32.240 optimism that has been attached to the opening up of China, 0:12:32.640 --> 0:12:35.440 and I think the meeting of Vielen and Luther is 0:12:35.440 --> 0:12:38.720 a good sign, but I think we should also keep 0:12:38.720 --> 0:12:42.760 it in check. Mary Callahan Urdos of JP Morgan says 0:12:42.800 --> 0:12:46.480 she's seeing some hopeful signs out of China already, having 0:12:46.520 --> 0:12:49.320 come back from Hong Kong just a few weeks ago. 0:12:49.640 --> 0:12:52.800 You can just see the pent up demand of what's there. 0:12:52.840 --> 0:12:54.959 People wanting to go in country, people wanting to come 0:12:55.000 --> 0:12:57.280 out of country to travel around the world. I think 0:12:57.320 --> 0:13:00.199 the opening up of China, while while we'll have that's 0:13:00.280 --> 0:13:02.720 ups and downs, uh, it will hopefully be a net 0:13:02.760 --> 0:13:05.760 exporter of deflation, which would be good for the world, 0:13:06.040 --> 0:13:08.679 getting all of those kinks out of the system, uh 0:13:08.720 --> 0:13:11.640 and really bringing back growth in a in a positive way. 0:13:11.800 --> 0:13:14.640 So I'm looking forward to that. I just say for 0:13:14.720 --> 0:13:17.719 us at JP Morgan, getting to see our people who 0:13:17.760 --> 0:13:19.800 are on the ground in China and have been working 0:13:20.120 --> 0:13:23.240 so hard throughout these many years um of us not 0:13:23.280 --> 0:13:25.559 being able to travel in We're really excited about that. 0:13:25.880 --> 0:13:29.520 We're looking forward um to lots of good reunions, UM 0:13:29.559 --> 0:13:31.680 and the like. But people are really excited, and I 0:13:31.679 --> 0:13:33.720 think it means a lot of things. The tone that 0:13:33.800 --> 0:13:36.960 you're hearing from many that are that are either going 0:13:37.000 --> 0:13:39.840 in already and or just listening to some of the 0:13:39.920 --> 0:13:44.600 conversations here today are really positive about what could be happening. 0:13:45.320 --> 0:13:49.200 And of course there's all sorts of um negotiations that 0:13:49.240 --> 0:13:51.040 have to happen to make sure that people do things 0:13:51.040 --> 0:13:53.800 in the right way, that people work forward to cooperation 0:13:54.480 --> 0:13:57.080 on a fair and even playing field. And I think 0:13:57.120 --> 0:13:59.080 that those are the important conversations that had to be 0:13:59.160 --> 0:14:01.800 that have to be head But now that we can 0:14:01.840 --> 0:14:03.280 do them in person, it's going to be a hell 0:14:03.360 --> 0:14:05.480 of a lot more fruitful to be able to do 0:14:05.520 --> 0:14:07.600 it that way than to try and do these things 0:14:07.880 --> 0:14:09.800 on some kind of a flat screen where you're not 0:14:09.960 --> 0:14:12.600 you're not able to have those personal connections that are 0:14:12.640 --> 0:14:17.359 so important when you're going through through these negotiations. For years, environmental, 0:14:17.440 --> 0:14:21.400 social and governance investing was all the rage, but it's 0:14:21.440 --> 0:14:24.680 become something of a political hot potato recently, with eighteen 0:14:24.720 --> 0:14:28.200 states now either enacting or proposing legislation to bar state 0:14:28.240 --> 0:14:31.280 governments from dealing with any financial institutions that take e 0:14:31.480 --> 0:14:35.200 s G into account in their investing. We asked Jane Fraser, 0:14:35.320 --> 0:14:38.480 CEO of City, whether her bank has lost any money 0:14:38.520 --> 0:14:40.440 because of E S g and she had a very 0:14:40.480 --> 0:14:44.760 simple direct answer, no, um. But but I think that's 0:14:44.800 --> 0:14:47.400 not really where we're focused. So when we look at it, 0:14:47.440 --> 0:14:50.080 the world's got a number of major transitions that we're 0:14:50.080 --> 0:14:52.720 going through, and to your point, these aren't These aren't 0:14:52.720 --> 0:14:56.760 easy ones. So where we're focused on is helping let's 0:14:56.760 --> 0:14:59.520 take climate, we're trying to make sure that there is 0:15:00.040 --> 0:15:04.000 both the realization of energy security for the world, which 0:15:04.080 --> 0:15:07.640 is critically important for economic growth. At the same time 0:15:08.040 --> 0:15:10.680 is that there is the investment and the innovation required 0:15:10.680 --> 0:15:15.720 in sustainable, green sources of energy and cleaner sources of energy, 0:15:15.800 --> 0:15:18.200 and we've got to solve both of them together. They're 0:15:18.240 --> 0:15:22.160 not mutually exclusive, um. So our focus is trying to 0:15:22.200 --> 0:15:24.960 move the noise out the way and actually roll up 0:15:24.960 --> 0:15:28.400 our sleeves and get on with the hard work of 0:15:28.440 --> 0:15:32.200 how do we um help support our clients who are 0:15:32.240 --> 0:15:35.320 investing in the innovations, get them to scale that we'll 0:15:35.360 --> 0:15:38.760 get those cleaner technologies that we need up and running 0:15:39.120 --> 0:15:42.000 at the same time as supporting clients who are also 0:15:42.120 --> 0:15:46.080 critical sources of energy for the world right now and 0:15:46.120 --> 0:15:49.360 helping them with that transition. But recognizing this takes time. 0:15:50.320 --> 0:15:53.520 Black Ruck, CEO Larry Think went even further to say 0:15:53.520 --> 0:15:56.200 that at least in Europe, if you do not have 0:15:56.240 --> 0:15:59.120 a lens towards a de carbonization, you're not gonna win 0:15:59.240 --> 0:16:04.000 one one year old business. You know, we are one 0:16:04.040 --> 0:16:07.800 of the largest hydrocarbon if not the largest hydrocarbon investor 0:16:07.840 --> 0:16:10.760 in the world, because we're the largest index er and 0:16:10.800 --> 0:16:13.040 we we work with all these different companies. At the 0:16:13.080 --> 0:16:15.920 same time, we're one of the fastest growing companies related 0:16:15.960 --> 0:16:19.360 to de carbonization. And let's be clear, the IRA in 0:16:19.360 --> 0:16:22.560 the United States is a game changer too, whether banks 0:16:22.600 --> 0:16:25.120 are losing money or making money from e s g. 0:16:25.360 --> 0:16:27.040 The one thing everything can agree and we need to 0:16:27.040 --> 0:16:28.800 know what it is and by the way, how to 0:16:28.880 --> 0:16:31.440 measure it. Something that Brian moynihan, the head of Bank 0:16:31.440 --> 0:16:34.000 of America, has been working on in his capacity as 0:16:34.120 --> 0:16:38.800 chair of the International Business Council for the World Economic Forum. 0:16:38.840 --> 0:16:42.520 We started many years ago thinking about how the private 0:16:42.560 --> 0:16:46.239 sector had to make the changes to drive the economies. 0:16:46.280 --> 0:16:48.040 And then, you know, with all going on in the 0:16:48.040 --> 0:16:50.560 public sector, with all going on in debt levels and 0:16:50.600 --> 0:16:52.560 all that stuff, and so we sat there and said, Okay, 0:16:52.560 --> 0:16:53.640 what do you need to do that, and what you 0:16:53.640 --> 0:16:55.640 need to do that was defining a set of standards 0:16:55.680 --> 0:16:57.520 that we believe of the right standards, and then we've 0:16:57.520 --> 0:17:00.240 got to stop from having a proliferation standards. So there's 0:17:00.920 --> 0:17:03.560 at one point there was gonna be six hundred uh 0:17:03.600 --> 0:17:05.840 in two thousand scheduled be I think in North America, 0:17:05.920 --> 0:17:09.960 like six hundred uh seminars on metrics. Yes, you know, 0:17:10.320 --> 0:17:12.280 and we've got stuffed to So we've come up with 0:17:12.359 --> 0:17:15.800 straightforward metrics that match the STGs and these other things 0:17:15.800 --> 0:17:18.000 that people talk about, their straightforward metrics that say, you know, 0:17:18.080 --> 0:17:20.480 are we good for our our customers, yes? Are we 0:17:20.520 --> 0:17:23.600 good for our teammatess, are we good for our shareholders yes? 0:17:23.600 --> 0:17:26.160 And are we good for society? Yes? Yeah. That that's 0:17:26.200 --> 0:17:28.080 how we drive a company. And and so we're saying 0:17:28.080 --> 0:17:30.399 if you disclose those metrics, then people can see what 0:17:30.400 --> 0:17:34.000 you're doing. It is not just investors and financial firms 0:17:34.040 --> 0:17:36.480 that are concerned with climate and what can be done 0:17:36.480 --> 0:17:38.760 about it. Tech is also moving into the area. As 0:17:38.800 --> 0:17:42.760 we talked to Gary Cohen, he's now vice chair of IBM. 0:17:42.800 --> 0:17:45.879 So environment is really important and as a technology company, 0:17:45.880 --> 0:17:48.560 we think about how we can help our clients and 0:17:48.600 --> 0:17:50.760 we look at the We look at climate no different 0:17:50.760 --> 0:17:53.320 than any other sort of business operation. First of all, 0:17:53.359 --> 0:17:55.800 it's a data problem. It's a big data problem. So 0:17:55.840 --> 0:17:57.800 you have to collect the data and you have to 0:17:57.840 --> 0:18:00.640 get it into a usable format. That's something that IBM 0:18:00.720 --> 0:18:03.159 really thrives on is we help people collect data, we 0:18:03.240 --> 0:18:06.399 help getting into usable format. Once you have the data, 0:18:06.720 --> 0:18:09.000 you need the technology, you need the software, you need 0:18:09.000 --> 0:18:12.199 the analytor the tools to start evaluating the data. So 0:18:12.200 --> 0:18:15.040 you've not got a baseline. You're evaluating your data. You 0:18:15.080 --> 0:18:18.040 know how much carbon you're admitting. Now, once you know 0:18:18.080 --> 0:18:20.880 how much carbon you're admitting, you can go through policies 0:18:20.880 --> 0:18:23.560 and procedures to change the way you're running your business, 0:18:23.560 --> 0:18:25.960 how you're running your business, and you can measure success 0:18:26.160 --> 0:18:29.080 so you operationalize it and you become much more efficient 0:18:29.119 --> 0:18:31.480 at running your business. Once you have the technology and 0:18:31.480 --> 0:18:33.160 once you have the data in a in a way 0:18:33.160 --> 0:18:36.160 that's useful to you as a company. As Global, Wall 0:18:36.160 --> 0:18:39.080 Street talked about climate and Davos. One of the main 0:18:39.160 --> 0:18:42.639 topics of conversation where those electric vehicle tax credits in 0:18:42.680 --> 0:18:45.280 the Inflation Reduction Act, which the United States is is 0:18:45.320 --> 0:18:48.320 a big step toward clean energy, but Europe is very 0:18:48.359 --> 0:18:51.600 concerned that it's actually protectionist because the favoral treatment it 0:18:51.640 --> 0:18:55.639 gives for US manufactured batteries. Democratics. Senator Joe Mansion of 0:18:55.680 --> 0:18:58.919 West Virginia came to Davos to talk about energy and 0:18:58.920 --> 0:19:02.000 why he thinks the US approach makes really good sense. 0:19:03.040 --> 0:19:04.760 They've been coming to me for years saying, you've got 0:19:04.760 --> 0:19:07.679 to have a carbon tax, You've got to have a 0:19:07.720 --> 0:19:11.880 carbon fee. And I said, we don't have any any 0:19:11.880 --> 0:19:15.040 other choices except to use fossil right now, because we 0:19:15.080 --> 0:19:17.320 don't have the horse power to run our economy in 0:19:17.320 --> 0:19:19.840 our country. But you want to penallyze people thinking it'll 0:19:19.840 --> 0:19:22.880 make them do it quicker. I never used I never 0:19:22.920 --> 0:19:25.560 thought that would work. I thought incentives work better. And 0:19:25.560 --> 0:19:28.200 guess what, the Europeans have used the carbon tax and 0:19:28.240 --> 0:19:30.800 carbon fees forever. We come along all of a sudden 0:19:30.800 --> 0:19:33.040 and do something, and we says we're gonna incentivize you. 0:19:33.600 --> 0:19:35.840 We're gonna help be your partner and take some of 0:19:35.840 --> 0:19:37.959 the risk out, but you're gonna have to invest. We're 0:19:38.000 --> 0:19:39.680 not send you a check. You've got to have either 0:19:39.720 --> 0:19:42.720 production tax credits or investment investment. Tell me which way 0:19:42.760 --> 0:19:44.920 you're going we're gonna work with you. You're gonna have 0:19:44.960 --> 0:19:48.080 a tenure runway, but that ten uere runway where the 0:19:48.080 --> 0:19:50.120 I ra A and I know the administration has been 0:19:50.119 --> 0:19:53.480 telling this as an environmental bill, environmental bill, This is 0:19:53.520 --> 0:19:56.720 truly an energy security bill, and we need everything, but 0:19:56.800 --> 0:19:59.159 we need a horse power from fossil for ten years 0:20:00.160 --> 0:20:02.080 win I mean not win, but as far as in 0:20:02.119 --> 0:20:04.800 cold gas and all, but do it cleaner than anywhere. 0:20:05.320 --> 0:20:10.000 That's climate, that's helping the climate. Coming up, we turned 0:20:10.000 --> 0:20:13.040 to what we learned to Davos about inclusive growth and 0:20:13.080 --> 0:20:17.600 what Global Wall Street can do for developing countries falling behind. 0:20:26.760 --> 0:20:29.360 This is a special edition of Wall Street Week from 0:20:29.600 --> 0:20:32.760 the World Economic Forum. I'm David weston Global wall Street 0:20:32.840 --> 0:20:35.040 wasn't just focused on the developed world when it came 0:20:35.080 --> 0:20:37.560 to Davos. The developing world also got a fair amount 0:20:37.560 --> 0:20:41.520 of attention, starting with Sub Saharan Africa, which cities Jane 0:20:41.520 --> 0:20:45.639 Fraser says is very much on her client's mind. A 0:20:45.680 --> 0:20:49.480 lot of the discussions we're having, particularly interestingly with a 0:20:49.520 --> 0:20:51.879 lot of our mid least and clients is what are 0:20:51.880 --> 0:20:55.600 they doing about Africa? And I think Africa is one 0:20:55.680 --> 0:20:57.800 that we've all got to keep our mind on because 0:20:58.200 --> 0:21:00.200 that is where the net growth in the world force 0:21:00.320 --> 0:21:03.240 is going to come over the next few decades. UM. 0:21:03.280 --> 0:21:06.520 If we get it right, it's a wonderful opportunity. If 0:21:06.560 --> 0:21:08.800 we don't, it's going to cause a lot of problems, 0:21:08.880 --> 0:21:11.440 both in Africa as well as in Europe as well 0:21:11.440 --> 0:21:14.040 as other parts of the world. And so looking at 0:21:14.080 --> 0:21:18.000 how do we build out transmission networks, greenness, supply chains 0:21:18.080 --> 0:21:22.119 there and the Biden administration echoes what city is hearing 0:21:22.119 --> 0:21:25.040 from its clients. As the United States Trade Representive Catherine 0:21:25.080 --> 0:21:29.600 tied laid out plans to support and engage Africa and 0:21:29.680 --> 0:21:34.080 described the great opportunities for the world economy there. President 0:21:34.080 --> 0:21:38.320 Biden hosted the African leaders at a summit in December 0:21:38.359 --> 0:21:41.200 in Washington, d c. And um, I think it came 0:21:41.240 --> 0:21:45.240