1 00:00:00,240 --> 00:00:05,000 Speaker 1: This is Bloomberg Wall Street Week. Market shruggle, higher consumer prices, 2 00:00:05,040 --> 00:00:07,400 Speaker 1: the economy is in the process of rebounding. Will the 3 00:00:07,400 --> 00:00:10,479 Speaker 1: flutter reserve have its own digital currency? The financial stories 4 00:00:10,520 --> 00:00:12,879 Speaker 1: that cheap hard work. Many people think the eels are 5 00:00:12,880 --> 00:00:15,080 Speaker 1: just going to keep marching up. We have more spending 6 00:00:15,120 --> 00:00:17,200 Speaker 1: coming out of Congress. One of the big questions I 7 00:00:17,200 --> 00:00:19,880 Speaker 1: think on investor's minds inflations through the eyes of the 8 00:00:19,920 --> 00:00:23,840 Speaker 1: most influential voices, Larry Summers, the former Treasury Secretary, Bryan 9 00:00:23,920 --> 00:00:27,240 Speaker 1: Wynahan back of America, Will Smart, CEO of Charlie Sharp. 10 00:00:27,360 --> 00:00:31,560 Speaker 1: Bloomberg wool Street Week with David Weston from Bloomberg Radio. 11 00:00:32,080 --> 00:00:34,840 Speaker 1: It was the dog that didn't bark, at least not yet, 12 00:00:35,400 --> 00:00:39,199 Speaker 1: as natural gas prices, a Chinese property collapse, and a 13 00:00:39,360 --> 00:00:43,000 Speaker 1: US debt default all reared their ugly heads and then 14 00:00:43,159 --> 00:00:46,040 Speaker 1: went back to sleep. This is Bloomberg Wall Street Week. 15 00:00:46,240 --> 00:00:50,120 Speaker 1: I'm David Weston. Despite those disappointing jobs numbers of Volatile 16 00:00:50,200 --> 00:00:53,120 Speaker 1: Week and equities showed a modest gain for the week overall, 17 00:00:53,159 --> 00:00:55,840 Speaker 1: with the SMP up a bit under one percent in 18 00:00:55,920 --> 00:00:57,960 Speaker 1: the Dow up a bit more than one percent, But 19 00:00:58,000 --> 00:01:00,560 Speaker 1: there was more action with the ten year tree as 20 00:01:00,640 --> 00:01:03,400 Speaker 1: yields went up for the seventh straight week, ending up 21 00:01:03,440 --> 00:01:06,080 Speaker 1: over one point six percent. To take us through the 22 00:01:06,120 --> 00:01:08,600 Speaker 1: week and the longer term prospects for investors, Welcome to 23 00:01:08,720 --> 00:01:11,280 Speaker 1: Stephen Ratner. He's chairman and CEO of Will and Advisors, 24 00:01:11,400 --> 00:01:14,560 Speaker 1: which invests the personal and philanthropic assets of Michael Bloomberg. 25 00:01:14,640 --> 00:01:17,039 Speaker 1: He's the founder majority owner of our parent company, and 26 00:01:17,120 --> 00:01:20,280 Speaker 1: Joe Anne Feenie, partner in Advisors Capital Management. Joe, and 27 00:01:20,400 --> 00:01:22,000 Speaker 1: let me start with you. As I said, there were 28 00:01:22,000 --> 00:01:24,399 Speaker 1: a lot of little spooks this week. We're a little 29 00:01:24,440 --> 00:01:27,440 Speaker 1: nervous about things. Are there real risks out there that 30 00:01:27,600 --> 00:01:29,200 Speaker 1: just happen to go away for the time being, or 31 00:01:29,640 --> 00:01:32,240 Speaker 1: did we overreact? You know, David, it's as if investors 32 00:01:32,280 --> 00:01:34,400 Speaker 1: just woke up and realized that the stock market is 33 00:01:34,440 --> 00:01:38,440 Speaker 1: a risky place. You know, you see COVID having surged 34 00:01:38,480 --> 00:01:41,120 Speaker 1: for a while, You see a slowdown economic growth because 35 00:01:41,160 --> 00:01:43,440 Speaker 1: of all the shortages we're having. You know, people are 36 00:01:43,520 --> 00:01:46,480 Speaker 1: now paying more attention to inflation and recognizing that interest 37 00:01:46,520 --> 00:01:49,080 Speaker 1: rates will eventually have to move higher, and you know 38 00:01:49,160 --> 00:01:52,240 Speaker 1: that that has created a bit of volatility. It's volatility 39 00:01:52,280 --> 00:01:55,920 Speaker 1: that you know, if we think back is actually pretty normal. Uh, 40 00:01:55,960 --> 00:01:58,640 Speaker 1: And so you know, yes, investors got a little bit nervous. 41 00:01:58,880 --> 00:02:01,080 Speaker 1: We saw also volatile little we've seen you know, growth 42 00:02:01,080 --> 00:02:04,280 Speaker 1: Bow continuing to outperform as investors run to some of 43 00:02:04,320 --> 00:02:07,160 Speaker 1: the bigger cap stocks that appear to have a longer 44 00:02:07,240 --> 00:02:09,960 Speaker 1: runway of secular growth ahead of them. So, Steve, what 45 00:02:10,000 --> 00:02:12,800 Speaker 1: about you, you're a longer term investor, as you sort 46 00:02:12,880 --> 00:02:16,000 Speaker 1: through this, which are the false negatives and which are 47 00:02:16,000 --> 00:02:18,079 Speaker 1: the ones that you're really worried about in the longer term. 48 00:02:18,240 --> 00:02:20,079 Speaker 1: Let me start with the ones that I worry about. 49 00:02:20,120 --> 00:02:25,120 Speaker 1: The thing I worry most about is inflation transmitting itself 50 00:02:25,160 --> 00:02:28,120 Speaker 1: into higher interest rates, interest higher interest rates being the 51 00:02:28,240 --> 00:02:31,000 Speaker 1: enemy of the stock market and of investing in general, 52 00:02:31,639 --> 00:02:34,320 Speaker 1: and that, to me is the singular biggest risk. There 53 00:02:34,360 --> 00:02:36,640 Speaker 1: plenty of other risks, but I do think for the 54 00:02:36,680 --> 00:02:40,120 Speaker 1: foreseeable future we're on a positive growth growth trajectory. Is 55 00:02:40,120 --> 00:02:43,520 Speaker 1: still an enormous amount of excell calling you can call 56 00:02:43,520 --> 00:02:45,640 Speaker 1: it access or surplus or whatever you want to call it, 57 00:02:46,000 --> 00:02:49,760 Speaker 1: money rattling around in the economy. Government transfers money that 58 00:02:49,800 --> 00:02:52,880 Speaker 1: people didn't spend last year during the lockdown and so forth, 59 00:02:53,320 --> 00:02:55,520 Speaker 1: And so I don't think there's any growth issue, but 60 00:02:55,600 --> 00:02:58,240 Speaker 1: I do think there's a serious inflation interest rate risk 61 00:02:58,280 --> 00:03:00,720 Speaker 1: out there. So Joan, let's pick up on of that specifically. 62 00:03:00,720 --> 00:03:02,440 Speaker 1: I talked to see the Nut in the former Treasury 63 00:03:02,440 --> 00:03:04,440 Speaker 1: sectary this week and he said he thinks the ten 64 00:03:04,520 --> 00:03:06,640 Speaker 1: years going to three point five in part because he 65 00:03:06,639 --> 00:03:10,000 Speaker 1: agrees with Steve he's really concerned about inflation. Is the 66 00:03:10,000 --> 00:03:12,080 Speaker 1: stock market ready for three point five percent in the 67 00:03:12,080 --> 00:03:15,040 Speaker 1: ten year yield? Well, we've already seen some pullbacks in 68 00:03:15,080 --> 00:03:18,000 Speaker 1: some of those higher multiple stocks because investors are finally 69 00:03:18,000 --> 00:03:20,880 Speaker 1: realizing that market interest rates right here are too low, 70 00:03:21,120 --> 00:03:22,840 Speaker 1: and the fan has made it clear they're gonna get 71 00:03:22,840 --> 00:03:25,880 Speaker 1: the taper their purchases and they're gonna hold away from 72 00:03:25,960 --> 00:03:28,280 Speaker 1: raising short term rates. But as they taper, the long 73 00:03:28,400 --> 00:03:31,000 Speaker 1: term rates are are going to start to rise, and 74 00:03:31,080 --> 00:03:33,920 Speaker 1: we should expect that the filter into higher multiple stocks. 75 00:03:34,040 --> 00:03:35,640 Speaker 1: Those are the stocks are going to see the biggest 76 00:03:35,640 --> 00:03:38,640 Speaker 1: declines in their multiples. And that's why we advise our 77 00:03:38,640 --> 00:03:41,400 Speaker 1: clients to make sure if you're gonna own expensive stocks 78 00:03:41,440 --> 00:03:44,000 Speaker 1: like that, make sure they have very good growth profiles, 79 00:03:44,320 --> 00:03:46,480 Speaker 1: you know, which a lot of them do. But yeah, 80 00:03:46,480 --> 00:03:49,280 Speaker 1: it's a risk. I think it's an asymmetric risk across 81 00:03:49,280 --> 00:03:52,280 Speaker 1: the stock market because not all stocks trade at multiples 82 00:03:52,280 --> 00:03:54,680 Speaker 1: that are vulnerable to rising interest rates, but some of 83 00:03:54,680 --> 00:03:56,880 Speaker 1: them really are, and so investors really need to stay 84 00:03:56,880 --> 00:03:59,920 Speaker 1: away from owning concentrated positions and all those stocks that 85 00:04:00,040 --> 00:04:02,600 Speaker 1: it's so well during the heart of the COVID crisis, 86 00:04:02,960 --> 00:04:05,560 Speaker 1: So Steve, the consensus seemed to be in response to 87 00:04:05,600 --> 00:04:08,240 Speaker 1: those very disappointing jobs numbers that in fact, it wasn't 88 00:04:08,280 --> 00:04:10,680 Speaker 1: going to deter the FED, which seems to attracted to 89 00:04:10,720 --> 00:04:13,960 Speaker 1: start tapering perhaps November, the next meeting they have. At 90 00:04:14,000 --> 00:04:16,480 Speaker 1: the same time, if the inflation really is worse than 91 00:04:16,520 --> 00:04:19,120 Speaker 1: what the FED is understanding, is there a danger they'll 92 00:04:19,120 --> 00:04:21,599 Speaker 1: have to really react much more violently when it comes 93 00:04:21,839 --> 00:04:24,120 Speaker 1: Well first, I think it's I think it's risk you 94 00:04:24,160 --> 00:04:26,120 Speaker 1: to try to read too much into any month of 95 00:04:26,200 --> 00:04:29,680 Speaker 1: jobs numbers. This month had a bunch of abnormalities in 96 00:04:29,720 --> 00:04:33,520 Speaker 1: it relating to UH people teachers and school employees going 97 00:04:33,560 --> 00:04:36,400 Speaker 1: back to work in September and so on and so forth. UH. 98 00:04:36,560 --> 00:04:39,680 Speaker 1: The labor force participation number was very disappointing that people 99 00:04:39,680 --> 00:04:41,719 Speaker 1: are actually still dropping out of the labor force, not 100 00:04:41,800 --> 00:04:45,320 Speaker 1: coming back into the labor force, So all of that 101 00:04:45,400 --> 00:04:49,320 Speaker 1: obviously does push you onto the slower side of the economy. 102 00:04:49,560 --> 00:04:52,320 Speaker 1: But on the other side, um, I do think I 103 00:04:52,320 --> 00:04:54,480 Speaker 1: don't think it's a question of when the FED decides 104 00:04:54,520 --> 00:04:56,159 Speaker 1: the taper. I think it's a question of when the 105 00:04:56,160 --> 00:04:59,560 Speaker 1: bond market decides that inflation is now the biggest concern 106 00:04:59,680 --> 00:05:02,280 Speaker 1: rather than slower growth, and the FETE is going to 107 00:05:02,400 --> 00:05:04,880 Speaker 1: end up, perhaps in a reactive position rather than a 108 00:05:05,040 --> 00:05:07,640 Speaker 1: leading position on that issue. Joanne, if that is a 109 00:05:07,760 --> 00:05:10,240 Speaker 1: risk taking in account of all the other risks as well, 110 00:05:10,600 --> 00:05:13,640 Speaker 1: what specific stocks do you do you like at this point, Well, 111 00:05:13,720 --> 00:05:15,440 Speaker 1: there there are several to choose from, depending on what 112 00:05:15,480 --> 00:05:17,360 Speaker 1: you're trying to accomplish. We try to add a few 113 00:05:17,360 --> 00:05:20,880 Speaker 1: different elements secular growth stocks that can hold up against 114 00:05:20,920 --> 00:05:24,720 Speaker 1: those inflation increases and interested increases. Steve, I understood you 115 00:05:24,800 --> 00:05:26,520 Speaker 1: were saying at the beginning, you're not so worried about 116 00:05:26,560 --> 00:05:29,159 Speaker 1: the growth pattern as you are about possible inflation. But 117 00:05:29,200 --> 00:05:31,760 Speaker 1: talk to me about China. Am I overly focused on 118 00:05:31,839 --> 00:05:34,479 Speaker 1: Evergrand and the Chinese property market, because I've seen some 119 00:05:34,520 --> 00:05:38,480 Speaker 1: remarkable numbers about how much of Chinese growth is depending 120 00:05:38,520 --> 00:05:41,280 Speaker 1: upon that property market, and therefore how much of global 121 00:05:41,320 --> 00:05:43,400 Speaker 1: growth is because we defended so much on China over 122 00:05:43,400 --> 00:05:46,600 Speaker 1: recent years. Well, you're certainly right to worry about everywhere, 123 00:05:46,600 --> 00:05:49,000 Speaker 1: and the problem with China in general, Ever Grand certainly 124 00:05:49,000 --> 00:05:52,279 Speaker 1: being an example of it, is there's so much opacity 125 00:05:52,320 --> 00:05:55,120 Speaker 1: in China that it's really hard to know what the 126 00:05:55,160 --> 00:05:57,560 Speaker 1: facts are, what we should even be worrying about. I 127 00:05:57,600 --> 00:05:59,960 Speaker 1: think the Chinese. Look, I think everybody on the planet 128 00:06:00,080 --> 00:06:02,039 Speaker 1: is aware of the ever Grand problem. I think the 129 00:06:02,120 --> 00:06:04,120 Speaker 1: Chinese is certainly aware of it. I think they're trying 130 00:06:04,120 --> 00:06:06,960 Speaker 1: to manage their way through it. I would be cautiously 131 00:06:06,960 --> 00:06:09,360 Speaker 1: optimistic that they will be able to manage their way 132 00:06:09,400 --> 00:06:11,560 Speaker 1: through it. They have a lot of tools at their disposal, 133 00:06:11,880 --> 00:06:13,640 Speaker 1: they don't have to deal with Congress and so on 134 00:06:13,720 --> 00:06:16,240 Speaker 1: and so forth. But but it is certainly, it is 135 00:06:16,240 --> 00:06:17,760 Speaker 1: certainly a risk. But let me mention just one of 136 00:06:17,800 --> 00:06:20,479 Speaker 1: the risk quickly, which I've meant to mention before, which 137 00:06:20,520 --> 00:06:23,560 Speaker 1: is the risk of corporate profit margins. So I agree 138 00:06:23,560 --> 00:06:26,479 Speaker 1: that as or as I said, growth is definitely happening 139 00:06:26,480 --> 00:06:28,920 Speaker 1: out there. But the question is really where the companies 140 00:06:28,960 --> 00:06:30,839 Speaker 1: are going to continue to be able to pass along 141 00:06:30,880 --> 00:06:33,640 Speaker 1: the increasing costs of their raw materials and their other 142 00:06:33,760 --> 00:06:36,560 Speaker 1: and their other supplies, and that is an issue for 143 00:06:36,720 --> 00:06:39,679 Speaker 1: corporate profits and then obviously for the stock market. After 144 00:06:39,760 --> 00:06:42,560 Speaker 1: that reassuring note to finish on, thank you so much 145 00:06:42,560 --> 00:06:45,159 Speaker 1: to Joe and Feenie of Advisor's Capital Management. Thank you 146 00:06:45,200 --> 00:06:48,440 Speaker 1: so much to Steve Ratner of will A Advisors. Coming up, 147 00:06:48,560 --> 00:06:52,479 Speaker 1: the investment opportunities in fintech and the need for crypto 148 00:06:52,600 --> 00:06:56,240 Speaker 1: regulation from a new player in the space, former Treasury 149 00:06:56,240 --> 00:07:00,720 Speaker 1: Secretary Stephen Manuchin. That's next on Wall Street Week on Bloomberg. 150 00:07:06,000 --> 00:07:10,000 Speaker 1: This is Bloomberg Wall Street Week with David Weston from 151 00:07:10,120 --> 00:07:16,160 Speaker 1: Bloomberg Radio. Fintech, everybody's talking about it, even if we're 152 00:07:16,200 --> 00:07:19,520 Speaker 1: not always sure what it is we're talking about. For some, 153 00:07:19,720 --> 00:07:23,280 Speaker 1: it's all about cryptocurrencies with all the promise and all 154 00:07:23,400 --> 00:07:28,680 Speaker 1: the uncertainty. Here's Don Fitzpatrick, Sorrow's fund management CEO. There's 155 00:07:28,760 --> 00:07:33,120 Speaker 1: two million users around the world. Um so I think 156 00:07:33,120 --> 00:07:37,400 Speaker 1: this has gone mainstream. For some, like Citadel CEO Ken Griffin, 157 00:07:37,560 --> 00:07:41,440 Speaker 1: all that uncertainty keeps them from even touching crypto. We 158 00:07:41,880 --> 00:07:46,080 Speaker 1: don't trade crypto because of the regulatory uncertainty. For others, 159 00:07:46,200 --> 00:07:49,720 Speaker 1: it's not about cryptocurrency as such, but about a better 160 00:07:49,760 --> 00:07:53,280 Speaker 1: way to transfer money and settle accounts. Here's Bank of 161 00:07:53,320 --> 00:07:58,120 Speaker 1: America's Brian moynihan and Aperture investors Peter Krauss. One half 162 00:07:58,240 --> 00:08:00,640 Speaker 1: the money moved by consumers today a Bank America today 163 00:08:00,880 --> 00:08:04,400 Speaker 1: has moved digital one half. The more interesting aspect of 164 00:08:04,480 --> 00:08:08,400 Speaker 1: cryptocurrency is not the fact that it is a speculative value, 165 00:08:08,720 --> 00:08:13,360 Speaker 1: but did it's a mechanism by which you can actually trade, settle, 166 00:08:13,880 --> 00:08:19,120 Speaker 1: and effectively record transactions immediately or instantaneously. That's the much 167 00:08:19,120 --> 00:08:22,080 Speaker 1: more valuable part of crypto, and some see the move 168 00:08:22,200 --> 00:08:25,440 Speaker 1: to digital currencies as a way to democratize all the finance, 169 00:08:25,880 --> 00:08:28,800 Speaker 1: removing some of the costs and frictions that keep much 170 00:08:28,800 --> 00:08:31,640 Speaker 1: of the world's population out of the system. That are 171 00:08:31,680 --> 00:08:36,199 Speaker 1: many frictions and international finance and domestic finance. Many people 172 00:08:36,280 --> 00:08:38,960 Speaker 1: don't have easy access to digital payments. You know, in 173 00:08:39,000 --> 00:08:41,640 Speaker 1: the US you need a debit or credit card or 174 00:08:41,640 --> 00:08:45,439 Speaker 1: a bank account to have access to digital payments. International 175 00:08:45,480 --> 00:08:49,599 Speaker 1: payments are still beset by lots of impediments. They're expensive, 176 00:08:49,720 --> 00:08:53,600 Speaker 1: they are very time consuming, it's very difficult to track payments. 177 00:08:53,640 --> 00:08:57,240 Speaker 1: So there is a real need for better digital payments. 178 00:08:57,320 --> 00:09:01,400 Speaker 1: That was Cornell professors. But however, you regard the move 179 00:09:01,480 --> 00:09:04,480 Speaker 1: to digital of our financial systems, the one thing that's 180 00:09:04,520 --> 00:09:07,719 Speaker 1: for certain is that it is coming, and that as 181 00:09:07,800 --> 00:09:11,720 Speaker 1: it comes, we will see regulations shape its future. Something 182 00:09:11,840 --> 00:09:16,480 Speaker 1: SEC Chair Gary Ginstler, Investor Ken Griffin, and Senator Elizabeth 183 00:09:16,480 --> 00:09:20,440 Speaker 1: Warren all agree is needed. Many of these tokens do 184 00:09:20,679 --> 00:09:25,000 Speaker 1: meet the tests of being an investment contract or a 185 00:09:25,040 --> 00:09:29,080 Speaker 1: note or some other form of security that we bring 186 00:09:29,120 --> 00:09:34,479 Speaker 1: them within the investor protection remit of the SEC. Chairperson 187 00:09:34,559 --> 00:09:38,800 Speaker 1: Ginstler is spot on on the need to have thought 188 00:09:38,840 --> 00:09:41,880 Speaker 1: for regulation around cryptocurrency. If people are going to be 189 00:09:41,920 --> 00:09:44,000 Speaker 1: out there trading in it, there needs to be a 190 00:09:44,040 --> 00:09:48,839 Speaker 1: cop on the b Whatever we mean by fintech. Former 191 00:09:48,880 --> 00:09:52,600 Speaker 1: Treasury Secretary Steve Manuchin means to invest in it through 192 00:09:52,760 --> 00:09:55,800 Speaker 1: his new two point five billion dollar fund called Liberty 193 00:09:55,960 --> 00:10:00,240 Speaker 1: Strategic Capital, And for the former secretary, it all begins 194 00:10:00,360 --> 00:10:03,720 Speaker 1: with payment systems. But we really like the payment space. 195 00:10:04,000 --> 00:10:08,160 Speaker 1: We think that's a gigantic opportunity, particularly for real time 196 00:10:08,440 --> 00:10:13,080 Speaker 1: cross border occurrences. I think the underlying technology of blockchain 197 00:10:13,320 --> 00:10:16,720 Speaker 1: and using stable coins is something that's very interesting. But 198 00:10:16,800 --> 00:10:19,199 Speaker 1: let me just comment because I saw a Bloomberg article 199 00:10:19,240 --> 00:10:22,240 Speaker 1: on one of the big stable coins. In my view, 200 00:10:22,800 --> 00:10:25,840 Speaker 1: you know, one, some of these stable coins should most 201 00:10:25,880 --> 00:10:28,960 Speaker 1: likely be regulated. In two, if they're backed by dollars, 202 00:10:29,400 --> 00:10:32,880 Speaker 1: they should be freely transferable, and we should make sure 203 00:10:33,480 --> 00:10:36,600 Speaker 1: that they're really backed by dollars, so that dollars are 204 00:10:36,640 --> 00:10:40,240 Speaker 1: held by a custodian bank and that they're secure. Let's 205 00:10:40,240 --> 00:10:42,079 Speaker 1: go exactly. I'm glad you raised that because it was 206 00:10:42,120 --> 00:10:45,000 Speaker 1: a piece on Bloombergs about Tether, specifically saying that right 207 00:10:45,000 --> 00:10:47,959 Speaker 1: now they have sixty nine billion tether's outstanding and forty 208 00:10:48,040 --> 00:10:50,920 Speaker 1: eight billion of them were issued this year. Theoretically, that 209 00:10:50,960 --> 00:10:53,400 Speaker 1: means they have six and nine billion dollars of more 210 00:10:53,480 --> 00:10:56,720 Speaker 1: or less US cash somewhere. How sured are we that 211 00:10:56,760 --> 00:10:58,760 Speaker 1: they actually have that money. Well, I don't know much 212 00:10:58,760 --> 00:11:01,360 Speaker 1: about Tether other than what I wrote about, and I 213 00:11:01,400 --> 00:11:04,120 Speaker 1: thought the piece was actually quite interesting, but again that 214 00:11:04,160 --> 00:11:07,120 Speaker 1: they shouldn't be like casino chips, that they should be 215 00:11:07,720 --> 00:11:10,280 Speaker 1: in my opinion, if you're going to issue a stable coin, 216 00:11:11,000 --> 00:11:15,440 Speaker 1: the actual money should go be held in a regulated bank, 217 00:11:16,160 --> 00:11:19,560 Speaker 1: uh in a trust account, and the people who hold 218 00:11:19,559 --> 00:11:22,960 Speaker 1: the stable coins should be able to exchange those for 219 00:11:23,280 --> 00:11:26,640 Speaker 1: real dollars at any time, So the stable coins should 220 00:11:26,679 --> 00:11:31,080 Speaker 1: be invested in US treasuries or things that look like 221 00:11:31,360 --> 00:11:36,360 Speaker 1: US treasuries, money markets of highly liquid backed investments. As 222 00:11:36,440 --> 00:11:38,520 Speaker 1: soon as not your job anymore. It was your job. 223 00:11:38,559 --> 00:11:40,640 Speaker 1: Now it's Janet Gellen's job to figure out how you 224 00:11:40,640 --> 00:11:43,319 Speaker 1: should best regulate that. She's had some meetings, as you know, 225 00:11:43,720 --> 00:11:46,679 Speaker 1: to try to figure out regulation of things like stable coins. 226 00:11:46,880 --> 00:11:48,840 Speaker 1: From your point of view, is that something that should 227 00:11:48,880 --> 00:11:51,760 Speaker 1: be the FED responsibility? Is that the SEC? Where does 228 00:11:51,800 --> 00:11:56,320 Speaker 1: that responsibly lie? Well, the Secretary of Treasury oversees a 229 00:11:56,480 --> 00:12:01,720 Speaker 1: committee of all the different regulators, and that's the right place. 230 00:12:01,920 --> 00:12:05,800 Speaker 1: So these issues cross different regulators. Some of them are 231 00:12:05,840 --> 00:12:09,839 Speaker 1: Treasury regulations through Finsen, some of them are the o 232 00:12:10,000 --> 00:12:11,960 Speaker 1: c C for banks, some of them are the FED, 233 00:12:12,000 --> 00:12:16,960 Speaker 1: and some of them are the SEC. And in general, um, 234 00:12:17,000 --> 00:12:19,320 Speaker 1: you know, I'm fine if people want to trade bitcoin 235 00:12:19,400 --> 00:12:22,559 Speaker 1: and cryptocurrencies, but I think there should be full transparency. 236 00:12:22,640 --> 00:12:25,880 Speaker 1: These shouldn't be the equivalent of a Swiss numbered bank account, 237 00:12:26,280 --> 00:12:28,520 Speaker 1: So if you're going to trade in these, they should 238 00:12:28,559 --> 00:12:32,760 Speaker 1: be fully regulatory compliant, fully b s A compliant. And 239 00:12:32,920 --> 00:12:36,160 Speaker 1: one of our big issues is to focus on cyber security, 240 00:12:36,840 --> 00:12:40,360 Speaker 1: and again one of the problems with ransomware is right 241 00:12:40,400 --> 00:12:43,400 Speaker 1: now it's way too easy to pay a twenty five 242 00:12:43,440 --> 00:12:47,360 Speaker 1: million dollar ransom payment in bitcoin. You know, you can't 243 00:12:47,440 --> 00:12:50,120 Speaker 1: wire twillion dollars to people who you don't know, you 244 00:12:50,160 --> 00:12:54,200 Speaker 1: can't deliver cash. I believe the regulation should be same 245 00:12:54,600 --> 00:12:57,600 Speaker 1: on these other cryptocurrencies. So as you look to make 246 00:12:57,640 --> 00:13:01,520 Speaker 1: investments with your fun in this area, how vulnerable are 247 00:13:01,559 --> 00:13:04,880 Speaker 1: your investments to sort of regulatory changes? I mean, is 248 00:13:04,880 --> 00:13:07,280 Speaker 1: that a risk and opportunity a little bit of both well, 249 00:13:07,320 --> 00:13:10,800 Speaker 1: As I like to say, I've been regulated when I 250 00:13:10,880 --> 00:13:13,400 Speaker 1: ran a O c C bank, and I've been a 251 00:13:13,440 --> 00:13:17,680 Speaker 1: regulate tour, so I understand both sides. We actually like 252 00:13:17,880 --> 00:13:22,760 Speaker 1: investing in companies in regulated entities because we think the 253 00:13:23,400 --> 00:13:26,840 Speaker 1: legal and political risk is a lot less and we 254 00:13:26,920 --> 00:13:31,320 Speaker 1: think their safety in a regulated institution, particularly whether a 255 00:13:31,640 --> 00:13:35,199 Speaker 1: US institution, whether it's a regulated by the O c C, 256 00:13:35,360 --> 00:13:38,480 Speaker 1: you are regulated by finn Send or or regulated by 257 00:13:38,480 --> 00:13:41,880 Speaker 1: the SEC. So I as an investor, would be very 258 00:13:41,880 --> 00:13:45,960 Speaker 1: careful investing in unregulated entities. There are clearly places where 259 00:13:46,000 --> 00:13:48,560 Speaker 1: it makes sense to do that, but one has to 260 00:13:48,559 --> 00:13:51,360 Speaker 1: be aware of the regulatory risk. To do you have 261 00:13:51,400 --> 00:13:53,840 Speaker 1: a sense of the possibility of contagion. Let me be specific. 262 00:13:53,880 --> 00:13:55,840 Speaker 1: Let's go back to tether promote. There's a suggestion that 263 00:13:55,880 --> 00:13:58,200 Speaker 1: perhaps if tether collapse, I'm not saying it will, but 264 00:13:58,240 --> 00:14:01,280 Speaker 1: if it did, it could affect other currencies. Is there 265 00:14:01,280 --> 00:14:04,280 Speaker 1: a danger of contagion across cryptocurrencies, Well, let me just 266 00:14:04,320 --> 00:14:07,440 Speaker 1: say I'm less focused on the contagion. I'm more focused 267 00:14:07,480 --> 00:14:10,120 Speaker 1: on there are people who are buying that thinking they're 268 00:14:10,120 --> 00:14:13,360 Speaker 1: buying the equivalent of US dollars. So when you say 269 00:14:13,400 --> 00:14:17,040 Speaker 1: you're buying into a stable coin backed by US dollars, 270 00:14:17,160 --> 00:14:20,640 Speaker 1: there should really be US dollars there. So, whether it's 271 00:14:21,240 --> 00:14:24,280 Speaker 1: an issue that drifts into other things, or whether it's 272 00:14:24,320 --> 00:14:27,520 Speaker 1: just investors can't get their money back, I think that's 273 00:14:27,520 --> 00:14:30,240 Speaker 1: a big problem, and that's a regulatory concern. That was 274 00:14:30,280 --> 00:14:33,840 Speaker 1: former US treasure Secretary Stephen Manuchin coming up a look 275 00:14:33,880 --> 00:14:36,640 Speaker 1: inside the future of electric vehicles with the CEO of 276 00:14:36,680 --> 00:14:40,320 Speaker 1: General Motors. That's next on Wall Street Week on Bloomberg. 277 00:14:45,680 --> 00:14:49,680 Speaker 1: This is Bloomberg Wall Street Week with David Weston from 278 00:14:49,800 --> 00:14:53,920 Speaker 1: Bloomberg Radio. General Motors held its Investors Day in Detroit 279 00:14:54,040 --> 00:14:56,880 Speaker 1: this week with a series of announcements, including the debut 280 00:14:56,920 --> 00:15:01,000 Speaker 1: it's much anticipated electric Silverado pickup. We talked with GM 281 00:15:01,040 --> 00:15:04,600 Speaker 1: CEO and chair Mary Barra about GM's position in the 282 00:15:04,760 --> 00:15:07,640 Speaker 1: race to an electric vehicle future with the scale that 283 00:15:07,680 --> 00:15:10,400 Speaker 1: General Motors has. As we continue to leverage l t M, 284 00:15:10,520 --> 00:15:14,400 Speaker 1: we get the scale, we keep leveraging the science to 285 00:15:14,440 --> 00:15:17,400 Speaker 1: get the cost of the battery cells down. Yes, we 286 00:15:17,400 --> 00:15:19,920 Speaker 1: we have a plan is and that's why we're very 287 00:15:19,960 --> 00:15:22,520 Speaker 1: confident that as we move forward through the end of 288 00:15:22,520 --> 00:15:24,800 Speaker 1: the decade, we're going to see margin growth. Mary, I 289 00:15:24,800 --> 00:15:26,960 Speaker 1: want to skip over the Silverado you mentioned it there 290 00:15:26,960 --> 00:15:29,320 Speaker 1: in brief. Everybody's been waiting for this. Now we've seen 291 00:15:29,320 --> 00:15:31,080 Speaker 1: some pictures of it. I know you're gonna have a 292 00:15:31,120 --> 00:15:33,800 Speaker 1: formal unveiling. I think at c Yes coming up at 293 00:15:33,800 --> 00:15:37,320 Speaker 1: the beginning of next year. Why glass roof, Well, I 294 00:15:37,640 --> 00:15:41,000 Speaker 1: think UM one because we can UM and I think 295 00:15:41,000 --> 00:15:44,240 Speaker 1: when you see the entire Silverado E, you're going to 296 00:15:44,320 --> 00:15:48,320 Speaker 1: see what doing a truck off at all electric platform, 297 00:15:48,360 --> 00:15:51,840 Speaker 1: not trying to retrofit off of an existing platform, opens 298 00:15:51,920 --> 00:15:55,880 Speaker 1: up all new design capability functionality. I'm so excited because 299 00:15:55,920 --> 00:15:59,880 Speaker 1: I think the Silverado E will be a very strong 300 00:16:00,000 --> 00:16:02,520 Speaker 1: reforming truck, but it's going to bring new buyers into 301 00:16:02,520 --> 00:16:06,160 Speaker 1: the truck market, into General Motors truck portfolio. Give us 302 00:16:06,160 --> 00:16:08,360 Speaker 1: a sense of what you need General Motors needs from 303 00:16:08,360 --> 00:16:11,240 Speaker 1: the government, and particularly talking about charging stations, because the 304 00:16:11,240 --> 00:16:14,080 Speaker 1: budget proposals that's being kicked around a capital hill includes 305 00:16:14,160 --> 00:16:16,680 Speaker 1: some serious money for charging stations. Do you need that 306 00:16:16,840 --> 00:16:18,840 Speaker 1: in order for General Motors to be a true leader 307 00:16:18,840 --> 00:16:21,800 Speaker 1: in electric vehicles? Well, we're investing in infrastructure, but we 308 00:16:21,840 --> 00:16:23,880 Speaker 1: do think that the federal government is going to play 309 00:16:23,880 --> 00:16:26,680 Speaker 1: a very important part because think about it, David, we 310 00:16:26,760 --> 00:16:30,480 Speaker 1: need to make sure that someone who only owns one vehicle, 311 00:16:30,560 --> 00:16:33,600 Speaker 1: who may live somewhere where they don't have designated parking, 312 00:16:33,880 --> 00:16:37,120 Speaker 1: to have access to reliable charging because that's what is 313 00:16:37,120 --> 00:16:39,240 Speaker 1: going to enable them to buy an electric vehicles. So 314 00:16:39,280 --> 00:16:42,480 Speaker 1: we think it's a partnership between business and UH the 315 00:16:42,560 --> 00:16:46,480 Speaker 1: government to make sure we provide that infrastructure across the country. 316 00:16:46,600 --> 00:16:48,800 Speaker 1: And in addition to that, we want to make sure 317 00:16:48,880 --> 00:16:50,760 Speaker 1: that we see the revisions to the e V tax 318 00:16:50,800 --> 00:16:54,440 Speaker 1: credit that currently right now, um you know penalizes first 319 00:16:54,480 --> 00:16:57,640 Speaker 1: movers in the way it was originally constructed. So you 320 00:16:57,720 --> 00:17:00,000 Speaker 1: do need some help again in the affordability from from 321 00:17:00,080 --> 00:17:02,240 Speaker 1: the government in terms of tax credits. But we think 322 00:17:02,240 --> 00:17:05,560 Speaker 1: that's just going to accelerate e V adoption and we 323 00:17:05,600 --> 00:17:09,879 Speaker 1: think that's a very important part of accomplishing the president's 324 00:17:09,920 --> 00:17:13,000 Speaker 1: goals for from a climate change perspective, and that will 325 00:17:13,359 --> 00:17:15,959 Speaker 1: expedite the adoption of e V s. And again when 326 00:17:16,040 --> 00:17:19,439 Speaker 1: we have a full portfolio with many different entries at 327 00:17:19,440 --> 00:17:23,280 Speaker 1: different price points, that's why we're well positioned. Mary. One 328 00:17:23,280 --> 00:17:25,080 Speaker 1: of the things we've talked about before is we think 329 00:17:25,080 --> 00:17:27,760 Speaker 1: of General Or as a vehicle company, a car company, 330 00:17:27,800 --> 00:17:30,240 Speaker 1: if you will, but you can see it somewhat differently. 331 00:17:30,240 --> 00:17:32,679 Speaker 1: It's a platform company, and sever your announcements go to 332 00:17:32,720 --> 00:17:35,480 Speaker 1: some of the software that can be put onto this platform. 333 00:17:35,520 --> 00:17:38,960 Speaker 1: Talked to us, particularly about for example, Ultra Cruz. Sure, well, 334 00:17:39,000 --> 00:17:41,639 Speaker 1: you know, if if I start with looking at what 335 00:17:41,800 --> 00:17:44,840 Speaker 1: our ultim platform gives us, this platform to do not 336 00:17:44,960 --> 00:17:48,120 Speaker 1: only a full range of electric vehicles, but also into 337 00:17:48,160 --> 00:17:52,119 Speaker 1: other markets other transportation type vehicles. On top of that, 338 00:17:52,240 --> 00:17:55,560 Speaker 1: then we have the Vehicle Intelligent platform that really allows 339 00:17:55,600 --> 00:17:58,600 Speaker 1: for over the error updates to almost any um you know, 340 00:17:58,680 --> 00:18:02,640 Speaker 1: part of the vehicle. Now we're launching Altify, which gives 341 00:18:02,720 --> 00:18:07,359 Speaker 1: us really a platform that we could offer services subscriptions 342 00:18:07,359 --> 00:18:09,800 Speaker 1: like super Cruise. You know that it's not just you 343 00:18:09,840 --> 00:18:11,800 Speaker 1: buy it in the vehicle, but it can be one 344 00:18:11,800 --> 00:18:14,000 Speaker 1: of those things that you you use it on demand 345 00:18:14,080 --> 00:18:17,920 Speaker 1: with a subscription. So we're very excited about the business 346 00:18:17,920 --> 00:18:20,600 Speaker 1: that we're unlocking. We really feel General Motors is moved 347 00:18:20,600 --> 00:18:24,239 Speaker 1: from being an automaker to really a platform innovator and 348 00:18:24,280 --> 00:18:28,680 Speaker 1: the vehicle itself has become a software defined vehicle that 349 00:18:28,800 --> 00:18:31,440 Speaker 1: it really is going to unlock a lot of revenue 350 00:18:31,480 --> 00:18:35,480 Speaker 1: that's at different margins and really serves the customer. You 351 00:18:35,480 --> 00:18:37,879 Speaker 1: said at different margins. Give us a sense put to 352 00:18:37,880 --> 00:18:41,720 Speaker 1: put aside revenue and talk about profit contribution. At what 353 00:18:41,880 --> 00:18:45,080 Speaker 1: point will those services contribute as much as the vehicles 354 00:18:45,119 --> 00:18:47,880 Speaker 1: will to the profits of General Motors. Well, I think 355 00:18:47,880 --> 00:18:50,080 Speaker 1: if you look at you know, our internal combustion business 356 00:18:50,160 --> 00:18:53,359 Speaker 1: or e V business, um, the services are are going 357 00:18:53,400 --> 00:18:55,800 Speaker 1: to play a very material role. But then on top 358 00:18:55,840 --> 00:18:58,000 Speaker 1: of that, there's also cruise, and we think there's tremendous 359 00:18:58,000 --> 00:19:01,720 Speaker 1: growth potential as we commercialize as crews in addition to 360 00:19:01,800 --> 00:19:06,280 Speaker 1: OnStar insurance, Bright Drop and our GM defense operations. So 361 00:19:06,320 --> 00:19:08,520 Speaker 1: that's why there's so much growth, and there's a different 362 00:19:08,560 --> 00:19:11,280 Speaker 1: margin profile for each of those businesses that I think 363 00:19:11,320 --> 00:19:14,720 Speaker 1: is going to lead to improve profitability. You mentioned bright Drop. 364 00:19:14,760 --> 00:19:16,600 Speaker 1: I want to focus on that for a moment because 365 00:19:16,640 --> 00:19:18,040 Speaker 1: one of the things that I think I see with 366 00:19:18,119 --> 00:19:20,240 Speaker 1: General Motors is a move as well from B to 367 00:19:20,440 --> 00:19:23,399 Speaker 1: C business or consumer to be to be business. You 368 00:19:23,480 --> 00:19:26,240 Speaker 1: have the bright Drop situation and their arrangement. FedEx take 369 00:19:26,280 --> 00:19:27,920 Speaker 1: us through that where you are on it all again 370 00:19:27,960 --> 00:19:29,480 Speaker 1: as as we look at bright Drop, what to me 371 00:19:29,640 --> 00:19:32,320 Speaker 1: is so important about bright Drop. It's not simply taking 372 00:19:32,480 --> 00:19:36,440 Speaker 1: an internal combustion light commercial vehicle and making it electric. 373 00:19:36,680 --> 00:19:40,080 Speaker 1: It's really creating an ecosystem and allowing our customers to 374 00:19:40,119 --> 00:19:42,480 Speaker 1: be more efficient. You know, for example, in some of 375 00:19:42,520 --> 00:19:44,840 Speaker 1: the piloting work we've done with fed X, you know, 376 00:19:44,960 --> 00:19:49,520 Speaker 1: really working with their their truck, their drivers, and then 377 00:19:49,680 --> 00:19:52,600 Speaker 1: how they do deliveries. Were able with our e palette 378 00:19:52,600 --> 00:19:55,520 Speaker 1: system to drive more efficiency so they can actually deliver 379 00:19:55,600 --> 00:19:58,760 Speaker 1: more packages in the same amount of time. And then 380 00:19:58,960 --> 00:20:03,400 Speaker 1: providing a whole uh software system to manage all aspects 381 00:20:03,560 --> 00:20:07,040 Speaker 1: of managing the fleet. So it's really an ecosystem. It's 382 00:20:07,080 --> 00:20:09,760 Speaker 1: a total solution for these customers and we've been working 383 00:20:09,760 --> 00:20:11,560 Speaker 1: with them, and that's what they say they want, We're 384 00:20:11,600 --> 00:20:15,600 Speaker 1: going to deliver. That's GM CEO Mary Barrow coming up. 385 00:20:15,680 --> 00:20:17,639 Speaker 1: We wrap up the week as we always do with 386 00:20:17,720 --> 00:20:21,200 Speaker 1: contributor Larry Summers of Harvard. That's next on Wall Street 387 00:20:21,200 --> 00:20:30,119 Speaker 1: Week on Bloomberg. This is Bloomberg Wall Street Week with 388 00:20:30,280 --> 00:20:33,920 Speaker 1: David Weston from Bloomberg Radio. This is Wall Stree Week. 389 00:20:34,000 --> 00:20:36,159 Speaker 1: I'm David Weston. We're going to conclude our week as 390 00:20:36,200 --> 00:20:38,640 Speaker 1: we always do with our special contributor in Walltere Week. 391 00:20:38,640 --> 00:20:41,040 Speaker 1: He is Larry Summers of Harvard. So, Larry, thank you 392 00:20:41,080 --> 00:20:42,639 Speaker 1: so much for being back with us. Let's start with 393 00:20:42,680 --> 00:20:46,280 Speaker 1: the jobs numbers came out on Friday this week, disappointing 394 00:20:46,359 --> 00:20:48,320 Speaker 1: by quite a margin, I must say, although some people 395 00:20:48,320 --> 00:20:50,880 Speaker 1: thought underlying it, the numbers weren't as bad as maybe 396 00:20:50,920 --> 00:20:53,760 Speaker 1: they appeared. David looked. I think this fit the story 397 00:20:53,880 --> 00:20:58,399 Speaker 1: that we've been telling on this show almost exactly. We 398 00:20:58,520 --> 00:21:02,080 Speaker 1: got a lot of demand, we don't have so much supply. 399 00:21:03,119 --> 00:21:06,800 Speaker 1: That's why the unemployment rate came down more than people expected. 400 00:21:07,480 --> 00:21:12,880 Speaker 1: That's why the wage growth was much higher than people expected. 401 00:21:13,400 --> 00:21:16,560 Speaker 1: We don't have a soft economy in terms of demand. 402 00:21:17,200 --> 00:21:21,480 Speaker 1: We have more of a more damage to people's willingness 403 00:21:21,560 --> 00:21:25,919 Speaker 1: to work than people expected a few months ago. The 404 00:21:26,000 --> 00:21:33,920 Speaker 1: problem is that this points in favor of the inflationary diagnosis. Look, 405 00:21:34,000 --> 00:21:39,040 Speaker 1: average hourly earnings this week this month rose at a 406 00:21:39,080 --> 00:21:43,560 Speaker 1: seven and a half percent annual rate. That's not consistent 407 00:21:43,640 --> 00:21:50,520 Speaker 1: with any reasonable theory of inflation. And with the unemployment 408 00:21:50,600 --> 00:21:55,320 Speaker 1: rate lower and falling, it may even get the situation 409 00:21:56,000 --> 00:21:59,760 Speaker 1: may even get worse. So I think we're in a 410 00:22:00,080 --> 00:22:07,280 Speaker 1: uh very uh difficult situation. Here's one way to think 411 00:22:07,280 --> 00:22:11,920 Speaker 1: about it. We've got interest rates way below their neutral level. 412 00:22:11,960 --> 00:22:14,479 Speaker 1: The FED thinks the neutral level of interest rates like 413 00:22:14,520 --> 00:22:17,240 Speaker 1: two and a quarter percent. They've got interest rates close 414 00:22:17,320 --> 00:22:20,560 Speaker 1: to a half percent. They've got interest rates close to zero. 415 00:22:21,320 --> 00:22:25,399 Speaker 1: And I think given the vast structural changes under way 416 00:22:25,480 --> 00:22:31,159 Speaker 1: after COVID, we've probably got unemployment below the natural or 417 00:22:31,200 --> 00:22:36,120 Speaker 1: neutral rate of unemployment. And that's just not a combination 418 00:22:36,280 --> 00:22:40,080 Speaker 1: that adds up to anything other than taking a big 419 00:22:40,200 --> 00:22:46,280 Speaker 1: risk on the inflation side. So I'm pretty concerned about 420 00:22:46,400 --> 00:22:48,040 Speaker 1: where we are. So I want to turn to a 421 00:22:48,040 --> 00:22:50,480 Speaker 1: different subject. Something you wrote on in the Washingt post 422 00:22:50,480 --> 00:22:52,960 Speaker 1: at the end of the week, and it's this proposal 423 00:22:53,240 --> 00:22:56,679 Speaker 1: actually as part of the Biden Packe aconomic page, that 424 00:22:56,680 --> 00:22:59,359 Speaker 1: that the banks report to the I r S on 425 00:22:59,400 --> 00:23:01,840 Speaker 1: the overall inflows on outflows, as I understand that the 426 00:23:01,920 --> 00:23:04,800 Speaker 1: deposits being held basically as a way to get at 427 00:23:04,800 --> 00:23:06,879 Speaker 1: some income that otherwise doesn't show up, for example on 428 00:23:06,920 --> 00:23:09,280 Speaker 1: your W two or your ten and nine. You wrote 429 00:23:09,400 --> 00:23:11,080 Speaker 1: and you were pretty forceful about it, I must say 430 00:23:11,080 --> 00:23:14,240 Speaker 1: in the Washington Post, explain your point of view on this, David, 431 00:23:14,280 --> 00:23:18,439 Speaker 1: I think this is really an easy one. Right now, 432 00:23:18,480 --> 00:23:20,520 Speaker 1: if you or I have an account in a bank, 433 00:23:21,240 --> 00:23:25,880 Speaker 1: the bank reports on that account by reporting interest, so 434 00:23:26,440 --> 00:23:30,080 Speaker 1: we're already sharing that information with the government, and the 435 00:23:30,119 --> 00:23:33,000 Speaker 1: I r S is already learning about our bank account. 436 00:23:33,880 --> 00:23:37,920 Speaker 1: The proposal that's made is that in addition to reporting 437 00:23:37,920 --> 00:23:41,160 Speaker 1: on the interest, state pay the report on the inflow 438 00:23:41,720 --> 00:23:45,280 Speaker 1: when the money comes in. And the reason for that 439 00:23:45,400 --> 00:23:49,560 Speaker 1: report is that we've got an epidemic of tax and 440 00:23:49,600 --> 00:23:53,600 Speaker 1: non payment in this country on income that you get 441 00:23:53,640 --> 00:23:56,199 Speaker 1: in a wage or a salary on a W two 442 00:23:56,800 --> 00:24:03,439 Speaker 1: compliances above an income where you don't have information reporting 443 00:24:04,280 --> 00:24:10,560 Speaker 1: by businesses it's below fifty and in total, the tax 444 00:24:10,640 --> 00:24:15,240 Speaker 1: gap is going to cost a seven trillion dollars over 445 00:24:15,280 --> 00:24:19,560 Speaker 1: the next ten years. So the proposal is that when 446 00:24:19,640 --> 00:24:26,919 Speaker 1: banks get substantial deposits, they have to report them. There's 447 00:24:27,080 --> 00:24:30,080 Speaker 1: plenty of room for argument about exempting the little guy. 448 00:24:30,560 --> 00:24:33,200 Speaker 1: There's plenty of room for argument about how if it's 449 00:24:33,200 --> 00:24:36,360 Speaker 1: a paycheck, it's already being reported on, so you shouldn't 450 00:24:36,400 --> 00:24:39,520 Speaker 1: have to report it again. Those are details that can 451 00:24:39,560 --> 00:24:44,400 Speaker 1: be worked out. But when the banking industry is saying 452 00:24:44,440 --> 00:24:48,560 Speaker 1: that this is some kind of major invasion of people's privacy, 453 00:24:48,600 --> 00:24:52,080 Speaker 1: this is something that's impossible to do. I mean, these 454 00:24:52,080 --> 00:24:55,240 Speaker 1: are people who are like incredibly proud of the fact 455 00:24:55,280 --> 00:24:58,359 Speaker 1: that they're letting you buy a fraction of a stock 456 00:24:58,440 --> 00:25:01,320 Speaker 1: on your cell phone into and a half seconds. The 457 00:25:01,359 --> 00:25:04,920 Speaker 1: idea that it's some kind of big burden to report 458 00:25:05,000 --> 00:25:08,239 Speaker 1: a basic inflow to the I r S on an 459 00:25:08,240 --> 00:25:13,520 Speaker 1: account where you already report is absurd. So Hilary speculate 460 00:25:13,560 --> 00:25:15,680 Speaker 1: with me, you know these banks trely, well, what's driving 461 00:25:15,760 --> 00:25:17,879 Speaker 1: if it's not the administrative word? And you sort of 462 00:25:17,920 --> 00:25:20,439 Speaker 1: dismissed that. If it's not the privacy concerns, why are 463 00:25:20,480 --> 00:25:25,240 Speaker 1: they protesting so strongly. Some of it is probably that 464 00:25:25,840 --> 00:25:30,040 Speaker 1: they want to maintain good relations with their customers who 465 00:25:30,240 --> 00:25:33,480 Speaker 1: aren't only is honest about the tax law and don't 466 00:25:33,560 --> 00:25:38,160 Speaker 1: want to be UH report reported on. You know, when 467 00:25:38,160 --> 00:25:43,080 Speaker 1: you see a business do an unreasonable thing, it's often 468 00:25:43,240 --> 00:25:50,119 Speaker 1: because they're in service of uh their customers. That's one possibility. 469 00:25:50,640 --> 00:25:54,439 Speaker 1: Another possibility is that they're people who just don't like 470 00:25:54,760 --> 00:26:03,040 Speaker 1: taxes and don't like anything about about out taxes. Look, 471 00:26:03,080 --> 00:26:06,080 Speaker 1: I think in fairness, UM, the i r S has 472 00:26:06,080 --> 00:26:09,480 Speaker 1: had some privacy problems. Some of these revelations that have 473 00:26:09,560 --> 00:26:13,760 Speaker 1: been show shocking have also been wrong, and I think 474 00:26:13,800 --> 00:26:20,560 Speaker 1: that contributes to uh this ethos. But I sure think 475 00:26:20,800 --> 00:26:24,280 Speaker 1: that the thing everybody ought to be able to agree on, 476 00:26:24,400 --> 00:26:30,600 Speaker 1: democratic and republican whatever exactly. You think seven trillion dollars 477 00:26:30,680 --> 00:26:34,880 Speaker 1: over the next decade in taxes that are legally owed, 478 00:26:35,880 --> 00:26:39,760 Speaker 1: legally owed under the tax law legislated by Donald Trump 479 00:26:40,400 --> 00:26:44,000 Speaker 1: and not paid, that's got to be a scandal that 480 00:26:44,080 --> 00:26:46,960 Speaker 1: calls for us to do much more than we're doing. 481 00:26:47,560 --> 00:26:51,240 Speaker 1: And information reporting is one part of that, and strengthening 482 00:26:51,280 --> 00:26:53,800 Speaker 1: the i r S is another. One of the big 483 00:26:53,800 --> 00:26:56,800 Speaker 1: developments potentially this week had to do with that Global 484 00:26:56,880 --> 00:27:00,239 Speaker 1: minimum corporate tax. Ireland surprised at least me you by 485 00:27:00,240 --> 00:27:02,040 Speaker 1: saying yes, we'll go along with it, and now we 486 00:27:02,080 --> 00:27:04,560 Speaker 1: know in fact it will go forward. Tell us about 487 00:27:04,560 --> 00:27:07,520 Speaker 1: the significance of that potentially, David, I think this is 488 00:27:07,560 --> 00:27:13,640 Speaker 1: the most important global economic agreement of the century so far. 489 00:27:14,840 --> 00:27:19,359 Speaker 1: It's important in reality because it's going to fortify tax 490 00:27:19,400 --> 00:27:24,800 Speaker 1: collections from corporations for companies all over the world. It's 491 00:27:24,840 --> 00:27:28,920 Speaker 1: important in principle because instead of countries running a race 492 00:27:29,000 --> 00:27:33,080 Speaker 1: to the bottom with respect to taxing business income, they're 493 00:27:33,119 --> 00:27:36,720 Speaker 1: now going to level up in a way that's going 494 00:27:36,800 --> 00:27:41,399 Speaker 1: to be fairer and permit tax reductions on working people 495 00:27:41,800 --> 00:27:46,800 Speaker 1: all over the world. And it's important in showing that 496 00:27:47,359 --> 00:27:52,919 Speaker 1: global economic diplomacy can be something that's not just about 497 00:27:52,920 --> 00:27:58,360 Speaker 1: the people who are in Davos, but about working people everywhere. 498 00:27:59,200 --> 00:28:02,919 Speaker 1: Joe Biden's talked about a middle class based farm policy. 499 00:28:03,400 --> 00:28:07,199 Speaker 1: This is a huge triumph of for that. It's a 500 00:28:07,200 --> 00:28:10,960 Speaker 1: great credit to the President who created the environment, to 501 00:28:11,160 --> 00:28:17,600 Speaker 1: Secretary Yellen, who drove the agreement, and to a large 502 00:28:17,720 --> 00:28:24,520 Speaker 1: number of officials who've been working in this area for many, 503 00:28:24,560 --> 00:28:30,639 Speaker 1: many years. This is really a big uh deal for 504 00:28:30,720 --> 00:28:34,840 Speaker 1: international economic diplomacy. Okay, Larry Summers, Harvard thank you so 505 00:28:34,960 --> 00:28:36,640 Speaker 1: very much for being back with us. Larry, of course, 506 00:28:36,720 --> 00:28:39,880 Speaker 1: is our special contributor here at Wall Street Week. Finally, 507 00:28:40,000 --> 00:28:45,080 Speaker 1: one more thought. Call it the mount Rushmore of tax havens. Taxes, 508 00:28:45,640 --> 00:28:48,000 Speaker 1: none of us wants to pay them. But what's even 509 00:28:48,040 --> 00:28:50,400 Speaker 1: worse is when you think you're paying yours and the 510 00:28:50,480 --> 00:28:53,600 Speaker 1: other guy isn't, which is why it's red meat every 511 00:28:53,600 --> 00:28:57,680 Speaker 1: time Democratic lawmakers pointed out to constituents when they want 512 00:28:57,760 --> 00:29:01,720 Speaker 1: to close loopholes. From Senator Amy Klobuchar of Minnesota, there 513 00:29:01,720 --> 00:29:05,400 Speaker 1: are just too many people that have been using things 514 00:29:05,440 --> 00:29:07,600 Speaker 1: that are maybe well meant in the tax code, or 515 00:29:07,680 --> 00:29:10,520 Speaker 1: many times not well meant um, and they use it 516 00:29:10,520 --> 00:29:12,240 Speaker 1: to make a lot of money at the expense of 517 00:29:12,280 --> 00:29:15,240 Speaker 1: other people. It's just not fair. The Senator Elizabeth Warren 518 00:29:15,440 --> 00:29:21,000 Speaker 1: of Massachusetts. Jeff Bezos is a billionaire grifter, and so 519 00:29:21,200 --> 00:29:24,520 Speaker 1: are the rist of these hugely wealthy people who pay 520 00:29:24,600 --> 00:29:27,840 Speaker 1: next to nothing in taxes, and all the way up 521 00:29:27,880 --> 00:29:32,280 Speaker 1: to President Biden himself. I'm not anti corporate, but it's 522 00:29:32,320 --> 00:29:35,800 Speaker 1: about time they start paying their fair share. That wealthy 523 00:29:35,880 --> 00:29:39,480 Speaker 1: people want to avoid paying taxes. There's nothing new, Let's 524 00:29:39,520 --> 00:29:42,880 Speaker 1: be honest. Here's President Obama back in two thousand nine, 525 00:29:43,240 --> 00:29:47,640 Speaker 1: pledging to close offshore tax loopholes. For years, we've talked 526 00:29:47,680 --> 00:29:52,000 Speaker 1: about stopping Americans from illegally hiding their money overseas and 527 00:29:52,040 --> 00:29:55,520 Speaker 1: getting tough with the financial institutions that let them get 528 00:29:55,520 --> 00:29:58,200 Speaker 1: away with it. Around the same time, US prosecutors went 529 00:29:58,240 --> 00:30:01,960 Speaker 1: after Swiss banks because they claimed bank secrecy laws were 530 00:30:01,960 --> 00:30:04,760 Speaker 1: protecting some of their clients from paying the taxes they owed. 531 00:30:04,960 --> 00:30:07,320 Speaker 1: U b s will hand over the names of American 532 00:30:07,360 --> 00:30:11,680 Speaker 1: account holders suspected of tax evasion. Now, other Swiss and 533 00:30:11,800 --> 00:30:15,240 Speaker 1: European banks may be part of the government's crackdown on 534 00:30:15,440 --> 00:30:18,320 Speaker 1: this practice. But now news comes with a new tax haven. 535 00:30:18,600 --> 00:30:21,440 Speaker 1: Not the Cayman Islands, not the Channel Islands, not an 536 00:30:21,440 --> 00:30:25,040 Speaker 1: island at all. No, it's good old South Dakota, where 537 00:30:25,080 --> 00:30:27,680 Speaker 1: the Washington Post reports that trust companies in the state 538 00:30:27,720 --> 00:30:30,400 Speaker 1: have more than quadrupled their assets in the last ten years, 539 00:30:30,520 --> 00:30:33,480 Speaker 1: up to three and sixty billion dollars, and a good 540 00:30:33,480 --> 00:30:36,280 Speaker 1: part of that money comes from overseas. How are they 541 00:30:36,320 --> 00:30:39,440 Speaker 1: doing It's the good old fashioned way. They're providing state 542 00:30:39,520 --> 00:30:43,320 Speaker 1: laws protecting assets from creditors and from taxing authorities. This 543 00:30:43,360 --> 00:30:45,800 Speaker 1: is all based on millions of documents obtained by the 544 00:30:45,800 --> 00:30:49,520 Speaker 1: Post and the International Consortium of Investigative Journalists, And although 545 00:30:49,560 --> 00:30:52,480 Speaker 1: the money deposited itself may not have come from any 546 00:30:52,520 --> 00:30:56,680 Speaker 1: illegal activity, it did come from some pretty controversial figures 547 00:30:56,720 --> 00:31:01,000 Speaker 1: like the Colombian textiles are caught laundering international drug money, 548 00:31:01,120 --> 00:31:04,360 Speaker 1: or a wealthy Brazilian alleged to have colluded to underpay 549 00:31:04,480 --> 00:31:07,240 Speaker 1: local farmers, or the family of the former head of 550 00:31:07,280 --> 00:31:10,640 Speaker 1: a sugar company in the Dominican Republic accused of exploiting 551 00:31:10,640 --> 00:31:13,800 Speaker 1: workers there. So, before we get too high and mighty 552 00:31:13,880 --> 00:31:17,360 Speaker 1: about how other countries are letting wealthy taxpayers get out 553 00:31:17,400 --> 00:31:20,640 Speaker 1: of paying their taxes, maybe we should look closer to home, 554 00:31:21,320 --> 00:31:24,480 Speaker 1: like in the Shadow of Mount Rushmore. That does it 555 00:31:24,560 --> 00:31:26,880 Speaker 1: for this episode of Wall Street Week. I'm David Weston. 556 00:31:26,960 --> 00:31:30,160 Speaker 1: This is Bloomberg. See you next week.