1 00:00:00,520 --> 00:00:03,760 Speaker 1: This is Bloomberg Wall Street Week. We turn our attention 2 00:00:03,840 --> 00:00:07,600 Speaker 1: to the markets this week. Us CPI members reinforcing concerns 3 00:00:07,600 --> 00:00:10,800 Speaker 1: about inflation. The financial stories that chief are worth a 4 00:00:10,840 --> 00:00:13,760 Speaker 1: really different reaction to mark. Its more indications of just 5 00:00:13,960 --> 00:00:16,360 Speaker 1: how hot the U. S economy really is. Through the 6 00:00:16,400 --> 00:00:19,759 Speaker 1: eyes of the most influential voices. Larry Summers, the former 7 00:00:19,800 --> 00:00:22,800 Speaker 1: Treatory Secretary, Katherine Keating, CEO of v n Y Mallin 8 00:00:22,960 --> 00:00:26,239 Speaker 1: Sam's l Sharmon and founder of Equatic Group Investments. In 9 00:00:26,320 --> 00:00:30,280 Speaker 1: Bloomberg Wall Street Week with David Weston from Bloomberg Radio, 10 00:00:30,360 --> 00:00:34,600 Speaker 1: speaker Pelosi goes to Taiwan, Open goes small in response 11 00:00:34,640 --> 00:00:37,640 Speaker 1: to President Biden's plea for more oil, and central banks 12 00:00:37,680 --> 00:00:40,960 Speaker 1: big go big in the struggle to tame inflation. This 13 00:00:41,000 --> 00:00:44,520 Speaker 1: is Bloomberg Wall Street Week. I'm David Weston. This week 14 00:00:44,600 --> 00:00:47,640 Speaker 1: contributors Larry Summers, Oh Harvard on a higher rate and 15 00:00:47,760 --> 00:00:51,159 Speaker 1: lower employment and Steve Ratner of Will and Advisors on 16 00:00:51,240 --> 00:00:54,400 Speaker 1: what the Inflation Reduction Act could mean for Wall Street. 17 00:00:54,800 --> 00:00:56,760 Speaker 1: So I think this is good for investors and that 18 00:00:56,920 --> 00:01:13,240 Speaker 1: it brings against some stability to fiscal policy. Affer it 19 00:01:13,400 --> 00:01:16,440 Speaker 1: was a week full of signaling as Speaker of the House, 20 00:01:16,520 --> 00:01:19,280 Speaker 1: Nancy Pelosi went to Taiwan to send a signal to 21 00:01:19,400 --> 00:01:24,360 Speaker 1: China about US commitments. Today, our delegation, bes Don very 22 00:01:24,440 --> 00:01:29,120 Speaker 1: proud came to Taiwan to make unequippically clear we will 23 00:01:29,160 --> 00:01:32,839 Speaker 1: not abandon our commitment to Taiwan, and we were proud 24 00:01:32,880 --> 00:01:36,840 Speaker 1: of our enjoying friendships, while China sent back its own 25 00:01:36,880 --> 00:01:40,560 Speaker 1: signal of displeasure with the visit. We will do what 26 00:01:40,640 --> 00:01:43,040 Speaker 1: we say, and let me say that to these measures 27 00:01:43,040 --> 00:01:47,440 Speaker 1: will be firm, strong and effective and open. Plus responded 28 00:01:47,520 --> 00:01:51,320 Speaker 1: to President Biden's requests for more production by increasing its limits, 29 00:01:51,360 --> 00:01:54,760 Speaker 1: but by a very modest one thousand barrels a day, 30 00:01:54,840 --> 00:01:57,760 Speaker 1: which Almas Hochstein of the State Department said was nice 31 00:01:58,120 --> 00:02:00,840 Speaker 1: but not enough. The importance of the President has is 32 00:02:00,840 --> 00:02:03,800 Speaker 1: not discussing barrels with with any country. He has been 33 00:02:03,920 --> 00:02:06,000 Speaker 1: very clear that he wants to see all prices come down, 34 00:02:06,240 --> 00:02:08,480 Speaker 1: and he wants to see gasoline prices come down. But 35 00:02:08,560 --> 00:02:11,280 Speaker 1: it wasn't just geopolitics this week. We also spent a 36 00:02:11,400 --> 00:02:14,120 Speaker 1: fair amount of time getting signals from our central banks, 37 00:02:14,400 --> 00:02:16,720 Speaker 1: whether it was the Bank of England on Thursday raising 38 00:02:16,800 --> 00:02:21,320 Speaker 1: rates fifty basis point as they battled even higher inflation CPR. 39 00:02:21,360 --> 00:02:24,400 Speaker 1: Inflation is not expected to peak at just over and 40 00:02:25,000 --> 00:02:27,480 Speaker 1: key four of this year and to remain at very 41 00:02:27,520 --> 00:02:31,560 Speaker 1: elevated levels, stout much of three or various FED members 42 00:02:31,639 --> 00:02:35,000 Speaker 1: all week long trying to walk back Chapal's statement for 43 00:02:35,080 --> 00:02:37,959 Speaker 1: the last week that we were close to the neutral rate. 44 00:02:38,480 --> 00:02:41,440 Speaker 1: We are a long way away from achieving an economy 45 00:02:41,480 --> 00:02:43,600 Speaker 1: that is back at two percent inflation, and that's where 46 00:02:43,639 --> 00:02:48,480 Speaker 1: we need to get to. And then then came Friday, 47 00:02:48,480 --> 00:02:50,799 Speaker 1: and boy did we get a signal with jobs numbers 48 00:02:50,800 --> 00:02:53,679 Speaker 1: coming in twice what was expected for five DWY eight 49 00:02:53,680 --> 00:02:57,080 Speaker 1: thousand people, and June was revised up as well, with 50 00:02:57,160 --> 00:03:00,400 Speaker 1: wages increasing at an annual pace of five point two percent. 51 00:03:00,840 --> 00:03:04,400 Speaker 1: Not surprisingly, this gave the bond market yet another abrupt turn, 52 00:03:04,680 --> 00:03:06,919 Speaker 1: and the ten year yield, which had dropped to near 53 00:03:06,960 --> 00:03:09,360 Speaker 1: two point five percent earlier in the week, shot up 54 00:03:09,360 --> 00:03:11,600 Speaker 1: again to end the week at two point eight three. 55 00:03:12,400 --> 00:03:15,720 Speaker 1: And while equities were volable, they weren't as bad as bonds, 56 00:03:15,960 --> 00:03:19,440 Speaker 1: with the spending the week up just over one third 57 00:03:19,440 --> 00:03:23,079 Speaker 1: of a percent, while the NASDAC moved back toward bold territory, 58 00:03:23,120 --> 00:03:25,600 Speaker 1: at least for a time. Ending the week up over 59 00:03:25,720 --> 00:03:28,519 Speaker 1: two percent. Here to tell what's sort through yet another 60 00:03:28,600 --> 00:03:30,880 Speaker 1: challenging week for the economy and for the markets, we 61 00:03:30,960 --> 00:03:34,040 Speaker 1: welcome to Mahajen. She is chief investment strategist at Edward 62 00:03:34,080 --> 00:03:37,440 Speaker 1: Jones and senior Markets editor for Bloomberg John Author. So 63 00:03:37,520 --> 00:03:39,240 Speaker 1: welcome both you to Walster. We're good to have you here. 64 00:03:39,360 --> 00:03:42,440 Speaker 1: More start with you, and certainly those jobs numbers really 65 00:03:42,480 --> 00:03:45,520 Speaker 1: got our attention on Friday. We're really dominant. What did 66 00:03:45,520 --> 00:03:48,680 Speaker 1: they tell the markets? Yeah, look, David, it's hard to 67 00:03:49,160 --> 00:03:52,600 Speaker 1: really say that we're in a recessionary environment with jobs 68 00:03:52,640 --> 00:03:56,840 Speaker 1: going increasing over five hundred thousand, five hundred thousand this month. Now, 69 00:03:56,920 --> 00:03:59,640 Speaker 1: keep in mind the U. S economy has started here 70 00:03:59,680 --> 00:04:02,240 Speaker 1: from the position of strength. So while we could see 71 00:04:02,280 --> 00:04:06,080 Speaker 1: weakening in the jobs figures, in economic in earnings data 72 00:04:06,160 --> 00:04:08,920 Speaker 1: in the months ahead, we certainly are nowhere near what 73 00:04:08,960 --> 00:04:12,680 Speaker 1: we'd call an economic downtour or recessionary environment. Now, now, 74 00:04:12,800 --> 00:04:15,080 Speaker 1: what were the market implications of this move? While you 75 00:04:15,160 --> 00:04:16,960 Speaker 1: touched on some of them, but one thing we saw 76 00:04:17,120 --> 00:04:20,280 Speaker 1: right off the bat, the expectations of a seventy five 77 00:04:20,320 --> 00:04:25,000 Speaker 1: basis point FED rate hike really skyrocketed between yesterday and today, 78 00:04:25,080 --> 00:04:29,240 Speaker 1: yesterday's probability thirty. Today we have a sixty percent probability 79 00:04:29,279 --> 00:04:31,719 Speaker 1: of a seventy bas point rate hike again by the 80 00:04:31,720 --> 00:04:34,440 Speaker 1: Federal Reserve in September. The second thing we saw was, 81 00:04:34,480 --> 00:04:37,080 Speaker 1: of course, those yields, so treasury yields both on the 82 00:04:37,120 --> 00:04:39,240 Speaker 1: tenure and the two year. Now keep in mind the 83 00:04:39,279 --> 00:04:41,680 Speaker 1: two year tends to be a proxy of what the 84 00:04:41,680 --> 00:04:43,680 Speaker 1: Fed may do in the next couple of years or 85 00:04:43,720 --> 00:04:48,279 Speaker 1: so both skyrocketed higher um, but we continue to have 86 00:04:48,360 --> 00:04:52,080 Speaker 1: what we call an inverted yield curve. So historically this 87 00:04:52,120 --> 00:04:57,160 Speaker 1: inverted yield curve does provide a leading indicator of recessionary environment, 88 00:04:57,240 --> 00:04:59,839 Speaker 1: but there is some lag to at six to eighteen months. 89 00:05:00,200 --> 00:05:03,920 Speaker 1: So net net, we saw a market that absorbed this 90 00:05:04,080 --> 00:05:08,560 Speaker 1: higher jobs figure, absorbed a potentially more aggressive FED. But 91 00:05:08,720 --> 00:05:11,280 Speaker 1: what we did see under the surface was that some 92 00:05:11,360 --> 00:05:15,240 Speaker 1: of those growth parts of the market, longer duration, tech, speculative, 93 00:05:15,279 --> 00:05:18,599 Speaker 1: higher valuation parts the market did underperform again today, and 94 00:05:18,680 --> 00:05:21,560 Speaker 1: that might be a thing we see going forward as well. So, John, others, 95 00:05:21,640 --> 00:05:23,839 Speaker 1: you follow central banks all around the world all the time, 96 00:05:23,880 --> 00:05:27,039 Speaker 1: including the Federal Reserve. Did the Friday numbers make the 97 00:05:27,080 --> 00:05:30,279 Speaker 1: Feds already difficult job harder or didn't make it easier. 98 00:05:30,839 --> 00:05:35,479 Speaker 1: I think it made it easier. They are people. I 99 00:05:35,560 --> 00:05:39,680 Speaker 1: don't think myself that Pwell tried to be that dubbish 100 00:05:39,920 --> 00:05:42,920 Speaker 1: last week. I think he meant to give the impression 101 00:05:42,920 --> 00:05:46,599 Speaker 1: that he was still very much committed to a more 102 00:05:46,640 --> 00:05:51,719 Speaker 1: hawkish series of rateykes. He was open to the the 103 00:05:52,240 --> 00:05:55,279 Speaker 1: claim that he was just not credible for a while. 104 00:05:55,320 --> 00:05:57,479 Speaker 1: The number of people who are convinced that the Fed 105 00:05:57,520 --> 00:06:01,560 Speaker 1: will have to turn turn around swiftly because the economy 106 00:06:01,640 --> 00:06:05,440 Speaker 1: will be two week it has been strong, that's been whin. 107 00:06:05,640 --> 00:06:09,640 Speaker 1: We've had this really remarkable fall back down in yields, 108 00:06:10,600 --> 00:06:14,719 Speaker 1: and with numbers like that, it's very hard to criticize 109 00:06:14,760 --> 00:06:21,000 Speaker 1: them for tightening rates this Obviously, the the employment picture 110 00:06:21,040 --> 00:06:24,360 Speaker 1: could scarcely be stronger. Thank you so much for John 111 00:06:24,440 --> 00:06:26,600 Speaker 1: Arthur's Bloomberg and Mono my hygen of Edward Jones. They're 112 00:06:26,600 --> 00:06:28,280 Speaker 1: gonna be staying with us as we talk a look 113 00:06:28,320 --> 00:06:31,320 Speaker 1: at what else may be driving the markets, particularly in geopolitics, 114 00:06:31,600 --> 00:06:33,800 Speaker 1: and where those markets may be headed. That's coming up 115 00:06:33,800 --> 00:07:02,159 Speaker 1: next on Wall Street Week on Bloomberg. This is Bloomberg 116 00:07:02,200 --> 00:07:11,960 Speaker 1: Wall Street Week with David Weston from Bloomberg Radio. This week, 117 00:07:12,360 --> 00:07:15,640 Speaker 1: China did some saber rattling versus the US. Where does 118 00:07:15,760 --> 00:07:17,920 Speaker 1: China fit in your thought process in the future? Are 119 00:07:17,920 --> 00:07:21,760 Speaker 1: there any significant investment implications with what's going on in China? Well, 120 00:07:21,800 --> 00:07:24,120 Speaker 1: in my group, I think that China is the biggest 121 00:07:24,400 --> 00:07:28,840 Speaker 1: potential growth vehicle for Boeing. UH. Two years ago, Boeing 122 00:07:29,120 --> 00:07:32,920 Speaker 1: delivered about six of their total aircraft output went to China. 123 00:07:33,200 --> 00:07:35,480 Speaker 1: It slipped down a little bit the last two years, 124 00:07:35,760 --> 00:07:37,680 Speaker 1: but we anticipate, say, as we get back to the 125 00:07:37,680 --> 00:07:42,440 Speaker 1: turn of the century, it could go sixteen. That was 126 00:07:42,480 --> 00:07:45,280 Speaker 1: Michael Holland and Peter s Oritis on Wall Street. We've 127 00:07:45,320 --> 00:07:48,800 Speaker 1: back in and once again this week China was in 128 00:07:48,920 --> 00:07:51,920 Speaker 1: the news with Speaker Pelosi's controversial trip to Taiwan and 129 00:07:52,000 --> 00:07:55,960 Speaker 1: China's rather strong reaction which certainly caused a geopolitical stir 130 00:07:56,280 --> 00:07:58,840 Speaker 1: but didn't have any effects on the markets or potential 131 00:07:58,840 --> 00:08:00,880 Speaker 1: effects on the global ecount of me. Here to help 132 00:08:01,000 --> 00:08:03,600 Speaker 1: us answer those questions and more are Monoma Hygen of 133 00:08:03,720 --> 00:08:07,240 Speaker 1: Edward Jones and Bloomberg's senior Markets editor John Author. So, John, 134 00:08:07,280 --> 00:08:09,800 Speaker 1: you actually wrote a column earlier this week noting in 135 00:08:09,840 --> 00:08:13,160 Speaker 1: the bond market reaction, apparently in part to Nancy Pelosi's visit. 136 00:08:13,400 --> 00:08:17,720 Speaker 1: But do you think it has longer term ramifications. I 137 00:08:17,720 --> 00:08:22,280 Speaker 1: I fear it has very much greater and longer term ramifications, 138 00:08:22,320 --> 00:08:26,840 Speaker 1: and I'm a little concerned both how quickly the bond 139 00:08:26,880 --> 00:08:30,080 Speaker 1: market got worried. We had a brief period of not 140 00:08:30,200 --> 00:08:32,360 Speaker 1: much more than twenty four hours when there was really 141 00:08:32,400 --> 00:08:37,120 Speaker 1: quite intense demand for treasuries born on the classic desire 142 00:08:37,160 --> 00:08:41,079 Speaker 1: for a safe haven. Uh. And more or less as 143 00:08:41,080 --> 00:08:44,600 Speaker 1: soon as Nancy Pelosi's plane and landed in Taiwan without 144 00:08:44,640 --> 00:08:49,440 Speaker 1: the Chinese trying to shoot it down, I'm only slightly exaggerating, 145 00:08:50,160 --> 00:08:54,280 Speaker 1: the market rebounded as though everything was everything was okay. 146 00:08:55,160 --> 00:08:58,559 Speaker 1: And certainly the degree of saber rattling we're seeing a 147 00:08:58,720 --> 00:09:06,319 Speaker 1: present from China is quite concerning. It's conceivable that this 148 00:09:06,520 --> 00:09:12,120 Speaker 1: speaker's trippers in some way called China's bluff. I'm not 149 00:09:12,160 --> 00:09:15,120 Speaker 1: a military strategist, but plenty of people are pointing out 150 00:09:15,160 --> 00:09:19,040 Speaker 1: that um Taiwan is an island a hundred miles away 151 00:09:19,080 --> 00:09:23,240 Speaker 1: from China. It will make um. Russia couldn't make a 152 00:09:23,240 --> 00:09:27,440 Speaker 1: good job of invading Ukraine. China actively invading Taiwan is 153 00:09:27,440 --> 00:09:32,240 Speaker 1: going to be orders of magnitude hardaer um. So whether 154 00:09:32,600 --> 00:09:36,040 Speaker 1: arguably the risk of a total breakdown and return to 155 00:09:36,120 --> 00:09:43,320 Speaker 1: conflict is is still quite slim um, but that there's 156 00:09:43,320 --> 00:09:47,520 Speaker 1: no question. If this leads to a serious worsening in 157 00:09:47,960 --> 00:09:51,720 Speaker 1: the US Chinese relations from where they are now, or 158 00:09:51,960 --> 00:09:58,160 Speaker 1: which we must all hope not outright conflict, that's very serious. 159 00:09:58,200 --> 00:10:01,360 Speaker 1: That's any an when you look at it, that's going 160 00:10:01,360 --> 00:10:04,400 Speaker 1: to be bad. What about your perspective, And not just 161 00:10:04,480 --> 00:10:06,920 Speaker 1: limited to China, We have an awful lot of geopolitics 162 00:10:06,960 --> 00:10:10,360 Speaker 1: going on, as John just referred to briefly in various respects. 163 00:10:10,520 --> 00:10:13,240 Speaker 1: Do you think geopolitics is affecting the markets right now 164 00:10:13,320 --> 00:10:15,479 Speaker 1: or do they have enough to worry about, whether it's inflation, 165 00:10:15,600 --> 00:10:18,960 Speaker 1: or whether it's supply chains, or whether it's the Fed. Yeah, 166 00:10:19,000 --> 00:10:21,240 Speaker 1: you know, David, this year we we actually got an 167 00:10:21,240 --> 00:10:25,240 Speaker 1: outsized amount of geopolitics impacting markets directly, of course, starting 168 00:10:25,240 --> 00:10:28,679 Speaker 1: with that Russia Ukraine conflict, which not only kind of 169 00:10:28,720 --> 00:10:32,360 Speaker 1: exacerbated the inflationary problems, but I've really put upward pressure 170 00:10:32,360 --> 00:10:36,360 Speaker 1: on oil, energy, grain prices across the globe. And then 171 00:10:36,400 --> 00:10:39,120 Speaker 1: of course we did shift some focus to China, but 172 00:10:39,400 --> 00:10:41,959 Speaker 1: because of the lockdowns and the on and off lockdowns 173 00:10:42,040 --> 00:10:46,560 Speaker 1: created tensions and supply chain created some demand, reopening and 174 00:10:46,600 --> 00:10:50,080 Speaker 1: then shutting down once again. And then of course, with 175 00:10:50,400 --> 00:10:53,400 Speaker 1: Nancy Pelosi's trip this week, we started to think about 176 00:10:53,440 --> 00:10:57,000 Speaker 1: maybe another tail risk emerging in geopolitics, which is uh, 177 00:10:57,200 --> 00:11:01,120 Speaker 1: the China Taiwan situation, which could potentially, at least in 178 00:11:01,120 --> 00:11:04,440 Speaker 1: an investor's mind, could be a Russia Ukraine two point oh, 179 00:11:04,480 --> 00:11:07,000 Speaker 1: and keep in mind the implications would be quite a 180 00:11:07,040 --> 00:11:11,480 Speaker 1: bit more severe. Supply chains and inflationary pressures again could 181 00:11:11,520 --> 00:11:15,160 Speaker 1: be exacerbated to more even more extreme level. So for now, 182 00:11:15,200 --> 00:11:17,200 Speaker 1: in our view, we think it's a tail risk, but 183 00:11:17,240 --> 00:11:20,040 Speaker 1: certainly one that's worth monitoring, and certainly one that we're watching. 184 00:11:20,080 --> 00:11:23,000 Speaker 1: Could intensify in headlines if we see you know, another 185 00:11:23,080 --> 00:11:28,160 Speaker 1: similar type of trip negotiation discussion UM, but hopefully for now, 186 00:11:28,200 --> 00:11:31,280 Speaker 1: a tail risk that has a lower probability than UM 187 00:11:31,360 --> 00:11:33,280 Speaker 1: certainly what we saw in Russia and Ukraine. So, to 188 00:11:33,320 --> 00:11:35,960 Speaker 1: translated into investment advice, if you would here, does that 189 00:11:36,040 --> 00:11:38,319 Speaker 1: mean if I'm an investor, for my portfolio, I should 190 00:11:38,320 --> 00:11:42,240 Speaker 1: look at more defensive investments, whether it's equities or dead Yeah, 191 00:11:42,240 --> 00:11:44,320 Speaker 1: you know, I think in the near term. So look, 192 00:11:44,360 --> 00:11:47,400 Speaker 1: we've had a great run rebound off the lows of 193 00:11:47,480 --> 00:11:51,040 Speaker 1: mid June across equity markets and even in fixed income 194 00:11:51,160 --> 00:11:56,640 Speaker 1: so inequities, we've seen the SMP rally nearly underneath the surface, 195 00:11:56,720 --> 00:11:59,120 Speaker 1: the growth parts of the market, technology, et cetera, up 196 00:11:59,160 --> 00:12:03,400 Speaker 1: nearly twenty per set um. Similarly, fixed income rebounded offloads 197 00:12:03,440 --> 00:12:06,160 Speaker 1: as well. Now going forward, if we start to see 198 00:12:06,320 --> 00:12:08,640 Speaker 1: yields move higher, you know, we've had a really nice 199 00:12:08,679 --> 00:12:10,960 Speaker 1: move downward and yields, but keep in mind we still 200 00:12:10,960 --> 00:12:13,920 Speaker 1: have the FED in play. We still have quantitative tightening 201 00:12:13,920 --> 00:12:16,800 Speaker 1: and play which could put upward pressure and yields. If 202 00:12:16,800 --> 00:12:20,959 Speaker 1: that occurs, we could probably once again see growth start 203 00:12:21,000 --> 00:12:24,199 Speaker 1: to underperform or lag again. So in our view, as 204 00:12:24,240 --> 00:12:26,920 Speaker 1: we get through the next few months, as those earnings 205 00:12:26,960 --> 00:12:30,520 Speaker 1: and economic data perhaps start to soften catch up with 206 00:12:30,520 --> 00:12:33,080 Speaker 1: what we've seen in equity markets earlier this year, we 207 00:12:33,080 --> 00:12:37,240 Speaker 1: would advise a more defensive tilt, value oriented defensive sectors 208 00:12:37,280 --> 00:12:41,080 Speaker 1: and equities and fixed income UM. But if and when 209 00:12:41,160 --> 00:12:44,840 Speaker 1: we do get inflation kind of in earnest moving lower 210 00:12:45,200 --> 00:12:47,960 Speaker 1: um the FED in earnest able to pause, that's really 211 00:12:47,960 --> 00:12:50,880 Speaker 1: when we see a pickup and risk assets, but perhaps 212 00:12:51,000 --> 00:12:54,040 Speaker 1: a shift towards growth once again, and that's when you'd 213 00:12:54,040 --> 00:12:56,720 Speaker 1: start layering in and barbelling growth. But for now, we'd 214 00:12:56,720 --> 00:13:00,680 Speaker 1: say stay invested, stay perhaps somewhat defensive, and the months ahead. 215 00:13:00,920 --> 00:13:04,360 Speaker 1: So so, John just overly simplistic here briefly, Does that 216 00:13:04,400 --> 00:13:06,360 Speaker 1: mean I actually have more bonds than I thought I should? 217 00:13:06,679 --> 00:13:09,560 Speaker 1: That is a very difficult one. I tend to be 218 00:13:09,679 --> 00:13:13,800 Speaker 1: somewhat bearish on bonds. I think that there is a 219 00:13:13,920 --> 00:13:18,360 Speaker 1: risk that the peak for the tenure rate isn't in yet. Uh, 220 00:13:18,400 --> 00:13:21,800 Speaker 1: And that is a that is a means that you 221 00:13:21,880 --> 00:13:24,280 Speaker 1: probably don't want to pile too much, too heavily into 222 00:13:24,520 --> 00:13:30,280 Speaker 1: into bonds. My best guess, because all of us have 223 00:13:30,400 --> 00:13:32,640 Speaker 1: to contend with the fact that that we don't really 224 00:13:32,720 --> 00:13:36,720 Speaker 1: know that the lack of good precedents for what happens 225 00:13:36,800 --> 00:13:39,880 Speaker 1: to the world in twenty means that there is also 226 00:13:39,920 --> 00:13:41,760 Speaker 1: a lack of good precedents for what we should be 227 00:13:41,800 --> 00:13:46,360 Speaker 1: expecting now. My best guess is that rates probably have 228 00:13:46,640 --> 00:13:50,040 Speaker 1: to rise higher to choke off inflation. The rule of 229 00:13:50,080 --> 00:13:54,520 Speaker 1: thumb is that inflation doesn't go down doesn't peak until 230 00:13:55,920 --> 00:13:59,360 Speaker 1: the interest rate exceeds the inflation rate. That implies that 231 00:13:59,400 --> 00:14:01,480 Speaker 1: we're going to be going I would say above for 232 00:14:01,840 --> 00:14:06,360 Speaker 1: cents at least. Uh. That would mean that you would 233 00:14:06,360 --> 00:14:11,760 Speaker 1: want to be getting into more defensive kinds of stocks 234 00:14:11,760 --> 00:14:15,240 Speaker 1: that actually benefit from higher rates. Just Mona said, is 235 00:14:15,559 --> 00:14:20,240 Speaker 1: basically value if you want it. In terms of hel risks, 236 00:14:20,320 --> 00:14:24,360 Speaker 1: there's this machiavellian possibility of getting into chipmakers that aren't 237 00:14:24,480 --> 00:14:29,000 Speaker 1: from Taiwan. If that happens there, then there you know, 238 00:14:29,160 --> 00:14:31,880 Speaker 1: there is something a lot more scarce Steve Chips. Yeah, there, 239 00:14:31,880 --> 00:14:34,200 Speaker 1: there you go. There's an interesting investment of chipmakers are 240 00:14:34,280 --> 00:14:36,960 Speaker 1: not in Taiwan. Thank you so much, Tomonomo, Hydgen of 241 00:14:37,040 --> 00:14:43,040 Speaker 1: Edward Jones and Bloomberg's own John Author's coming up. Democrats 242 00:14:43,200 --> 00:14:46,160 Speaker 1: like their new reconciliation package. They call it the Inflation 243 00:14:46,240 --> 00:14:49,440 Speaker 1: Reduction Act, and some economists won't. They like it too, 244 00:14:49,760 --> 00:14:52,720 Speaker 1: But what would it mean for investors? We asked Steve 245 00:14:52,800 --> 00:14:56,040 Speaker 1: Ratner of Will Advisors. That's next on Wall Street Week 246 00:14:56,320 --> 00:15:03,040 Speaker 1: on Bloomberg. This is Bloomberg Wall Street Week with David 247 00:15:03,080 --> 00:15:12,680 Speaker 1: Weston from Bloomberg Radio. Well, this is really a very 248 00:15:12,760 --> 00:15:16,920 Speaker 1: comprehensive and historic piece of legislation. Joe Manchin, he made 249 00:15:16,960 --> 00:15:20,360 Speaker 1: a terrible deal. Leave it to Congress to surprise us 250 00:15:20,680 --> 00:15:24,120 Speaker 1: take two of our biggest problems. Inflation. We have a 251 00:15:24,240 --> 00:15:28,000 Speaker 1: serious inflation challenge which is hitting economies around the click 252 00:15:28,000 --> 00:15:33,080 Speaker 1: globe and climate. As the climate crisis gets worse, extreme 253 00:15:33,120 --> 00:15:37,520 Speaker 1: weather will pose a rapidly growing danger to a rapidly 254 00:15:37,760 --> 00:15:42,040 Speaker 1: growing number of communities. Put them together in one big 255 00:15:42,080 --> 00:15:45,240 Speaker 1: package and give it the attractive name of the Inflation 256 00:15:45,440 --> 00:15:50,520 Speaker 1: Reduction Act. This bill will reduce inflationary pressures on economy. 257 00:15:50,960 --> 00:15:53,000 Speaker 1: In the end, it all came down to getting West 258 00:15:53,120 --> 00:15:56,880 Speaker 1: Virginia Senator Joe Mansion to sign on. This is fighting inflation. 259 00:15:56,920 --> 00:16:00,600 Speaker 1: This is all about the the absolute horrible position that 260 00:16:00,680 --> 00:16:03,800 Speaker 1: people are in now because of the inflation cost and 261 00:16:03,920 --> 00:16:07,800 Speaker 1: senator mentions. Republican colleagues like Pat Toomey of Pennsylvania can't 262 00:16:07,800 --> 00:16:12,640 Speaker 1: believe he went along. It's a very significant corporate tax increase, 263 00:16:12,760 --> 00:16:16,640 Speaker 1: mostly focused on manufacturers, which is a bad idea. It's 264 00:16:16,640 --> 00:16:20,320 Speaker 1: combined with price controls on prescription drugs. I've been asking 265 00:16:20,360 --> 00:16:22,480 Speaker 1: myself what does Joe Mantion get out of this? But 266 00:16:22,640 --> 00:16:26,720 Speaker 1: thus far, economists like Larry Summers think the Inflation Reduction 267 00:16:26,720 --> 00:16:30,560 Speaker 1: Act maybe just what the doctor ordered. I was glad 268 00:16:30,640 --> 00:16:32,880 Speaker 1: to see the bill. I think it's going to reduce 269 00:16:32,920 --> 00:16:35,840 Speaker 1: the rate of inflation, because it's going to reduce deficits 270 00:16:35,880 --> 00:16:39,600 Speaker 1: and demand over time, because it's going to use the 271 00:16:39,680 --> 00:16:45,160 Speaker 1: federal government's power to negotiate lower prices for pharmaceuticals, and 272 00:16:45,280 --> 00:16:53,480 Speaker 1: because it's going to increase uh supply of energy. So 273 00:16:53,520 --> 00:16:55,800 Speaker 1: economists really like the Inflation Reduction Act. But what does 274 00:16:55,840 --> 00:16:57,760 Speaker 1: it mean for investors? To get an answer to that, 275 00:16:57,760 --> 00:16:59,920 Speaker 1: we're gonna turn to someone who invests a fair amount 276 00:16:59,920 --> 00:17:03,360 Speaker 1: of capital. He is Stephen Ratner. He's chairman and CEO 277 00:17:03,640 --> 00:17:07,200 Speaker 1: of Willard Advisors. They invest the personal and philanthropic assets 278 00:17:07,320 --> 00:17:09,520 Speaker 1: of Michael R. Bloomberg, who, of course is our founder 279 00:17:09,760 --> 00:17:11,800 Speaker 1: and majority of Sheherrelder See. Thanks so much for being 280 00:17:11,800 --> 00:17:14,000 Speaker 1: back on Wall Street. League, of course, love to be here. 281 00:17:14,119 --> 00:17:16,040 Speaker 1: So you wrote a terrific not ed piece for The 282 00:17:16,040 --> 00:17:18,720 Speaker 1: New York Times this week and which you said, these 283 00:17:18,720 --> 00:17:21,000 Speaker 1: are pretty strong words. I must say. Do you think 284 00:17:21,040 --> 00:17:23,040 Speaker 1: that this may be one of the best packages that 285 00:17:23,080 --> 00:17:26,120 Speaker 1: you can remember Congress giving birth to? So you think 286 00:17:26,119 --> 00:17:28,359 Speaker 1: it's a good idea for the country. What does it 287 00:17:28,400 --> 00:17:32,520 Speaker 1: mean for investors? I think for investors it's it's basically positive. 288 00:17:32,560 --> 00:17:34,640 Speaker 1: I think we're making progress on a number of our 289 00:17:34,640 --> 00:17:38,200 Speaker 1: really important problems, climate being first and foremost among them. 290 00:17:38,400 --> 00:17:40,800 Speaker 1: That's good for the country. It's ultimately good for investors. 291 00:17:41,280 --> 00:17:45,120 Speaker 1: I think prescription drugs may not pricing may not be 292 00:17:45,440 --> 00:17:48,399 Speaker 1: absolutely great for every farmer company in America, but for 293 00:17:48,440 --> 00:17:50,760 Speaker 1: the average in America, and it will eventually give them 294 00:17:50,760 --> 00:17:53,920 Speaker 1: more spending power and the afford the ability to buy 295 00:17:53,920 --> 00:17:58,000 Speaker 1: other things, and that helps the economy. The minimum corporate tax, 296 00:17:58,480 --> 00:18:00,480 Speaker 1: it's just something we needed to do. I think the 297 00:18:01,240 --> 00:18:04,439 Speaker 1: Trump t c j A was so widely unfair in 298 00:18:04,560 --> 00:18:06,399 Speaker 1: terms of the amount of the business rollbacks. At this 299 00:18:06,480 --> 00:18:09,720 Speaker 1: broad back, I would note that after the mansion proposal 300 00:18:09,880 --> 00:18:12,840 Speaker 1: was very surprisingly announced, as you know, nobody thought this 301 00:18:13,000 --> 00:18:15,960 Speaker 1: was coming. But after it was announced, the stock market 302 00:18:15,960 --> 00:18:18,080 Speaker 1: in the next several days had several of its best 303 00:18:18,119 --> 00:18:22,000 Speaker 1: days throughout the difficult period. So obviously investors were not 304 00:18:22,040 --> 00:18:24,719 Speaker 1: put off by this thing, and indeed even encouraged by 305 00:18:24,760 --> 00:18:26,879 Speaker 1: the idea of progress in Washington. One of the things 306 00:18:26,920 --> 00:18:30,119 Speaker 1: Republicans I think done, for example Pat too Many from Pennsylvania, 307 00:18:30,359 --> 00:18:33,040 Speaker 1: is to say that corporate minium attacks effectively would take 308 00:18:33,119 --> 00:18:36,200 Speaker 1: some of the benefits away from the expensing of capital investment, 309 00:18:36,359 --> 00:18:39,960 Speaker 1: will deter capital investment corporations ultimately hurt us in terms 310 00:18:39,960 --> 00:18:42,720 Speaker 1: of investment in terms of growth. Well, the first part 311 00:18:42,720 --> 00:18:44,200 Speaker 1: of that is right. We are taking some of the 312 00:18:44,240 --> 00:18:47,600 Speaker 1: centers away. Although we're doing it, we're not really directly 313 00:18:47,640 --> 00:18:50,640 Speaker 1: taking them away. We didn't roll back the depreciation provision. 314 00:18:50,680 --> 00:18:53,840 Speaker 1: We simply put a minimum tax on all the corporate profits, 315 00:18:53,840 --> 00:18:55,920 Speaker 1: so that in fact leaves most of the investment in 316 00:18:56,000 --> 00:18:58,320 Speaker 1: sentiment place. But there are those those who felt that 317 00:18:58,320 --> 00:19:00,320 Speaker 1: that was simply too much when it was as the 318 00:19:00,359 --> 00:19:04,120 Speaker 1: t c J. Why I give companies right off upfront? 319 00:19:04,359 --> 00:19:06,320 Speaker 1: Is that really going to change the investment that much? 320 00:19:06,400 --> 00:19:08,320 Speaker 1: Is it really the way you want to run tax policy? 321 00:19:08,560 --> 00:19:10,119 Speaker 1: And I don't think there's a lot of evidence that 322 00:19:10,240 --> 00:19:12,680 Speaker 1: had much of an impact on investment, so I don't 323 00:19:12,680 --> 00:19:15,080 Speaker 1: buy that. I think I think the problem of investment 324 00:19:15,080 --> 00:19:17,760 Speaker 1: here is there are not enough profitable opportunities out there, 325 00:19:18,000 --> 00:19:19,919 Speaker 1: not that companies are worried about their tax rate or 326 00:19:19,960 --> 00:19:22,040 Speaker 1: they don't have the cash or something like that. One 327 00:19:22,040 --> 00:19:25,240 Speaker 1: of the aspects of this, obviously is the inflation reduction, because, 328 00:19:25,280 --> 00:19:27,919 Speaker 1: as I understand, of reducing the deficit, actually paying for 329 00:19:28,040 --> 00:19:31,080 Speaker 1: it having more in revenue than the costs going out. 330 00:19:31,520 --> 00:19:34,560 Speaker 1: What does that due to investors? Well, first, on the 331 00:19:34,600 --> 00:19:38,000 Speaker 1: inflation thing, the Republicans have created I think a false 332 00:19:38,000 --> 00:19:40,520 Speaker 1: psychotomy away they have made. They made the point or 333 00:19:40,600 --> 00:19:44,440 Speaker 1: claimed this wouldn't really reduce inflation, and that's not untrue. 334 00:19:44,600 --> 00:19:46,679 Speaker 1: It's impact on inflation in the first few years is 335 00:19:46,680 --> 00:19:49,359 Speaker 1: relatively small. It gets a bit larger in the out years. 336 00:19:49,560 --> 00:19:51,600 Speaker 1: But the most important thing is that it is a 337 00:19:51,640 --> 00:19:54,919 Speaker 1: reversaile policy from the last several packages we've passed that 338 00:19:54,960 --> 00:19:57,760 Speaker 1: have been highly inflationary. So I think this is good 339 00:19:57,760 --> 00:20:00,720 Speaker 1: for investors and that it brings against some ability to 340 00:20:00,760 --> 00:20:03,080 Speaker 1: fiscal policy in Washington for the first time in a 341 00:20:03,119 --> 00:20:06,639 Speaker 1: long time, a fiscal policy package that actually does at 342 00:20:06,720 --> 00:20:11,120 Speaker 1: least lean against inflation, even if the total impact isn't enormous. 343 00:20:11,160 --> 00:20:13,440 Speaker 1: If this package, and again we're assuming for the moment 344 00:20:13,440 --> 00:20:16,520 Speaker 1: that it gets enacted, if it in fact gets enacted, 345 00:20:16,840 --> 00:20:19,080 Speaker 1: is the benefit to investors mainly sort of the rising 346 00:20:19,080 --> 00:20:21,479 Speaker 1: tide notion. I mean, it's the macro that everything goes 347 00:20:21,560 --> 00:20:23,880 Speaker 1: up until we're all better off, or are the specific 348 00:20:23,920 --> 00:20:26,880 Speaker 1: sectors that actually would be more attractive to investors such 349 00:20:26,920 --> 00:20:30,119 Speaker 1: as you mentioned climate and energy. Probably yes, the rising 350 00:20:30,119 --> 00:20:32,479 Speaker 1: tide is certainly the overarching part of this. It's not 351 00:20:32,520 --> 00:20:35,439 Speaker 1: a complicated package that doesn't have that many provisions in it, 352 00:20:35,920 --> 00:20:38,760 Speaker 1: so it's really it really is climate and prescription drugs 353 00:20:38,800 --> 00:20:41,280 Speaker 1: and then obviously some of the tax stuff. So in 354 00:20:41,359 --> 00:20:43,280 Speaker 1: climate and I don't think anyone yet has really been 355 00:20:43,359 --> 00:20:45,720 Speaker 1: a comb through all the little minutia. Thank you so 356 00:20:45,800 --> 00:20:48,320 Speaker 1: much so Stephen Radder, he's the chairman and CEO of 357 00:20:48,320 --> 00:20:52,560 Speaker 1: will It Advisors. My pleasure. Thank you. Coming up, we 358 00:20:52,600 --> 00:20:55,080 Speaker 1: wrap up the week once again with our special contributor 359 00:20:55,200 --> 00:20:58,360 Speaker 1: Larry Summers of Harvard. That's next on Wall Street Week 360 00:20:58,640 --> 00:21:05,000 Speaker 1: on Bloomberg. This is Bloomberg Wall Street Week with David 361 00:21:05,040 --> 00:21:14,959 Speaker 1: Weston from Bloomberg Radio. This is Wall Street Week. I'm 362 00:21:15,000 --> 00:21:17,199 Speaker 1: David western We end the week as we always do 363 00:21:17,280 --> 00:21:19,840 Speaker 1: with our special contributor Larry Summers of Harvard. So, Larry, 364 00:21:19,880 --> 00:21:22,280 Speaker 1: thank you so much for joining us. Let's address that 365 00:21:22,359 --> 00:21:25,440 Speaker 1: big number that came out on Friday. Five thousand new 366 00:21:25,520 --> 00:21:28,080 Speaker 1: jobs also were vision up in June, and by the way, 367 00:21:28,160 --> 00:21:30,200 Speaker 1: wages up at a rate of five point two percent 368 00:21:30,280 --> 00:21:31,879 Speaker 1: year a year. President Biden came out and said this 369 00:21:31,880 --> 00:21:34,320 Speaker 1: shows that his economic policy is working. What did you 370 00:21:34,359 --> 00:21:36,760 Speaker 1: make of those numbers? I think it's more mixed. I 371 00:21:37,119 --> 00:21:41,520 Speaker 1: celebrate all the extra jobs, and that's surely a good 372 00:21:41,520 --> 00:21:45,399 Speaker 1: thing to see. But my principal concern, as you know, David, 373 00:21:45,480 --> 00:21:48,920 Speaker 1: has been that we've got an overheated economy, and then 374 00:21:49,119 --> 00:21:52,200 Speaker 1: if you overheat the economy longer and longer, you get 375 00:21:52,240 --> 00:21:55,600 Speaker 1: more and more inflation and bigger and bigger problems down 376 00:21:55,640 --> 00:22:00,879 Speaker 1: the road. And everything in this number says to me, overheating, 377 00:22:01,440 --> 00:22:06,800 Speaker 1: not yet under control, not our path to being under control. 378 00:22:06,840 --> 00:22:12,080 Speaker 1: So I was actually not gratified by these numbers, but 379 00:22:12,680 --> 00:22:17,040 Speaker 1: my concern was actually magnified. So what message does this 380 00:22:17,160 --> 00:22:20,200 Speaker 1: send to the Fed? Do you think? Look, I don't 381 00:22:20,240 --> 00:22:24,119 Speaker 1: think the Fed has the thread right now. As I 382 00:22:24,160 --> 00:22:27,640 Speaker 1: said on this show last week, I think the idea 383 00:22:27,760 --> 00:22:31,720 Speaker 1: that we're at the neutral rate, we're near the neutral rate, 384 00:22:32,440 --> 00:22:38,000 Speaker 1: is not a defensible concept. And now when we're seeing 385 00:22:38,480 --> 00:22:44,800 Speaker 1: wage inflation unambiguously after this number accelerating, after this number, 386 00:22:44,840 --> 00:22:48,720 Speaker 1: after the e c I, after the Atlanta Fed, we have, 387 00:22:49,119 --> 00:22:55,800 Speaker 1: by every reasonable measure of core inflation um inflation running 388 00:22:55,880 --> 00:23:00,680 Speaker 1: somewhere plus or minus uh five. That is more than 389 00:23:00,720 --> 00:23:04,719 Speaker 1: it was when Richard Nixon UH put price controls in 390 00:23:04,840 --> 00:23:11,400 Speaker 1: place that is not acceptable by any dimension. And if 391 00:23:11,440 --> 00:23:15,480 Speaker 1: we don't act on it, and act strongly on it, 392 00:23:15,880 --> 00:23:20,560 Speaker 1: and that means raising real interest rates UH significantly, then 393 00:23:20,600 --> 00:23:24,719 Speaker 1: we're just setting the stage for stagflation. Here's what I'm 394 00:23:24,840 --> 00:23:29,680 Speaker 1: very worried about. Because we've seen the movie before. I'm worried, 395 00:23:29,800 --> 00:23:32,959 Speaker 1: and I was interested to see that Paul Krogman, who 396 00:23:33,000 --> 00:23:35,960 Speaker 1: has hardly agreed with me in general on these things, 397 00:23:35,960 --> 00:23:40,800 Speaker 1: expressed exactly this concern UH. Today. I'm worried that we're 398 00:23:40,800 --> 00:23:47,240 Speaker 1: gonna see some good news on non core inflation, on commodities, 399 00:23:47,520 --> 00:23:51,480 Speaker 1: on what's happened in gasolene, for example, and we're gonna 400 00:23:51,520 --> 00:23:54,920 Speaker 1: see a bit of economic slowing, and that's gonna lead 401 00:23:54,960 --> 00:23:58,080 Speaker 1: the FED to think that things are under control, but 402 00:23:58,160 --> 00:24:03,360 Speaker 1: in fact, underlying inflation, it's gonna be still completely unacceptable. 403 00:24:03,880 --> 00:24:06,400 Speaker 1: Things are gonna go up and down in terms of 404 00:24:06,600 --> 00:24:12,600 Speaker 1: the non core inflation. And if we've got a labor 405 00:24:12,680 --> 00:24:16,680 Speaker 1: market that's red hot, that's only gonna mean constant or 406 00:24:16,760 --> 00:24:21,000 Speaker 1: even accelerating inflation, and we're gonna have a situation like 407 00:24:21,080 --> 00:24:25,639 Speaker 1: we did in the nineties seventies where we perpetuated inflation 408 00:24:25,800 --> 00:24:29,800 Speaker 1: by not doing enough to contain it. The doctor tells 409 00:24:29,840 --> 00:24:32,560 Speaker 1: you to take all your medicine. If you take only 410 00:24:32,640 --> 00:24:35,879 Speaker 1: some of your medicine, you're gonna get the illness back. 411 00:24:36,359 --> 00:24:39,080 Speaker 1: The bacteria are going to be resistant, and it is 412 00:24:39,119 --> 00:24:43,080 Speaker 1: going to be worse. And that is the risk that 413 00:24:43,240 --> 00:24:47,119 Speaker 1: I believe we are running in this situation on the 414 00:24:47,160 --> 00:24:50,040 Speaker 1: path that the FETE is predicting and on the path 415 00:24:50,160 --> 00:24:53,800 Speaker 1: that the market is expecting. Another big piece of news 416 00:24:53,840 --> 00:24:56,280 Speaker 1: this week I came from that Inflation Reduction Act what 417 00:24:56,359 --> 00:24:58,119 Speaker 1: you talked about last week on the program, saying you 418 00:24:58,160 --> 00:25:00,840 Speaker 1: were glad to see the bill. It's been adjusted in 419 00:25:00,920 --> 00:25:04,280 Speaker 1: some ways to a company, particularly Center Cinema from Arizona. 420 00:25:04,480 --> 00:25:06,640 Speaker 1: But as of right now, it looks like it may 421 00:25:06,720 --> 00:25:10,040 Speaker 1: well pass the Senate this weekend and maybe be enacted 422 00:25:10,240 --> 00:25:12,280 Speaker 1: next week. So what do you make of the bill 423 00:25:12,359 --> 00:25:14,200 Speaker 1: as it looks now? The package, as much as we 424 00:25:14,320 --> 00:25:17,920 Speaker 1: understand it, this is really positive news. This is good 425 00:25:17,960 --> 00:25:22,400 Speaker 1: news on healthcare, This is good news on the environment 426 00:25:22,760 --> 00:25:28,879 Speaker 1: and energy. This is uh good news on tax reform. 427 00:25:29,359 --> 00:25:33,200 Speaker 1: This is going to make our economy better while at 428 00:25:33,200 --> 00:25:37,520 Speaker 1: the same time reducing the budget deficit and contributing, albeit 429 00:25:37,520 --> 00:25:43,679 Speaker 1: in a small way, to a reduction in inflation. But 430 00:25:43,880 --> 00:25:49,200 Speaker 1: it is a beginning, a very important beginning, not an end. 431 00:25:49,840 --> 00:25:54,200 Speaker 1: We still have huge international tax loopholes that are driving 432 00:25:54,280 --> 00:26:00,560 Speaker 1: businesses abroad. We still shockingly and this is something that 433 00:26:01,119 --> 00:26:04,560 Speaker 1: really disappointed me, and I was sorry with the judgment 434 00:26:04,680 --> 00:26:08,639 Speaker 1: that uh Senator Cinema came to. We still have the 435 00:26:09,200 --> 00:26:13,959 Speaker 1: carried interests loophoul that is allowing many of the wealthiest 436 00:26:14,040 --> 00:26:17,760 Speaker 1: Americans to pay taxes at a much lower rate than 437 00:26:17,800 --> 00:26:22,120 Speaker 1: the people who clean uh their floors by getting capital 438 00:26:22,160 --> 00:26:27,760 Speaker 1: gains on what is really earned uh income. And it 439 00:26:27,840 --> 00:26:31,480 Speaker 1: is uh just wrong, and it makes me worry about 440 00:26:31,520 --> 00:26:35,680 Speaker 1: our politics that it has lasted as long as it has. 441 00:26:36,080 --> 00:26:40,560 Speaker 1: But look, that's for another day. For today, it's to 442 00:26:40,680 --> 00:26:44,359 Speaker 1: celebrate that this is a good and important bill that 443 00:26:44,560 --> 00:26:48,120 Speaker 1: is moving the country uh forward. And I think it's 444 00:26:48,160 --> 00:26:53,800 Speaker 1: a tribute to the perseverance of many the perseverance in 445 00:26:53,920 --> 00:26:59,720 Speaker 1: negotiating and negotiating and negotiating of Senator Schumer, of Senator 446 00:26:59,800 --> 00:27:04,679 Speaker 1: may Mention, who many people have raised questions about, and 447 00:27:04,680 --> 00:27:08,000 Speaker 1: who I don't agree about on everything, but who has 448 00:27:08,160 --> 00:27:12,440 Speaker 1: stuck with some basic views he had about the importance 449 00:27:12,480 --> 00:27:16,680 Speaker 1: of not adding to inflation for a year, and contrary 450 00:27:16,680 --> 00:27:20,080 Speaker 1: to what many people said, was prepared to reach a 451 00:27:20,119 --> 00:27:23,040 Speaker 1: deal if it was the right deal and stayed at 452 00:27:23,040 --> 00:27:26,720 Speaker 1: the table at above all, I think it reflects the 453 00:27:26,760 --> 00:27:32,680 Speaker 1: fact that President Biden laid out an agenda. Larry addressed 454 00:27:32,680 --> 00:27:35,040 Speaker 1: one specific issue that's come up in the scoring. As 455 00:27:35,080 --> 00:27:38,400 Speaker 1: it's called. The Joint Committee of Taxation, which is bipartisan, 456 00:27:38,480 --> 00:27:41,000 Speaker 1: came out and said that in fact, a fair amount 457 00:27:41,000 --> 00:27:42,520 Speaker 1: of the tax birden would fall and people will make 458 00:27:42,520 --> 00:27:45,440 Speaker 1: four dollars and less. I understand what that is. It's saying, 459 00:27:45,640 --> 00:27:47,840 Speaker 1: if the corporations are paying more tax, some of that 460 00:27:48,080 --> 00:27:51,840 Speaker 1: is going to go to the employees and the regular consumers. 461 00:27:52,200 --> 00:27:54,439 Speaker 1: What do you make of that argument? Is it true? 462 00:27:56,359 --> 00:27:58,879 Speaker 1: I don't think it's very good economics. I think that 463 00:27:59,359 --> 00:28:03,199 Speaker 1: the core for share owners and other capitalists pay the 464 00:28:03,280 --> 00:28:06,600 Speaker 1: vast majority of corporate taxes in general, and I think 465 00:28:06,640 --> 00:28:11,840 Speaker 1: that's even more true with respect to corporate subsidies and loopholes. 466 00:28:11,880 --> 00:28:15,919 Speaker 1: And it's corporate subsidies and loopholes that we're going after 467 00:28:16,960 --> 00:28:22,200 Speaker 1: as a consequence of UH this UH. I think the vast, 468 00:28:22,400 --> 00:28:26,600 Speaker 1: vast majority of Americans are happy to see the tax 469 00:28:26,680 --> 00:28:30,240 Speaker 1: rate on companies like Amazon go up, and they're not 470 00:28:30,320 --> 00:28:34,119 Speaker 1: worried that that means an increase in their taxes. They'd 471 00:28:34,200 --> 00:28:37,520 Speaker 1: much rather see us when we need tax revenue, as 472 00:28:37,600 --> 00:28:42,000 Speaker 1: we do now, go after companies that year after year 473 00:28:42,040 --> 00:28:45,400 Speaker 1: after year or reporting billions of dollars of profits to 474 00:28:45,440 --> 00:28:49,440 Speaker 1: their shareholders and still not paying taxes at a rate 475 00:28:49,520 --> 00:28:52,560 Speaker 1: of even fient. And that is all that. This bill 476 00:28:52,640 --> 00:28:57,480 Speaker 1: goes after high profits to shareholders, no taxes. That's the 477 00:28:57,560 --> 00:29:00,680 Speaker 1: right thing to do. Larry, thank you, Silvery's special contributor 478 00:29:00,680 --> 00:29:04,520 Speaker 1: here Walster Larry Summers of Harvard. Finally, one more thought. 479 00:29:04,560 --> 00:29:07,440 Speaker 1: All the glitters is not gold, but it might just 480 00:29:07,520 --> 00:29:11,040 Speaker 1: be crypto. Remember those glory days of yesteryear, or at 481 00:29:11,080 --> 00:29:14,160 Speaker 1: least the year before last, when money was cheap the 482 00:29:14,240 --> 00:29:18,120 Speaker 1: Fed was still cutting rates. Today the FMC kept interest 483 00:29:18,200 --> 00:29:21,719 Speaker 1: rates near zero, and asset values had nowhere to go 484 00:29:22,040 --> 00:29:25,000 Speaker 1: but up. We're here record highs, the stock markets making 485 00:29:25,000 --> 00:29:27,840 Speaker 1: grand new record highs. Equities can continue to move higher. 486 00:29:28,120 --> 00:29:30,280 Speaker 1: One of the hottest asset classes of the last few 487 00:29:30,360 --> 00:29:34,680 Speaker 1: years was crypto, with Bitcoin peaking near seventy thousand dollars 488 00:29:34,720 --> 00:29:37,920 Speaker 1: just after Mr Powell announced his decision to cut rates again, 489 00:29:38,320 --> 00:29:41,040 Speaker 1: making it just too good to resist For investors like 490 00:29:41,080 --> 00:29:45,240 Speaker 1: Michael Sailor, we have to invest in something, and we've 491 00:29:45,320 --> 00:29:48,160 Speaker 1: chosen as a business strategy to FoST focus on what 492 00:29:48,240 --> 00:29:52,960 Speaker 1: we believe is the most exciting investment idea, because it's 493 00:29:53,000 --> 00:29:57,360 Speaker 1: a digital commodity that's absolutely scarce and only getting technically 494 00:29:57,400 --> 00:30:01,320 Speaker 1: better every year. Well, Mike NOVERGTS told our own Eric Shasker, 495 00:30:01,480 --> 00:30:03,960 Speaker 1: it was as good as gold. It's a weapon in 496 00:30:04,000 --> 00:30:07,280 Speaker 1: people's portfolio. It is a version of gold. We call 497 00:30:07,360 --> 00:30:10,680 Speaker 1: it digital gold. And if retail investors needed any more 498 00:30:10,760 --> 00:30:13,400 Speaker 1: reason to get on the crypto bandwagon, they got a 499 00:30:13,520 --> 00:30:16,880 Speaker 1: not so subtle nudge from some of the biggest celebrities around, 500 00:30:17,360 --> 00:30:20,840 Speaker 1: people like greatest of all time quarterback Tom Brady, I'm 501 00:30:20,840 --> 00:30:26,520 Speaker 1: getting into cryptox and Reese Witherspoon tweeting quote crypto is 502 00:30:26,560 --> 00:30:30,360 Speaker 1: here to stay. And Steph Curry telling us he's not 503 00:30:30,440 --> 00:30:34,640 Speaker 1: an expert, but that's not stopping him from trading crypto anyway. 504 00:30:34,680 --> 00:30:38,400 Speaker 1: This is Steph Curry, the world's leading expert on cryptocurrency. 505 00:30:39,080 --> 00:30:42,560 Speaker 1: I'm not, but that was then and this is now. 506 00:30:42,880 --> 00:30:46,520 Speaker 1: Inflation is up. We really need to restore price stability, 507 00:30:46,560 --> 00:30:49,360 Speaker 1: get inflation back down to two. The FED is on 508 00:30:49,440 --> 00:30:52,480 Speaker 1: a tightening spree. Well, the message is that there will 509 00:30:52,520 --> 00:30:57,120 Speaker 1: be continuing rate increases, although I think starting at September meeting, 510 00:30:57,320 --> 00:31:00,080 Speaker 1: as he said, it will be meeting by meeting, and 511 00:31:00,160 --> 00:31:03,200 Speaker 1: crypto isn't looking like quite the sure thing it did 512 00:31:03,240 --> 00:31:07,280 Speaker 1: to some, with bitcoin down over from its peak, leading 513 00:31:07,320 --> 00:31:10,680 Speaker 1: people like Eddie Low of May Bank Singapore to lose faith. 514 00:31:11,040 --> 00:31:14,720 Speaker 1: Crypto was actually touted as the alternative goal when he 515 00:31:14,800 --> 00:31:17,040 Speaker 1: was when bitcoin was at sixty thou but I think 516 00:31:17,400 --> 00:31:19,760 Speaker 1: now at twenty thousand or below that it is no 517 00:31:19,800 --> 00:31:23,360 Speaker 1: longer really that valid. And that's even before we get 518 00:31:23,360 --> 00:31:26,320 Speaker 1: two questions about what mining crypto is doing to our climate. 519 00:31:26,720 --> 00:31:29,960 Speaker 1: Bitcoin community should see the biggest risk of bitcoin is 520 00:31:30,000 --> 00:31:33,480 Speaker 1: climate is getting worse used every day and bitcoin is 521 00:31:33,480 --> 00:31:37,520 Speaker 1: contributing to that. But never fear. Matt Damon is here, 522 00:31:37,760 --> 00:31:39,719 Speaker 1: and we know that the characters he plays in the 523 00:31:39,720 --> 00:31:43,240 Speaker 1: movies are nothing if not courageous. We can't stay there, 524 00:31:43,320 --> 00:31:47,160 Speaker 1: not say, but Damon also styles himself as brave, at 525 00:31:47,240 --> 00:31:50,520 Speaker 1: least according to this Crypto dot com. Add four simple 526 00:31:50,560 --> 00:31:52,920 Speaker 1: words that have been whispered by the intrepid since the 527 00:31:52,960 --> 00:31:57,720 Speaker 1: time of the Romans. Fortune favors the Brave. I suspect 528 00:31:57,720 --> 00:32:00,360 Speaker 1: that there just maybe some crypto owners out there hoping 529 00:32:00,400 --> 00:32:05,040 Speaker 1: that fortune catches up with Mr Damon's bravery. That does 530 00:32:05,080 --> 00:32:07,480 Speaker 1: it for this episode of Wall Street Week. I'm David Weston. 531 00:32:07,560 --> 00:32:09,480 Speaker 1: This is Bloomberg. See you next week.