1 00:00:00,160 --> 00:00:03,360 Speaker 1: This is Bloomberg Wall Street Week. What's the state of 2 00:00:03,400 --> 00:00:06,360 Speaker 1: corporate governance? The deficit is a real issue. The US 3 00:00:06,400 --> 00:00:09,920 Speaker 1: economy continues to send mixed signals. The financial stories that 4 00:00:10,000 --> 00:00:13,000 Speaker 1: cheap our world fed action to con concerns over dollar 5 00:00:13,039 --> 00:00:16,520 Speaker 1: liquidity and encouraging China data. The five hundred wealthiest people 6 00:00:16,520 --> 00:00:19,160 Speaker 1: in the world. Through the eyes of the most influential 7 00:00:19,239 --> 00:00:22,880 Speaker 1: voices Larry Summers, the former Treasury Secretary, Star CEO, Kevin 8 00:00:22,960 --> 00:00:26,640 Speaker 1: Johnson sec Chairman j Clayton. Bloomberg wool Street Week with 9 00:00:26,760 --> 00:00:31,320 Speaker 1: David Weston from Bloomberg Radio. A glass half full with 10 00:00:31,440 --> 00:00:34,559 Speaker 1: the new president and a vaccine on the horizon. This 11 00:00:34,640 --> 00:00:38,280 Speaker 1: is Bloomberg Wall Street Week. I'm David Weston. Four years ago, 12 00:00:38,479 --> 00:00:41,600 Speaker 1: President Trump committed his administration to undoing much of what 13 00:00:41,720 --> 00:00:44,760 Speaker 1: came before him, whether it was trade policy, or financial 14 00:00:44,800 --> 00:00:49,519 Speaker 1: regulation or international agreements. President elect Biden has promised to 15 00:00:49,560 --> 00:00:52,560 Speaker 1: reverse much of that course, but to grow the economy, 16 00:00:52,680 --> 00:00:56,320 Speaker 1: even as he pursues his goals on climate change, racial justice, 17 00:00:56,480 --> 00:01:00,240 Speaker 1: and inequality. Can you do both? We asked Dan't rule 18 00:01:00,240 --> 00:01:03,880 Speaker 1: of former Federal Reserve governor who held senior economic policy 19 00:01:03,960 --> 00:01:07,520 Speaker 1: roles in the Obama and Clinton administrations. I mean, in 20 00:01:07,560 --> 00:01:10,880 Speaker 1: the short term, as as we've all been saying for 21 00:01:11,240 --> 00:01:15,400 Speaker 1: nine months now, uh, getting ahold of the virus, getting 22 00:01:15,440 --> 00:01:18,679 Speaker 1: a vaccine out is the single most important thing to 23 00:01:18,720 --> 00:01:22,560 Speaker 1: continue a cyclical recovery, and that in and of itself 24 00:01:22,880 --> 00:01:27,440 Speaker 1: will provide a substantial boost hopefully through all and into 25 00:01:28,280 --> 00:01:31,280 Speaker 1: two So there, I think, as again as we've all 26 00:01:31,360 --> 00:01:34,560 Speaker 1: been saying, the public health issue is the most important 27 00:01:34,600 --> 00:01:38,480 Speaker 1: economic issue. In the short term, there is stimulus. I 28 00:01:38,680 --> 00:01:42,280 Speaker 1: think there's a crying need for stimulus to carry us 29 00:01:42,280 --> 00:01:45,760 Speaker 1: into the period where the whether the vaccine is going 30 00:01:45,760 --> 00:01:49,080 Speaker 1: to take effect. But after that you are going to 31 00:01:49,200 --> 00:01:54,080 Speaker 1: get some tail winds basically from from their recovery. Longer term, 32 00:01:54,120 --> 00:01:58,120 Speaker 1: I think it's it's a question of whether the now 33 00:01:58,200 --> 00:02:02,640 Speaker 1: president elect is going to be able to manage to 34 00:02:02,680 --> 00:02:06,400 Speaker 1: get Congress to go along with some of the spending 35 00:02:06,440 --> 00:02:09,160 Speaker 1: priorities that he has as an enormous amount he can 36 00:02:09,200 --> 00:02:11,920 Speaker 1: do just by having control of the executive branch, but 37 00:02:12,040 --> 00:02:14,480 Speaker 1: it is going to be important for Congress to at 38 00:02:14,520 --> 00:02:17,320 Speaker 1: least be somewhat cooperative. Well, and when you talk Congress 39 00:02:17,440 --> 00:02:19,959 Speaker 1: as a practical we're probably talking the Senate right because 40 00:02:20,200 --> 00:02:23,240 Speaker 1: as we sit here we're not gonna until late in January, 41 00:02:23,320 --> 00:02:25,640 Speaker 1: where the Republicans or Democrats have the majority. Right now, 42 00:02:26,080 --> 00:02:28,679 Speaker 1: I think you'd probably say it's likely that the Republicans will. 43 00:02:29,000 --> 00:02:32,640 Speaker 1: Is it possible for a president buying to do business 44 00:02:32,760 --> 00:02:35,200 Speaker 1: with Mitch McConnell and get some things done that certainly 45 00:02:35,200 --> 00:02:37,959 Speaker 1: knows we hadn't gotten done last time? Well, I think 46 00:02:37,960 --> 00:02:40,440 Speaker 1: I would say, David, if it's possible for any Democrat 47 00:02:40,560 --> 00:02:43,080 Speaker 1: to do it, it's probably Joe Biden who can do it. 48 00:02:43,440 --> 00:02:45,760 Speaker 1: He has he's not only a veteran of the Senate, 49 00:02:46,520 --> 00:02:52,440 Speaker 1: but obviously has a longstanding relationship with the Senator McConnell. Um. 50 00:02:52,440 --> 00:02:55,600 Speaker 1: But if we step back from personalities a bit, I 51 00:02:55,639 --> 00:02:59,760 Speaker 1: think there may also be some motivation that at least 52 00:03:00,440 --> 00:03:03,360 Speaker 1: Republican a handful of Republican members of the Senate may have. 53 00:03:03,880 --> 00:03:07,640 Speaker 1: So consider, for example, in infrastructure investment, I mean that 54 00:03:07,639 --> 00:03:11,000 Speaker 1: that elicits raised eyebrows now in Washington, New York, and 55 00:03:11,040 --> 00:03:14,120 Speaker 1: just about everywhere else. People have been talking about it 56 00:03:14,160 --> 00:03:19,079 Speaker 1: as a potential bipartisan um project and it hasn't happened. 57 00:03:19,400 --> 00:03:22,200 Speaker 1: But I think you've gotten an administration, as we will, 58 00:03:22,720 --> 00:03:26,400 Speaker 1: that has competence, that coordinates its policies, and that has 59 00:03:26,400 --> 00:03:30,240 Speaker 1: a consistent set of policy, there are chances of working 60 00:03:30,280 --> 00:03:34,359 Speaker 1: something out become much greater. And consider, for example, if 61 00:03:34,720 --> 00:03:39,480 Speaker 1: the EPA administrator and other heads of agencies in the 62 00:03:39,480 --> 00:03:44,960 Speaker 1: federal government begin to implement regulations directed towards climate change. 63 00:03:45,320 --> 00:03:48,640 Speaker 1: So you dealt with ecademy policies, certainly when you remember 64 00:03:48,720 --> 00:03:52,840 Speaker 1: the Federal Reserve, but also before that in the administration, 65 00:03:52,920 --> 00:03:55,400 Speaker 1: in the Clint administration, you really dealt with econdic policy. 66 00:03:55,640 --> 00:03:57,560 Speaker 1: As you look at the economy today, we still have 67 00:03:57,640 --> 00:03:59,400 Speaker 1: ways to come back. We've come back some, we still 68 00:03:59,400 --> 00:04:01,440 Speaker 1: always to come com particularly it comes to jobs. We've 69 00:04:01,440 --> 00:04:03,720 Speaker 1: still got over ten million people who don't have jobs 70 00:04:03,720 --> 00:04:07,680 Speaker 1: today who did before the pandemic. Is infrastructure the best, quickest, 71 00:04:07,680 --> 00:04:10,480 Speaker 1: more sure way to restore some of that in the 72 00:04:10,480 --> 00:04:15,000 Speaker 1: economy now. Coronavirus vaccine is the quickest, insurest way to 73 00:04:15,040 --> 00:04:17,160 Speaker 1: do it, because that's what's going to get the service 74 00:04:17,200 --> 00:04:20,480 Speaker 1: sectors back up. And environment, I would say, David, the 75 00:04:20,520 --> 00:04:25,080 Speaker 1: infrastructure investment is the medium to longer term project. It's 76 00:04:25,120 --> 00:04:29,320 Speaker 1: one that would both improve productivity and create good jobs 77 00:04:29,360 --> 00:04:32,640 Speaker 1: along the way. But as we've seen it again and again, 78 00:04:32,680 --> 00:04:34,920 Speaker 1: no matter how many times people say that projects are 79 00:04:34,920 --> 00:04:38,200 Speaker 1: shovel ready. Yeah, they're they're ready enough that you can 80 00:04:38,200 --> 00:04:40,240 Speaker 1: start walking to the truck to get the shovel, But 81 00:04:40,279 --> 00:04:43,280 Speaker 1: they never seem to be ready to have as much 82 00:04:43,320 --> 00:04:46,200 Speaker 1: impact as quickly as you'd like them too. So you 83 00:04:46,240 --> 00:04:48,480 Speaker 1: mentioned earlier, Dan that there are some things that the 84 00:04:48,520 --> 00:04:51,120 Speaker 1: executive branch can do on its own, pretty much without 85 00:04:51,160 --> 00:04:53,880 Speaker 1: support through a divided Congress. Give us a sense in 86 00:04:53,880 --> 00:04:56,599 Speaker 1: the economic sphere, one are the things that this president, 87 00:04:56,640 --> 00:04:59,640 Speaker 1: President Biden could get done in a reasonably short period 88 00:04:59,680 --> 00:05:04,120 Speaker 1: of time. Well, within the labor department, for example, where 89 00:05:04,240 --> 00:05:09,280 Speaker 1: you've got the uh Fair Labor Standards Act, he can 90 00:05:09,560 --> 00:05:14,360 Speaker 1: his appointees and make different determinations as to who's covered 91 00:05:14,440 --> 00:05:18,200 Speaker 1: by minimum wage laws when you have to pay over time, 92 00:05:18,240 --> 00:05:20,239 Speaker 1: that sort of thing which could have a big effect. 93 00:05:20,680 --> 00:05:24,160 Speaker 1: Within the gig economy. Um, he can do things on 94 00:05:24,240 --> 00:05:28,280 Speaker 1: student debt relief as well. Uh. There there are any 95 00:05:28,440 --> 00:05:31,719 Speaker 1: number of regulatory actions that he can take, and of 96 00:05:31,760 --> 00:05:35,440 Speaker 1: course he can also use such spending powers as he 97 00:05:35,520 --> 00:05:38,919 Speaker 1: has with already appropriated or soon to be appropriated funds 98 00:05:39,200 --> 00:05:43,880 Speaker 1: to redirect them. So in terms of economic priorities, there's 99 00:05:44,000 --> 00:05:47,200 Speaker 1: quite a bit that he can do where he needs 100 00:05:47,480 --> 00:05:53,240 Speaker 1: the cooperation of Congress is obviously in increasing total spending 101 00:05:53,480 --> 00:05:57,000 Speaker 1: or total tax reforms. Should we be concerned all about 102 00:05:57,000 --> 00:06:01,520 Speaker 1: the effect of regulation more regulation on the economic growth? 103 00:06:01,600 --> 00:06:05,560 Speaker 1: That's always a question, right UM, in any administration, no 104 00:06:05,600 --> 00:06:09,400 Speaker 1: matter what its ideological leanings. But I think in the 105 00:06:09,480 --> 00:06:16,160 Speaker 1: areas where the President elect has emphasized most the regulatory agenda, 106 00:06:16,200 --> 00:06:18,760 Speaker 1: which would be on climate change, which would be on 107 00:06:19,000 --> 00:06:24,160 Speaker 1: worker protection UH, and to a lesser extent, financial regulation UH. 108 00:06:24,240 --> 00:06:27,359 Speaker 1: In each of those areas, I think that it's quite 109 00:06:27,440 --> 00:06:31,880 Speaker 1: possible to get a set of regulations to achieve your 110 00:06:31,880 --> 00:06:36,000 Speaker 1: regulatory end, but do so in a sensible way that 111 00:06:36,200 --> 00:06:40,760 Speaker 1: doesn't create unnecessary disruption. That was Dan Trullo of Harvard 112 00:06:40,839 --> 00:06:44,239 Speaker 1: Law School. Coming up, we'll talk with Tom Monte, chief 113 00:06:44,320 --> 00:06:47,000 Speaker 1: operating officer of Bank of America, and and finukin the 114 00:06:47,040 --> 00:06:50,320 Speaker 1: Bank's co vice chairman about why they're taking the lead 115 00:06:50,560 --> 00:06:54,080 Speaker 1: in issuing sustainability bonds. That's coming up on Wall Street 116 00:06:54,120 --> 00:07:03,560 Speaker 1: Week on Bloomberg. This is Bloomberg Wall Street Week with 117 00:07:03,720 --> 00:07:08,480 Speaker 1: David Weston from Bloomberg Radio. E s G. Environmental, social 118 00:07:08,480 --> 00:07:11,560 Speaker 1: and governance investing is all the rage, But how far 119 00:07:11,680 --> 00:07:14,280 Speaker 1: can it go. Bank of America has been a leader 120 00:07:14,360 --> 00:07:17,600 Speaker 1: in sustainable investing, and it's not limited to the environment 121 00:07:17,720 --> 00:07:20,240 Speaker 1: or to governance. Last month, b of A issued a 122 00:07:20,280 --> 00:07:24,720 Speaker 1: two billion dollar sustainability bond tied to equality, with proceeds 123 00:07:24,760 --> 00:07:27,960 Speaker 1: going not just a clean transportation and energy, but also 124 00:07:28,000 --> 00:07:32,880 Speaker 1: to alleviating inequalities in Black and Hispanic Latino communities. Tom Monteg, 125 00:07:32,960 --> 00:07:35,760 Speaker 1: chief operating officer of Bank of America, and and Fanuken, 126 00:07:35,960 --> 00:07:39,640 Speaker 1: the bank's co vice chairman, explained the how and the why. 127 00:07:39,760 --> 00:07:42,280 Speaker 1: You know, we had made our billion dollar pledge for 128 00:07:42,440 --> 00:07:45,600 Speaker 1: racial equality, and after that, because we've been a leader 129 00:07:45,720 --> 00:07:48,119 Speaker 1: in the green and social bonds, we decided it would 130 00:07:48,120 --> 00:07:51,520 Speaker 1: be good to prod a blueprint for everyone else to 131 00:07:51,520 --> 00:07:53,880 Speaker 1: be able to access this market, and so we put 132 00:07:53,960 --> 00:07:56,760 Speaker 1: together the two billion dollar sustainability bond, and it was 133 00:07:56,800 --> 00:07:59,760 Speaker 1: green and social. As you say, the difference for this 134 00:07:59,880 --> 00:08:03,280 Speaker 1: was the social aspect of it was all for financial 135 00:08:03,320 --> 00:08:07,880 Speaker 1: empowerment for Black African American Hispanic Latino communities, and so 136 00:08:08,120 --> 00:08:12,120 Speaker 1: the entire social aspect is there. And then this is 137 00:08:12,200 --> 00:08:14,120 Speaker 1: hard work because once you do that, you have to 138 00:08:14,200 --> 00:08:16,480 Speaker 1: track the things that you're doing and make sure you're 139 00:08:16,480 --> 00:08:18,200 Speaker 1: doing them, and so there was a lot of work 140 00:08:18,240 --> 00:08:20,800 Speaker 1: internally and with finance to be able to have the 141 00:08:20,840 --> 00:08:22,680 Speaker 1: tracking elements and know what we were gonna do. So 142 00:08:22,720 --> 00:08:24,840 Speaker 1: we track how much we do in affordable housing, we 143 00:08:24,880 --> 00:08:28,840 Speaker 1: track how much we do for health practices. We tracked 144 00:08:29,160 --> 00:08:32,320 Speaker 1: supply change for minorities, and so all those things are 145 00:08:32,360 --> 00:08:34,920 Speaker 1: part of the social aspect, David. So this was two billion. 146 00:08:35,400 --> 00:08:40,760 Speaker 1: We had incredible demand across from corporate, corporate treasurers and 147 00:08:40,960 --> 00:08:43,439 Speaker 1: from investors, and so we were very pleased with it. 148 00:08:43,440 --> 00:08:46,920 Speaker 1: It's interesting, I think you'd like this that five years ago, 149 00:08:46,920 --> 00:08:49,520 Speaker 1: in two thousand fifteen, there was thirty eight billion dollars 150 00:08:49,559 --> 00:08:53,320 Speaker 1: of green social sustainable bonds. This year they'll be almost 151 00:08:53,360 --> 00:08:57,400 Speaker 1: fo so and we've been so ten times in five years, 152 00:08:57,400 --> 00:08:59,800 Speaker 1: and so we're really pleased with the bond and what's happened. 153 00:08:59,840 --> 00:09:01,760 Speaker 1: And alway, it's part of how we work here. I 154 00:09:01,800 --> 00:09:05,400 Speaker 1: was looking yesterday at just at affordable housing. Last year 155 00:09:05,440 --> 00:09:08,760 Speaker 1: we had over eight thousand affordable housing units that we 156 00:09:09,280 --> 00:09:12,320 Speaker 1: helped finance, and of those eight thousand, over half of 157 00:09:12,360 --> 00:09:15,800 Speaker 1: them almost half of them, excuse me, we're green themselves. 158 00:09:16,120 --> 00:09:18,160 Speaker 1: And so we've tried to take green and social and 159 00:09:18,160 --> 00:09:19,480 Speaker 1: a lot of the things we do. So we we 160 00:09:19,840 --> 00:09:22,920 Speaker 1: were so excited about this, this bond and what represented 161 00:09:22,920 --> 00:09:26,719 Speaker 1: in the blueprint it's set for America. So an as 162 00:09:26,760 --> 00:09:29,400 Speaker 1: Tom just suggested, this is part of a larger plan, 163 00:09:29,480 --> 00:09:31,920 Speaker 1: a strategy for Bank of America. Put it in context, 164 00:09:31,920 --> 00:09:33,480 Speaker 1: how does this fit with the other things that Bank 165 00:09:33,520 --> 00:09:35,960 Speaker 1: of America is doing. E s G is sort of 166 00:09:36,000 --> 00:09:40,079 Speaker 1: a good reflection of our strategy of responsible growth. Uh, 167 00:09:40,200 --> 00:09:42,760 Speaker 1: how could you be responsible if you're not thinking about 168 00:09:42,800 --> 00:09:46,440 Speaker 1: sustainability in the long term. It's also, as as Tom 169 00:09:46,559 --> 00:09:49,400 Speaker 1: is laying out, a very good business opportunity for us. 170 00:09:49,720 --> 00:09:53,640 Speaker 1: We probably represent about a quarter one fourth of the 171 00:09:53,679 --> 00:09:56,679 Speaker 1: social or E s G bonds that have been issued 172 00:09:56,679 --> 00:10:01,640 Speaker 1: and underwritten in the last eight or nine year. Also, 173 00:10:01,920 --> 00:10:04,560 Speaker 1: it's just been and we meet with maybe the top 174 00:10:04,640 --> 00:10:08,120 Speaker 1: fifty institutional investors. All of them are asking about this. 175 00:10:08,520 --> 00:10:12,120 Speaker 1: All of them expect for you to uh be be 176 00:10:12,360 --> 00:10:15,280 Speaker 1: progressive in this regard and to do more. And our 177 00:10:15,320 --> 00:10:17,920 Speaker 1: employees care about it too. And I might add that 178 00:10:17,960 --> 00:10:20,320 Speaker 1: we see a lot of regulation that will be coming 179 00:10:20,320 --> 00:10:22,440 Speaker 1: out of Europe and the next year or so, so 180 00:10:22,880 --> 00:10:24,840 Speaker 1: we think that this is the place to be. There's 181 00:10:24,840 --> 00:10:27,200 Speaker 1: a big business opportunity, and we're going to have to 182 00:10:27,200 --> 00:10:30,239 Speaker 1: do it anyway. So Tom pick upout the business opportunity. 183 00:10:30,320 --> 00:10:32,440 Speaker 1: How do you make money on this bond? How does 184 00:10:32,480 --> 00:10:34,960 Speaker 1: an investor make money? How do the proceeds come back? 185 00:10:35,000 --> 00:10:38,120 Speaker 1: Who's making the money can pay off the bond? Well, 186 00:10:38,120 --> 00:10:41,440 Speaker 1: it's the bonds proceeds to whoever issues the bond. On 187 00:10:41,440 --> 00:10:44,040 Speaker 1: one hand, the bonds proceeds are used by us on 188 00:10:44,200 --> 00:10:47,200 Speaker 1: funding the things that we have written down that we're 189 00:10:47,200 --> 00:10:49,640 Speaker 1: going to trap, be it green or be at the 190 00:10:49,720 --> 00:10:54,280 Speaker 1: social aspect. So for that, that's how we invest our money, 191 00:10:54,480 --> 00:10:56,480 Speaker 1: and that's why it's called a green or social bond. 192 00:10:56,760 --> 00:10:59,080 Speaker 1: As far as the investor, they like these bonds because 193 00:10:59,080 --> 00:11:00,880 Speaker 1: there's lots of E s G funds out there are 194 00:11:00,880 --> 00:11:02,960 Speaker 1: people that want to invest in E s G product. 195 00:11:03,520 --> 00:11:06,040 Speaker 1: Uh At times the s G product will trade better 196 00:11:06,440 --> 00:11:09,280 Speaker 1: than the non E s G product, and so they 197 00:11:09,280 --> 00:11:11,680 Speaker 1: can make money in that way. And in general, I 198 00:11:11,679 --> 00:11:14,600 Speaker 1: think there's more and more money that's being used by 199 00:11:14,640 --> 00:11:18,079 Speaker 1: people to support this and this kind of effort, and 200 00:11:18,160 --> 00:11:20,440 Speaker 1: that's why so much is being issued this way. And 201 00:11:20,480 --> 00:11:22,600 Speaker 1: talk about that pricing issue. When you price the bond, 202 00:11:22,640 --> 00:11:24,559 Speaker 1: do you have to put a premium in to encourage 203 00:11:24,559 --> 00:11:27,120 Speaker 1: investors come in. And how is it traded SITUATIONE. It's 204 00:11:27,120 --> 00:11:28,719 Speaker 1: traded well. I mean the market has been you know, 205 00:11:28,920 --> 00:11:30,080 Speaker 1: it's been a month and a lot as you know, 206 00:11:30,160 --> 00:11:31,520 Speaker 1: a lot of things have happened in the month. So 207 00:11:31,559 --> 00:11:34,199 Speaker 1: it's it's it's traded well. You know. You usually it 208 00:11:34,520 --> 00:11:37,480 Speaker 1: will come at or slightly tighter than than a normal 209 00:11:37,520 --> 00:11:40,480 Speaker 1: than a normal bond would at the time. Um, but 210 00:11:40,520 --> 00:11:41,880 Speaker 1: you can't see it all the time. And by the way, 211 00:11:41,880 --> 00:11:44,120 Speaker 1: people are issuing different kinds of bonds too in this 212 00:11:44,280 --> 00:11:47,760 Speaker 1: in this area in green where things are coupons can 213 00:11:47,800 --> 00:11:50,040 Speaker 1: go up and down based on how you meet the 214 00:11:50,080 --> 00:11:52,640 Speaker 1: different hurdles that you put for yourself, for a manufacturer 215 00:11:52,880 --> 00:11:56,160 Speaker 1: or someone on the paper industry, for example. So there's 216 00:11:56,200 --> 00:11:59,880 Speaker 1: all sorts of bonds being done in the market right now. 217 00:12:00,440 --> 00:12:02,360 Speaker 1: So and as you say, thank you, America has been 218 00:12:02,400 --> 00:12:06,640 Speaker 1: dressing directly investing equity as well as loans into areas 219 00:12:06,679 --> 00:12:09,440 Speaker 1: that need the help goodness nokes in this country. How 220 00:12:09,480 --> 00:12:11,160 Speaker 1: do you coordinate if you coordinate at all, with the 221 00:12:11,160 --> 00:12:13,480 Speaker 1: proceeds of this bond, the sustainability bond that we've been 222 00:12:13,520 --> 00:12:15,920 Speaker 1: talking about, with the other efforts do you do it 223 00:12:15,960 --> 00:12:17,880 Speaker 1: with the same sorts of entities in some of the 224 00:12:17,920 --> 00:12:20,959 Speaker 1: Hispanic and the Black communities. Yeah, the two are coordinated, 225 00:12:21,040 --> 00:12:23,240 Speaker 1: but but I think there's even a bigger effort here. 226 00:12:23,760 --> 00:12:26,640 Speaker 1: This one is a jump start to the other. The 227 00:12:26,720 --> 00:12:29,280 Speaker 1: one billion dollars is intended to do things that we 228 00:12:29,360 --> 00:12:32,920 Speaker 1: might ordinarily not have been able to do. So perhaps 229 00:12:33,000 --> 00:12:39,480 Speaker 1: concessionary capital, maybe it's philanthropy. It's investigating and investing where 230 00:12:39,520 --> 00:12:43,520 Speaker 1: we might not have before. So for instance, we've put 231 00:12:44,000 --> 00:12:47,480 Speaker 1: We've got a program with minority deposit institutions where we 232 00:12:47,520 --> 00:12:51,360 Speaker 1: will put money, and we have always put deposits into 233 00:12:51,400 --> 00:12:53,800 Speaker 1: these institutions, but now we're going to put equity, and 234 00:12:53,840 --> 00:12:56,920 Speaker 1: we've already done twelve of them. And the idea here 235 00:12:57,080 --> 00:12:59,800 Speaker 1: is that when we put money into those institutions, they 236 00:13:00,160 --> 00:13:02,600 Speaker 1: give more, they can lend more at a community level, 237 00:13:02,960 --> 00:13:06,160 Speaker 1: so one begets the next, and it it just increases 238 00:13:06,160 --> 00:13:10,080 Speaker 1: the opportunity. The two billion dollar bond just means there's 239 00:13:10,120 --> 00:13:13,320 Speaker 1: that much more opportunity to land and invest than we 240 00:13:13,400 --> 00:13:17,000 Speaker 1: might have had otherwise. Tom, what about the accountability for 241 00:13:17,040 --> 00:13:19,240 Speaker 1: all this. I'm not even necessarily talking about Bank of America, 242 00:13:19,240 --> 00:13:20,920 Speaker 1: but in general, there's a lot of people saying they're 243 00:13:20,920 --> 00:13:25,920 Speaker 1: doing environmental sustainable things, things good for social the social compact. 244 00:13:26,320 --> 00:13:28,440 Speaker 1: How do we know that that's true because we don't 245 00:13:28,480 --> 00:13:31,760 Speaker 1: really have standards yet, do we? Well? We well, we 246 00:13:31,840 --> 00:13:34,160 Speaker 1: have standards and the standards that we we literally have 247 00:13:34,360 --> 00:13:36,719 Speaker 1: our our auditors come in and make sure we are 248 00:13:36,800 --> 00:13:39,360 Speaker 1: doing the things that we list that we're going to do. 249 00:13:39,440 --> 00:13:42,480 Speaker 1: And so it is a it is a well trapped process. 250 00:13:42,480 --> 00:13:44,320 Speaker 1: We you know, did we have as I said, ten 251 00:13:44,360 --> 00:13:47,720 Speaker 1: billion dollars of these type of bonds outstanding, five green 252 00:13:47,760 --> 00:13:51,200 Speaker 1: bonds to social We did a COVID bond also this 253 00:13:51,280 --> 00:13:54,160 Speaker 1: year which was one billion, and this two billion sustainable bonds. 254 00:13:54,200 --> 00:13:57,120 Speaker 1: So all of those bonds, I have a list of 255 00:13:57,160 --> 00:13:59,720 Speaker 1: things that the proceeds can be used for and that 256 00:14:00,280 --> 00:14:04,440 Speaker 1: list is tracked and maintain an audited UH to make 257 00:14:04,480 --> 00:14:07,600 Speaker 1: sure we're doing that in success. In success, does this 258 00:14:07,679 --> 00:14:11,240 Speaker 1: create more customers for Bank of America as well? Sure, 259 00:14:11,280 --> 00:14:15,080 Speaker 1: there's plenty of research to indicate that those companies that 260 00:14:15,120 --> 00:14:18,599 Speaker 1: are good in E s G also have higher satisfaction 261 00:14:18,679 --> 00:14:22,680 Speaker 1: levels with their employees, with their customers, with their clients. 262 00:14:22,720 --> 00:14:26,080 Speaker 1: They're less volatile. Uh. There are any number of reasons 263 00:14:26,120 --> 00:14:28,360 Speaker 1: why you might do this. I also think, as I 264 00:14:28,440 --> 00:14:33,000 Speaker 1: mentioned earlier, that we will see legislation and regulation first 265 00:14:33,040 --> 00:14:37,360 Speaker 1: out of Europe and potentially with the Biden administration here 266 00:14:37,480 --> 00:14:41,000 Speaker 1: United States. That was Antonucn, co vice chairman of Bank 267 00:14:41,040 --> 00:14:44,400 Speaker 1: of America and Tom Monteg, the Bank's chief operating officer 268 00:14:44,680 --> 00:14:47,200 Speaker 1: coming up. The election may not have gotten us past 269 00:14:47,240 --> 00:14:51,040 Speaker 1: our partisan disagreements, but economist Paul Wimer says the coronavirus 270 00:14:51,080 --> 00:14:53,440 Speaker 1: may force us to do just that, because in the 271 00:14:53,440 --> 00:14:56,600 Speaker 1: world of the pandemic, there are no blue or red states. 272 00:14:57,120 --> 00:15:05,240 Speaker 1: That's next on Wall Street Week on Bloomberg. This is 273 00:15:05,280 --> 00:15:09,640 Speaker 1: Bloomberg Wall Street Week with David Weston from Bloomberg Radio. 274 00:15:09,960 --> 00:15:12,040 Speaker 1: President like Joe Biden will come to office with a 275 00:15:12,120 --> 00:15:15,440 Speaker 1: series of policy goals, but may well face a divided Congress. 276 00:15:15,640 --> 00:15:17,640 Speaker 1: And so we begin to look at the next four 277 00:15:17,760 --> 00:15:20,440 Speaker 1: years of a Biden administration and what it might hold. 278 00:15:20,720 --> 00:15:23,840 Speaker 1: We asked n y U economist and Nobel Laureate Paul Romer, 279 00:15:23,880 --> 00:15:26,600 Speaker 1: what will determine the course of the next four years 280 00:15:26,680 --> 00:15:30,040 Speaker 1: under a President Biden? And he began with the pandemic. 281 00:15:30,360 --> 00:15:33,960 Speaker 1: I'm afraid that this might turn into an exercise where 282 00:15:34,240 --> 00:15:36,840 Speaker 1: people say, well, the Blue States had it right. The 283 00:15:36,880 --> 00:15:39,000 Speaker 1: Red States had it wrong. They've got to behave more 284 00:15:39,040 --> 00:15:41,880 Speaker 1: like the Blue States. Neither of them did that that well. 285 00:15:41,960 --> 00:15:45,640 Speaker 1: The Blue States had a lower death rate, but they've 286 00:15:45,680 --> 00:15:48,840 Speaker 1: also had slower recoveries of employment back to where we 287 00:15:48,840 --> 00:15:52,560 Speaker 1: were in January. So we need a new measure. Uh. 288 00:15:52,720 --> 00:15:56,000 Speaker 1: That's different from what either side was doing, uh in 289 00:15:56,040 --> 00:15:58,240 Speaker 1: the last three or four months. And I think it's 290 00:15:58,240 --> 00:16:01,080 Speaker 1: clear what that measure is. Do what the NBA did, 291 00:16:01,160 --> 00:16:04,280 Speaker 1: Do what Harvard and Cornell and NYU were doing. Test 292 00:16:04,320 --> 00:16:07,880 Speaker 1: people frequently, isolate them, and then let's get back to business. 293 00:16:07,960 --> 00:16:10,120 Speaker 1: By the way, do what Taiwan did, as I understand, 294 00:16:10,120 --> 00:16:12,360 Speaker 1: to do what South Korea did as well. So it's 295 00:16:12,360 --> 00:16:15,000 Speaker 1: pretty basic. We gotta test, we gotta do contact tracing, 296 00:16:15,200 --> 00:16:17,520 Speaker 1: where a mask, whatever you do. And he said specifically, 297 00:16:17,520 --> 00:16:19,760 Speaker 1: it doesn't matter who you voted for. Now, that seems 298 00:16:19,800 --> 00:16:23,040 Speaker 1: pretty simple, but the simple can sometimes be hard because 299 00:16:23,040 --> 00:16:25,200 Speaker 1: it's not clear people are going to comply with that. Yeah, well, 300 00:16:25,240 --> 00:16:27,920 Speaker 1: you know. There was an interesting comparison of how New 301 00:16:28,000 --> 00:16:31,280 Speaker 1: Jersey responded to an outbreak in the Orthodox Jewish community 302 00:16:31,520 --> 00:16:34,440 Speaker 1: as opposed to how New York responded. New York responded 303 00:16:34,440 --> 00:16:38,120 Speaker 1: with the more traditional public health measures mandates, don't group 304 00:16:38,160 --> 00:16:40,440 Speaker 1: together in big groups, don't do this, don't do that, 305 00:16:40,520 --> 00:16:43,480 Speaker 1: wear masks. In New Jersey, they just started testing people 306 00:16:43,480 --> 00:16:46,760 Speaker 1: and gave people the information and this produced less of 307 00:16:46,800 --> 00:16:49,840 Speaker 1: a backlash in New Jersey and more compliance because once 308 00:16:49,840 --> 00:16:52,400 Speaker 1: people started to see how many of them were infected, 309 00:16:52,560 --> 00:16:55,120 Speaker 1: they they took this much more seriously. So, as you say, 310 00:16:55,160 --> 00:16:56,760 Speaker 1: we've got to figure out a way to do both 311 00:16:56,800 --> 00:16:58,680 Speaker 1: walk and chew gum as it were, which is to say, 312 00:16:59,320 --> 00:17:01,000 Speaker 1: keep the kind as open as we can at the 313 00:17:01,000 --> 00:17:03,640 Speaker 1: same time protect people. But beyond that, there are larger 314 00:17:03,680 --> 00:17:06,200 Speaker 1: issues over the next four years, eight years, twelve years 315 00:17:06,280 --> 00:17:08,439 Speaker 1: we need to address with the economy, and we have 316 00:17:08,480 --> 00:17:10,480 Speaker 1: some people saying, look in order to really get growth 317 00:17:10,480 --> 00:17:13,440 Speaker 1: going again, because as you know well, professor Roma, we've 318 00:17:13,520 --> 00:17:16,320 Speaker 1: not had really growth rates with the developed countries for 319 00:17:16,400 --> 00:17:18,800 Speaker 1: some time the way we did before. We need some 320 00:17:19,000 --> 00:17:22,359 Speaker 1: massive things, something like a martial plan effectively to really 321 00:17:22,400 --> 00:17:24,240 Speaker 1: invest in the economy by the way we could use 322 00:17:24,240 --> 00:17:26,720 Speaker 1: the infrastructure, and we need to move to green technology. 323 00:17:26,720 --> 00:17:28,880 Speaker 1: At the same time, You're absolutely right if you look 324 00:17:28,920 --> 00:17:32,639 Speaker 1: at the growth over this entire recovery up until the pandemic, 325 00:17:32,880 --> 00:17:35,880 Speaker 1: both like the second Obama term and the Trump turn. 326 00:17:36,280 --> 00:17:38,720 Speaker 1: This had the lowest rate of GDP growth of any 327 00:17:38,800 --> 00:17:41,840 Speaker 1: recovery since uh the end of World War two. So 328 00:17:42,080 --> 00:17:45,360 Speaker 1: there is something deeper structural that we have to address. 329 00:17:45,880 --> 00:17:50,080 Speaker 1: And you know, this is the time when borrowing is inexpensive. 330 00:17:50,160 --> 00:17:53,280 Speaker 1: This is the time to go big on borrow and build. 331 00:17:53,400 --> 00:17:56,879 Speaker 1: So I hope we can reach a consensus on the 332 00:17:56,960 --> 00:17:59,399 Speaker 1: kinds of things we could borrow and then build to 333 00:17:59,560 --> 00:18:02,879 Speaker 1: make the country better and profess as I say, you 334 00:18:02,960 --> 00:18:05,399 Speaker 1: received the Nobel Prize where you're working economics, and in 335 00:18:05,440 --> 00:18:08,040 Speaker 1: part I understand that was a growth theory that had 336 00:18:08,080 --> 00:18:11,320 Speaker 1: to do with information and particularly government investing. We have 337 00:18:11,440 --> 00:18:14,320 Speaker 1: Arvin Krishna, who's the CEO of IBM, just provided me 338 00:18:14,359 --> 00:18:17,640 Speaker 1: with a letter that he's written to President elect Biden saying, 339 00:18:17,640 --> 00:18:19,719 Speaker 1: look at we need to leverage science technology, We can 340 00:18:19,840 --> 00:18:23,159 Speaker 1: to close the skills gap, We need to modernize digital infrastructure. 341 00:18:23,160 --> 00:18:26,200 Speaker 1: It sounds like the sorts of things you talk about. Yeah, 342 00:18:26,359 --> 00:18:28,680 Speaker 1: although you know, you know the joke about economists, there's 343 00:18:28,680 --> 00:18:31,640 Speaker 1: always this other hand. I worry just a little bit 344 00:18:31,800 --> 00:18:34,439 Speaker 1: that this is gonna sound like the scientists saying we 345 00:18:34,560 --> 00:18:36,960 Speaker 1: told you so like we told you so, we were right. 346 00:18:37,000 --> 00:18:39,880 Speaker 1: Give us more money, give us more power, and everything 347 00:18:39,880 --> 00:18:44,120 Speaker 1: will be fine. I think the scientific community, the academic community, 348 00:18:44,280 --> 00:18:47,280 Speaker 1: has to take ownership of the fact that expertise is 349 00:18:47,400 --> 00:18:50,360 Speaker 1: not respected in the same way it once was. So 350 00:18:50,640 --> 00:18:53,000 Speaker 1: we need to figure out what it will take to 351 00:18:53,160 --> 00:18:57,639 Speaker 1: rebuild the confidence and trust amongst most members of the public. 352 00:18:58,040 --> 00:18:59,919 Speaker 1: And we're not going to get there by just rooteful 353 00:19:00,320 --> 00:19:03,280 Speaker 1: or scolding people. Well, when you talk about expertise, it 354 00:19:03,320 --> 00:19:05,600 Speaker 1: makes me think a bit about the government itself, the 355 00:19:05,640 --> 00:19:08,679 Speaker 1: federal government itself, because various experts have written saying that 356 00:19:08,800 --> 00:19:11,560 Speaker 1: under the Trump administration, there has been a d emphasis 357 00:19:11,560 --> 00:19:13,520 Speaker 1: if I can put it that way, on expertise, and 358 00:19:13,560 --> 00:19:17,000 Speaker 1: that perhaps we don't have the same intellectual firepower, the 359 00:19:17,040 --> 00:19:19,920 Speaker 1: inectual capital that we had before within the government. Yeah, 360 00:19:19,960 --> 00:19:23,600 Speaker 1: we we not only haven't promoted people, we've left positions unfilled, 361 00:19:23,800 --> 00:19:27,159 Speaker 1: but we've also frozen people. We've paralyzed them so that 362 00:19:27,200 --> 00:19:30,119 Speaker 1: they're afraid to make decisions. I think this poor woman 363 00:19:30,320 --> 00:19:32,800 Speaker 1: whose job it is at the g O to decide 364 00:19:32,800 --> 00:19:36,600 Speaker 1: whether there's a consensus that the election is over and 365 00:19:36,600 --> 00:19:41,800 Speaker 1: then triggers the transition process. This woman is like frozen 366 00:19:41,840 --> 00:19:44,760 Speaker 1: in place, afraid to make a decision because she's afraid 367 00:19:44,800 --> 00:19:47,200 Speaker 1: she'll get yelled at if she does. What's the obvious 368 00:19:47,200 --> 00:19:50,399 Speaker 1: thing is to recognize the the election is over, and 369 00:19:50,640 --> 00:19:52,520 Speaker 1: there were people in the f d A, people in 370 00:19:52,560 --> 00:19:55,199 Speaker 1: the CDC in the same way, they were frozen. They 371 00:19:55,240 --> 00:19:58,240 Speaker 1: wouldn't take leadership, they wouldn't act, they wouldn't take the 372 00:19:58,320 --> 00:20:00,560 Speaker 1: kind of bold steps we needed to take. So we 373 00:20:00,600 --> 00:20:04,200 Speaker 1: need an administration that gives people the confidence to rely 374 00:20:04,320 --> 00:20:08,320 Speaker 1: on their professional expertise and do their jobs. Do we 375 00:20:08,440 --> 00:20:10,359 Speaker 1: know whether that's something the president could do with his 376 00:20:10,440 --> 00:20:13,320 Speaker 1: administration without the support of the Congress, because it looks 377 00:20:13,359 --> 00:20:15,760 Speaker 1: like right now it's more likely than that that the 378 00:20:15,800 --> 00:20:18,520 Speaker 1: Senate will have a majority of Republicans. Yeah. I think 379 00:20:18,520 --> 00:20:21,199 Speaker 1: that the person who's at the very top of the 380 00:20:21,240 --> 00:20:25,960 Speaker 1: executive branch exerts an enormous influence over all of the 381 00:20:26,040 --> 00:20:29,359 Speaker 1: decisions made by all of the people under the executive branch. 382 00:20:29,880 --> 00:20:32,359 Speaker 1: And I think the signal from the top that you 383 00:20:32,440 --> 00:20:35,399 Speaker 1: will be trusted, you will be respected, even if you 384 00:20:35,520 --> 00:20:38,960 Speaker 1: disagree with some of your peers or some other UH 385 00:20:39,000 --> 00:20:43,160 Speaker 1: policy statement from within this this um UH this administration 386 00:20:43,480 --> 00:20:47,560 Speaker 1: that that respect I think can enable the people all 387 00:20:47,640 --> 00:20:50,160 Speaker 1: up and down the bureaucracy to to do their jobs. 388 00:20:50,400 --> 00:20:53,240 Speaker 1: That was Professor of economics Paul Rohmer of n y U. 389 00:20:53,880 --> 00:20:56,160 Speaker 1: Coming up, we wrap up the week with our special 390 00:20:56,200 --> 00:21:01,040 Speaker 1: contributor Larry Summers. This is Wall Street Week on Bloomberg. 391 00:21:06,480 --> 00:21:10,440 Speaker 1: This is Bloomberg Wall Street Week with David Weston from 392 00:21:10,600 --> 00:21:13,800 Speaker 1: Bloomberg Radio. It felt like we took a turn this 393 00:21:13,880 --> 00:21:17,360 Speaker 1: week toward a new president elect who called for unity. 394 00:21:18,080 --> 00:21:21,080 Speaker 1: The selection is over. It's trying to put aside the 395 00:21:21,119 --> 00:21:25,359 Speaker 1: partners of the partisanship and the rhetoric that designed to 396 00:21:25,520 --> 00:21:28,720 Speaker 1: demonize one another, toward a new Congress that looks like 397 00:21:28,760 --> 00:21:31,520 Speaker 1: it won't go too far out on the progressive wing, 398 00:21:31,720 --> 00:21:35,040 Speaker 1: and toward a promising vaccine candidate from Fiser and beyond 399 00:21:35,040 --> 00:21:38,560 Speaker 1: Tech that initial data suggested could be much more effective 400 00:21:38,720 --> 00:21:41,760 Speaker 1: than we thought. And so the markets were pretty much 401 00:21:41,800 --> 00:21:44,960 Speaker 1: off to the races and treasury yields signaled better times 402 00:21:45,040 --> 00:21:47,720 Speaker 1: lay ahead, at least until the end of the week. 403 00:21:48,280 --> 00:21:50,840 Speaker 1: But is there a half empty part of that glass 404 00:21:50,880 --> 00:21:54,080 Speaker 1: that we're looking past with continued division in a country 405 00:21:54,160 --> 00:21:56,920 Speaker 1: still led by a president who won't concede that he's 406 00:21:57,000 --> 00:22:00,200 Speaker 1: lost for a reality check. We welcome to our rush 407 00:22:00,240 --> 00:22:02,959 Speaker 1: All Wall Street. We contributed Larry Summers and Steve Ratner, 408 00:22:03,040 --> 00:22:05,879 Speaker 1: the chairman and CEUO Will Advisors, which manages the private 409 00:22:05,880 --> 00:22:09,000 Speaker 1: and philanthropic funds for our founder and majority owner of 410 00:22:09,000 --> 00:22:11,040 Speaker 1: Michael R. Bloomberg. So welcome to both of you. Letter. 411 00:22:11,160 --> 00:22:12,479 Speaker 1: Let me start with you. That's the question I've been 412 00:22:12,520 --> 00:22:14,760 Speaker 1: asking myself all week long. Are the markets getting ahead 413 00:22:14,760 --> 00:22:16,840 Speaker 1: of themselves? We've got record numbers here at the end 414 00:22:16,840 --> 00:22:19,320 Speaker 1: of the week from the SMP and the Russell as well. 415 00:22:19,560 --> 00:22:21,320 Speaker 1: We got that problems of vaccine, but at the same 416 00:22:21,320 --> 00:22:23,240 Speaker 1: time we have a hundred and fifty new cases a 417 00:22:23,320 --> 00:22:25,280 Speaker 1: day at this point in the United States. Who knows 418 00:22:25,480 --> 00:22:28,920 Speaker 1: for sure, but I think it's important to remember that 419 00:22:29,160 --> 00:22:31,919 Speaker 1: at least nine of the value of the market, and 420 00:22:31,920 --> 00:22:35,879 Speaker 1: probably of the value of the market is from earnings 421 00:22:35,880 --> 00:22:39,320 Speaker 1: to companies who are going to generate sometime after nine 422 00:22:39,320 --> 00:22:43,200 Speaker 1: months from now, And as long as that's true, it's 423 00:22:43,240 --> 00:22:47,760 Speaker 1: really long run prospects that matter more than short run prospects, 424 00:22:47,800 --> 00:22:51,720 Speaker 1: and I think the vaccine is a big deal in 425 00:22:52,480 --> 00:22:55,080 Speaker 1: that regard. I think the fact that we're going to 426 00:22:55,240 --> 00:23:00,080 Speaker 1: have a transition of power um in America is a 427 00:23:00,200 --> 00:23:04,880 Speaker 1: deal in that regard. So while I feel much worse 428 00:23:05,520 --> 00:23:09,479 Speaker 1: about the grimness of the winter than I did a 429 00:23:09,480 --> 00:23:13,359 Speaker 1: week or ten days ago, I feel better about the 430 00:23:13,440 --> 00:23:17,600 Speaker 1: long run UH future of the prospects, at least for 431 00:23:17,960 --> 00:23:22,639 Speaker 1: corporations UH in UH the United States. I think the 432 00:23:22,720 --> 00:23:26,879 Speaker 1: combination of the fact that we're going to have a 433 00:23:26,960 --> 00:23:31,959 Speaker 1: more stable government and whether it's good or bad, ultimately, 434 00:23:32,040 --> 00:23:35,560 Speaker 1: and I've got reservations about it, they're gonna be more 435 00:23:35,680 --> 00:23:41,040 Speaker 1: stymied in their abilities to promote inequality UM in the Congress. 436 00:23:41,520 --> 00:23:45,720 Speaker 1: That combination is pretty benign from the point of view 437 00:23:45,720 --> 00:23:48,240 Speaker 1: of corporate interests. And that's of course with the stock 438 00:23:48,280 --> 00:23:51,679 Speaker 1: market reflects and Steve, what about that transition. It's not 439 00:23:51,840 --> 00:23:54,360 Speaker 1: as abrupt of transition as we thought. It looks right 440 00:23:54,400 --> 00:23:56,760 Speaker 1: now at least like this, and it may well remain 441 00:23:56,840 --> 00:23:58,600 Speaker 1: in repult your hands. What does that say about the 442 00:23:58,600 --> 00:24:01,359 Speaker 1: positive stimulus which all of it thought we needed rather badly, 443 00:24:01,480 --> 00:24:05,000 Speaker 1: including to deal with the COVID NINETEAM problem. Yeah, I 444 00:24:05,000 --> 00:24:07,159 Speaker 1: think I agree with everything like I said, and I 445 00:24:07,200 --> 00:24:10,680 Speaker 1: think adding stimulus or lack of stimulus into the equation 446 00:24:10,880 --> 00:24:12,960 Speaker 1: is an important part of trying to understand the market. 447 00:24:13,000 --> 00:24:15,600 Speaker 1: I'm not going to make short term predictions either, but 448 00:24:16,080 --> 00:24:19,040 Speaker 1: I would note that essentially on the same day, we 449 00:24:19,119 --> 00:24:21,639 Speaker 1: had the announcement of the vaccine, and we had the 450 00:24:21,640 --> 00:24:24,080 Speaker 1: news that we were going to have divided government, which 451 00:24:24,119 --> 00:24:26,520 Speaker 1: the market I think correctly interpreted to mean we were 452 00:24:26,520 --> 00:24:28,800 Speaker 1: going to have a lot less stimulus, and that sent 453 00:24:28,920 --> 00:24:32,359 Speaker 1: interest rates down, even as the vaccine and theory should 454 00:24:32,440 --> 00:24:35,080 Speaker 1: have been more bullish for the economy. And so it 455 00:24:35,160 --> 00:24:38,280 Speaker 1: was almost like the opposite of a perfect storm for 456 00:24:38,359 --> 00:24:40,160 Speaker 1: the market, and that I had two good things happened 457 00:24:40,160 --> 00:24:42,640 Speaker 1: more or less at the same time. Low interest rates, 458 00:24:42,640 --> 00:24:45,240 Speaker 1: which are very bullish for the market, as well as 459 00:24:45,920 --> 00:24:48,760 Speaker 1: the prospect, the real prospect for the first time of 460 00:24:48,760 --> 00:24:51,720 Speaker 1: a vaccine that could be a game changer within a 461 00:24:51,760 --> 00:24:54,800 Speaker 1: reasonable time horizon. So so, Larry, what about the interest 462 00:24:54,880 --> 00:24:57,240 Speaker 1: rate issue, and particularly the yield curve, because it really 463 00:24:57,280 --> 00:24:59,200 Speaker 1: steep and it's come off that a little bit towards 464 00:24:59,240 --> 00:25:01,040 Speaker 1: the end of the week. What is that yield curve 465 00:25:01,080 --> 00:25:06,480 Speaker 1: telling us anything relevant right now? You know, these movements 466 00:25:06,480 --> 00:25:09,280 Speaker 1: are big in the slope of the yield curve relative 467 00:25:09,359 --> 00:25:13,000 Speaker 1: to what we've seen lately, but but well, but by 468 00:25:13,040 --> 00:25:17,640 Speaker 1: the standards of the longer term of economic history. Uh, 469 00:25:17,800 --> 00:25:22,000 Speaker 1: These movements of ten twenty points, if that in UH 470 00:25:22,240 --> 00:25:26,680 Speaker 1: the yield curve, aren't that immense, So I wouldn't overdo 471 00:25:27,119 --> 00:25:31,560 Speaker 1: uh the significance of those movements. And of course movements 472 00:25:31,560 --> 00:25:34,120 Speaker 1: in the yield curve are different when they're about real 473 00:25:34,200 --> 00:25:39,680 Speaker 1: interest rates than when they're about UH nominal interest rates. 474 00:25:39,800 --> 00:25:45,119 Speaker 1: I do think we're at risk of making a consequential 475 00:25:45,320 --> 00:25:50,520 Speaker 1: error in not providing UH more stimulus. It may be 476 00:25:50,760 --> 00:25:53,679 Speaker 1: that will be okay, because there's a lot of cash 477 00:25:53,720 --> 00:25:57,000 Speaker 1: that got built up from unspent stimulus in the past, 478 00:25:57,560 --> 00:25:59,800 Speaker 1: but it may be that we're not okay. And so 479 00:25:59,880 --> 00:26:03,159 Speaker 1: I think we're taking much more of a risk of 480 00:26:03,240 --> 00:26:08,679 Speaker 1: a double dip than he is prudent. And UH, you know, 481 00:26:08,800 --> 00:26:12,040 Speaker 1: you look at what's happening around the rest of the world, 482 00:26:12,160 --> 00:26:15,080 Speaker 1: and the risk that they're gonna be some real financial 483 00:26:15,119 --> 00:26:19,960 Speaker 1: aftershocks here is not something I'm prepared to predict, but 484 00:26:20,240 --> 00:26:24,159 Speaker 1: it's certainly something that as a policy maker I would 485 00:26:24,160 --> 00:26:28,440 Speaker 1: want to be UH ensuring the givest steve. As an investor, 486 00:26:28,720 --> 00:26:32,000 Speaker 1: looking below the top line numbers on the equity indusease, 487 00:26:32,720 --> 00:26:34,959 Speaker 1: what did we see this week? Because tech had been 488 00:26:35,040 --> 00:26:37,240 Speaker 1: driving things up. Then tech came off some of this week, 489 00:26:37,280 --> 00:26:38,919 Speaker 1: it looked like we were at least flirting with some 490 00:26:38,960 --> 00:26:41,560 Speaker 1: cyclicals and even some value stocks. What is that telling 491 00:26:41,640 --> 00:26:44,639 Speaker 1: us about what investors are thinking. Yeah, No, there was 492 00:26:44,680 --> 00:26:48,000 Speaker 1: a significant rotation in the market uh this week, and 493 00:26:48,040 --> 00:26:51,480 Speaker 1: again it really related to the vaccine more than anything, 494 00:26:51,520 --> 00:26:55,159 Speaker 1: because the cyplicals have that You've had the greatest dispersion 495 00:26:55,200 --> 00:26:57,680 Speaker 1: between growth so called growth stocks and so called value 496 00:26:57,720 --> 00:27:01,480 Speaker 1: stocks and cypical stocks. Uh, certainly in my recollection, I 497 00:27:01,520 --> 00:27:04,359 Speaker 1: think probably in fact, I know essentially in history where 498 00:27:04,400 --> 00:27:08,080 Speaker 1: like the nine we were at the pile dispersion between 499 00:27:08,119 --> 00:27:12,440 Speaker 1: those two fundamentally different investment strategies. And when the market 500 00:27:12,800 --> 00:27:14,800 Speaker 1: perceived that there was a light at the end of 501 00:27:14,800 --> 00:27:17,879 Speaker 1: the so called tunnel, two interesting things happened. First, the 502 00:27:17,960 --> 00:27:21,720 Speaker 1: civical stocks rallied enormously. You had airlines up twenty percent 503 00:27:21,800 --> 00:27:25,040 Speaker 1: in one day, hotel stocks, leisure stocks, everything that has 504 00:27:25,080 --> 00:27:28,119 Speaker 1: been really beaten up because of the virus. At the 505 00:27:28,160 --> 00:27:31,440 Speaker 1: same time, ironically, you had the growth stocks come off 506 00:27:31,480 --> 00:27:34,760 Speaker 1: because people uh perceived that there was might be less 507 00:27:34,920 --> 00:27:37,040 Speaker 1: use of these things going forward. So you had Zoom 508 00:27:37,040 --> 00:27:40,120 Speaker 1: stock go down I think four the first day after 509 00:27:40,160 --> 00:27:43,800 Speaker 1: all this hit the news, and so markets. You know, we, 510 00:27:44,000 --> 00:27:46,240 Speaker 1: Larry and I have had many discussions about the efficiency 511 00:27:46,240 --> 00:27:48,320 Speaker 1: of markets, but this was a case where the market 512 00:27:48,320 --> 00:27:50,680 Speaker 1: suddenly woke up and decided the world was going to 513 00:27:50,760 --> 00:27:52,359 Speaker 1: be different than what I thought it was going to be. 514 00:27:52,800 --> 00:27:56,280 Speaker 1: And you saw the stock prices, and just accordingly, Larry, 515 00:27:56,280 --> 00:27:59,360 Speaker 1: we are on the border of a new era here 516 00:27:59,359 --> 00:28:02,000 Speaker 1: with a new pres in maybe a divideed government, we'll see, 517 00:28:02,160 --> 00:28:06,000 Speaker 1: But nonetheless we're turning a chapter here. As a practical matter, 518 00:28:06,080 --> 00:28:09,560 Speaker 1: what do you think the chances are that the Biden presidency, 519 00:28:09,760 --> 00:28:12,120 Speaker 1: whether it's one term or two years, could be consequential. 520 00:28:14,800 --> 00:28:18,679 Speaker 1: I think that it will be made consequential by the 521 00:28:18,760 --> 00:28:25,560 Speaker 1: magnitude of the events that gonna deal with. It's gonna 522 00:28:25,640 --> 00:28:30,399 Speaker 1: deal with a reconceptualization of some kind of the U. 523 00:28:30,520 --> 00:28:33,920 Speaker 1: S relationship with China. These are going to be crucial 524 00:28:34,040 --> 00:28:38,760 Speaker 1: years for the global effort on climate change. Make no mistake, 525 00:28:39,120 --> 00:28:44,360 Speaker 1: uh the expected return time of some kind of pandemic threat. 526 00:28:44,920 --> 00:28:48,080 Speaker 1: This is nowadays more like a once every fifteen year 527 00:28:48,160 --> 00:28:51,000 Speaker 1: thing than like a once every fifty year thing. And 528 00:28:51,040 --> 00:28:53,120 Speaker 1: the world's gonna have to get it together to be 529 00:28:53,240 --> 00:28:56,280 Speaker 1: ready for the next one. We're not, and that's going 530 00:28:56,360 --> 00:28:59,880 Speaker 1: to depend on what happens in a Biden administration. Perhaps 531 00:29:00,080 --> 00:29:05,360 Speaker 1: most fundamentally, Abraham Lincoln talked about government by the people 532 00:29:05,440 --> 00:29:09,720 Speaker 1: in government for the people, and he assumed that those 533 00:29:09,720 --> 00:29:15,760 Speaker 1: two things went together. And you saw in the number 534 00:29:15,760 --> 00:29:18,360 Speaker 1: of people who voted for Donald Trump, what you saw 535 00:29:18,840 --> 00:29:23,640 Speaker 1: in Brexit, what you saw in Boston, Naro's election in Brazil, 536 00:29:23,800 --> 00:29:28,560 Speaker 1: what you've seen with Modi in India, what you see 537 00:29:28,600 --> 00:29:32,000 Speaker 1: in the greater attraction of the Chinese model to people 538 00:29:32,040 --> 00:29:34,640 Speaker 1: around the world. What you see in the number of 539 00:29:34,680 --> 00:29:37,280 Speaker 1: young people in the United States who professed not to 540 00:29:37,320 --> 00:29:42,440 Speaker 1: believe in democracy is the best system. Is increasing doubt 541 00:29:43,080 --> 00:29:46,360 Speaker 1: about the proposition the government by the people will always 542 00:29:46,400 --> 00:29:50,200 Speaker 1: be the best government for the people. And fundamentally, that's 543 00:29:50,240 --> 00:29:55,720 Speaker 1: the task of this administration to reconvince people of that 544 00:29:55,960 --> 00:29:59,800 Speaker 1: central American premise, both in the United States and a 545 00:30:00,000 --> 00:30:03,400 Speaker 1: around the rest of the world. So I did succeed 546 00:30:03,680 --> 00:30:06,720 Speaker 1: or fail, This is likely to be a very very 547 00:30:06,800 --> 00:30:12,800 Speaker 1: consequential UH presidency. And I'm I'm optimal, I'm apt, but 548 00:30:12,840 --> 00:30:15,920 Speaker 1: no one can be certain. Well, everyone has a hope 549 00:30:15,920 --> 00:30:19,600 Speaker 1: for success, Steve, but as a practical matter. Can President 550 00:30:19,640 --> 00:30:22,120 Speaker 1: Biden deal with a Mitch McConnell if he if he 551 00:30:22,200 --> 00:30:24,800 Speaker 1: is a majority leader, and make it a government for 552 00:30:24,840 --> 00:30:27,040 Speaker 1: the people. Whatever one could say about that, it means 553 00:30:27,200 --> 00:30:29,880 Speaker 1: can he make fundamental change in what we're doing in 554 00:30:29,920 --> 00:30:33,840 Speaker 1: this country. That That's exactly my concern about this. And 555 00:30:33,920 --> 00:30:36,400 Speaker 1: I don't want anything else I say in this show 556 00:30:36,440 --> 00:30:39,480 Speaker 1: at all to sound partisan, but I would say the following, 557 00:30:39,520 --> 00:30:42,920 Speaker 1: which is that I understand why the markets to some 558 00:30:43,000 --> 00:30:45,680 Speaker 1: degree and lots of people that we all know, I 559 00:30:45,920 --> 00:30:48,320 Speaker 1: think divided government isn't such a bad idea to checks 560 00:30:48,320 --> 00:30:52,000 Speaker 1: and balances limitation on what the president could do. But 561 00:30:52,280 --> 00:30:54,400 Speaker 1: I worry a lot about I grew with everything like 562 00:30:54,640 --> 00:30:58,680 Speaker 1: said about the fears about democracy, the threats to democracy, 563 00:30:58,200 --> 00:31:00,720 Speaker 1: that the concerns that there may be a better system 564 00:31:00,920 --> 00:31:04,680 Speaker 1: that democracies and working. You look at China's success in 565 00:31:05,560 --> 00:31:08,120 Speaker 1: getting past the virus and the way their economy is 566 00:31:08,120 --> 00:31:10,000 Speaker 1: going to grow this year, unlike the way any other 567 00:31:10,000 --> 00:31:11,880 Speaker 1: developed country is going to grow this year. There's a 568 00:31:11,880 --> 00:31:16,280 Speaker 1: lot to worry about about democracy, and I worry that 569 00:31:16,360 --> 00:31:19,880 Speaker 1: divided government isn't going to help. Um. We are living 570 00:31:20,040 --> 00:31:24,440 Speaker 1: in an ultrapartisan environment. There have been. You could count 571 00:31:24,440 --> 00:31:26,840 Speaker 1: on one hand probably the number of bills that have 572 00:31:26,880 --> 00:31:29,680 Speaker 1: been passed by Congress in the last four years that 573 00:31:29,720 --> 00:31:32,600 Speaker 1: had any kind of bipartisan support of one kind or another. 574 00:31:33,320 --> 00:31:35,560 Speaker 1: Um Larry will be able to speak to this better 575 00:31:35,560 --> 00:31:37,960 Speaker 1: than I can. But we were both in Washington and 576 00:31:38,000 --> 00:31:41,400 Speaker 1: two thousand and nine when the Democrats had sixty votes 577 00:31:41,440 --> 00:31:43,720 Speaker 1: in the Senate until Teddy Kennedy died in August the 578 00:31:43,720 --> 00:31:47,360 Speaker 1: two thousand and nine, and even then it required perculian 579 00:31:47,400 --> 00:31:51,320 Speaker 1: efforts by by many people in the administration to get 580 00:31:51,320 --> 00:31:54,120 Speaker 1: even what got passed past. There you have an economist 581 00:31:54,120 --> 00:31:56,280 Speaker 1: and an investor giving us the balance of hope on 582 00:31:56,320 --> 00:31:58,880 Speaker 1: the one side and caution on the other. Many many 583 00:31:58,960 --> 00:32:01,360 Speaker 1: thanks to Larry Some is our special contributor to Wall 584 00:32:01,360 --> 00:32:03,320 Speaker 1: Street Week. He is, of course from Harvard and see 585 00:32:03,440 --> 00:32:06,840 Speaker 1: ratter of will It Advisors, who invests the personal and 586 00:32:06,880 --> 00:32:10,200 Speaker 1: philmthropic funds of Michael R. Bloomberg. And that does it 587 00:32:10,320 --> 00:32:13,040 Speaker 1: for this edition of Wall Street Week. I'm David Weston, 588 00:32:13,280 --> 00:32:16,840 Speaker 1: this is Bloomberg. See you next week.