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Speaker 1: Welcome to the Bloomberg Surveillance Podcast and I'm Tom Keane

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Speaker 1: Jai Ley. We bring you insight from the best in economics, finance, investment,

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Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,

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Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. Paul

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Speaker 1: Donovan joins US with UBS, their global chief economists and

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Speaker 1: just a wonderful perspective on the Pacific rim. The upside

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Speaker 1: surprise Paul Donovan has been China. I want to go

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Speaker 1: back to the UBS heritage of Jonathan Anderson from years

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Speaker 1: ago in the U b S expertise. I don't want

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Speaker 1: to know about Hong Kong, or Shanghai or Beijing. Paul Donovan,

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Speaker 1: What does U b SC and the rest of China

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Speaker 1: we never speak of. So the Chinese economy we sold

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Speaker 1: this morning with the industrial production data, production is kicking,

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Speaker 1: my kid. China is is a very interesting comparison to

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Speaker 1: what we're seeing in the US and in Europe because

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Speaker 1: the US and Europe what's happened is consumers saved money

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Speaker 1: during lockdown, and then as lockdowns have ended, they've started

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Speaker 1: to spend it because that's what consumers do. But in China,

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Speaker 1: the consumer was less able to save money, so the

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Speaker 1: domestic economy was sort of a little bit on the

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Speaker 1: back foot as it came out of lockdown. Unless you

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Speaker 1: were middle class, you didn't really have savings to spend.

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Speaker 1: But what's now happening, of course, is that we're seeing

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Speaker 1: global consumer demand picking up and that's working its way

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Speaker 1: up the supply chains, and we're seeing these better production

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Speaker 1: numbers coming out of China beating expectations. I don't have

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Speaker 1: a lot of faith at the expectations particularly accurate. The

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Speaker 1: range of forecast is very wide, but certainly a decent

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Speaker 1: number coming out reflecting that improvement in global activity. Okay,

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Speaker 1: you can extrapolate it to Australia, and John Farrell was

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Speaker 1: more to the house a long Australia here into the

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Speaker 1: end of the year. Can you extrapolate it to the

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Speaker 1: rest of the world. Can you extrampolate Chinese better over

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Speaker 1: to America and over to the continent of Europe. I

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Speaker 1: think it has to be taken a looking at both sides.

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Speaker 1: So China is a linking global supply chains. It's now

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Speaker 1: the world's largest manufacturer UM, It's a key part of

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Speaker 1: global supply chains. So if we're seeing better production in China,

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Speaker 1: if we're seeing improvements in the export numbers, that is

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Speaker 1: telling us something about global levels of demand. And we're

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Speaker 1: seeing it also come through in terms of proper indications

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Speaker 1: about confidence in the economy. You're not these useless surveys,

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Speaker 1: but detailed behavior of consumers, of individuals in Europe and

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Speaker 1: the US is pointing towards a better economic outlook. And

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Speaker 1: this is always the case. Markets are always always too

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Speaker 1: pessimistic about recovery from a crisis. This was no different

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Speaker 1: to previous crisis. The markets have failed to understand the

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Speaker 1: speed of the bounce back, the resilience of consumers and

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Speaker 1: businesses in the face of a challenge, Paul, is there

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Speaker 1: anything unique about the willingness of many people to still

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Speaker 1: under appreciate this rebound in this economy? So, I think

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Speaker 1: we've got some complications here. Um, So we've got problems

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Speaker 1: with the data itself. I mean, the data quality has

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Speaker 1: been deteriorating for several years, but it's it's been really

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Speaker 1: really bad during this crisis, and we're now seeing the

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Speaker 1: inconsistencies in the data. So the fact that different countries

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Speaker 1: use different methods to calculate GDP. Your only economists get

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Speaker 1: excited about this most of the time. But now it's

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Speaker 1: leading to these absolute a normalies in the data when

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Speaker 1: you do international comparisons. So that's throwing up a lot

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Speaker 1: of problems. But also, of course what's happening throughout all

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Speaker 1: of this is the pandemic has accelerated the structural changes

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Speaker 1: of the Fourth Industrial Revolution and also the environmental credit crunch.

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Speaker 1: Both of those big, big structural issues have been sped

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Speaker 1: up throughout this and that means of course that we

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Speaker 1: may be failing to capture some of what's going on

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Speaker 1: in the economy. So to give just one example, we

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Speaker 1: have seen an absolute search in business creation in America,

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Speaker 1: in the UK and France, in Japan, in Singapore, huge

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Speaker 1: huge increase in business creation since lockdowns ended. That's not

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Speaker 1: likely to be properly reflected in the data. You know,

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Speaker 1: some of the entrepreneurship is just going to be missed

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Speaker 1: because the satisticians aren't going to be looking for it.

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Speaker 1: So do you think that right now, going forward, we're

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Speaker 1: going to see ongoing improvement in the data, or do

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Speaker 1: you think that with the pullback in fiscal support we'll

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Speaker 1: see a PLATEAUA I mean, do you think that right

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Speaker 1: now people are still getting it wrong and expecting a

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Speaker 1: cool down in the recovery, So there will be a

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Speaker 1: call down. I mean, let's be realistic. What's what's really

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Speaker 1: fueling this is the fact that most people accumulated about

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Speaker 1: a month's worth of income in savings while so we're

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Speaker 1: stuck in lockdown, unable to do anything. And of course,

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Speaker 1: as soon as lockdown ends, you know, you've just spent

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Speaker 1: you know whatever it is, two months stuck at home

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Speaker 1: with you, your your close family, as as companions. You're

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Speaker 1: desperate to get out and get away from them, and

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Speaker 1: they go out and spend money. And that's what's happening.

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Speaker 1: And that's the surge of the third quarter. Now that's

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Speaker 1: not gonna last. It's like a tax rebate. Within six months,

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Speaker 1: this money is going to be gone and with them

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Speaker 1: back into a more normal pattern of growth. But I

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Speaker 1: think that that will still be fairly resilient because the

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Speaker 1: labor market is bouncing back more strongly, and we do

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Speaker 1: get fiscal support, particularly in Europe obviously, but also potentially

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Speaker 1: in the States next year. The other thing to remember is,

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Speaker 1: of course, that we've been seeing an awful lot of

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Speaker 1: upward revisions to numbers. So once business got a bit

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Speaker 1: back to normal, we saw statisticians being able to go

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Speaker 1: out and collect data a bit more reliably. And so

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Speaker 1: in both Europe and in the United States, there's been

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Speaker 1: a lot of upward revisions. Sort of. The the Revision Index,

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Speaker 1: which looks at revising data, has ticking up since lockdown ended,

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Speaker 1: and that's also telling us that actually things weren't quite

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Speaker 1: as bad as we thought in the second quarter. The

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Speaker 1: other aspect of this, and you wrote an essay on

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Speaker 1: this I thought was fascinating, was that you believe homeworking

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Speaker 1: actually boosts growth. Can you talk a little bit about that,

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Speaker 1: especially if that growth may not be in the big

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Speaker 1: cities that traditionally were the economic engines. So I think

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Speaker 1: the first point about this is this was going to

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Speaker 1: be happening anyway. The technological changes that the changes of

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Speaker 1: the Fourth Industrial Revolution fascinating from an economic point of view,

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Speaker 1: in many ways, reverses the social shifts of the First

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Speaker 1: Industrial Revolution. You know, we're leaving the cities and going

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Speaker 1: back to rural areas or out of town. But what

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Speaker 1: that does, of course, is it changes patterns, It changes

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Speaker 1: work time. So I'm not traveling to work on London underground,

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Speaker 1: spending half an hour to and from work every day,

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Speaker 1: stuck on the Central Line. My daily community if I'm

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Speaker 1: working here from home, is me stumbling five yards from

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Speaker 1: my bedroom to my home office. That's it. So I'm

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Speaker 1: saving myself an hour a day. And what am I

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Speaker 1: doing with that? Well, you know, I'm looking for entertainment.

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Speaker 1: I'm looking for leisure, and I may spend money in

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Speaker 1: doing that. And this, of course has been the progression

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Speaker 1: throughout the twentieth century. Lord Caine's very famously wrote that

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Speaker 1: we'd all be working fifteen our days by the year.

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Speaker 1: I'm sure that's that's true for Tom, but we're average

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Speaker 1: economist is not working a fifteen day. We're we're really

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Speaker 1: having to push the hours. It so Kings was looking

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Speaker 1: at this big, big drop in terms of the amount

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Speaker 1: of time that people were spending at work, and it happened.

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Speaker 1: But it happened because we spent less time doing chores

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Speaker 1: outside of work, less time doing housework, less time commuting,

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Speaker 1: and we have more leisure. That's what's going to come

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Speaker 1: out of this. I think homeworking is not something to

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Speaker 1: be shunned. It changes the structured the economy, but it

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Speaker 1: changes it in a good way, which gives people more

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Speaker 1: free time, and it gives them the opportunity to spend

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Speaker 1: money in different ways and to use their standard of John.

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Speaker 1: It's just amazing that Paul Donovan, in this pandemic is

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Speaker 1: graduated from the muhammadal Area pile on Tom school, he says,

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Speaker 1: he pretending it. There's a seventy Just tell everyone go on, go,

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Speaker 1: I mean to go, Okay, I'll go. Paul Donovan, what's

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Speaker 1: so important here in the time we're in and there's

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Speaker 1: such a respect for the holistic nature of your research reports?

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Speaker 1: What do we need to focus on on global trade?

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Speaker 1: I mean Stigletts talks about the globalization and our discontent

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Speaker 1: and all that. What's the thing forward on world trade?

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Speaker 1: We need to focus on. So globalization, the rise of

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Speaker 1: global trade, of SHRIF of GDP, that's over. That's done, um,

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Speaker 1: because the globalization story of the last twenty five years

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Speaker 1: was about increasingly complex, increasingly long supply chains and that's

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Speaker 1: no longer desirable. And again, this is a change. It's

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Speaker 1: not being brought about by the pandemic. It's being accelerated

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Speaker 1: by the pandemic, and we're now i think, going to

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Speaker 1: see a fairly steady decline in Global Trader of Share GDP.

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Speaker 1: But there are two possible ways this happened, and they

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Speaker 1: have very very different implications. If we go down the

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Speaker 1: route of trade taxes tariffs, that is not good news

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Speaker 1: because that is telling companies, right, you've chosen the best

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Speaker 1: possible location for your production. We're going to force you

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Speaker 1: to go to somewhere that second best. No company wants

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Speaker 1: to go to second best. That's less efficient. That's going

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Speaker 1: to lead to either squeezed profits or higher prices of

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Speaker 1: the consumer, or some combination. But if we see automation, robotics,

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Speaker 1: digitization coming in, then what that is going to be

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Speaker 1: doing is leading to localization of production. You start producing

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Speaker 1: close to the consumer because it is efficient to do so,

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Speaker 1: and that's going to be a very very different situation

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Speaker 1: because that means lower prices for the consumer, or higher

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Speaker 1: profits for the producer, or some combination of the two.

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Speaker 1: So what we've got to focus on is look globalization

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Speaker 1: as we've recorded it. It's going into reverse. There is

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Speaker 1: a negative story around trade taxes and autarchy and all

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Speaker 1: that sort of stuff, but there's also a positive story

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Speaker 1: about it's just more efficient to be producing closer to

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Speaker 1: the consumer because of the technological changes, and so working

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Speaker 1: out which of those two options is predominant that's going

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Speaker 1: to be key. The shortest nine minute interview we've ever done, Paul,

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Speaker 1: it just went too quickly. We're gonna do it much

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Speaker 1: much along the next time, Paul Donovan Greater to catch up.

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Speaker 1: UBS global chief economists to speak of the American economy.

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Speaker 1: Lindsay p Exit joins us right now with Stephile. Their

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Speaker 1: chief economists Lindsey John Ferroll brought up twenty minutes ago

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Speaker 1: the idea of the all in United Kingdom unemployment rate?

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Speaker 1: What is the all in US unemployment rate? Is it

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Speaker 1: double digit? It could be right now. Of course, we

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Speaker 1: know that the civilian rate, the rate reported from the BLS,

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Speaker 1: has come down to eight point four, and we do

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Speaker 1: know that there has been vast improvement from that peak

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Speaker 1: that we saw early on in the pandemic, but we

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Speaker 1: don't know if that's fully capturing what's been happening out

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Speaker 1: in the labor market. As you said, the true unemployment

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Speaker 1: rate is much likely to be closer to that double

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Speaker 1: digit range. But as we wait for the Fed's decision

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Speaker 1: later this week tomorrow exactly. We do think that the

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Speaker 1: FED is going to emphasize that improvement that we've seen

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Speaker 1: in the labor market, that further growth that we've seen

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Speaker 1: in terms of hiring, that further decline in the unemployment rate,

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Speaker 1: as well as the decline in jobless claims. So the

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Speaker 1: FEED is going to be focusing on the improvement that

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Speaker 1: we've seen, as opplosed to some of that that more

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Speaker 1: tertiary or secondary numbers that suggest a higher level of

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Speaker 1: joblessness in the US labor market. And then they they're

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Speaker 1: going to get to the November I FED meeting, which

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Speaker 1: I assume was going to be a virtually silent meeting

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Speaker 1: just with respect to the American election. We may not

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Speaker 1: even have results by then. Lindsey, I want you to

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Speaker 1: take us out to December and into two thousand twenty one.

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Speaker 1: What's the economic run rate right now? Right now, the

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Speaker 1: economy does seem to be improving. We are seeing improvement,

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Speaker 1: as I mentioned, in the labor market, in the housing market,

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Speaker 1: we've seen improvement in the manufacturing numbers. So it does

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Speaker 1: suggest that the U s economy is rebounding from that

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Speaker 1: extremely low level that we saw in the second quarter,

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Speaker 1: But I hesitate to say that we're in the position

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Speaker 1: for a v shaped recovery. As the FED is pointed out,

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Speaker 1: COVID remains the number one risk to the outlook, so

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Speaker 1: we can't get complacent at this point. Yet. There still

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Speaker 1: is a tremendous amount of risk that the virus poses

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Speaker 1: to the economy, that it poses to the outlook, and

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Speaker 1: if we need to, we should remain very vigilant in

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Speaker 1: terms of the safety protocols, in terms of wearing masks,

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Speaker 1: social distancing, in order to keep the economy open and

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Speaker 1: continuing to move towards that point of full employment. But

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Speaker 1: I don't think we're there yet, and we do run

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Speaker 1: the risk of a second wave of cases, a second

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Speaker 1: round of layoffs, which could keep the economy very anemic

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Speaker 1: going into one And this is exactly why the FED

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Speaker 1: has said that they're not even thinking about thinking about

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Speaker 1: raising rates at this point. Interest rates are likely to

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Speaker 1: stay in this very near zero range, this very low range,

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Speaker 1: for the foreseeable future, for several years to come. Well, NSI,

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Speaker 1: let's talk about how they manage that message tomorrow then,

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Speaker 1: because tomorrow, surely the unemployment forecast has to get an

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Speaker 1: upgrade given where unemployment has come down to absolutely that

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Speaker 1: we do get that summary of economic projections, and the

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Speaker 1: unemployment rate is likely to be lowered in terms of

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Speaker 1: the FEDS forecast reflecting the improvement that we have seen

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Speaker 1: in the labor market. I wouldn't expect much change around

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Speaker 1: the inflation figure. I wouldn't expect much more optimism to

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Speaker 1: be priced in terms of their GDP forecast, But you're

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Speaker 1: right the unemployment rate their forecast is likely to come

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Speaker 1: down again reflecting that improvement. But I think it's more

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Speaker 1: important what we hear from the chairman during the press conference,

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Speaker 1: and he's going to be very careful to walk that

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Speaker 1: line between patting the FED on the back, saying the

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Speaker 1: swift and decisive action that we took helped stem a

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Speaker 1: further downturn, so the the conditions that we saw in

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Speaker 1: the second quarter could have been much more dire, and

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Speaker 1: again balancing that against the risk as I mentioned, the

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Speaker 1: virus still remains out there. Businesses have been able to

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Speaker 1: stem that bridge uh in terms of staying open for

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Speaker 1: several months. But if we don't see a meaningful way

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Speaker 1: of separating the healthy from the sick, or if we

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Speaker 1: don't see additional fiscal stimulus to help bridge that gap

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Speaker 1: for businesses and the American families. It's going to be

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Speaker 1: very difficult to keep the U. S economy on this

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Speaker 1: pathway back to a more prosperous and sustainable growth level. Lindsay,

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Speaker 1: there seems to be a divergence between the C suite

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Speaker 1: in America and economists. The C suite saying we're seeing

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Speaker 1: petter than expected business performance across the board, and you

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Speaker 1: have economists saying, well, you do now, but as this

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Speaker 1: fiscal support runs off, you will see it lose a

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Speaker 1: lot of luster. Have economists lost credibility in a meaningful

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Speaker 1: way or are are they looking at something that perhaps

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Speaker 1: the C suite isn't seeing? I think right now, I

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Speaker 1: think most of management, most of corporate America is focused

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Speaker 1: on the near term outlook, and they're focused on the

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Speaker 1: minimal improvement that we have seen from those low levels

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Speaker 1: at the onset of the pandemic. I think economists are

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Speaker 1: taking more of a longer term picture, a longer term

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Speaker 1: view of where the economy is headed. Remember, the economy

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Speaker 1: was already losing momentum as we were heading into We

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Speaker 1: had slowed from a three percent growth rate down to

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Speaker 1: two percent, Yet corporate America was still elated with the

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Speaker 1: prospects of continuing the expansion. So economists were already recognizing

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Speaker 1: that loss of momentum. And I think that loss of

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Speaker 1: momentum has carried through and kept the economy in this

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Speaker 1: extremely fragile position. Then you layer on this pandemic and

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Speaker 1: it's going to be increasingly difficult for us to get

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Speaker 1: back to a more sustainable organ ne level of growth.

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Speaker 1: So it could also be that corporate America has become

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Speaker 1: complacent with this unprecedented support from monetary and fiscal policies. Okay,

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Speaker 1: so we don't get another fiscal round of support. Where

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Speaker 1: do you see the year ending with respect to the

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Speaker 1: US unemployment rate. I think that it's going to remain

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Speaker 1: elevated in this eight to nine percent level. I don't

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Speaker 1: think we've pushed back towards that double digit level that

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Speaker 1: we saw again at the onset of the pandemic. But

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Speaker 1: the labor market still is under an extreme amount of pressure. Again,

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Speaker 1: businesses have been able to recall some workers, we have

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Speaker 1: been able to see some new payrolls created. But if

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Speaker 1: we don't see additional fiscal stimas if we don't see

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Speaker 1: additional federal funding. If we don't see that vaccine, it's

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Speaker 1: going to be difficult to continue these conditions that have

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Speaker 1: allowed businesses to take on those new hires or to

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Speaker 1: rehire some of those workers that have been pushed to

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Speaker 1: the sideline. So we could actually see a second wave

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Speaker 1: of layoffs or furloughs towards the end of the year,

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Speaker 1: which would keep that unemployment rate artificially high in that

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Speaker 1: eight to nine that range Lindsey Pa. Yesterday, William Gross

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Speaker 1: talked about a six trillion dollar need, a six trillion

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Speaker 1: dollar deficit call others have you know come up about

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Speaker 1: that number as well. We're talking one and two trillion.

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Speaker 1: Is an arguing point. Are we able to go out

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Speaker 1: and find three or four or five or six trillion

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Speaker 1: of new debt to fold under the American balance sheet?

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Speaker 1: I think we could. The question is do we want

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Speaker 1: to We have to be very careful. We want to

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Speaker 1: make sure that we're finding enough stimulus in the near

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Speaker 1: term to get the economy back on track, but we

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Speaker 1: also don't want to create additional barriers on the back

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Speaker 1: end when the economy does begin to recover. Are we

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Speaker 1: are we struggling under this insurmountable amount of debt that

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Speaker 1: creates future barriers for growth and future generation. So I

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Speaker 1: do think it's a it's a delicate balance. We want

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Speaker 1: to make sure again that we get the economy back

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Speaker 1: on track, but not just in the short term, that

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Speaker 1: we're putting it on a longer term ur tect jury

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Speaker 1: towards a higher level of prosperity. Lindsay half delicate is

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Speaker 1: that balance right now and asked to no seriousness with

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Speaker 1: ten yere yields at the moment at zero point six.

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Speaker 1: I think it's extremely delicate. As we've seen the deficit,

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Speaker 1: the total debt held by the American public at record levels.

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Speaker 1: In fact, debt to GDP is the highest level that

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Speaker 1: we've seen in post World War two history. So we

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Speaker 1: are on an unsustainable trajectory in terms of continuing to

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Speaker 1: load debt onto the balance sheet. That being said, there's

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Speaker 1: not much we can do during these unprecedented times. We

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Speaker 1: have to take on additional debt, but we don't need

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Speaker 1: to be irresponsible about it. We want to make sure

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Speaker 1: that the programs that the federal government is putting into

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Speaker 1: into play is going to those that is going to

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Speaker 1: the businesses that need it to to continue to bridge

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Speaker 1: this gap. We don't want fraud or we don't want

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Speaker 1: abuse of these programs. That's very important at this point,

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Speaker 1: and I think the American public has a much lower

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Speaker 1: tolerance at this point for any sort of lot around

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Speaker 1: those programs, given what we did see with the first

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Speaker 1: round in the pp prief program as well. Oh absolutely,

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Speaker 1: I think most people would agree with that sentiment. Lindsay,

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Speaker 1: great to catch up, Lindsay, p x of that A

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Speaker 1: staffel Robert for a few seconds with Jones Day. He's

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Speaker 1: head of mergers and acquisitions, but that barely describes his

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Speaker 1: decades as many decades experience in all different shades of

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Speaker 1: M and A. We're thrilled he could join us again above.

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Speaker 1: It's been way, way, way too long since you've been on.

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Speaker 1: What's different this time around? In the many billions of

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Speaker 1: the M and A Derby, Well, the biggest difference I

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Speaker 1: think is obviously the markets have been fabulous in many respects.

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Speaker 1: Everybody focuses on the equity capital markets, but the debt

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Speaker 1: markets are just mind blowing way supportive. Now, you know,

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Speaker 1: the others on your show always talk about out how

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Speaker 1: that supports the equity markets too. But it really is

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Speaker 1: is A is a great bone for M and A.

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Speaker 1: Um And you know, if you if you stand back

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Speaker 1: over those decades, M and A generally tracks what the

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Speaker 1: equity markets, uh do um and I think we're starting

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Speaker 1: to see that now. A lot of people said, well,

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Speaker 1: yesterday is a one off thing. TikTok is political, not

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Speaker 1: an economic event. Um. Uh. The soft Bank deal, it

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Speaker 1: was kind of a for sale because of other issues

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Speaker 1: that that the soft Bank has. Well, yeah, that's true,

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Speaker 1: but there was a lot of other stuff. All the

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Speaker 1: headline deals got of course the headlines, but there were

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Speaker 1: many other deals or including including a deal for Verizon,

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Speaker 1: the New York Mets. They are all sorts of stuff.

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Speaker 1: So it's it's much more active, no question about it.

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Speaker 1: Well that's great. Are we at the point Robert Busk

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Speaker 1: where we're seeing transactions so the other guy doesn't get

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Speaker 1: the company, like Steve Cohen goes out and takes some

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Speaker 1: metso Hilarion can't buy them. I mean, are we at

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Speaker 1: that point across all of them and A? Well, yes,

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Speaker 1: we're at a. M and A is strategic right now.

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Speaker 1: There's there's a lot of financial transactions. In fact, I

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Speaker 1: at least in my my personal world. It started for

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Speaker 1: to pick up again in August with some private equity deals,

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Speaker 1: but it's mostly strategic. Um. I don't think that they

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Speaker 1: deal probably was not even mentioned yesterday. The Verizon deal. Um,

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Speaker 1: And that's a not a huge deal at least by

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Speaker 1: comparison to the others. But it was almost seven billion

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Speaker 1: and it's and it's uh designed to build out a

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Speaker 1: part of the Horizons platform. They don't have the prepaid

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Speaker 1: phone prepaid cards. For sure. There are a lot of

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Speaker 1: deals that are strategic and looking to buy revenue at

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Speaker 1: a time of meager growth. But things have gotten a

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Speaker 1: lot more political, and I'm wondering how much TikTok is

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Speaker 1: representative of the increase recently politicized m and a backdrop

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Speaker 1: versus a sort of idiosyncratic affair. Uh. There's no question

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Speaker 1: that nationalism um is a factor. You wouldn't have said

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Speaker 1: this before the current administration, but um, it isn't just

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Speaker 1: the USUM. And nationalism is a real issue in terms

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Speaker 1: of cross border deals, UM, no question about it. Um.

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Speaker 1: And how we deal with how we deal with this

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Speaker 1: stuff going forward could have an impact whenever a significant

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Speaker 1: cross border transaction shows up in the boardroom, you got

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Speaker 1: a lot of directors kind of you know, saying, do

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Speaker 1: we really want to go through this? Because, um, because

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Speaker 1: because it is a factor. Um, the the TikTok deals

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Speaker 1: is unique. But but if this is a real issue

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Speaker 1: with cross border deals, which of course is most deals

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Speaker 1: have some element of that, but bobb, it may may

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Speaker 1: well push bigger companies to get with bigger companies. Now,

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Speaker 1: another has been regulatory issues antitrust issues down in Washington,

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Speaker 1: d C. Around big tech. But let's think about how

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Speaker 1: this story is evolving. In Europe. Is a huge conversation

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Speaker 1: about whether they should move away and move towards from

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Speaker 1: this national champions to European champions that can compete with

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Speaker 1: China and compete with heavyweights in the United States as well.

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Speaker 1: And I wonder if that's something that grips the United

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Speaker 1: States to push forward and allow the big to get

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Speaker 1: bicker through acquisitions so they can compete with Chinese companies.

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Speaker 1: But how are you thinking about that at the moment? Uh,

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Speaker 1: That's that's an interesting topic for a for a frankly

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Speaker 1: kind of law school debate. Um. I don't think that

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Speaker 1: that that has maybe has more traction in the EU

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Speaker 1: because EU obviously, see you it thinks about things in

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Speaker 1: those in that way. Um and you know there's been

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Speaker 1: rumors again recently about um uh ubs and credit suite,

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Speaker 1: you know, and obviously that would raise a regulatory and

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Speaker 1: other issues, but maybe that would be something that would

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Speaker 1: fall into the that kind of category. The US is different. Um. Yeah,

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Speaker 1: politics plays a role, and when the President says something

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Speaker 1: about a deal, the staff people who deal with these

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Speaker 1: things think about it. But but it really works out

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Speaker 1: in a much more, much more granular technical way. In

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Speaker 1: the US. It's it's done by people who are largely

431
00:24:18,400 --> 00:24:20,359
Speaker 1: a political I know that's hard to believe in the

432
00:24:20,400 --> 00:24:24,160
Speaker 1: today's world, but there, you know, these are many, many

433
00:24:24,200 --> 00:24:27,560
Speaker 1: cases a career staff people who are trying to do

434
00:24:27,600 --> 00:24:31,680
Speaker 1: the right thing rather than follow the political winds. I'm

435
00:24:31,720 --> 00:24:33,920
Speaker 1: just wander now quickly. That changes. Bob's gribe to catch

436
00:24:34,000 --> 00:24:35,800
Speaker 1: up with you as always, Robert for fu sack that

437
00:24:36,000 --> 00:24:42,320
Speaker 1: Jones Day had of mergers and acquisitions right now a

438
00:24:42,359 --> 00:24:45,919
Speaker 1: two hour conversation was Scott Stringer. He went to the

439
00:24:45,920 --> 00:24:50,040
Speaker 1: Bella Bella Absug School of charm and became a politician

440
00:24:50,080 --> 00:24:53,960
Speaker 1: on the Island of Manhattan. Has been comptroller and now

441
00:24:54,000 --> 00:24:56,600
Speaker 1: we'll run for mayor. There's forty seven things to talk

442
00:24:56,720 --> 00:24:59,280
Speaker 1: to him about, and of course with a Shinali Bassek

443
00:24:59,359 --> 00:25:02,280
Speaker 1: of Bloomberg as well, because there's a lot to talk

444
00:25:02,280 --> 00:25:05,800
Speaker 1: about right now, Scott, I must start with your aspiration

445
00:25:05,840 --> 00:25:09,040
Speaker 1: to be the mayor of this great city. What is

446
00:25:09,080 --> 00:25:12,800
Speaker 1: the stringer plan to drag this city out of this pandemic?

447
00:25:14,000 --> 00:25:16,000
Speaker 1: That is the number one priority is We're going to

448
00:25:16,080 --> 00:25:18,000
Speaker 1: have to do a lot at the same time. One,

449
00:25:18,440 --> 00:25:22,199
Speaker 1: we have to use our financial chops to slowly and

450
00:25:22,240 --> 00:25:25,199
Speaker 1: carefully turn the economy on. I would argue that we

451
00:25:25,240 --> 00:25:28,159
Speaker 1: can't turn the economy on the same way we closed it.

452
00:25:28,240 --> 00:25:31,160
Speaker 1: We have to be more thoughtful about how we invest

453
00:25:31,200 --> 00:25:34,480
Speaker 1: in infrastructure, how we invest in the neighborhoods that have

454
00:25:34,640 --> 00:25:37,399
Speaker 1: just been ripped apart by COVID. So the next mayor

455
00:25:37,480 --> 00:25:39,879
Speaker 1: is going to have to govern in a serious way

456
00:25:40,080 --> 00:25:43,240
Speaker 1: to get this economy going. For me, the priority has

457
00:25:43,280 --> 00:25:47,359
Speaker 1: to be closing budget deficits in a way that start

458
00:25:47,359 --> 00:25:50,840
Speaker 1: as economic development and growth in all of our communities.

459
00:25:50,880 --> 00:25:52,840
Speaker 1: And it's something I'm thinking about not just as a

460
00:25:52,920 --> 00:25:56,000
Speaker 1: mayor candidate, but as control of the chief financial officer

461
00:25:56,040 --> 00:25:59,639
Speaker 1: of the city. Within the liberal ethos of New York City.

462
00:26:00,000 --> 00:26:05,760
Speaker 1: Can you go after the rich people? My view is,

463
00:26:06,200 --> 00:26:08,400
Speaker 1: look cans the state of play. We have a four

464
00:26:08,440 --> 00:26:11,440
Speaker 1: point two billion dollar deficit in our city budget for

465
00:26:11,520 --> 00:26:15,040
Speaker 1: next year. It's top but manageable. So we have to

466
00:26:15,119 --> 00:26:17,480
Speaker 1: use all the levels at our disposed to close that

467
00:26:17,520 --> 00:26:20,679
Speaker 1: budget again. So, for example, we have billions of dollars

468
00:26:20,680 --> 00:26:23,680
Speaker 1: and reserves. We can draw it down on those reserves.

469
00:26:23,960 --> 00:26:26,480
Speaker 1: We have the opportunity to find more efficiencies in our

470
00:26:26,520 --> 00:26:29,960
Speaker 1: agencies that our mayor has never gone through an exercise

471
00:26:30,080 --> 00:26:32,640
Speaker 1: looking to save money year and year out. So there's

472
00:26:32,680 --> 00:26:36,200
Speaker 1: a lot that we can do simply by being good

473
00:26:36,320 --> 00:26:39,560
Speaker 1: uditors and saving hundreds of millions of dollars. I also

474
00:26:39,920 --> 00:26:43,200
Speaker 1: have put on the table, as we should uh people

475
00:26:43,440 --> 00:26:45,760
Speaker 1: of great wealth who did great in the city over

476
00:26:45,760 --> 00:26:48,840
Speaker 1: the last ten twenty years, they should be prepared, if necessary,

477
00:26:48,840 --> 00:26:51,760
Speaker 1: to step up and help out as well. When that happens,

478
00:26:52,160 --> 00:26:54,880
Speaker 1: and we have a balanced approach to balancing the budget,

479
00:26:55,680 --> 00:26:57,959
Speaker 1: then we're on for something, but everyone has to help it.

480
00:26:58,000 --> 00:27:00,280
Speaker 1: I would make the argument that we in New York

481
00:27:00,320 --> 00:27:03,960
Speaker 1: City have watched heroes every single day. This pandemic started

482
00:27:04,000 --> 00:27:07,520
Speaker 1: with us. We saw a frontline workers going uh to

483
00:27:07,680 --> 00:27:10,400
Speaker 1: save lives. They didn't have mass they didn't have protection.

484
00:27:10,720 --> 00:27:13,520
Speaker 1: They went out. Some people lost their lives. And I

485
00:27:13,560 --> 00:27:17,160
Speaker 1: think the business community, you know, come on, step up,

486
00:27:18,200 --> 00:27:20,520
Speaker 1: we need We're all in this together. Do you have

487
00:27:20,560 --> 00:27:23,639
Speaker 1: any concerns about members of the business community, members of

488
00:27:23,720 --> 00:27:27,320
Speaker 1: the wealthier class in New York leaving New York? Should

489
00:27:27,359 --> 00:27:30,360
Speaker 1: you raise taxes on them? Look, we've had a fiscal crisis.

490
00:27:30,600 --> 00:27:32,919
Speaker 1: Uh as far back as the nineteen seventy when I

491
00:27:32,960 --> 00:27:35,440
Speaker 1: was growing up with the fact right my cousin Bell

492
00:27:35,480 --> 00:27:38,520
Speaker 1: abs a brand from Mayor of New York City, people fled.

493
00:27:38,600 --> 00:27:41,200
Speaker 1: I remember they left as a kid. They came back.

494
00:27:41,800 --> 00:27:44,639
Speaker 1: After that eleven people fled, but they came back. After

495
00:27:44,680 --> 00:27:47,400
Speaker 1: two thousand and eight recession, people left, they came back.

496
00:27:47,720 --> 00:27:50,639
Speaker 1: There will be some that will leave. But everyone, at

497
00:27:50,640 --> 00:27:52,119
Speaker 1: the end of the day, wants to be in the

498
00:27:52,160 --> 00:27:55,000
Speaker 1: center of the universe. No disrespect to London. They want

499
00:27:55,040 --> 00:27:57,040
Speaker 1: to live in New York City. The next mayor has

500
00:27:57,080 --> 00:28:01,120
Speaker 1: to continue to build quality of life, economic stability, and

501
00:28:01,200 --> 00:28:04,280
Speaker 1: also reimagine what the city can look like, whether it's

502
00:28:04,320 --> 00:28:08,360
Speaker 1: transportation or helping communities most in need. And once that happens,

503
00:28:08,400 --> 00:28:11,080
Speaker 1: I believe people could come rowing back here. By the way,

504
00:28:11,160 --> 00:28:12,960
Speaker 1: what I would say to people with a lot of money,

505
00:28:13,000 --> 00:28:16,679
Speaker 1: why would you risk your life going to Texas or

506
00:28:16,720 --> 00:28:21,440
Speaker 1: Florida or any place where you have governors who who

507
00:28:22,359 --> 00:28:26,399
Speaker 1: just ignore health health safety laws. You've gotta be nuts

508
00:28:26,440 --> 00:28:28,360
Speaker 1: to go there. Stay where you are in New York

509
00:28:28,359 --> 00:28:30,160
Speaker 1: City is the safest place in the world right now.

510
00:28:30,400 --> 00:28:32,679
Speaker 1: The thing is who we're moving there even before the

511
00:28:32,680 --> 00:28:35,919
Speaker 1: pandemic had even started, and before there was a greater

512
00:28:36,000 --> 00:28:38,719
Speaker 1: push for these taxes. And I'm wondering there are some

513
00:28:38,760 --> 00:28:41,280
Speaker 1: executives in the financial industry now that are talking about

514
00:28:41,320 --> 00:28:44,720
Speaker 1: moving some of their jobs there to potentially lower cost

515
00:28:44,800 --> 00:28:48,400
Speaker 1: locations for their employees. Are you concerned about that? Realistically?

516
00:28:48,640 --> 00:28:50,200
Speaker 1: What can we do to keep the New York City

517
00:28:50,280 --> 00:28:53,200
Speaker 1: jobs in the financial industry? Well, look, we have to

518
00:28:53,240 --> 00:28:58,600
Speaker 1: continue to build a city that attracts business, attracts entrepreneurship.

519
00:28:58,960 --> 00:29:01,640
Speaker 1: We have to invest in tech community. We're starting to

520
00:29:01,680 --> 00:29:05,000
Speaker 1: do that. Life sciences has always been something that has

521
00:29:05,040 --> 00:29:08,240
Speaker 1: been a foundation for a future economy. We've got to

522
00:29:08,280 --> 00:29:11,240
Speaker 1: build our schools and invest in our universities because that's

523
00:29:11,240 --> 00:29:13,640
Speaker 1: why young people from around the world want to come

524
00:29:13,640 --> 00:29:16,040
Speaker 1: and get educated here, and when they come here, they

525
00:29:16,080 --> 00:29:19,320
Speaker 1: always stayed here. So we need a strong plan to

526
00:29:19,440 --> 00:29:22,240
Speaker 1: make sure that we have a robust business community. But

527
00:29:22,440 --> 00:29:24,440
Speaker 1: we also have to remind ourselves and we have six

528
00:29:24,480 --> 00:29:27,520
Speaker 1: and six thousand small businesses in New York City. They

529
00:29:27,560 --> 00:29:30,200
Speaker 1: employ seven hunder thousand people. I don't want to see

530
00:29:30,240 --> 00:29:32,680
Speaker 1: them get squeezed or lost. You know, I do have

531
00:29:33,040 --> 00:29:37,280
Speaker 1: great expectation that Amazon is going to do just by Facebook.

532
00:29:37,320 --> 00:29:39,960
Speaker 1: We'll do just bying for me. We have to double

533
00:29:40,000 --> 00:29:43,400
Speaker 1: down on our small businesses. There's middle businesses that committe

534
00:29:43,400 --> 00:29:46,760
Speaker 1: the difference of people flee or people saying, but we

535
00:29:46,840 --> 00:29:49,520
Speaker 1: need a mayor with the plan and somebody who has

536
00:29:49,600 --> 00:29:52,600
Speaker 1: the strength of management jobs to get a suit these

537
00:29:52,680 --> 00:29:56,280
Speaker 1: very tough times stronger. I don't know if I've missed it.

538
00:29:56,360 --> 00:29:57,800
Speaker 1: I want to go, you know, back to some of

539
00:29:57,800 --> 00:30:00,520
Speaker 1: the costing efficiencies you're talking about. But first, would you

540
00:30:00,600 --> 00:30:03,600
Speaker 1: raise taxes for the wealthy? I said that we should

541
00:30:03,640 --> 00:30:07,040
Speaker 1: put everything on the table. Wealthy people if needed to

542
00:30:07,080 --> 00:30:09,680
Speaker 1: pay a little more to get us through this crisis.

543
00:30:10,000 --> 00:30:13,960
Speaker 1: We have asked our frontline workers to make the ultimate sacrifice.

544
00:30:14,240 --> 00:30:17,360
Speaker 1: Seems reasonable that people who have great wealth, who want

545
00:30:17,400 --> 00:30:20,800
Speaker 1: to help the city where they city in which they

546
00:30:20,880 --> 00:30:24,600
Speaker 1: made money at. I don't understand this notion of throwing

547
00:30:24,600 --> 00:30:26,920
Speaker 1: your hands up and running away. This is the time

548
00:30:26,960 --> 00:30:28,800
Speaker 1: to stay in fight and we build back the city.

549
00:30:29,080 --> 00:30:31,320
Speaker 1: This is the city that made you great. It's the

550
00:30:31,320 --> 00:30:34,080
Speaker 1: greatest city in the world. Let's all do it together,

551
00:30:34,400 --> 00:30:37,240
Speaker 1: and let's all be heroes. As we struggle to get

552
00:30:37,240 --> 00:30:40,840
Speaker 1: our deficits under control and our economy under control. Without

553
00:30:40,880 --> 00:30:44,520
Speaker 1: New York City, the national economy will struggle. We send

554
00:30:44,560 --> 00:30:47,600
Speaker 1: twenty two billion dollars more to our federal government than

555
00:30:47,720 --> 00:30:50,320
Speaker 1: we get back, and all we're asking for it on

556
00:30:50,400 --> 00:30:54,400
Speaker 1: a federal level is the stimulant back. It recognizes the political,

557
00:30:54,840 --> 00:30:58,000
Speaker 1: uh not the political, but certainly the economic might of

558
00:30:58,080 --> 00:31:03,960
Speaker 1: New York City. You're mentioning spending inefficiencies, where how much

559
00:31:03,960 --> 00:31:07,720
Speaker 1: can you save by getting that back in order? I

560
00:31:07,720 --> 00:31:10,080
Speaker 1: I estimate that you could spend You could save up

561
00:31:10,120 --> 00:31:13,440
Speaker 1: to five a million to one billion dollars, depending on

562
00:31:13,880 --> 00:31:16,280
Speaker 1: how deep you go with those efficiencies. Again, these are

563
00:31:16,320 --> 00:31:20,080
Speaker 1: not layoffs. These are not efficiencies that woul hurt essential services.

564
00:31:20,520 --> 00:31:23,280
Speaker 1: We have that much fat in our budget. I've done

565
00:31:23,320 --> 00:31:26,080
Speaker 1: the audits of all the agencies. It exists. We have

566
00:31:26,160 --> 00:31:28,920
Speaker 1: to collect it out and then reinvest that money and

567
00:31:28,960 --> 00:31:31,880
Speaker 1: the things that we need to keep going services in

568
00:31:31,960 --> 00:31:34,400
Speaker 1: our city, but also to close our budget depths. You know,

569
00:31:34,480 --> 00:31:36,680
Speaker 1: here's the deal. In my office, we did a four

570
00:31:36,760 --> 00:31:40,400
Speaker 1: percent cut. I returned millions of dollars from the Controls office,

571
00:31:40,440 --> 00:31:43,040
Speaker 1: gave it to the city general fund without the eve

572
00:31:43,040 --> 00:31:46,480
Speaker 1: been asking. And it's not that hard. You take a scalpel,

573
00:31:46,560 --> 00:31:50,560
Speaker 1: not a sledgehammer, do the hard work of finding those efficiencies,

574
00:31:50,600 --> 00:31:52,960
Speaker 1: and then you bring them into the general fund to

575
00:31:53,080 --> 00:31:55,520
Speaker 1: offset the depths of the Other thing that I've offered

576
00:31:55,560 --> 00:31:58,040
Speaker 1: to do with the mayor is doing the kind of

577
00:31:58,240 --> 00:32:01,480
Speaker 1: refinancings of our city that we have low interest rate.

578
00:32:01,760 --> 00:32:04,440
Speaker 1: I estimate that we can realize four hundred million dollars

579
00:32:04,520 --> 00:32:07,920
Speaker 1: in financing, perhaps another five from a million next year.

580
00:32:08,120 --> 00:32:10,840
Speaker 1: So there's a lot that we can do to stem

581
00:32:10,920 --> 00:32:13,840
Speaker 1: the tide. It's not just raising taxes. That could be

582
00:32:13,880 --> 00:32:16,840
Speaker 1: a component. It's not just borrowing, but that could be

583
00:32:16,880 --> 00:32:19,720
Speaker 1: a component. We have a lot sitting out there to

584
00:32:19,800 --> 00:32:22,800
Speaker 1: get this depsit under control. We just need the political will.

585
00:32:23,120 --> 00:32:26,320
Speaker 1: We just need to get to work and do the savings.

586
00:32:26,600 --> 00:32:29,160
Speaker 1: To what extent are we facing a New York City

587
00:32:29,320 --> 00:32:34,959
Speaker 1: that's like the nineteen seventies. Today, we're not. Uh, what

588
00:32:35,040 --> 00:32:37,280
Speaker 1: I worry about is that we could create our own

589
00:32:37,360 --> 00:32:40,640
Speaker 1: nineteen seventies story if we don't take decisive action. But

590
00:32:40,760 --> 00:32:43,880
Speaker 1: we are not on the edge of bankruptcy. Look, I

591
00:32:43,920 --> 00:32:47,160
Speaker 1: still believe that even with all of the saving measures

592
00:32:47,200 --> 00:32:51,480
Speaker 1: I'm talking about on your show today, Biden will become president.

593
00:32:51,680 --> 00:32:54,600
Speaker 1: We will have a real stimulus package that will help

594
00:32:54,760 --> 00:32:58,400
Speaker 1: government a local and state governments. That's ultimately the way

595
00:32:58,440 --> 00:33:00,160
Speaker 1: we get out of this. But in the meantime, I'm

596
00:33:00,200 --> 00:33:02,800
Speaker 1: New York City will do it share as well. I'm

597
00:33:02,800 --> 00:33:05,760
Speaker 1: sure other little calbuns around the country that Donald Trump

598
00:33:05,800 --> 00:33:08,760
Speaker 1: has given up on his hometown long before the pandemic,

599
00:33:09,120 --> 00:33:12,920
Speaker 1: and he has been the chief architect of literally poisoning

600
00:33:13,040 --> 00:33:17,080
Speaker 1: hundreds of thousands of people, and that era hopefully comes

601
00:33:17,120 --> 00:33:19,760
Speaker 1: to an end. Politically, we just have to hold on

602
00:33:19,840 --> 00:33:21,880
Speaker 1: until help is on the way, and hopefully that will

603
00:33:21,920 --> 00:33:25,000
Speaker 1: come in November. Mr Springer, thank you so much. Scott

604
00:33:25,000 --> 00:33:28,200
Speaker 1: Stringers in New York City, Controller Son and Alibasa, thank

605
00:33:28,200 --> 00:33:31,360
Speaker 1: you so much as well. Thanks for listening to the

606
00:33:31,400 --> 00:33:37,840
Speaker 1: Bloomberg Surveillance podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud,

607
00:33:38,240 --> 00:33:42,480
Speaker 1: or whichever podcast platform you prefer. I'm on Twitter at

608
00:33:42,520 --> 00:33:46,800
Speaker 1: Tom Keane before the podcast. You can always catch us worldwide.

609
00:33:47,240 --> 00:34:00,240
Speaker 1: I'm Bloomberg Radio