1 00:00:02,520 --> 00:00:13,760 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 2 00:00:13,840 --> 00:00:17,920 Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern 3 00:00:18,200 --> 00:00:22,000 Speaker 1: on Apple CarPlay or Android Auto with the Bloomberg Business app. 4 00:00:22,360 --> 00:00:25,680 Speaker 1: Listen on demand wherever you get your podcasts, or watch 5 00:00:25,760 --> 00:00:26,880 Speaker 1: us live on YouTube. 6 00:00:26,960 --> 00:00:28,760 Speaker 2: Peter Ford, yourself and. 7 00:00:28,800 --> 00:00:31,480 Speaker 3: David Gura with us as well. 8 00:00:31,520 --> 00:00:34,200 Speaker 4: Tina, I want to focus on Ukraine and I want 9 00:00:34,200 --> 00:00:36,800 Speaker 4: to go back to nineteen eighty two, the Falklands War, 10 00:00:37,200 --> 00:00:40,000 Speaker 4: where I learned how to spell exo set. I remember 11 00:00:40,600 --> 00:00:45,800 Speaker 4: the technological shock that a missile could take out not one, 12 00:00:45,880 --> 00:00:50,040 Speaker 4: but two, but three British ships. That was stunning. Now 13 00:00:50,080 --> 00:00:53,680 Speaker 4: we have the same thing. How will your world change 14 00:00:54,160 --> 00:00:58,720 Speaker 4: with drones that could kill take out armament from a distance. 15 00:01:01,280 --> 00:01:06,520 Speaker 5: Ukraine launched an incredibly bold and audacious attack eighteen months 16 00:01:06,600 --> 00:01:10,959 Speaker 5: in the making. You've talked about the idea that this 17 00:01:11,000 --> 00:01:15,319 Speaker 5: could signal a change in trend, and others have written 18 00:01:15,360 --> 00:01:19,360 Speaker 5: about China being able to do the same thing. But 19 00:01:19,440 --> 00:01:22,520 Speaker 5: when we look at the markets, guys, right, we don't 20 00:01:22,560 --> 00:01:26,520 Speaker 5: see a very big reaction at all. I think just 21 00:01:26,560 --> 00:01:30,280 Speaker 5: because of the amount of newsflow. So it's an example 22 00:01:30,360 --> 00:01:34,880 Speaker 5: of something that is potentially, you know, a pivotal moment 23 00:01:35,120 --> 00:01:39,920 Speaker 5: in geopolitics, certainly one that means that in the short 24 00:01:40,000 --> 00:01:45,319 Speaker 5: term there isn't going to be sanctions relief likely anytime soon, 25 00:01:45,440 --> 00:01:49,440 Speaker 5: or a ceasefire. But there's so much going on for 26 00:01:49,640 --> 00:01:54,840 Speaker 5: investors to digest that it's not moving the needle as. 27 00:01:54,720 --> 00:01:55,880 Speaker 2: We sift through that news flow. 28 00:01:55,960 --> 00:01:57,840 Speaker 6: Let me ask you about something that's complimentary. We have 29 00:01:57,880 --> 00:02:00,680 Speaker 6: this presidential election in Poland over the weekend, and the 30 00:02:00,760 --> 00:02:02,960 Speaker 6: nationalist candidate won that election, which is just going to 31 00:02:03,240 --> 00:02:05,480 Speaker 6: I think provide further headaches for Donald Tuk, the Prime 32 00:02:05,480 --> 00:02:09,040 Speaker 6: minister of that country. But we have there a president 33 00:02:09,080 --> 00:02:12,480 Speaker 6: elect who is you could say anti Europe or not 34 00:02:12,480 --> 00:02:15,359 Speaker 6: not pro Europe. We could say that, and what does 35 00:02:15,400 --> 00:02:19,960 Speaker 6: that mean just for that country's attitude toward continued involvement 36 00:02:20,000 --> 00:02:22,280 Speaker 6: in the war in Ukraine and in Europe's involvement more broadly. 37 00:02:22,440 --> 00:02:23,800 Speaker 2: The outcome of that election in Poland. 38 00:02:25,080 --> 00:02:29,040 Speaker 5: But the Polish presidential election isn't the kind of thing 39 00:02:29,080 --> 00:02:31,840 Speaker 5: that you know, we would normally be talking about in 40 00:02:31,880 --> 00:02:35,120 Speaker 5: a program like this, But because we are looking at 41 00:02:35,320 --> 00:02:41,440 Speaker 5: Europe that feels increasingly isolated following the US security and 42 00:02:41,560 --> 00:02:47,080 Speaker 5: economic reset, who is in charge in Poland has a 43 00:02:47,080 --> 00:02:50,400 Speaker 5: great deal to do with what kinds of decisions the 44 00:02:50,440 --> 00:02:54,960 Speaker 5: European Union can take when it comes to security and 45 00:02:55,000 --> 00:02:58,480 Speaker 5: when it comes again back to Ukraine. So even though 46 00:02:58,520 --> 00:03:02,320 Speaker 5: markets we'd like to put the Ukraine conflict behind them, 47 00:03:02,760 --> 00:03:07,000 Speaker 5: in this new global context, which we've talked about in 48 00:03:07,040 --> 00:03:13,280 Speaker 5: our new research on the geopolitics supercycle, a small, a 49 00:03:13,400 --> 00:03:18,280 Speaker 5: small kind of domestic vote like a Polish presidential election 50 00:03:18,760 --> 00:03:22,960 Speaker 5: can actually have a big ripple effect in a changed 51 00:03:23,040 --> 00:03:24,840 Speaker 5: security and economic environment. 52 00:03:25,200 --> 00:03:27,639 Speaker 6: Tina, you mentioned that supercycle. So that's a circumstance in 53 00:03:27,680 --> 00:03:32,240 Speaker 6: which geopolitical risks are accelerating and accelerating quickly. 54 00:03:33,280 --> 00:03:34,080 Speaker 2: Talk about that in. 55 00:03:34,080 --> 00:03:38,880 Speaker 6: The context of negotiation and dialogue and diplomacy. On any 56 00:03:38,880 --> 00:03:40,880 Speaker 6: given day, I get a statement from the State Department 57 00:03:41,080 --> 00:03:44,200 Speaker 6: or from a European government indicating that talks are continuing 58 00:03:44,200 --> 00:03:46,480 Speaker 6: when it comes to Ukraine, or it comes to trade 59 00:03:46,560 --> 00:03:49,800 Speaker 6: negotiations or tariff the tariffs and the trade war. Your 60 00:03:49,920 --> 00:03:52,560 Speaker 6: sense of sort of the role that diplomacy is playing 61 00:03:53,120 --> 00:03:54,680 Speaker 6: in that supercycle. 62 00:03:55,640 --> 00:03:59,320 Speaker 5: Well, the geopolitics supercycle is my term, and it's the 63 00:04:00,120 --> 00:04:02,800 Speaker 5: name of a new report that we've published I borrowed 64 00:04:02,840 --> 00:04:06,600 Speaker 5: from astronomy the idea of an acceleration, and what we 65 00:04:06,800 --> 00:04:09,160 Speaker 5: established in the first place before we get to the 66 00:04:09,160 --> 00:04:12,400 Speaker 5: present day is that this isn't in fact new. We've 67 00:04:12,440 --> 00:04:17,800 Speaker 5: seen a tripling of geopolitical risk events materializing over the 68 00:04:17,839 --> 00:04:21,280 Speaker 5: past fifteen years. We established the evidence base for that, 69 00:04:22,080 --> 00:04:25,440 Speaker 5: and in our framework we look at the drivers of 70 00:04:25,520 --> 00:04:29,400 Speaker 5: geopolitical risk against the guard rails. And whether we're talking 71 00:04:29,440 --> 00:04:35,880 Speaker 5: about diplomacy, international institutions, or even global central banks, these 72 00:04:35,920 --> 00:04:41,400 Speaker 5: are the guard rails and unless these institutions function effectively, 73 00:04:42,440 --> 00:04:45,200 Speaker 5: we're going to see more risk events. And I think 74 00:04:45,320 --> 00:04:49,559 Speaker 5: that this heuristic is a useful way to look at 75 00:04:49,600 --> 00:04:53,000 Speaker 5: this kind of blizzard of events. 76 00:04:53,320 --> 00:04:54,840 Speaker 3: This is so important, folks. 77 00:04:54,839 --> 00:04:57,800 Speaker 4: And of course the title of Tina Fortum's forum Global 78 00:04:57,839 --> 00:05:01,640 Speaker 4: Foresight there note is never going back to normal. If 79 00:05:01,640 --> 00:05:05,279 Speaker 4: we're not going back to normal, Tin of fordom, how 80 00:05:05,320 --> 00:05:11,320 Speaker 4: do we defend ourselves against not populism because there's benefits there, 81 00:05:11,839 --> 00:05:16,680 Speaker 4: but harmful populism. How do we defend ourselves from the 82 00:05:16,720 --> 00:05:20,359 Speaker 4: harmful populism of other eras that ended ugly. 83 00:05:23,720 --> 00:05:27,239 Speaker 5: That's where rule of law and institutions come in. And 84 00:05:27,320 --> 00:05:30,560 Speaker 5: these are the kinds of you know, the kinds of 85 00:05:31,400 --> 00:05:36,640 Speaker 5: forces that are increasingly under attack and mistrusted. The problem 86 00:05:36,720 --> 00:05:40,640 Speaker 5: is we don't really have alternatives to them. And any 87 00:05:40,760 --> 00:05:45,719 Speaker 5: kind of revolutionary movement wants to you know, wants to 88 00:05:45,760 --> 00:05:49,880 Speaker 5: burn down what came before it, the idea being of course, 89 00:05:49,920 --> 00:05:53,360 Speaker 5: that you could build something newer and better in its place. 90 00:05:54,360 --> 00:05:56,719 Speaker 5: And this is where when you know, when people ask 91 00:05:56,760 --> 00:06:01,240 Speaker 5: me this question at investor events or board meetings, I 92 00:06:01,320 --> 00:06:04,480 Speaker 5: talk about, how, you know, unless we believe in predestination, 93 00:06:05,240 --> 00:06:08,640 Speaker 5: there is a you know, contributions that we make as individuals, 94 00:06:08,640 --> 00:06:12,400 Speaker 5: as citizens, as you know, as investors and business leaders, 95 00:06:12,400 --> 00:06:17,240 Speaker 5: and even as as parents into maintaining the guardrails that 96 00:06:17,400 --> 00:06:21,120 Speaker 5: prevent risks from turning into crises. 97 00:06:22,000 --> 00:06:24,320 Speaker 4: Tina, one final question I want to get this. INCURTI 98 00:06:24,400 --> 00:06:29,480 Speaker 4: grouped in London yesterday was absolutely riveting on the images 99 00:06:29,680 --> 00:06:33,680 Speaker 4: of the migrants across the English Channel over the weekend. 100 00:06:34,560 --> 00:06:38,400 Speaker 4: Is the phrasing here migration is out of control in 101 00:06:38,440 --> 00:06:39,400 Speaker 4: the United Kingdom? 102 00:06:39,600 --> 00:06:40,640 Speaker 3: How would you call her that? 103 00:06:43,960 --> 00:06:48,960 Speaker 5: On a day like that, there were more border crossings. 104 00:06:49,040 --> 00:06:51,440 Speaker 5: And again, if we put it back in the super 105 00:06:51,480 --> 00:06:57,760 Speaker 5: cycle framework, climate change, corruption, erosion of civil rights and 106 00:06:57,800 --> 00:07:01,800 Speaker 5: civil liberties, these are all drivers of more migration, and 107 00:07:01,839 --> 00:07:05,359 Speaker 5: so as long as they proliferate, we should expect more 108 00:07:05,920 --> 00:07:10,040 Speaker 5: efforts for people to leave their homes and come elsewhere, 109 00:07:10,400 --> 00:07:15,280 Speaker 5: and without institutions, we're going to see that feed into 110 00:07:15,760 --> 00:07:20,200 Speaker 5: the political process, into regulation, legislation, and the kind of 111 00:07:20,240 --> 00:07:23,960 Speaker 5: low trust that we see in so many developed countries 112 00:07:23,960 --> 00:07:25,400 Speaker 5: around the world right now. 113 00:07:25,320 --> 00:07:28,040 Speaker 4: Tina, thank you for the time. Tina Fordham, she's with 114 00:07:28,120 --> 00:07:36,640 Speaker 4: Fordham Global Foresight. Look for her report from Fordham Global Foresight. 115 00:07:38,120 --> 00:07:41,720 Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us Live 116 00:07:41,760 --> 00:07:44,920 Speaker 1: weekday afternoons from seven to ten am Eastern. Listen on 117 00:07:45,000 --> 00:07:48,680 Speaker 1: Applecarplay and Android Atto with the Bloomberg Business app, or 118 00:07:48,840 --> 00:07:50,320 Speaker 1: watch us live on YouTube. 119 00:07:50,680 --> 00:07:52,080 Speaker 3: I spent weeks. 120 00:07:51,720 --> 00:07:54,280 Speaker 4: Trying to get Christopher Harvey in here, hesus Wells Fargo 121 00:07:54,320 --> 00:07:58,360 Speaker 4: ahead of Equity Strategy and joins us this morning. I 122 00:07:58,680 --> 00:08:01,600 Speaker 4: love the tone of your optimism. 123 00:08:02,040 --> 00:08:05,400 Speaker 3: How do you do it? Given the malstroam of newsflow 124 00:08:06,000 --> 00:08:08,680 Speaker 3: literally hour by hour? How do you do it? How 125 00:08:08,680 --> 00:08:09,880 Speaker 3: do you frame a view? 126 00:08:10,200 --> 00:08:12,680 Speaker 7: Come on, Tom? What's not to like? You have rates 127 00:08:12,720 --> 00:08:15,560 Speaker 7: going up, you have tariffs every day, you have tweets, 128 00:08:15,880 --> 00:08:19,440 Speaker 7: you have concerned about the consumer. You have uncertainty, it's perfect, right, 129 00:08:20,240 --> 00:08:22,280 Speaker 7: But what we look at is we're looking at the 130 00:08:22,360 --> 00:08:25,920 Speaker 7: data and we're looking at six months ahead of time. Right, 131 00:08:26,040 --> 00:08:29,760 Speaker 7: we think we have seen maximum uncertainty. We think we 132 00:08:29,880 --> 00:08:32,440 Speaker 7: have seen the bottom of the market, and we think 133 00:08:32,480 --> 00:08:35,240 Speaker 7: that we're going to work better from here. Right, we're 134 00:08:35,280 --> 00:08:38,920 Speaker 7: expectingly have not not a ton of information on trade 135 00:08:38,920 --> 00:08:41,920 Speaker 7: and tariff, but progress on trade and tarwiff and templates 136 00:08:42,080 --> 00:08:43,720 Speaker 7: that we can work from as we go forward. 137 00:08:44,320 --> 00:08:50,000 Speaker 4: My foundational thing, Chris Harvey, is corporations adapt. Right across 138 00:08:50,040 --> 00:08:54,560 Speaker 4: the Wills Fargo span. How are you seeing corporations adapt 139 00:08:54,920 --> 00:08:57,319 Speaker 4: so they have the optimism you have? 140 00:08:58,000 --> 00:09:01,160 Speaker 7: Well, I think what corporations are doing is they're watching 141 00:09:01,200 --> 00:09:03,559 Speaker 7: every day. They're looking at the same thing that we're doing. 142 00:09:03,720 --> 00:09:05,760 Speaker 7: Every day. They're saying, okay, are we seeing it in 143 00:09:05,800 --> 00:09:09,720 Speaker 7: our business? And again getting back to Tony Capriano, he's saying, hey, 144 00:09:09,960 --> 00:09:13,280 Speaker 7: we're seeing pod, We're seeing the consumer spend. Right. The 145 00:09:13,400 --> 00:09:17,000 Speaker 7: US consumer, I think is really underappreciated. They we start 146 00:09:17,040 --> 00:09:19,680 Speaker 7: spending one we're five years old, and we continue to 147 00:09:19,720 --> 00:09:22,160 Speaker 7: spend until hopefully until ninety five. 148 00:09:22,480 --> 00:09:22,680 Speaker 4: Right. 149 00:09:22,800 --> 00:09:27,000 Speaker 7: We understand value intuitively, we understand utility and what we 150 00:09:27,040 --> 00:09:29,360 Speaker 7: do is we shift to where we're finding that that 151 00:09:29,480 --> 00:09:32,320 Speaker 7: utility and that's what the consumer is doing, and as 152 00:09:32,320 --> 00:09:34,640 Speaker 7: long as the consumer has a job, they will continue. 153 00:09:34,920 --> 00:09:37,640 Speaker 7: And we're just not seeing that pain or labor. 154 00:09:37,400 --> 00:09:38,920 Speaker 2: Market that people are really worried about it. 155 00:09:39,000 --> 00:09:41,960 Speaker 4: I just had a vision of the next Wells Fargo 156 00:09:42,120 --> 00:09:44,880 Speaker 4: equity junket to the gritty and there you go. 157 00:09:45,240 --> 00:09:46,160 Speaker 2: Yeah, thank you. 158 00:09:46,720 --> 00:09:50,760 Speaker 6: I was hatch here on this Tuesday. How do you 159 00:09:50,880 --> 00:09:54,120 Speaker 6: look at the soft data in complement with the hard data? 160 00:09:54,160 --> 00:09:56,560 Speaker 6: Think that's what you're getting at here. And I've noted 161 00:09:56,760 --> 00:09:59,360 Speaker 6: many members of the present's economic team have been highlighting this. 162 00:09:59,720 --> 00:10:01,840 Speaker 6: They're has been a lot of anxiety about where this 163 00:10:01,920 --> 00:10:04,120 Speaker 6: might be headed. We've seen that in consumer cent but 164 00:10:04,160 --> 00:10:06,359 Speaker 6: we've seen it in kind of the sentiment from employers 165 00:10:06,360 --> 00:10:09,160 Speaker 6: as well. The hard data hasn't met that. And did 166 00:10:09,280 --> 00:10:11,559 Speaker 6: you see them coming together at some point or should 167 00:10:11,600 --> 00:10:12,839 Speaker 6: we be looking at them kind of different when we 168 00:10:12,880 --> 00:10:13,520 Speaker 6: look at them together. 169 00:10:13,840 --> 00:10:16,360 Speaker 7: So about a couple of weeks ago, we sat down 170 00:10:16,400 --> 00:10:18,400 Speaker 7: we had this conversation, what's going to happen between the 171 00:10:18,440 --> 00:10:20,400 Speaker 7: hard and soft data? Are they're going to converge or 172 00:10:20,440 --> 00:10:23,320 Speaker 7: should we actually be looking at the soft data, and 173 00:10:23,360 --> 00:10:26,280 Speaker 7: the conclusion we came to is we're not completely dismissing 174 00:10:26,320 --> 00:10:29,280 Speaker 7: the soft data, but what we realized is after the 175 00:10:29,320 --> 00:10:32,400 Speaker 7: presidential election cycle, we should be looking at the betting markets, 176 00:10:32,559 --> 00:10:35,559 Speaker 7: placing more weight on the betting markets. And the betting markets, 177 00:10:35,920 --> 00:10:38,400 Speaker 7: or the prediction markets, i should say, are where we're 178 00:10:38,440 --> 00:10:41,199 Speaker 7: getting our quote unquote soft data, and it's telling you 179 00:10:41,200 --> 00:10:44,880 Speaker 7: a much different story on inflation, on recession, so on and 180 00:10:44,840 --> 00:10:49,679 Speaker 7: so forth. So we discount significantly the soft data. We 181 00:10:49,720 --> 00:10:52,120 Speaker 7: watch the hard data like a hawk every day, and 182 00:10:52,160 --> 00:10:55,120 Speaker 7: when we want sentiment soft data, we're either talking to 183 00:10:55,160 --> 00:10:57,080 Speaker 7: clients or we're looking at the prediction markes. 184 00:10:57,240 --> 00:10:59,080 Speaker 6: A bit more about that, I'm very curious of how 185 00:10:59,080 --> 00:11:01,400 Speaker 6: someone in your position approaches that world, which I think 186 00:11:01,480 --> 00:11:03,280 Speaker 6: is a novel want to renew one to a lot 187 00:11:03,320 --> 00:11:03,679 Speaker 6: of people. 188 00:11:04,040 --> 00:11:06,360 Speaker 2: How do you make good use of the prediction markets? 189 00:11:06,520 --> 00:11:08,439 Speaker 7: Well, well, you're talking to a guy that when was 190 00:11:08,480 --> 00:11:11,280 Speaker 7: seven years old, which reason the racing forms to his grandfathers. 191 00:11:11,679 --> 00:11:14,720 Speaker 7: So we have been involved in these types of markets 192 00:11:14,760 --> 00:11:16,120 Speaker 7: for a while, and I think there's a lot of 193 00:11:16,160 --> 00:11:18,520 Speaker 7: information in these markets, and we saw that during the 194 00:11:18,520 --> 00:11:22,160 Speaker 7: presidential election cycle. And what we do is we're just 195 00:11:22,280 --> 00:11:25,200 Speaker 7: always looking for that signal. We're always looking for information, 196 00:11:25,480 --> 00:11:28,480 Speaker 7: and there's information there. When we start to deconstruct how 197 00:11:28,480 --> 00:11:31,880 Speaker 7: the surveys are done, we get less confidence on the 198 00:11:31,920 --> 00:11:34,800 Speaker 7: soft data. And while people look at it and we 199 00:11:34,880 --> 00:11:36,439 Speaker 7: have to think about it and we have to react 200 00:11:36,520 --> 00:11:38,320 Speaker 7: to it, we're just not putting a whole lot of 201 00:11:38,320 --> 00:11:39,719 Speaker 7: weight on it. And at the end of the day, 202 00:11:39,760 --> 00:11:42,719 Speaker 7: we're talking to our economists, we're talking to companies, we're 203 00:11:42,760 --> 00:11:46,280 Speaker 7: going through transcripts, we're trying to break our thesis every day, 204 00:11:46,400 --> 00:11:47,840 Speaker 7: and we're just having a hard time doing that. 205 00:11:48,160 --> 00:11:54,839 Speaker 4: How do you overlay the technology view forward and productivity 206 00:11:54,920 --> 00:11:58,680 Speaker 4: forward right onto a persistency of corporate earnings? To me, 207 00:11:58,760 --> 00:11:59,920 Speaker 4: it's underestimated. 208 00:12:01,320 --> 00:12:04,880 Speaker 7: I think so I was around in the late nineties 209 00:12:04,880 --> 00:12:08,240 Speaker 7: and I remember what was happening there wa way. 210 00:12:08,160 --> 00:12:12,920 Speaker 3: Faster, John help here. 211 00:12:13,880 --> 00:12:17,880 Speaker 7: And the comparison, it's not a comparison between today and 212 00:12:17,960 --> 00:12:21,880 Speaker 7: back then. Back then you had very levered companies. I'll 213 00:12:21,920 --> 00:12:25,040 Speaker 7: throw out some goodies World com Quest, Global, Crossing level three, 214 00:12:25,440 --> 00:12:33,200 Speaker 7: tapping God bless you. But today you have the hyper 215 00:12:33,240 --> 00:12:37,040 Speaker 7: scace that aws the Microsoft, the Metas, the Googles of 216 00:12:37,080 --> 00:12:39,560 Speaker 7: the world. These are companies that don't need to go 217 00:12:39,600 --> 00:12:41,760 Speaker 7: to the capital markets and fund themselves. 218 00:12:41,960 --> 00:12:42,120 Speaker 4: Right. 219 00:12:42,240 --> 00:12:44,280 Speaker 7: Furthermore, if you look at the technology, what we were 220 00:12:44,320 --> 00:12:46,400 Speaker 7: doing is we were laying a dumb We were a 221 00:12:46,440 --> 00:12:49,560 Speaker 7: dumb technology in the ground fiber optic cable, which did 222 00:12:49,640 --> 00:12:52,840 Speaker 7: not become obsolete for a good decade decade plus. Today, 223 00:12:52,960 --> 00:12:55,640 Speaker 7: what we have is really and I'm using the phrase 224 00:12:55,640 --> 00:13:00,400 Speaker 7: that Jensen used, we have AI factories. You have then foundation, 225 00:13:00,720 --> 00:13:02,800 Speaker 7: and on top of that you have the innovation. And 226 00:13:02,840 --> 00:13:05,520 Speaker 7: it's a very nice symbolic. Really is symbiotic release. 227 00:13:05,440 --> 00:13:07,760 Speaker 4: Joy Chris Harvey with us with Wells Fargo. We continue 228 00:13:07,800 --> 00:13:11,840 Speaker 4: as chief US secuity strategist here. We do this at 229 00:13:11,880 --> 00:13:13,720 Speaker 4: eight or nine year with the futures improved, how. 230 00:13:13,640 --> 00:13:14,640 Speaker 3: Are we lifting the market? 231 00:13:14,800 --> 00:13:18,160 Speaker 4: Futures negative eighteen on negative nine, the vics nicely under 232 00:13:18,200 --> 00:13:20,440 Speaker 4: twenty eighteen point five to. 233 00:13:20,400 --> 00:13:23,760 Speaker 3: Two dollar churning a little bit on DXY, little bit. 234 00:13:23,679 --> 00:13:26,520 Speaker 4: Of dollar strength fractional I call it. Over the last 235 00:13:26,520 --> 00:13:28,920 Speaker 4: two days. David Gera in for Paul Sweeney. 236 00:13:29,040 --> 00:13:31,439 Speaker 6: David, Chris, I want to ask you about AI. We've 237 00:13:31,440 --> 00:13:33,240 Speaker 6: talked too much about in video yet you mentioned it 238 00:13:33,320 --> 00:13:35,080 Speaker 6: just a moment ago. We had this news this morning 239 00:13:35,080 --> 00:13:38,080 Speaker 6: that Meta is going to contract for nuclear power with Constellation. 240 00:13:38,440 --> 00:13:39,240 Speaker 7: You have this kind of. 241 00:13:39,160 --> 00:13:41,640 Speaker 6: Picks and shovels portfolio when it comes to AIS. These 242 00:13:41,640 --> 00:13:44,160 Speaker 6: are companies that are kind of ancillary maybe the big 243 00:13:44,200 --> 00:13:45,640 Speaker 6: ones that we talk a lot about. 244 00:13:46,160 --> 00:13:47,480 Speaker 2: Where do you see growth there? 245 00:13:47,520 --> 00:13:49,199 Speaker 6: So it's not as if we've turned the page here 246 00:13:49,200 --> 00:13:51,480 Speaker 6: from that last chapter, this one, the AI story continues. 247 00:13:52,080 --> 00:13:54,120 Speaker 6: What's interesting to you about the secretor today? Where do 248 00:13:54,160 --> 00:13:56,720 Speaker 6: you see opportunity besides the big names, the handful of 249 00:13:56,720 --> 00:13:57,920 Speaker 6: big names we talk so much about. 250 00:13:58,040 --> 00:14:01,000 Speaker 7: I think the biggest near term issue you is the 251 00:14:01,080 --> 00:14:04,000 Speaker 7: AID Diffusion Act. The AI Diffusion Act has been mitigated. 252 00:14:04,080 --> 00:14:06,360 Speaker 7: So now what you can do is you can export 253 00:14:06,400 --> 00:14:10,440 Speaker 7: that technology. And what I think is Jensen is probably 254 00:14:10,440 --> 00:14:13,480 Speaker 7: the new Tim Cook if it looks like he has 255 00:14:13,520 --> 00:14:16,200 Speaker 7: the ear of the administration. And what they're realizing is 256 00:14:16,400 --> 00:14:19,360 Speaker 7: we do need to be that base level of AI. 257 00:14:19,440 --> 00:14:22,200 Speaker 7: We do need to export it. We do need us 258 00:14:22,240 --> 00:14:25,000 Speaker 7: technology all throughout the world because if we don't, somebody 259 00:14:25,040 --> 00:14:27,800 Speaker 7: else will step in. That somebody else is properly China. 260 00:14:27,840 --> 00:14:31,120 Speaker 7: And so I think the most important thing is the 261 00:14:31,160 --> 00:14:34,520 Speaker 7: mitigation of the AI difusion index, because now we can export, 262 00:14:34,680 --> 00:14:37,560 Speaker 7: we can become that base layer. But this is a 263 00:14:37,680 --> 00:14:40,360 Speaker 7: very different technology than what we saw in the late nineties, 264 00:14:40,600 --> 00:14:43,160 Speaker 7: and we're still, i would say, in the mid innings 265 00:14:43,200 --> 00:14:45,880 Speaker 7: for this. There's a lot more to do. The computational 266 00:14:46,760 --> 00:14:49,680 Speaker 7: power that you need, the actual power that you use 267 00:14:49,840 --> 00:14:51,400 Speaker 7: is hard to comprehend. 268 00:14:51,080 --> 00:14:54,000 Speaker 4: In the grind of this, which ratio and the income 269 00:14:54,120 --> 00:14:57,080 Speaker 4: statement is most efficacious right now? I mean I think 270 00:14:57,160 --> 00:14:59,960 Speaker 4: back to time, Gelbot at DLJ was a price to say, 271 00:15:00,200 --> 00:15:03,600 Speaker 4: price to sales. But coming down the income statement, which 272 00:15:03,720 --> 00:15:05,960 Speaker 4: describes your optimism best. 273 00:15:06,080 --> 00:15:08,640 Speaker 7: It's still not earnings. Right if you look at the hyperscale, 274 00:15:08,640 --> 00:15:10,880 Speaker 7: as the hyperscals are making money up. 275 00:15:10,800 --> 00:15:14,400 Speaker 3: Thirty two percent versus this, am I right up eight percent? 276 00:15:15,200 --> 00:15:16,840 Speaker 7: I don't know off the top of my head, but 277 00:15:16,880 --> 00:15:20,680 Speaker 7: they are. The answer is we've never seen this, right, 278 00:15:20,760 --> 00:15:24,240 Speaker 7: That's right. They are putting. They are spending capex, but 279 00:15:24,320 --> 00:15:26,240 Speaker 7: they are getting a return for their capex, and they 280 00:15:26,280 --> 00:15:29,800 Speaker 7: will continue to do that until that equation no longer works. 281 00:15:30,080 --> 00:15:32,800 Speaker 7: And as we look at it, it is working and 282 00:15:32,840 --> 00:15:34,000 Speaker 7: it will continue to work. 283 00:15:34,080 --> 00:15:37,720 Speaker 4: So this is critical if I'm scared stiff, right, But 284 00:15:37,880 --> 00:15:41,200 Speaker 4: Chris Harvey's telling me I got to participate is my 285 00:15:41,360 --> 00:15:46,400 Speaker 4: psychological relief to take my terminal value out a little 286 00:15:46,440 --> 00:15:49,080 Speaker 4: bit farther and say, Okay, I'm nervous. I'm going to 287 00:15:49,160 --> 00:15:51,520 Speaker 4: own this stuff. But it's not a three year vision, 288 00:15:51,600 --> 00:15:54,600 Speaker 4: it's a five year vision. Is that the act? 289 00:15:54,720 --> 00:15:57,200 Speaker 7: Well, I think what you want to do in any portfolio, 290 00:15:57,240 --> 00:15:59,640 Speaker 7: you have to have some you have to have an anchor, 291 00:15:59,680 --> 00:16:01,520 Speaker 7: You have to have some sort of low volatility or 292 00:16:01,560 --> 00:16:04,320 Speaker 7: defensive property to it. What we've been telling people, we 293 00:16:04,360 --> 00:16:07,160 Speaker 7: started the year with anchoring it with staples. Now we're 294 00:16:07,160 --> 00:16:11,280 Speaker 7: anchoring it with utilities, and so that's going to mitigate 295 00:16:11,360 --> 00:16:14,040 Speaker 7: and has mitigated the uncertainty. If you want to if 296 00:16:14,080 --> 00:16:17,280 Speaker 7: you want to get involved in lovall, SPLV or USMV, 297 00:16:17,680 --> 00:16:20,760 Speaker 7: that's fine, but just anchor, right, look for those really 298 00:16:20,760 --> 00:16:24,360 Speaker 7: good risk awards. Look out three five years, right, take 299 00:16:24,400 --> 00:16:27,080 Speaker 7: those good risk awards, but anchor that with something else, 300 00:16:27,080 --> 00:16:29,480 Speaker 7: because you do have to mitigate that uncertainty because of 301 00:16:29,480 --> 00:16:32,000 Speaker 7: the uncertainty. I'm not going to discount it's. 302 00:16:31,640 --> 00:16:35,720 Speaker 6: Still quite real maximum uncertainty. You're confident in that sort 303 00:16:35,720 --> 00:16:37,680 Speaker 6: of how do you see all this playing out over 304 00:16:37,680 --> 00:16:39,920 Speaker 6: the course of the summer. So we're coming up against 305 00:16:39,920 --> 00:16:42,080 Speaker 6: some very hard deadlines here as the President continues to 306 00:16:42,080 --> 00:16:44,480 Speaker 6: make threats and ratchet up the tariffs that he's put 307 00:16:44,560 --> 00:16:47,400 Speaker 6: in place. Your sense of where we're headed. 308 00:16:47,960 --> 00:16:50,160 Speaker 2: So these in these talks, these negotiations, you. 309 00:16:50,080 --> 00:16:52,240 Speaker 7: Know, it's really I don't mean to be evasive, but 310 00:16:52,400 --> 00:16:54,560 Speaker 7: it is really tough. What I'm looking for is I'm 311 00:16:54,600 --> 00:16:57,720 Speaker 7: just looking for progress. I expect to hear progress out 312 00:16:57,760 --> 00:17:02,760 Speaker 7: of Asia. First. I am really surprised about the relationship 313 00:17:02,880 --> 00:17:06,000 Speaker 7: between China and the US. I did not expect them 314 00:17:06,000 --> 00:17:08,880 Speaker 7: to sit down as early as they did, and that 315 00:17:09,040 --> 00:17:10,960 Speaker 7: I think is a real positive. And that's a positive 316 00:17:11,000 --> 00:17:14,000 Speaker 7: I hadn't been thinking about. I thought that was frozen. 317 00:17:14,320 --> 00:17:16,919 Speaker 7: That's not happening. That's the last thing that's going to occur. 318 00:17:17,240 --> 00:17:20,080 Speaker 7: So that's actually very encouraging. But we do need to 319 00:17:20,119 --> 00:17:23,159 Speaker 7: see something either out of India or Japan or South Korea, 320 00:17:23,680 --> 00:17:26,399 Speaker 7: something to set the template. We don't see that, and 321 00:17:26,800 --> 00:17:28,920 Speaker 7: by the end of June the summer is going to 322 00:17:28,960 --> 00:17:30,960 Speaker 7: be a little bit more choppy than I think. 323 00:17:31,080 --> 00:17:33,480 Speaker 4: What is there, I mean, you know, the advantage to 324 00:17:33,600 --> 00:17:36,520 Speaker 4: Jay Brice and what is the what is their incentive 325 00:17:36,640 --> 00:17:38,560 Speaker 4: to provide an initial template. 326 00:17:38,640 --> 00:17:41,960 Speaker 3: I see no incentive for Japan to act well. 327 00:17:42,000 --> 00:17:44,640 Speaker 7: If you're India, I think there's a lot there. Right. 328 00:17:44,720 --> 00:17:51,240 Speaker 7: We have a lot of things that they want ag aerospace, armament, power, 329 00:17:51,800 --> 00:17:54,240 Speaker 7: and they have many things that that we need. Right, 330 00:17:54,280 --> 00:17:56,960 Speaker 7: they can help us this intermediate China. They have the 331 00:17:57,000 --> 00:17:57,960 Speaker 7: ability to do that. 332 00:17:58,400 --> 00:17:58,520 Speaker 5: Right. 333 00:17:58,600 --> 00:18:00,639 Speaker 7: One of the things that we do worry about, and 334 00:18:00,680 --> 00:18:03,320 Speaker 7: we've been talking about, is what about the ports. How 335 00:18:03,359 --> 00:18:05,640 Speaker 7: do you get things from point A to point B? 336 00:18:06,080 --> 00:18:08,800 Speaker 7: And do they have enough ports? But I think India 337 00:18:09,119 --> 00:18:11,359 Speaker 7: is the key, and I think they will likely be 338 00:18:11,480 --> 00:18:12,800 Speaker 7: the first or one of the first. 339 00:18:12,680 --> 00:18:15,240 Speaker 4: Chris Harvey with was his optimism on the equity market. 340 00:18:15,240 --> 00:18:17,720 Speaker 4: He's with Wells Fargo. I want you to up set 341 00:18:17,800 --> 00:18:19,680 Speaker 4: up the polarity we've been talking about for the last 342 00:18:19,720 --> 00:18:22,879 Speaker 4: couple of days, which is maybe three zip codes in 343 00:18:22,960 --> 00:18:26,239 Speaker 4: Manhattan versus the rest of the country. You're advantaged at 344 00:18:26,280 --> 00:18:30,920 Speaker 4: Wells Fargo by having I think, really a breadth across America. 345 00:18:31,240 --> 00:18:35,159 Speaker 4: What is the difference between the zeitgeist now almost of 346 00:18:35,200 --> 00:18:37,960 Speaker 4: the eastern quarters, you know a little bit of the 347 00:18:37,960 --> 00:18:40,920 Speaker 4: West coast, and what's really going on out there. 348 00:18:41,280 --> 00:18:43,760 Speaker 7: So what I think is really going on out there 349 00:18:43,960 --> 00:18:46,560 Speaker 7: is people really do back up the administration. They really 350 00:18:46,600 --> 00:18:49,320 Speaker 7: do feel like something has to be done on trade 351 00:18:49,359 --> 00:18:51,680 Speaker 7: and tower and they think that we're making the right 352 00:18:51,760 --> 00:18:55,399 Speaker 7: steps in that direction. When for somebody like me and 353 00:18:55,440 --> 00:18:58,000 Speaker 7: somebody like you, we're looking at every single tweet, we're 354 00:18:58,000 --> 00:19:00,800 Speaker 7: looking every single thing. People in the and people on 355 00:19:00,840 --> 00:19:02,719 Speaker 7: their day to day jobs, they just don't do that. 356 00:19:02,960 --> 00:19:06,120 Speaker 7: And what they see is have a job. Things are good, 357 00:19:06,160 --> 00:19:09,960 Speaker 7: they're doing well. Economy seems to be fine, and we're 358 00:19:10,000 --> 00:19:12,040 Speaker 7: just going to keep moving forward. And we think the 359 00:19:12,080 --> 00:19:15,000 Speaker 7: economy and the situation is moving forward. And they look 360 00:19:15,000 --> 00:19:17,040 Speaker 7: at the technology and they say, hey, this is an 361 00:19:17,040 --> 00:19:20,040 Speaker 7: amazing technology. The world's an okay place, David. 362 00:19:20,920 --> 00:19:21,680 Speaker 2: When it comes to. 363 00:19:23,880 --> 00:19:25,880 Speaker 6: How about when it comes to this tax and spending bill, 364 00:19:25,920 --> 00:19:28,119 Speaker 6: and you can talking about regular folks in this country 365 00:19:28,240 --> 00:19:30,840 Speaker 6: or watching all of that unfold maybe from a distance, 366 00:19:31,800 --> 00:19:34,240 Speaker 6: how much does that standard sort of change your world, 367 00:19:34,280 --> 00:19:36,440 Speaker 6: whether or not we see that past in July or 368 00:19:36,440 --> 00:19:37,920 Speaker 6: August or later this year. 369 00:19:38,280 --> 00:19:40,520 Speaker 7: I don't think it changes for the average person all 370 00:19:40,520 --> 00:19:42,840 Speaker 7: that much. The salt tab. We've been looking into the 371 00:19:42,880 --> 00:19:44,679 Speaker 7: salt tax, and I think that helps a lot of 372 00:19:44,680 --> 00:19:47,639 Speaker 7: people in high tax states, but on the higher income, 373 00:19:48,040 --> 00:19:52,320 Speaker 7: and that probably helps spending later over the next twelve 374 00:19:52,359 --> 00:19:54,879 Speaker 7: eighteen months, and it helps a little bit with their 375 00:19:54,880 --> 00:19:57,960 Speaker 7: bird to sentiment. I think the bigger issue is is 376 00:19:58,000 --> 00:20:02,240 Speaker 7: the deficit stabilizing. Looks like the deficit is stabilizing. I'm 377 00:20:02,280 --> 00:20:04,680 Speaker 7: a little bit concerned about the rhetoric and the talk 378 00:20:05,040 --> 00:20:07,600 Speaker 7: about longer end rates. But if you think about it 379 00:20:07,600 --> 00:20:10,240 Speaker 7: and you look at it, things haven't gotten worse. So 380 00:20:10,320 --> 00:20:13,280 Speaker 7: I'm not really sure why the narrative negative it is today. 381 00:20:13,520 --> 00:20:16,120 Speaker 7: It should have been much worse, much sooner. So it's 382 00:20:16,160 --> 00:20:17,080 Speaker 7: a little confounding. 383 00:20:17,560 --> 00:20:20,040 Speaker 4: Chris, thank you generously to come in this morning. Chris 384 00:20:20,040 --> 00:20:23,360 Speaker 4: Harvey with us with Wells Fire with a real optimist 385 00:20:23,800 --> 00:20:26,719 Speaker 4: take here. All of his literature is like, get on board, 386 00:20:27,280 --> 00:20:30,200 Speaker 4: participate in America's feature. 387 00:20:30,880 --> 00:20:34,800 Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday 388 00:20:34,840 --> 00:20:38,119 Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto 389 00:20:38,240 --> 00:20:41,200 Speaker 1: with the Bloomberg Business app. You can also listen live 390 00:20:41,280 --> 00:20:44,879 Speaker 1: on Amazon Alexa from our flagship New York station, Just 391 00:20:44,920 --> 00:20:47,399 Speaker 1: say Alexa Play Bloomberg eleven thirty. 392 00:20:47,480 --> 00:20:49,680 Speaker 3: We dive into the American labor economy right now. 393 00:20:49,680 --> 00:20:53,160 Speaker 4: There's no one better qualified than Thomas Purcelli is chief 394 00:20:53,200 --> 00:20:57,760 Speaker 4: yours economist and PGM definitive on America's wage growth or. 395 00:20:57,840 --> 00:21:01,720 Speaker 3: Lack thereof, definitive on the bar economy. In tom I'm 396 00:21:01,720 --> 00:21:03,280 Speaker 3: going to go to tourst and slack out. 397 00:21:03,160 --> 00:21:05,960 Speaker 4: Or the morning paragraph this morning saying look, we're at 398 00:21:05,960 --> 00:21:08,760 Speaker 4: one hundred and thirty thousand non farm payrolls on Friday. 399 00:21:09,080 --> 00:21:10,000 Speaker 3: He doesn't buy it. 400 00:21:10,119 --> 00:21:16,240 Speaker 4: Question mark sixty four thousand NFP coming with continuing claims 401 00:21:16,680 --> 00:21:21,000 Speaker 4: doing that little second derivative lift is a weaker job economy. 402 00:21:21,280 --> 00:21:23,679 Speaker 8: Finally here Yeah, So so, first of all, could be 403 00:21:23,720 --> 00:21:27,040 Speaker 8: with you all. Look, I think that you know this 404 00:21:27,119 --> 00:21:29,919 Speaker 8: is not for us. This is not new new information, right. 405 00:21:29,960 --> 00:21:32,200 Speaker 8: I mean that labor backdrop has been sort of showing 406 00:21:32,200 --> 00:21:34,880 Speaker 8: these cracks for quite some time now, you know, whether 407 00:21:34,920 --> 00:21:37,680 Speaker 8: you're looking at hiring rates or quit rates or labor differentials, 408 00:21:38,280 --> 00:21:41,920 Speaker 8: and now recently this little curl up in continuing claims. 409 00:21:42,520 --> 00:21:44,920 Speaker 8: I think it's all the evidence is pretty clear that 410 00:21:44,920 --> 00:21:47,760 Speaker 8: that labor is slowing down. So so from our perspective, 411 00:21:48,080 --> 00:21:49,720 Speaker 8: it's you know, it's just a question of when now 412 00:21:50,000 --> 00:21:51,200 Speaker 8: do you really start to see a show up in 413 00:21:51,200 --> 00:21:53,200 Speaker 8: the payroll report. But but I would hasten to add 414 00:21:53,720 --> 00:21:55,800 Speaker 8: everyone's waiting for it to show up in the payroll report. 415 00:21:55,800 --> 00:21:57,800 Speaker 8: But once it show's up there, it tends to be 416 00:21:57,840 --> 00:22:00,199 Speaker 8: too late. I mean, it's like that's the last thing 417 00:22:00,280 --> 00:22:02,760 Speaker 8: that breaks. But you have all these other all this 418 00:22:02,880 --> 00:22:04,760 Speaker 8: other evidence that's already pointing in that direction. 419 00:22:05,040 --> 00:22:06,280 Speaker 3: When it goes, it goes. 420 00:22:06,359 --> 00:22:08,720 Speaker 4: I would suggest, folks, my reading back to World War 421 00:22:09,400 --> 00:22:12,560 Speaker 4: to thank you Olivia Blunchard for being with us yesterday 422 00:22:12,560 --> 00:22:16,640 Speaker 4: in memory of Professor Fisher Tom Percelling. When I look 423 00:22:16,640 --> 00:22:20,080 Speaker 4: at unemployment rate, it goes four point two percent. When 424 00:22:20,119 --> 00:22:22,879 Speaker 4: it goes, do you frame out a quie s in 425 00:22:23,000 --> 00:22:25,119 Speaker 4: five percent or could it be worser? 426 00:22:25,400 --> 00:22:26,879 Speaker 8: Yeah, I think by the end of the year you 427 00:22:26,880 --> 00:22:30,160 Speaker 8: could easily you'll you'll be up close to five percent. 428 00:22:30,200 --> 00:22:32,439 Speaker 8: We don't think you necessarily break through that. I do 429 00:22:32,480 --> 00:22:35,040 Speaker 8: think that there's an interesting sort of dynamic to consider 430 00:22:35,040 --> 00:22:37,280 Speaker 8: in the context of you know, immigration flows of obviously 431 00:22:37,320 --> 00:22:40,520 Speaker 8: slow down pretty notably, and as long as you know 432 00:22:40,640 --> 00:22:43,320 Speaker 8: the economy is not going to break in a meaningful way, 433 00:22:43,840 --> 00:22:45,760 Speaker 8: I don't think the unemployment rate really has to sort 434 00:22:45,760 --> 00:22:47,439 Speaker 8: of do a lot of heavy lifting. So we do 435 00:22:47,480 --> 00:22:50,280 Speaker 8: expect the unemployment rate will rise, and in fact, that's 436 00:22:50,480 --> 00:22:52,959 Speaker 8: sort of one of their key criteria for for US 437 00:22:53,000 --> 00:22:55,359 Speaker 8: as relates to our view on the FED, which is 438 00:22:55,400 --> 00:22:57,919 Speaker 8: to say they will be cutting before the end of 439 00:22:57,920 --> 00:23:00,680 Speaker 8: the year. But I don't know that it to get ugly, 440 00:23:00,720 --> 00:23:01,679 Speaker 8: but it's going to happen. 441 00:23:02,480 --> 00:23:04,640 Speaker 6: Let me ask you a bit about inflation and sort 442 00:23:04,680 --> 00:23:07,439 Speaker 6: of where you see that story going here. And we 443 00:23:07,440 --> 00:23:09,520 Speaker 6: were talking earlier about the soft data and the hard 444 00:23:09,600 --> 00:23:12,639 Speaker 6: data and the anxiety that we see among consumers and businesses. 445 00:23:13,720 --> 00:23:15,639 Speaker 6: What do you think that will start to manifest itself 446 00:23:15,640 --> 00:23:18,359 Speaker 6: more in the harder data as we see again I 447 00:23:18,560 --> 00:23:20,840 Speaker 6: call them negotiations. I guess back and forth over over 448 00:23:20,880 --> 00:23:23,360 Speaker 6: these trade deals and the prospect that they could could 449 00:23:23,359 --> 00:23:25,240 Speaker 6: be inflationary, it could lead to higher inflation. 450 00:23:25,440 --> 00:23:25,640 Speaker 2: Yeah. 451 00:23:25,680 --> 00:23:28,320 Speaker 8: Look, I think what's interesting is if you look at 452 00:23:28,320 --> 00:23:31,320 Speaker 8: some of these company transcripts right like during the quarterly 453 00:23:31,560 --> 00:23:34,800 Speaker 8: earnings calls, I mean, some companies took price in April. 454 00:23:34,960 --> 00:23:37,000 Speaker 8: I mean you didn't even have terrorists that really went 455 00:23:37,040 --> 00:23:39,680 Speaker 8: through at that point, and this was early in a. 456 00:23:39,680 --> 00:23:42,240 Speaker 6: Less defensive or opportunistic I think it's probably a little 457 00:23:42,240 --> 00:23:42,680 Speaker 6: bit of both. 458 00:23:43,400 --> 00:23:47,000 Speaker 8: And so you know, and think back on yesterday's IM 459 00:23:47,359 --> 00:23:51,280 Speaker 8: I mean there were some really interesting comment forget about 460 00:23:51,280 --> 00:23:53,560 Speaker 8: the indexes with an ism. I mean they're fine, but 461 00:23:54,040 --> 00:23:56,719 Speaker 8: I think the sort of you know, the responding comments 462 00:23:56,760 --> 00:23:59,680 Speaker 8: I think are always much more interesting. And responding comments 463 00:23:59,680 --> 00:24:03,280 Speaker 8: were pret clear like they're pushing price through. There's no 464 00:24:03,400 --> 00:24:05,919 Speaker 8: question that that is going to happen. So here's the 465 00:24:05,960 --> 00:24:09,760 Speaker 8: thing though, while we expect inflation will rise again, that's 466 00:24:09,920 --> 00:24:11,439 Speaker 8: a part of our call, has been a part of 467 00:24:11,440 --> 00:24:15,800 Speaker 8: our call. This is not the COVID lift in inflation. 468 00:24:15,840 --> 00:24:18,760 Speaker 8: And I think that's especially true when you consider incomes. 469 00:24:19,040 --> 00:24:22,480 Speaker 8: I mean real incomes right, like real incomes x transfers 470 00:24:23,359 --> 00:24:26,960 Speaker 8: is running out of slower pace than is consumption, real consumption. 471 00:24:27,280 --> 00:24:29,000 Speaker 8: That's not a sustainable set up, and so I think 472 00:24:29,040 --> 00:24:31,680 Speaker 8: that means that it probably breaks the spirit of the 473 00:24:31,680 --> 00:24:32,520 Speaker 8: consumer to some extent. 474 00:24:32,600 --> 00:24:34,800 Speaker 3: An extended discussion with Tom PERCELLI. 475 00:24:34,600 --> 00:24:37,119 Speaker 6: Pees tiught we had this warning that John Tucker mentioned 476 00:24:37,200 --> 00:24:39,520 Speaker 6: just a moment ago from the OEC this morning about 477 00:24:39,640 --> 00:24:42,760 Speaker 6: slowing growth globally US A part of that seeing slowing 478 00:24:42,760 --> 00:24:45,840 Speaker 6: growth here here as well. What is your sense of 479 00:24:45,880 --> 00:24:48,240 Speaker 6: where that's headed? Does it does it marry with or 480 00:24:48,240 --> 00:24:50,000 Speaker 6: dovetail with what the OECD said this morning? 481 00:24:50,080 --> 00:24:51,760 Speaker 8: Yeah, I mean, look, I think the I think the 482 00:24:52,880 --> 00:24:55,119 Speaker 8: I think those forecasts are just sort of catching up 483 00:24:55,119 --> 00:24:56,639 Speaker 8: with some with some of the reality that I think 484 00:24:56,640 --> 00:24:59,359 Speaker 8: there's already been in place. You know, the sort of 485 00:24:59,359 --> 00:25:02,560 Speaker 8: the slower rejectory of economic activity in the United States 486 00:25:02,560 --> 00:25:05,600 Speaker 8: and elsewhere, I think has been pretty known at this point. 487 00:25:06,600 --> 00:25:09,600 Speaker 8: You know, it's funny we were having this conversation internally. 488 00:25:09,960 --> 00:25:12,320 Speaker 8: You know, there's I think you could break the backdrop 489 00:25:12,520 --> 00:25:17,800 Speaker 8: up into structural and cyclical right cyclically speaking, Uh, you know, 490 00:25:17,840 --> 00:25:20,200 Speaker 8: we see slowing economic activity, like you know, we're calling 491 00:25:20,240 --> 00:25:22,320 Speaker 8: it the muddle through with a sort of you know, 492 00:25:22,359 --> 00:25:24,439 Speaker 8: a skew to the left tail. I think over the 493 00:25:24,440 --> 00:25:26,880 Speaker 8: more medium term, right, you know, medium to long term. 494 00:25:27,000 --> 00:25:28,359 Speaker 8: You know, it's easy to see a sort of a 495 00:25:28,400 --> 00:25:30,920 Speaker 8: fatter right tail that will take time. Though in fact, 496 00:25:31,040 --> 00:25:32,400 Speaker 8: I've been saying, I think you've got to go through 497 00:25:32,440 --> 00:25:34,080 Speaker 8: the left tail before you get to the right tail. 498 00:25:34,880 --> 00:25:36,440 Speaker 8: But yeah, I think that that to me is it's 499 00:25:36,440 --> 00:25:38,280 Speaker 8: already baked in the cake that folds in. 500 00:25:38,400 --> 00:25:40,400 Speaker 4: I wanted to ask you you came from a wonderful 501 00:25:40,400 --> 00:25:45,919 Speaker 4: house RBC, like haleemccroft on Hydrocarbon's your parachute in. You know, 502 00:25:45,960 --> 00:25:48,119 Speaker 4: you get off the boat, the Hinckley and your parachute 503 00:25:48,160 --> 00:25:50,960 Speaker 4: in them pagium and these guys are. 504 00:25:50,840 --> 00:25:55,879 Speaker 3: A world class bond geeks. Yes, what do they teach you? 505 00:25:55,920 --> 00:26:00,640 Speaker 3: What does what does the Greg Peters in the rest? What? 506 00:26:00,840 --> 00:26:04,520 Speaker 3: How do they inform your economics? Now that you're surrounded 507 00:26:04,520 --> 00:26:05,400 Speaker 3: by this brain ball? 508 00:26:05,680 --> 00:26:08,719 Speaker 8: You know, it's I I love this question. So I 509 00:26:08,760 --> 00:26:10,720 Speaker 8: always said, you know, being on the when I was 510 00:26:10,760 --> 00:26:12,800 Speaker 8: on the sale side, you know, you would you would 511 00:26:12,800 --> 00:26:14,840 Speaker 8: go into, you know, a meeting and you would just 512 00:26:14,960 --> 00:26:16,760 Speaker 8: drop these ideas and then you get the hell out 513 00:26:16,760 --> 00:26:19,080 Speaker 8: of there and you never knew really what happened with 514 00:26:19,160 --> 00:26:21,960 Speaker 8: those ideas because you'd be running off to the next meeting. 515 00:26:22,520 --> 00:26:24,679 Speaker 8: But now there, you know, my next meeting is the 516 00:26:24,840 --> 00:26:27,840 Speaker 8: sort of another internal meeting. So it's been great to 517 00:26:27,880 --> 00:26:30,200 Speaker 8: sort of see my ideas sort of you know, come 518 00:26:30,240 --> 00:26:32,800 Speaker 8: to life as it relates to working with guys like 519 00:26:33,280 --> 00:26:37,000 Speaker 8: Greg and Robert Tip and then of course delete saying 520 00:26:37,560 --> 00:26:39,160 Speaker 8: it's been it's been a wonderful experience. 521 00:26:39,240 --> 00:26:42,040 Speaker 3: How do you fold in then really yield dynamics. 522 00:26:42,119 --> 00:26:45,520 Speaker 4: Ken Rogoff was in recently with my book of the Summer, 523 00:26:45,560 --> 00:26:49,239 Speaker 4: Our Dollar Your problem and the bottom line is the 524 00:26:49,240 --> 00:26:52,000 Speaker 4: inflation had just yields the heart of the debate. Yes, 525 00:26:52,400 --> 00:26:56,360 Speaker 4: how do you lecture Greg Peters on the vector of. 526 00:26:56,400 --> 00:26:56,960 Speaker 7: The real you? 527 00:26:58,400 --> 00:27:01,520 Speaker 8: He does not want me to lecture him, and I 528 00:27:01,560 --> 00:27:04,480 Speaker 8: don't think I want to lecture him either, So who 529 00:27:04,520 --> 00:27:05,719 Speaker 8: I adore him? 530 00:27:05,720 --> 00:27:06,480 Speaker 7: Actually, he's great. 531 00:27:07,160 --> 00:27:10,160 Speaker 8: Look, I think one thing that we're really trying to do, 532 00:27:10,640 --> 00:27:13,320 Speaker 8: and I think that this is something that is sort 533 00:27:13,320 --> 00:27:16,320 Speaker 8: of the holy grail in my humble opinion, I think 534 00:27:16,400 --> 00:27:19,679 Speaker 8: the marrying you know, look, p Jim is first and 535 00:27:19,720 --> 00:27:22,160 Speaker 8: foremost to bottom up shop. That has always been true. 536 00:27:22,440 --> 00:27:23,840 Speaker 8: And so I think one thing that you know, we're 537 00:27:23,880 --> 00:27:25,119 Speaker 8: really trying to think about a lot is. 538 00:27:25,080 --> 00:27:26,160 Speaker 7: How do we marry that right? 539 00:27:26,160 --> 00:27:28,240 Speaker 8: How do we marry the bottom and the bottom up 540 00:27:28,240 --> 00:27:30,320 Speaker 8: and the top down. I think we've been doing a 541 00:27:30,320 --> 00:27:33,080 Speaker 8: pretty good job of making some progress on that, and 542 00:27:33,160 --> 00:27:35,920 Speaker 8: it's something I look forward to continuing with with Greg 543 00:27:35,920 --> 00:27:38,000 Speaker 8: and the rest of the team. It's actually been a 544 00:27:38,040 --> 00:27:39,000 Speaker 8: really useful project. 545 00:27:39,200 --> 00:27:41,280 Speaker 6: I was reading in this morning and our friend Claudia 546 00:27:41,320 --> 00:27:43,080 Speaker 6: Sam has a new piece out talking abo's what the 547 00:27:43,080 --> 00:27:45,480 Speaker 6: FED is thinking through at this moment in time, and 548 00:27:45,560 --> 00:27:47,960 Speaker 6: she said, kind of the fundamental question here is will 549 00:27:48,000 --> 00:27:51,159 Speaker 6: tariff induced inflation be short lived as the level of 550 00:27:51,160 --> 00:27:53,439 Speaker 6: prices adjust to higher tariffs, or will it persist as 551 00:27:53,480 --> 00:27:56,680 Speaker 6: a series of feedback loops lead to further price increases. 552 00:27:57,240 --> 00:27:58,520 Speaker 2: Where do you fall on that question? 553 00:27:58,520 --> 00:28:00,919 Speaker 6: We were talking about the way that companies have been 554 00:28:00,920 --> 00:28:06,080 Speaker 6: addressing this defensively or opportunistically. As I interjected, how worried 555 00:28:06,119 --> 00:28:08,879 Speaker 6: are you about that feedback loop turning into something kind 556 00:28:08,920 --> 00:28:09,560 Speaker 6: of crippling? 557 00:28:09,680 --> 00:28:13,680 Speaker 8: It is very hard to see this inflation dynamic persist, 558 00:28:13,840 --> 00:28:16,440 Speaker 8: and it's very hard to see. I think again, we'll 559 00:28:16,600 --> 00:28:18,479 Speaker 8: sort of have a you know, sort of short memories 560 00:28:18,480 --> 00:28:22,000 Speaker 8: for this stuff, and I think people are looking back 561 00:28:22,200 --> 00:28:24,840 Speaker 8: over this COVID window and they're saying, hey, well, this 562 00:28:24,880 --> 00:28:26,840 Speaker 8: is what happened then. Yeah, But there's so many differences, right, 563 00:28:26,840 --> 00:28:29,160 Speaker 8: I mean, people were sitting on a mountain of cash. 564 00:28:29,240 --> 00:28:31,679 Speaker 8: We shut down an otherwise pretty healthy economy, turned it 565 00:28:31,720 --> 00:28:33,639 Speaker 8: back on like a light switch, creating a pent up 566 00:28:33,640 --> 00:28:36,240 Speaker 8: demand scenario. People were able to dip into this mountain 567 00:28:36,280 --> 00:28:39,680 Speaker 8: of cash. We had massive supplies shortages. So I think 568 00:28:39,680 --> 00:28:41,200 Speaker 8: it was really easy to sort of build a case, 569 00:28:41,280 --> 00:28:42,400 Speaker 8: or at least it was for us when I was 570 00:28:42,400 --> 00:28:44,080 Speaker 8: at RBC, to build the case that you were going 571 00:28:44,120 --> 00:28:47,760 Speaker 8: to see much more persistent inflation than was appreciated. This 572 00:28:47,840 --> 00:28:51,040 Speaker 8: setup today is wildly different. I think what wants up 573 00:28:51,040 --> 00:28:54,800 Speaker 8: happening is these these price increases that we are undoubtedly 574 00:28:54,840 --> 00:28:58,800 Speaker 8: going to see will basically break break the consumer. And 575 00:28:58,840 --> 00:29:00,920 Speaker 8: I think ultimately I could give re session, which is 576 00:29:00,920 --> 00:29:03,080 Speaker 8: why we have that left tail is a little bit 577 00:29:03,080 --> 00:29:03,640 Speaker 8: on the fat side. 578 00:29:03,680 --> 00:29:07,440 Speaker 4: Truss, there evidence that they will lower prices if and 579 00:29:07,480 --> 00:29:10,640 Speaker 4: when the tariffs are over, so see that. 580 00:29:10,720 --> 00:29:12,920 Speaker 8: In my literal I don't think that they're talking about 581 00:29:12,920 --> 00:29:14,960 Speaker 8: that right now. I mean, in fact, if anything, companies 582 00:29:15,000 --> 00:29:16,640 Speaker 8: want to take price as much as they can. It's 583 00:29:16,680 --> 00:29:19,160 Speaker 8: been pretty clear on that, so I think it'll I 584 00:29:19,200 --> 00:29:21,720 Speaker 8: think that the what that means to me is that 585 00:29:21,760 --> 00:29:25,240 Speaker 8: the lift in inflation could actually be firmer than a 586 00:29:25,280 --> 00:29:26,880 Speaker 8: lot of people think. I think people are sort of 587 00:29:26,880 --> 00:29:28,400 Speaker 8: flirting with the idea of, hey, maybe you get to 588 00:29:28,440 --> 00:29:32,240 Speaker 8: three percent and maybe it Peter's out there. My risk 589 00:29:32,280 --> 00:29:35,120 Speaker 8: on that is that it can run. But I think ultimately, 590 00:29:35,320 --> 00:29:38,320 Speaker 8: if you have a slowing labor backdrop, which is what 591 00:29:38,440 --> 00:29:40,640 Speaker 8: we expect, then that'll give way. 592 00:29:40,880 --> 00:29:43,440 Speaker 3: Here's the way the act works, folks. I'm overwhelmed. 593 00:29:43,440 --> 00:29:48,400 Speaker 4: My email inbox is insane and young Turks show up 594 00:29:48,520 --> 00:29:48,880 Speaker 4: and they. 595 00:29:48,800 --> 00:29:50,040 Speaker 3: Have research reports. 596 00:29:50,040 --> 00:29:52,160 Speaker 4: And the rule is if it's seven pages, I read 597 00:29:52,200 --> 00:29:55,080 Speaker 4: the first two pages, and if it's thirty pages, I 598 00:29:55,120 --> 00:29:58,920 Speaker 4: read the first four pages. And that ages ago, this 599 00:29:59,040 --> 00:30:01,640 Speaker 4: clown showed up from our RBC Capital markets. I'm like, 600 00:30:01,680 --> 00:30:05,920 Speaker 4: who is this guy? And he's talking wage dynamics. Here 601 00:30:06,000 --> 00:30:09,720 Speaker 4: begin with the discussion on the wages. What's our real wage? 602 00:30:09,840 --> 00:30:11,720 Speaker 4: Look like you own the high ground on this. 603 00:30:12,000 --> 00:30:14,080 Speaker 8: Yeah, well, thank you for those nice words. 604 00:30:14,800 --> 00:30:15,000 Speaker 3: You know. 605 00:30:15,040 --> 00:30:17,120 Speaker 8: Look, I think the way that I like to look 606 00:30:17,120 --> 00:30:20,400 Speaker 8: at the backdrop right now is I'm looking at real incomes, 607 00:30:20,760 --> 00:30:25,600 Speaker 8: and I think real incomes X transfers that running at 608 00:30:25,640 --> 00:30:29,160 Speaker 8: a slower pace than real consumption that is not sustainable. 609 00:30:29,200 --> 00:30:31,800 Speaker 8: That is simply not sustainable. So it's really easy for 610 00:30:31,920 --> 00:30:34,960 Speaker 8: us to build a case on slower economic activity. 611 00:30:35,400 --> 00:30:39,560 Speaker 4: Forget the continuum, the media frenzy of the phrase barbelle, 612 00:30:39,560 --> 00:30:41,800 Speaker 4: I don't buy it for a minute, yep. And I'll 613 00:30:41,840 --> 00:30:44,920 Speaker 4: let you decide on a death sile or quintile basis. 614 00:30:45,040 --> 00:30:47,240 Speaker 4: Ye where does America break? To me? 615 00:30:47,320 --> 00:30:50,760 Speaker 3: It's a way higher income and beneath that is painful. 616 00:30:50,880 --> 00:30:53,680 Speaker 8: I agree with that. I think that that's exactly what 617 00:30:53,720 --> 00:30:55,840 Speaker 8: we're seeing right now. I mean, you know, this is 618 00:30:55,880 --> 00:30:58,120 Speaker 8: the you know, the classic K shape recovery conversation that 619 00:30:58,120 --> 00:31:00,880 Speaker 8: we've been having for for quite some time. I think 620 00:31:00,880 --> 00:31:04,200 Speaker 8: that there's almost no doubt that there's a lot more 621 00:31:04,240 --> 00:31:07,240 Speaker 8: pain happening in those other quintiles that you just mentioned. 622 00:31:07,480 --> 00:31:09,320 Speaker 8: But you know, you look at it, and again this 623 00:31:09,360 --> 00:31:12,240 Speaker 8: gets into the hard verse soft data point. Just look 624 00:31:12,320 --> 00:31:15,720 Speaker 8: at confidence at the upper income confidencing the upper income 625 00:31:15,800 --> 00:31:18,480 Speaker 8: is also starting to break too, And I think it 626 00:31:18,560 --> 00:31:20,760 Speaker 8: look it's easy to sort of see that happen when 627 00:31:20,800 --> 00:31:24,280 Speaker 8: you have equity markets that are also breaking them coming back. 628 00:31:24,360 --> 00:31:27,280 Speaker 8: Equity markets coming back probably will ease some of that concern, 629 00:31:27,640 --> 00:31:32,040 Speaker 8: but I think most folks get that in an environment 630 00:31:32,080 --> 00:31:36,880 Speaker 8: where you're talking about significant terrors and potentially significant price increases, 631 00:31:37,040 --> 00:31:40,320 Speaker 8: I think that gives everyone a moment of pause, where 632 00:31:40,320 --> 00:31:40,520 Speaker 8: do you. 633 00:31:40,480 --> 00:31:41,360 Speaker 2: See things going from here? 634 00:31:41,360 --> 00:31:43,480 Speaker 6: When it comes to the labor market, so there is 635 00:31:43,520 --> 00:31:45,719 Speaker 6: a lot of happy talk from the administration about how 636 00:31:45,720 --> 00:31:47,840 Speaker 6: this is going to usher in a lot of new 637 00:31:47,920 --> 00:31:52,360 Speaker 6: jobs and manufacturing in particular, we're talking about diminution of 638 00:31:52,560 --> 00:31:54,000 Speaker 6: the labor market. You have to say, we're kind of 639 00:31:54,040 --> 00:31:56,200 Speaker 6: late late to the party. Recognizing that you were there earlier, 640 00:31:56,200 --> 00:31:59,080 Speaker 6: But how do you see that ending and how much 641 00:31:59,400 --> 00:32:02,000 Speaker 6: faith or or optimism that you have that all of 642 00:32:02,040 --> 00:32:05,160 Speaker 6: this could lead to some sort of reimagined or or 643 00:32:05,360 --> 00:32:06,960 Speaker 6: a labor market renaissance of some sort. 644 00:32:07,160 --> 00:32:09,000 Speaker 8: So I think over the so this gets into the 645 00:32:09,000 --> 00:32:12,280 Speaker 8: cyclic over structural right like cyclically, I think again, I 646 00:32:12,320 --> 00:32:14,959 Speaker 8: think you'll start to see the slow down in in 647 00:32:15,120 --> 00:32:18,560 Speaker 8: labor and as a result, economic activity at large. I think, 648 00:32:18,760 --> 00:32:21,920 Speaker 8: I think longer term, I think that there's I think 649 00:32:21,920 --> 00:32:24,840 Speaker 8: there's a real case to make for I you know, 650 00:32:25,040 --> 00:32:28,000 Speaker 8: I hate the term, you know, US exceptionalism. I just 651 00:32:28,000 --> 00:32:29,840 Speaker 8: think it's overused and there has to be a better 652 00:32:29,840 --> 00:32:33,360 Speaker 8: way of saying it. But I think the idea of 653 00:32:33,480 --> 00:32:35,920 Speaker 8: US exceptionalism over the more medium to long term, for 654 00:32:36,000 --> 00:32:38,760 Speaker 8: lack of a better phrase, I think is real. And 655 00:32:38,800 --> 00:32:40,880 Speaker 8: I think about that in the context of the pieces 656 00:32:40,880 --> 00:32:43,720 Speaker 8: are in place for productivity to kill it again, it'll 657 00:32:43,760 --> 00:32:45,520 Speaker 8: take time to get there, and I do think that 658 00:32:45,600 --> 00:32:47,760 Speaker 8: some of the things that the administration is doing could 659 00:32:47,760 --> 00:32:50,800 Speaker 8: actually help in that. Regard the corporate tax part of 660 00:32:50,840 --> 00:32:53,120 Speaker 8: that of the tax cuts, I think that that can 661 00:32:53,160 --> 00:32:55,040 Speaker 8: actually go a long way to sort of helping build 662 00:32:55,120 --> 00:32:57,600 Speaker 8: the base of productivity. But again that you got to 663 00:32:57,640 --> 00:32:58,920 Speaker 8: I think you're going to go through the left tail 664 00:32:58,920 --> 00:32:59,720 Speaker 8: before you go to the right. 665 00:33:00,160 --> 00:33:00,880 Speaker 3: Tant arrested. 666 00:33:02,280 --> 00:33:06,040 Speaker 4: They FORDA, it does thirty five knots coming back down 667 00:33:06,080 --> 00:33:06,760 Speaker 4: the East River. 668 00:33:07,320 --> 00:33:09,520 Speaker 3: Wow, he's gonna be flying over the city. 669 00:33:09,600 --> 00:33:13,360 Speaker 4: Tom bertz Ellie, thank you so much, with a don't thanks, guys, stranger, 670 00:33:13,440 --> 00:33:14,280 Speaker 4: please please please. 671 00:33:19,560 --> 00:33:23,480 Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday 672 00:33:23,520 --> 00:33:26,560 Speaker 1: starting at seven am Eastern on Apple, Corplay and Android 673 00:33:26,560 --> 00:33:29,560 Speaker 1: Auto with the Bloomberg Business app. You can also watch 674 00:33:29,640 --> 00:33:32,600 Speaker 1: us live every weekday on YouTube and always on the 675 00:33:32,600 --> 00:33:33,680 Speaker 1: Bloomberg Terminal. 676 00:33:34,000 --> 00:33:36,040 Speaker 4: The new heart and soul of the New Yorker is 677 00:33:36,120 --> 00:33:40,200 Speaker 4: emin as knows out with a new book on Greenwich, Connecticut, 678 00:33:40,560 --> 00:33:43,959 Speaker 4: and it reads like McPhee. You read it, you keep 679 00:33:44,200 --> 00:33:47,120 Speaker 4: reading it, David, because it's crafted. 680 00:33:47,760 --> 00:33:49,560 Speaker 6: Evan Aso is great to have you with a staff 681 00:33:49,560 --> 00:33:51,320 Speaker 6: writer the New Yorker is Tom alluded to there. The 682 00:33:51,360 --> 00:33:53,800 Speaker 6: new book is called The Haves and Have Yachts Dispatches 683 00:33:53,840 --> 00:33:56,560 Speaker 6: on the Ultra Rich. Congrats on the book. Congrats also 684 00:33:56,600 --> 00:33:59,680 Speaker 6: on the title, which is excellent. Let's start with the 685 00:33:59,680 --> 00:34:02,720 Speaker 6: warning that we heard from former President Biden has prepared 686 00:34:02,720 --> 00:34:05,080 Speaker 6: to leave office. He said, today an oligarchy is taking 687 00:34:05,120 --> 00:34:08,440 Speaker 6: shape in America of extreme wealth, power and influence that 688 00:34:08,520 --> 00:34:12,360 Speaker 6: really threatens our entire democracy, our basic rights and freedom. 689 00:34:12,560 --> 00:34:15,040 Speaker 6: He sounded the alarm as he was making his way 690 00:34:15,080 --> 00:34:17,360 Speaker 6: to the exit. What has changed when it comes to 691 00:34:18,000 --> 00:34:21,480 Speaker 6: wealth inequality in this country over the last five six months. 692 00:34:22,840 --> 00:34:24,719 Speaker 9: Thanks guys, by the way, Tom, you made my day. 693 00:34:24,800 --> 00:34:26,720 Speaker 9: We live in a world, John McPhee made. 694 00:34:27,080 --> 00:34:28,400 Speaker 2: I'll say that. 695 00:34:29,840 --> 00:34:32,960 Speaker 9: What President Biden was getting at is something really important 696 00:34:33,000 --> 00:34:35,680 Speaker 9: to a lot of folks. Frankly, it sounded almost belated. Look, 697 00:34:35,719 --> 00:34:38,719 Speaker 9: the good news is this country has never been wealthier 698 00:34:38,840 --> 00:34:41,800 Speaker 9: in so many respects. We are building companies, We're on 699 00:34:41,880 --> 00:34:44,319 Speaker 9: the cusp of a new era of technology and all 700 00:34:44,320 --> 00:34:46,000 Speaker 9: the ways you talk about on the show every day, 701 00:34:46,000 --> 00:34:49,520 Speaker 9: whether it's AI and robotics. And yet at the same time, 702 00:34:49,880 --> 00:34:52,760 Speaker 9: as you know, there are about half of American adults 703 00:34:52,800 --> 00:34:54,960 Speaker 9: who will tell you that they don't have one thousand 704 00:34:54,960 --> 00:34:58,239 Speaker 9: dollars to spend on an emergency expense. We are at 705 00:34:58,239 --> 00:35:01,000 Speaker 9: a point now it's really similar to where we've been 706 00:35:01,040 --> 00:35:05,200 Speaker 9: at moments in our history where we have tremendous technological opportunity, 707 00:35:05,600 --> 00:35:08,360 Speaker 9: huge wealth creation, and we're also facing a fork in 708 00:35:08,400 --> 00:35:11,400 Speaker 9: the road to make sure that that is also not 709 00:35:12,080 --> 00:35:15,600 Speaker 9: steering our government down a path that Henry Ford used 710 00:35:15,600 --> 00:35:18,160 Speaker 9: to say that he wanted to make sure that his 711 00:35:18,200 --> 00:35:21,160 Speaker 9: own employees, his own workers, could afford the cars he 712 00:35:21,200 --> 00:35:23,160 Speaker 9: was making. And those are some of the decisions we 713 00:35:23,239 --> 00:35:24,080 Speaker 9: have to be making now. 714 00:35:24,280 --> 00:35:26,719 Speaker 6: This is clearly a theme that has animated a lot 715 00:35:26,719 --> 00:35:28,640 Speaker 6: of your work. I look at the Osmoso for going 716 00:35:28,680 --> 00:35:31,320 Speaker 6: back to your first book, Age of Ambition, Chasing Fortune, 717 00:35:31,320 --> 00:35:33,560 Speaker 6: Truth and Faith in the New China, which I read 718 00:35:33,600 --> 00:35:36,839 Speaker 6: on my first trip to Shanghai, and you mark then 719 00:35:36,880 --> 00:35:39,720 Speaker 6: on just the abundance the amount of wealthy excitement about 720 00:35:39,840 --> 00:35:43,600 Speaker 6: wealth and up mobility in China. As you look at 721 00:35:43,640 --> 00:35:46,080 Speaker 6: this particular book, are we looking at something that's uniquely 722 00:35:46,120 --> 00:35:48,800 Speaker 6: American or has this rise of the ultra rich and 723 00:35:48,920 --> 00:35:50,400 Speaker 6: sort of shared globally. 724 00:35:51,480 --> 00:35:53,840 Speaker 9: Yeah, it's a fascinating parallel in many ways, David. I 725 00:35:53,880 --> 00:35:57,279 Speaker 9: mean I first started reading in a sense about the 726 00:35:57,320 --> 00:36:00,239 Speaker 9: American guilded age when I was living in China. Hus 727 00:36:00,280 --> 00:36:02,600 Speaker 9: I was trying to understand what was happening. We were 728 00:36:02,600 --> 00:36:04,879 Speaker 9: seeing railroads built at a pace we hadn't seen since 729 00:36:04,880 --> 00:36:07,840 Speaker 9: America in the nineteenth century. It's fitting in some ways 730 00:36:07,880 --> 00:36:10,040 Speaker 9: that I used The Great Gapsbie when I lived in 731 00:36:10,080 --> 00:36:13,120 Speaker 9: Beijing to conceptualize it. Here we are it's twenty twenty 732 00:36:13,120 --> 00:36:15,839 Speaker 9: five hundredth anniversary of that book. There are a lot 733 00:36:15,880 --> 00:36:18,600 Speaker 9: of lessons in there about how do you take that 734 00:36:18,800 --> 00:36:21,400 Speaker 9: sense of cultural energy that we might have had at 735 00:36:21,440 --> 00:36:25,160 Speaker 9: certain moments in the Roaring twenties, but also the awareness 736 00:36:25,239 --> 00:36:29,400 Speaker 9: that without making really smart choices, we're not going to 737 00:36:29,480 --> 00:36:31,080 Speaker 9: make sure that this money gets into the hands of 738 00:36:31,120 --> 00:36:33,920 Speaker 9: people who can rise with the tide. 739 00:36:34,120 --> 00:36:37,200 Speaker 4: Evan, you grew up in the crucible this Grantwich, Connecticut, 740 00:36:37,200 --> 00:36:39,400 Speaker 4: where I'm sure three kids down the street did have 741 00:36:39,480 --> 00:36:40,760 Speaker 4: Hinckley picnic boats. 742 00:36:40,920 --> 00:36:45,320 Speaker 3: You didn't. Your father was acclaimed within journalism. 743 00:36:45,760 --> 00:36:49,880 Speaker 4: But what does the crew do below the fancy people 744 00:36:50,760 --> 00:36:53,960 Speaker 4: to try to get their kids to motivate and have 745 00:36:54,080 --> 00:36:57,759 Speaker 4: a good life and even aspire to be richer. I 746 00:36:57,760 --> 00:37:00,080 Speaker 4: mean this is topic one right now between the of 747 00:37:01,080 --> 00:37:04,480 Speaker 4: AI the decline of liberal arts. What do the kids 748 00:37:04,560 --> 00:37:07,600 Speaker 4: do just below those with the super yachts. 749 00:37:08,760 --> 00:37:11,279 Speaker 9: Yeah, you know, I face these questions myself. I'm a dad, 750 00:37:11,320 --> 00:37:13,480 Speaker 9: I've got two kids, I think about the challenges of 751 00:37:13,520 --> 00:37:16,120 Speaker 9: people coming out of school today and how hard it's 752 00:37:16,160 --> 00:37:18,520 Speaker 9: going to be to get those first jobs. But here's 753 00:37:18,560 --> 00:37:21,560 Speaker 9: the thing, you know, we have some pretty great models 754 00:37:21,600 --> 00:37:24,600 Speaker 9: to inspire us in terms of how to think about 755 00:37:25,239 --> 00:37:28,680 Speaker 9: being energetic, being creative. I think about Warren Buffett. He's 756 00:37:28,680 --> 00:37:30,600 Speaker 9: on our minds a lot, all of us these days. 757 00:37:30,719 --> 00:37:30,920 Speaker 7: You know. 758 00:37:30,960 --> 00:37:33,000 Speaker 9: He talks about how much he left, how much he 759 00:37:33,040 --> 00:37:35,040 Speaker 9: will leave to his kids. He likes to say, as 760 00:37:35,080 --> 00:37:37,560 Speaker 9: you know, Tommy says, I want to leave them enough 761 00:37:37,600 --> 00:37:39,440 Speaker 9: that they can do anything, but not so much that 762 00:37:39,480 --> 00:37:42,680 Speaker 9: they can do nothing. I try, as I think about 763 00:37:42,719 --> 00:37:45,720 Speaker 9: the opportunities that are coming, to say to people, Look, 764 00:37:46,239 --> 00:37:48,800 Speaker 9: it's not enough for us to just say, Elon Musk 765 00:37:48,840 --> 00:37:51,919 Speaker 9: has now crossed the four hundred billion dollar threshold. We've 766 00:37:51,960 --> 00:37:54,360 Speaker 9: never had somebody with that kind of prosperity. Isn't that 767 00:37:54,360 --> 00:37:56,280 Speaker 9: as sign of strength. No, we have to be saying 768 00:37:56,280 --> 00:37:59,440 Speaker 9: to people, if we don't make smart choices, it's going 769 00:37:59,480 --> 00:38:01,440 Speaker 9: to end up with too many Musks and perhaps not 770 00:38:01,560 --> 00:38:03,840 Speaker 9: enough Buffets. And I think that's an important thing to 771 00:38:03,920 --> 00:38:04,480 Speaker 9: keep in mind. 772 00:38:05,080 --> 00:38:07,839 Speaker 6: Spare a teer for the billionaire class, but I am 773 00:38:07,880 --> 00:38:10,640 Speaker 6: interested in this element of loneliness that comes through in 774 00:38:10,680 --> 00:38:13,560 Speaker 6: your book. So if you have billionaires buying these super yachts, 775 00:38:13,560 --> 00:38:15,719 Speaker 6: they can be in isolation on the open seas. You 776 00:38:15,719 --> 00:38:19,240 Speaker 6: have another chapter or another piece that you've written about 777 00:38:19,560 --> 00:38:22,240 Speaker 6: Silicon Valley billionaires who are looking to remote New Zealand 778 00:38:22,239 --> 00:38:23,920 Speaker 6: as a place where they can go weather the storm, 779 00:38:23,960 --> 00:38:28,240 Speaker 6: if that's a nuclear disaster or something that's a natural disaster. 780 00:38:29,000 --> 00:38:29,840 Speaker 2: What explains it? 781 00:38:29,880 --> 00:38:31,799 Speaker 6: And just I think the contrast is so stark to 782 00:38:31,800 --> 00:38:33,279 Speaker 6: what you were talking about a moment ago, which is, 783 00:38:33,320 --> 00:38:36,680 Speaker 6: during the Gilded Age you had billionaires, you had multimillionaire 784 00:38:36,719 --> 00:38:38,640 Speaker 6: I should say, maybe not billionaires who are interested in 785 00:38:38,680 --> 00:38:42,120 Speaker 6: philanthropy and in helping the wider population, building libraries in 786 00:38:42,200 --> 00:38:45,400 Speaker 6: towns across America. It seems like there is a stark 787 00:38:45,440 --> 00:38:47,759 Speaker 6: contrast that exists now between the aspirations of a lot 788 00:38:47,800 --> 00:38:50,160 Speaker 6: of these ultra wealthy than what we saw before. 789 00:38:51,360 --> 00:38:53,279 Speaker 9: Yeah, David, you know, for the reporting for this book, 790 00:38:53,320 --> 00:38:55,640 Speaker 9: I went to New Zealand, I went to Monaco. Hardship 791 00:38:55,680 --> 00:38:59,440 Speaker 9: pay was not forthcoming despite my insistence, and it was 792 00:38:59,520 --> 00:39:02,600 Speaker 9: a fat way of getting into the minds of people 793 00:39:02,600 --> 00:39:04,840 Speaker 9: who have succeeded. And I think what you find in 794 00:39:04,880 --> 00:39:06,920 Speaker 9: a lot of cases. And this is the surprise, is 795 00:39:06,960 --> 00:39:10,080 Speaker 9: a sense of fear, frankly, a sense of vertigo. You know, 796 00:39:10,120 --> 00:39:11,839 Speaker 9: a lot of people will say, look, you've made all 797 00:39:11,840 --> 00:39:14,040 Speaker 9: the money in the world, what are you afraid of? 798 00:39:14,080 --> 00:39:15,600 Speaker 9: Why do you need to stand on the stage with 799 00:39:15,640 --> 00:39:18,839 Speaker 9: a president who you may not even necessarily ideologically agree with. 800 00:39:18,920 --> 00:39:21,160 Speaker 9: And I think what that tells us is that the 801 00:39:21,280 --> 00:39:25,040 Speaker 9: higher you get, you actually can end up feeling quite vulnerable, 802 00:39:25,120 --> 00:39:27,960 Speaker 9: quite exposed. I mean, as Silicon Valley CEO said to me, 803 00:39:28,560 --> 00:39:31,239 Speaker 9: I keep a helicopter gassed up all the time, and 804 00:39:31,320 --> 00:39:33,640 Speaker 9: I have a bunker with an air filtration system. And 805 00:39:33,680 --> 00:39:36,640 Speaker 9: I think that is Another former hedge fund manager said 806 00:39:36,680 --> 00:39:38,680 Speaker 9: to me, Look, there are twenty five hedge fund managers 807 00:39:38,680 --> 00:39:41,319 Speaker 9: in this country who make it more money combined than 808 00:39:41,360 --> 00:39:44,600 Speaker 9: all of the kindergartener teachers. And he said, and it 809 00:39:44,680 --> 00:39:47,120 Speaker 9: doesn't feel good to be one of those twenty five. 810 00:39:47,239 --> 00:39:48,080 Speaker 9: That's the vertigo. 811 00:39:48,239 --> 00:39:50,040 Speaker 4: Evn We got to leave it there, but don't be 812 00:39:50,080 --> 00:39:53,360 Speaker 4: a stranger. Evan Austen's congratulations from the New Yorker. The 813 00:39:53,440 --> 00:39:57,360 Speaker 4: haves and they have not have yachts. Piece it together 814 00:39:58,160 --> 00:40:01,040 Speaker 4: from a wonderful New York can't say enough about this 815 00:40:01,040 --> 00:40:04,960 Speaker 4: as a general read on these odd odd times. 816 00:40:05,400 --> 00:40:10,239 Speaker 1: This is the Bloomberg Surveillance Podcast, available on Apple, Spotify, 817 00:40:10,360 --> 00:40:14,640 Speaker 1: and anywhere else you get your podcasts. Listen live each weekday, 818 00:40:14,760 --> 00:40:18,239 Speaker 1: seven to ten am Eastern on Bloomberg dot com, the 819 00:40:18,320 --> 00:40:22,359 Speaker 1: iHeartRadio app, tune In, and the Bloomberg Business app. You 820 00:40:22,360 --> 00:40:25,759 Speaker 1: can also watch us live every weekday on YouTube and 821 00:40:25,960 --> 00:40:27,680 Speaker 1: always on the Bloomberg terminal.