1
00:00:09,880 --> 00:00:13,800
Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane Jay Ley.

2
00:00:14,000 --> 00:00:17,599
Speaker 1: We bring you insight from the best in economics, finance, investment,

3
00:00:18,040 --> 00:00:23,560
Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, Sam Cloud,

4
00:00:23,640 --> 00:00:27,360
Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. To

5
00:00:27,440 --> 00:00:32,640
Speaker 1: those who think that it's autopilot, I think that's that's ridiculous. Um,

6
00:00:32,680 --> 00:00:35,120
Speaker 1: there is a forward guidance which is strong, which is

7
00:00:35,159 --> 00:00:40,000
Speaker 1: setting you know, a very clear timetable that is fact independent.

8
00:00:40,760 --> 00:00:43,400
Speaker 1: But let's look at the facts. Let's look at how

9
00:00:43,760 --> 00:00:46,280
Speaker 1: the economy evolves. That's what we do. We need to

10
00:00:46,280 --> 00:00:49,240
Speaker 1: be fact driven. We need to be clear now communication

11
00:00:49,280 --> 00:00:52,440
Speaker 1: and we will be. And I'm saying today don't assume

12
00:00:52,479 --> 00:00:55,800
Speaker 1: that it will be on autopilot. Yesterday you talked to

13
00:00:55,960 --> 00:00:59,000
Speaker 1: quite extensively about negative rates. He said, tearing is working well,

14
00:00:59,120 --> 00:01:01,160
Speaker 1: but is there a point? Actually the side effects of

15
00:01:01,200 --> 00:01:03,560
Speaker 1: negative rates means that you need to scale it back.

16
00:01:04,560 --> 00:01:07,280
Speaker 1: We will be looking at the side effects as part

17
00:01:07,319 --> 00:01:10,720
Speaker 1: of the strategy review. There's no question about that. We

18
00:01:10,760 --> 00:01:13,200
Speaker 1: need to be attentive to that. Financial stability is not

19
00:01:13,360 --> 00:01:18,640
Speaker 1: our first driver of concern and consideration, but we will.

20
00:01:18,680 --> 00:01:21,000
Speaker 1: We will have to look at it, of course is

21
00:01:21,240 --> 00:01:22,920
Speaker 1: and we need don't forget that, we need to have

22
00:01:23,440 --> 00:01:26,039
Speaker 1: a banking sector in the your area that acts as

23
00:01:26,040 --> 00:01:29,880
Speaker 1: a good channel of transmission, which means that, which means

24
00:01:29,880 --> 00:01:33,479
Speaker 1: one that you could extend hearing or the multiple responses.

25
00:01:34,200 --> 00:01:36,560
Speaker 1: It's not, as I said yesterday, we're not considering that

26
00:01:36,760 --> 00:01:39,480
Speaker 1: at the moment. The President Trump left have also saying

27
00:01:39,520 --> 00:01:42,640
Speaker 1: that actually still thinking about possible tariffs against Germany and

28
00:01:42,680 --> 00:01:47,480
Speaker 1: Europe in general. You're seeing, you know, growth in Europe.

29
00:01:47,480 --> 00:01:51,320
Speaker 1: How do you match up the two We're saying modest

30
00:01:51,360 --> 00:01:56,560
Speaker 1: growth in Europe, we're saying a bit more modest downside

31
00:01:56,680 --> 00:01:59,440
Speaker 1: risks as well. So that's probably the reason why it's

32
00:01:59,440 --> 00:02:02,760
Speaker 1: it's kind of slightly balanced to the upside, but very

33
00:02:02,760 --> 00:02:07,040
Speaker 1: slightly um you know, we we shall see. What I

34
00:02:07,120 --> 00:02:08,840
Speaker 1: was pleased about is to see that there had been

35
00:02:08,880 --> 00:02:13,360
Speaker 1: a good first meeting between Lay and President of the

36
00:02:13,360 --> 00:02:16,800
Speaker 1: European Commission and President Trump. So that's that's, you know,

37
00:02:16,880 --> 00:02:20,080
Speaker 1: it's better to start off on on on a good footing,

38
00:02:20,600 --> 00:02:24,880
Speaker 1: and there would be difficult relationships going forward and points

39
00:02:24,880 --> 00:02:27,880
Speaker 1: of negotiations that will be hard, you know, whether it's trade,

40
00:02:27,919 --> 00:02:31,799
Speaker 1: whether it's tags, whether it's technology, whether it's energy, the

41
00:02:31,960 --> 00:02:36,120
Speaker 1: multiple topics. But as a Usula said, Europe and the

42
00:02:36,240 --> 00:02:39,120
Speaker 1: United States have been friends for a long long time.

43
00:02:39,240 --> 00:02:42,440
Speaker 1: It will not go away. And in many instances they

44
00:02:42,480 --> 00:02:45,880
Speaker 1: have joint interests. But Europe is different. Europe operates on

45
00:02:45,919 --> 00:02:49,480
Speaker 1: different values with different systems and and that needs to

46
00:02:49,520 --> 00:02:51,880
Speaker 1: be secured and preserved for the sake of the Europeans.

47
00:02:52,080 --> 00:02:54,520
Speaker 1: There are our tears. The biggest concerned easy for for

48
00:02:54,600 --> 00:02:59,280
Speaker 1: the European economy. It's a big concern. Let's face it. Um,

49
00:02:59,680 --> 00:03:03,960
Speaker 1: don't get that there is trade intra Europe and that

50
00:03:04,000 --> 00:03:07,919
Speaker 1: would not need be affected, but trade with the United States,

51
00:03:07,919 --> 00:03:12,720
Speaker 1: which is an important trade partner, would would be affected

52
00:03:12,800 --> 00:03:16,119
Speaker 1: if there was a sudden rise on on ontariff's yes,

53
00:03:16,320 --> 00:03:18,160
Speaker 1: or a terry fools where you know it for that

54
00:03:18,400 --> 00:03:21,000
Speaker 1: you you you tariff me, I'll terryf you. That's going

55
00:03:21,040 --> 00:03:23,040
Speaker 1: to operate as a break on the economy for sure.

56
00:03:23,520 --> 00:03:25,399
Speaker 1: You've done a number of public events in the last

57
00:03:25,400 --> 00:03:30,079
Speaker 1: couple of weeks. What concerns that people raise with you? Um,

58
00:03:30,600 --> 00:03:37,520
Speaker 1: you know it varies. UM. When I talked to when

59
00:03:37,520 --> 00:03:40,000
Speaker 1: I talk to family members, they say, explain what you

60
00:03:40,080 --> 00:03:42,680
Speaker 1: do mom? Please we don't really understand. And that's a

61
00:03:42,840 --> 00:03:46,120
Speaker 1: real good signal for me that we need to to

62
00:03:46,240 --> 00:03:50,480
Speaker 1: communicate in a more explicit way about what we procure.

63
00:03:51,560 --> 00:03:54,560
Speaker 1: You know, because if we explain that exactly what we do,

64
00:03:54,680 --> 00:03:58,840
Speaker 1: it's it's technically sound. The experts will understand, family members

65
00:03:58,880 --> 00:04:02,960
Speaker 1: and that actually drivers, the hairdressers and the shopkeepers are

66
00:04:02,960 --> 00:04:04,840
Speaker 1: not going to understand. But if we explain that what

67
00:04:05,160 --> 00:04:10,960
Speaker 1: we do actually procures growth, facilitates investment, and creates jobs,

68
00:04:11,280 --> 00:04:13,960
Speaker 1: then it means something. But we should not be the

69
00:04:14,000 --> 00:04:15,920
Speaker 1: only one to try to do that. So is it

70
00:04:16,000 --> 00:04:19,880
Speaker 1: reconnecting with the citizens or I think that's an important factor. Yeah,

71
00:04:19,960 --> 00:04:23,719
Speaker 1: because you know, the people of Europe, particularly the your area,

72
00:04:23,880 --> 00:04:27,600
Speaker 1: are quite bullish about the Euro. They're pleased to have

73
00:04:27,640 --> 00:04:29,560
Speaker 1: the Euro as their currency, and we do everything we

74
00:04:29,600 --> 00:04:33,200
Speaker 1: can to make sure that Euros can flow easily, that

75
00:04:33,320 --> 00:04:40,840
Speaker 1: payments are secure, that what they have is solid stability. Um.

76
00:04:40,960 --> 00:04:43,400
Speaker 1: But but I think we need we need to do

77
00:04:43,440 --> 00:04:45,680
Speaker 1: a bit more And a lot of the focus here

78
00:04:45,720 --> 00:04:48,560
Speaker 1: is on sustainability. You talked about sustainability. Is there a

79
00:04:48,640 --> 00:04:52,000
Speaker 1: danger that we have outsized expectations about what central banks

80
00:04:52,040 --> 00:04:57,280
Speaker 1: can do to tackle this? Possibly? But I think that nonetheless,

81
00:04:57,720 --> 00:05:01,599
Speaker 1: each and everyone of us has to floor what he

82
00:05:01,720 --> 00:05:04,640
Speaker 1: or she can do about the current risks. And I

83
00:05:04,680 --> 00:05:08,600
Speaker 1: think that it has been under The risks caused by

84
00:05:08,640 --> 00:05:14,000
Speaker 1: climate change on corporates, on the economy, on general stability

85
00:05:14,320 --> 00:05:18,559
Speaker 1: have been largely underestimated, and for good reasons, because many

86
00:05:20,240 --> 00:05:24,159
Speaker 1: risks are difficult to assess. We are talking about what

87
00:05:24,240 --> 00:05:26,880
Speaker 1: happens in thirty years. It's not in the cards of

88
00:05:26,960 --> 00:05:31,479
Speaker 1: a stress tester to anticipate what happens in thirty years.

89
00:05:31,520 --> 00:05:33,480
Speaker 1: You know, you look at the immediate future, you do.

90
00:05:33,600 --> 00:05:36,840
Speaker 1: You look at the market risks, you look at macro risks,

91
00:05:36,880 --> 00:05:41,000
Speaker 1: but the climate risks in thirty years that need action. Now,

92
00:05:41,120 --> 00:05:45,560
Speaker 1: if we want to remedy those risks, that's difficult, but

93
00:05:45,720 --> 00:05:59,960
Speaker 1: we need We need to do it absolutely the start

94
00:06:00,040 --> 00:06:02,640
Speaker 1: you of what's available, and that's really one of the

95
00:06:02,680 --> 00:06:07,000
Speaker 1: great focuses for Christine Lagarde to assist her economists with

96
00:06:07,160 --> 00:06:11,440
Speaker 1: the tools available, given how odd the times are a

97
00:06:11,520 --> 00:06:15,360
Speaker 1: perfect person to speak to honest the limitations that constraints

98
00:06:15,360 --> 00:06:18,839
Speaker 1: that we see with an economics, finance and particularly investment

99
00:06:18,839 --> 00:06:22,080
Speaker 1: in Sheila Ptel, She's a golden Sax asset management. She

100
00:06:22,279 --> 00:06:24,720
Speaker 1: is their chairman, and we're thrilled she could join us

101
00:06:24,839 --> 00:06:26,960
Speaker 1: for what I wish was a four hour conversation, and

102
00:06:27,000 --> 00:06:29,599
Speaker 1: we're not going to do that. Uh. Today, I have

103
00:06:29,920 --> 00:06:32,320
Speaker 1: eight things to talk about and only a few times

104
00:06:32,360 --> 00:06:34,520
Speaker 1: or two. I need to talk first of all about

105
00:06:34,520 --> 00:06:37,880
Speaker 1: your core obligation to the Golden Sex company. Golden Sacks

106
00:06:37,920 --> 00:06:41,760
Speaker 1: Asset Management for years has had not a stumble, But

107
00:06:41,960 --> 00:06:45,240
Speaker 1: I need to be focused. You have had great acclaim

108
00:06:45,640 --> 00:06:49,000
Speaker 1: for bringing a new focus to Golden Sex Asset Management

109
00:06:49,200 --> 00:06:52,520
Speaker 1: to compete out there? What's the Patel focus for Golden

110
00:06:52,560 --> 00:06:55,800
Speaker 1: Sex Asset Management? Look? As an investor, you focus a

111
00:06:55,920 --> 00:06:58,240
Speaker 1: number one has to be your client needs. And what

112
00:06:58,320 --> 00:07:01,000
Speaker 1: I would say we've tried to do is refocused our

113
00:07:01,160 --> 00:07:03,960
Speaker 1: entire investing team on the questions clients are asking us.

114
00:07:04,000 --> 00:07:05,800
Speaker 1: What are they asking you right now? They're asking us

115
00:07:05,800 --> 00:07:08,760
Speaker 1: about E s G and sustainability. They're asking us about

116
00:07:08,800 --> 00:07:11,360
Speaker 1: what to do in this low yield environment, and they're

117
00:07:11,400 --> 00:07:14,200
Speaker 1: asking us how they should think about asset allocation in

118
00:07:14,240 --> 00:07:17,000
Speaker 1: the broader context of all their stakeholders. What we heard

119
00:07:17,000 --> 00:07:19,760
Speaker 1: this week and a Happy Valley is the arch question

120
00:07:19,800 --> 00:07:24,200
Speaker 1: of the efficient frontier and asset allocation given low rates

121
00:07:24,200 --> 00:07:25,680
Speaker 1: we've got boom bust, and I don't want to get

122
00:07:25,680 --> 00:07:29,320
Speaker 1: into boom busted. You your your leader, David was quite

123
00:07:29,800 --> 00:07:31,840
Speaker 1: it was quite good on that as well. Forget about that.

124
00:07:32,160 --> 00:07:35,080
Speaker 1: Forget about I gotta put my money in the market

125
00:07:35,160 --> 00:07:38,600
Speaker 1: after bonds up, yields down, stocks up, up, up up

126
00:07:38,760 --> 00:07:41,800
Speaker 1: is your answer to buy more tesla? Well, it doesn't

127
00:07:41,840 --> 00:07:44,000
Speaker 1: necessarily have to be Tesla, but I would say people

128
00:07:44,000 --> 00:07:46,760
Speaker 1: have been penalized more for trying to guess when the

129
00:07:46,760 --> 00:07:49,400
Speaker 1: market would go down, then by keeping to a steady

130
00:07:49,400 --> 00:07:52,640
Speaker 1: core asset allocation, particularly with exposure to equities, when you

131
00:07:52,680 --> 00:07:55,440
Speaker 1: believe that growth is stable. Do we think that growth

132
00:07:55,800 --> 00:07:59,320
Speaker 1: is growing exponentially growing getting better over the next year. No,

133
00:07:59,480 --> 00:08:02,640
Speaker 1: But do we think the US looks decent? There are

134
00:08:02,720 --> 00:08:05,880
Speaker 1: hotspots in Europe of both growth and pain, and that

135
00:08:05,920 --> 00:08:09,880
Speaker 1: we have interesting opportunities in em and particularly in Japan. Yes, Okay,

136
00:08:09,960 --> 00:08:13,040
Speaker 1: your charm as you came up on the trading side,

137
00:08:13,120 --> 00:08:15,200
Speaker 1: on the management side, on what I'm going to call

138
00:08:15,280 --> 00:08:19,680
Speaker 1: the execution side. This isn't some Ivory Tower exercise for you.

139
00:08:19,800 --> 00:08:24,480
Speaker 1: Even though you've got prodigious academics from an execution trading side,

140
00:08:25,080 --> 00:08:28,640
Speaker 1: your expert in the observance of liquidity, is a liquidity

141
00:08:28,680 --> 00:08:31,400
Speaker 1: there in the market's given shocks. Right now, I would

142
00:08:31,400 --> 00:08:33,560
Speaker 1: say liquidity is there. We're certainly in a better place

143
00:08:33,559 --> 00:08:35,640
Speaker 1: than we were a year ago at DAVAS. A year

144
00:08:35,679 --> 00:08:38,920
Speaker 1: ago you had everyone worried about liquidity, extremely worried about

145
00:08:38,920 --> 00:08:41,480
Speaker 1: where the markets went head and we were counseling carm

146
00:08:41,520 --> 00:08:44,280
Speaker 1: and I think today you have people worried about liquidity

147
00:08:44,320 --> 00:08:46,360
Speaker 1: given the mix of private to public that they have

148
00:08:46,400 --> 00:08:50,040
Speaker 1: in their portfolios, particularly the way that various investors have

149
00:08:50,120 --> 00:08:52,920
Speaker 1: leaned into things like private credit. Where we see the

150
00:08:52,960 --> 00:08:55,840
Speaker 1: balance is by making sure that the overall portfolio has

151
00:08:55,920 --> 00:08:58,160
Speaker 1: liquidity needed for the needs That will be different for

152
00:08:58,160 --> 00:09:00,360
Speaker 1: a pension than a sovereign wealth fund and for an

153
00:09:00,360 --> 00:09:03,120
Speaker 1: insurance company. Can I go off script on a Friday?

154
00:09:03,120 --> 00:09:06,760
Speaker 1: We can do that, Shela Patil portfolio insurance. This is

155
00:09:06,800 --> 00:09:11,520
Speaker 1: before your time. Our e t s the new portfolio insurance.

156
00:09:11,559 --> 00:09:13,720
Speaker 1: This is beneath you to talk about. I get that

157
00:09:14,120 --> 00:09:17,559
Speaker 1: everybody listening and watching should they be petrified of the

158
00:09:17,679 --> 00:09:21,199
Speaker 1: certitude that ETFs are the only way to go. I

159
00:09:21,240 --> 00:09:23,400
Speaker 1: don't think it's a new portfolio insurance, and I think

160
00:09:23,440 --> 00:09:26,520
Speaker 1: there's a huge diversification of the options in the e

161
00:09:26,640 --> 00:09:31,920
Speaker 1: t F markets, they span an incredible number. Well, it's

162
00:09:31,920 --> 00:09:34,480
Speaker 1: a very very broad market. I think what we have

163
00:09:34,559 --> 00:09:36,800
Speaker 1: to think about with e t s is really what

164
00:09:36,960 --> 00:09:39,240
Speaker 1: is the purpose of having them in your portfolio? Is

165
00:09:39,280 --> 00:09:41,760
Speaker 1: it the best exposure to a particular index is in

166
00:09:41,760 --> 00:09:44,079
Speaker 1: an area where you just want beta versus alpha. And

167
00:09:44,200 --> 00:09:45,640
Speaker 1: it goes back to the question of do you want

168
00:09:45,640 --> 00:09:48,360
Speaker 1: active or passive in certain segments of the market. I

169
00:09:48,480 --> 00:09:51,160
Speaker 1: think that's a question that investors need to answer themselves

170
00:09:51,280 --> 00:09:54,640
Speaker 1: over and over again, and it's become very binary. We

171
00:09:54,760 --> 00:09:57,000
Speaker 1: love binaries. It's easier to say choose air, choose be,

172
00:09:57,400 --> 00:09:59,880
Speaker 1: But the reality is we see a bounce portfolio includes

173
00:10:00,040 --> 00:10:02,360
Speaker 1: both passive and active, depending on where you think the

174
00:10:02,400 --> 00:10:05,360
Speaker 1: opportunity set is in an asset class. Unfortunately, last night

175
00:10:05,400 --> 00:10:08,000
Speaker 1: I was talking about c D e F. I wasn't

176
00:10:08,080 --> 00:10:11,160
Speaker 1: binary last night. Sheila was right, that's a simpler in

177
00:10:11,280 --> 00:10:25,679
Speaker 1: better world. What we're gona do today is trying to

178
00:10:25,800 --> 00:10:29,079
Speaker 1: give you a recapitulation of the proper theory and foundation

179
00:10:29,200 --> 00:10:32,439
Speaker 1: of this. Joining us later Robert Schiller, the Laureate of

180
00:10:32,559 --> 00:10:36,640
Speaker 1: Yale University and joining us now someone as a claim

181
00:10:36,760 --> 00:10:40,000
Speaker 1: Jacob Frankel joins as chairman of JP Morgan Chase International,

182
00:10:40,360 --> 00:10:43,760
Speaker 1: former governor of the Bank of Israel and Chicago academic

183
00:10:43,920 --> 00:10:48,240
Speaker 1: from just a few years ago as well. The uproar

184
00:10:48,520 --> 00:10:53,559
Speaker 1: here is the sick locality of markets linked into your

185
00:10:53,640 --> 00:10:57,800
Speaker 1: world of economics. Possibly is done and there will be

186
00:10:57,960 --> 00:11:03,240
Speaker 1: a more leaden, non vollow a trend because central banks

187
00:11:03,280 --> 00:11:06,640
Speaker 1: have dragged us down to the zero bound. I don't

188
00:11:06,720 --> 00:11:10,240
Speaker 1: see this in the academic literature. Is it an original

189
00:11:10,400 --> 00:11:14,559
Speaker 1: idea that needs to be tested to begin with? It

190
00:11:14,880 --> 00:11:18,960
Speaker 1: is being tested, and frankly, I think that the zero bound,

191
00:11:19,160 --> 00:11:23,600
Speaker 1: or the driving down on interest rate to zero was emphasized,

192
00:11:24,000 --> 00:11:26,960
Speaker 1: has been emphasized as the way in which the crisis

193
00:11:27,040 --> 00:11:30,520
Speaker 1: that emanated twelve years ago came to the system so

194
00:11:30,720 --> 00:11:34,720
Speaker 1: called unconventional policies. But if we are talking now about

195
00:11:35,080 --> 00:11:38,439
Speaker 1: a recovery, getting out of it, coming back to normalcy,

196
00:11:38,840 --> 00:11:42,520
Speaker 1: I think that the zero interest rates has exhausted its

197
00:11:42,600 --> 00:11:46,920
Speaker 1: benefits and it's time now to think again, how do

198
00:11:47,040 --> 00:11:50,599
Speaker 1: we come to the highway from this particular detail, to

199
00:11:50,760 --> 00:11:53,839
Speaker 1: return to the highway in which interest rates are at

200
00:11:53,960 --> 00:11:58,400
Speaker 1: normal level, in which financial industry can perform well. Because

201
00:11:58,440 --> 00:12:04,080
Speaker 1: at the present time, engining systems, insurance, life insurance, even

202
00:12:04,160 --> 00:12:09,400
Speaker 1: banking have to redesign their business model to accommodate zero

203
00:12:09,520 --> 00:12:12,839
Speaker 1: interest rates, which makes no sense. I think that at

204
00:12:12,920 --> 00:12:15,680
Speaker 1: this stage we will need to bring back the other

205
00:12:15,880 --> 00:12:19,520
Speaker 1: policy instruments. The other policy instruments have to do with

206
00:12:19,760 --> 00:12:24,000
Speaker 1: fiscal policy, have to do with structure policy. Today, the

207
00:12:24,160 --> 00:12:30,320
Speaker 1: greatest danger to the economy is growth comes from fragmentation.

208
00:12:30,720 --> 00:12:35,880
Speaker 1: The world is global, policy making is local. The pressures

209
00:12:36,080 --> 00:12:39,800
Speaker 1: on policy makers come from domestic pressures. And if you

210
00:12:39,920 --> 00:12:44,240
Speaker 1: have great fragmentation within economies, you will end up having

211
00:12:44,320 --> 00:12:49,559
Speaker 1: also great fugment fragmentations between economies and the bridges that

212
00:12:49,679 --> 00:12:52,960
Speaker 1: are so essential for the functioning of the global economy.

213
00:12:53,280 --> 00:12:55,439
Speaker 1: Maybe have your voice is so important. I have to

214
00:12:55,520 --> 00:12:59,160
Speaker 1: get this on record. If we begin a path to normalcy,

215
00:12:59,840 --> 00:13:03,520
Speaker 1: do we sustain a Latin non volatile state or do

216
00:13:03,640 --> 00:13:07,680
Speaker 1: we maintain the normal historic boom and bus cycles. At

217
00:13:07,760 --> 00:13:10,439
Speaker 1: Rogof and Rhiner, I've talked about which is it is

218
00:13:10,440 --> 00:13:14,280
Speaker 1: a binomial? Is a bipolar? Almost? Which is it? It's no,

219
00:13:14,880 --> 00:13:17,679
Speaker 1: it's not a law of nature that it will be

220
00:13:17,840 --> 00:13:20,440
Speaker 1: either or it depends on the policy. Let me give

221
00:13:20,480 --> 00:13:24,439
Speaker 1: you an example here the recovery started, and suddenly the

222
00:13:24,600 --> 00:13:29,040
Speaker 1: trade wall came in. Trade wall means you break a

223
00:13:29,160 --> 00:13:34,679
Speaker 1: bridge between important partners. This creates volatility. Then there is

224
00:13:34,720 --> 00:13:37,720
Speaker 1: a glimpse of hope that this trade wall may be settled,

225
00:13:37,800 --> 00:13:40,599
Speaker 1: at least as phase one. Then suddenly the markets like

226
00:13:40,720 --> 00:13:44,079
Speaker 1: it again. Amusan coming down to Earth will say, hey,

227
00:13:44,200 --> 00:13:47,679
Speaker 1: we have volatility. But let's understand that volatility is a

228
00:13:47,760 --> 00:13:53,000
Speaker 1: reflection of the signals that policy makers give to markets,

229
00:13:53,160 --> 00:13:57,040
Speaker 1: and in the market in which financial markets are important,

230
00:13:57,120 --> 00:13:59,600
Speaker 1: that they are growing to be more and more important.

231
00:14:00,080 --> 00:14:04,559
Speaker 1: That's the market in which expectations about the future transmitting

232
00:14:04,600 --> 00:14:09,840
Speaker 1: itself to current behavior. So let's be very careful worlds metals,

233
00:14:10,040 --> 00:14:13,439
Speaker 1: expectations metters, and if things are still not done but

234
00:14:13,559 --> 00:14:17,000
Speaker 1: they are expected to be done, volatility already comes in

235
00:14:17,400 --> 00:14:21,360
Speaker 1: to your claim on to on on the bank of Israel,

236
00:14:21,440 --> 00:14:23,760
Speaker 1: and folks, let's make clear here as we more. In

237
00:14:23,800 --> 00:14:26,400
Speaker 1: the late Paul Worker, people talk of Frankel as a

238
00:14:26,440 --> 00:14:29,120
Speaker 1: vocal equivalent with the courage of what he did in

239
00:14:29,240 --> 00:14:32,960
Speaker 1: Israel years ago. You had a tool kit. Then Legard

240
00:14:33,080 --> 00:14:36,320
Speaker 1: this morning with Francine talks about tools or finities is

241
00:14:36,360 --> 00:14:39,800
Speaker 1: written about this authoritatively at the FED. What's in the

242
00:14:39,920 --> 00:14:43,640
Speaker 1: tool kit at the zero bound. Well, the tool kit

243
00:14:43,880 --> 00:14:49,000
Speaker 1: today is much less potent than what it used to be,

244
00:14:49,120 --> 00:14:53,840
Speaker 1: which is Bridgewater's point alately, but it is also not

245
00:14:54,320 --> 00:14:59,720
Speaker 1: a cause of nature. It is again a policy maker making.

246
00:15:00,160 --> 00:15:03,120
Speaker 1: What do I have in mind? The most important tool

247
00:15:03,760 --> 00:15:08,600
Speaker 1: in the policy arsenal is interest rate. Of course, you

248
00:15:08,640 --> 00:15:13,280
Speaker 1: can always speak about macroprudential policies. You can speak about guidance,

249
00:15:13,400 --> 00:15:16,640
Speaker 1: how to manipulate expectations, you can speak about many things.

250
00:15:16,720 --> 00:15:19,680
Speaker 1: But let's face it, it is the interest rates the

251
00:15:19,840 --> 00:15:24,480
Speaker 1: central bank is setting, which is the jewel in the

252
00:15:24,600 --> 00:15:27,520
Speaker 1: crown of policy making arsenal. If we think if it

253
00:15:27,680 --> 00:15:30,320
Speaker 1: is being stuck at close to zero, in addition to

254
00:15:30,440 --> 00:15:35,000
Speaker 1: the damage to the financial industry, it also projects that

255
00:15:35,080 --> 00:15:38,080
Speaker 1: the monetary authority can do in the future less than

256
00:15:38,160 --> 00:15:40,120
Speaker 1: what he did in the past, which is another reason

257
00:15:40,440 --> 00:15:43,200
Speaker 1: to wake up other policy instruments. I think that the

258
00:15:43,440 --> 00:15:47,360
Speaker 1: only game in town syndrome in which central banks have

259
00:15:47,520 --> 00:15:51,480
Speaker 1: become two centered to the debate, has to be changed.

260
00:15:51,560 --> 00:15:55,400
Speaker 1: It's a very very dubious compliment. The spirited conversation he

261
00:15:55,480 --> 00:15:57,600
Speaker 1: or Jacob Franklin. Some of the themes that we're seeing

262
00:15:57,640 --> 00:16:00,520
Speaker 1: here from central banks and praticularly from those after a

263
00:16:00,640 --> 00:16:04,400
Speaker 1: bang up successful two thousand nineteen Dr Frankel, of course,

264
00:16:04,840 --> 00:16:20,520
Speaker 1: with JP Morgan International Panels continue a very important panel

265
00:16:21,000 --> 00:16:24,960
Speaker 1: UH this morning on central banking and on treasury as well.

266
00:16:25,080 --> 00:16:27,840
Speaker 1: What I like about this panel, it's a mixture of

267
00:16:28,200 --> 00:16:32,600
Speaker 1: the bankers and the finance officials together and has led

268
00:16:32,640 --> 00:16:36,000
Speaker 1: to a spirited conversation about the mysteries. Of course, we

269
00:16:36,080 --> 00:16:38,760
Speaker 1: can summarize that and maybe do better than five or

270
00:16:38,800 --> 00:16:41,920
Speaker 1: six people talking at once to singularly talk to the

271
00:16:42,000 --> 00:16:46,280
Speaker 1: gentleman from Mexico. I know Guria brings first rate academic

272
00:16:46,400 --> 00:16:48,720
Speaker 1: economics to his job at the O E c D

273
00:16:49,440 --> 00:16:52,600
Speaker 1: UH as their secretary General has held court for some times.

274
00:16:52,960 --> 00:16:55,120
Speaker 1: And the good news here with Lawrence Boone and the

275
00:16:55,160 --> 00:16:57,880
Speaker 1: other great analysts at the O E c D is

276
00:16:58,000 --> 00:17:01,440
Speaker 1: very simply he can synthesize a lot for us. He

277
00:17:01,520 --> 00:17:03,920
Speaker 1: takes the sunglasses off now so we can do TV.

278
00:17:04,520 --> 00:17:07,320
Speaker 1: I wore my sunglasses one and Saturn. They said, don't

279
00:17:07,359 --> 00:17:10,280
Speaker 1: ever do that again. Wonderful they have you here. But

280
00:17:10,640 --> 00:17:13,720
Speaker 1: the themes are so important. There's Qi, there's boomer bus,

281
00:17:14,080 --> 00:17:16,040
Speaker 1: or this is that you're gonna go back to your

282
00:17:16,119 --> 00:17:18,480
Speaker 1: lawns Boon and say this is what I want you

283
00:17:18,520 --> 00:17:22,760
Speaker 1: to research. What is it. Basically, we have to get

284
00:17:22,840 --> 00:17:26,760
Speaker 1: back to productivity, we have to get back to skills,

285
00:17:27,440 --> 00:17:31,480
Speaker 1: and we basically have to find a way to lower

286
00:17:31,600 --> 00:17:34,760
Speaker 1: the trade tensions. They're still there. They've already cost us

287
00:17:34,840 --> 00:17:38,919
Speaker 1: more than one percent of the world's GDP growth. Uh

288
00:17:39,520 --> 00:17:43,280
Speaker 1: the rate of growth of trade went from five and

289
00:17:43,320 --> 00:17:46,440
Speaker 1: a half percent to practically flat. The rate of growth

290
00:17:46,520 --> 00:17:50,440
Speaker 1: of investment went from five six percent. Voices on held

291
00:17:50,480 --> 00:17:52,240
Speaker 1: to the President of the United States, we're able to

292
00:17:52,320 --> 00:17:54,600
Speaker 1: corner Donald Trump at the espresso bar and say, look,

293
00:17:54,680 --> 00:17:56,639
Speaker 1: this is the way it is for the O. E c. D,

294
00:17:56,720 --> 00:17:59,720
Speaker 1: if not for your America. We have said it in

295
00:18:00,000 --> 00:18:03,359
Speaker 1: so many ways, written it, we've insisted, we published it,

296
00:18:03,880 --> 00:18:08,600
Speaker 1: and basically saying the trade tensions are causing disruption. Why

297
00:18:09,040 --> 00:18:15,160
Speaker 1: because they're causing uncertainty. Uncertainty killed investment. Investment, of course,

298
00:18:15,320 --> 00:18:18,240
Speaker 1: is the seed of the growth of tomorrow. So basically,

299
00:18:18,400 --> 00:18:22,480
Speaker 1: by by creating the trade tensions, you kill the investment,

300
00:18:22,560 --> 00:18:24,639
Speaker 1: you kill the growth. How this is what has happened.

301
00:18:24,760 --> 00:18:27,000
Speaker 1: How much of a headache is does the US and

302
00:18:27,240 --> 00:18:30,560
Speaker 1: in particular does the US administration think that actually tears

303
00:18:30,640 --> 00:18:34,000
Speaker 1: work and will they use them against Europe? Well, first

304
00:18:34,040 --> 00:18:38,439
Speaker 1: of all, I hope that they don't use them against Europe.

305
00:18:38,560 --> 00:18:41,240
Speaker 1: And I think there's when there's a will, there's a way.

306
00:18:41,720 --> 00:18:47,760
Speaker 1: And yesterday we found a way. The French UH agreed

307
00:18:47,920 --> 00:18:52,399
Speaker 1: to defer the action on their digital taxation law, and

308
00:18:52,680 --> 00:18:56,840
Speaker 1: the Americans agreed to defer the actions on their three

309
00:18:56,920 --> 00:19:01,679
Speaker 1: or one you know, potentially the sanctions, et cetera. Because

310
00:19:01,720 --> 00:19:04,920
Speaker 1: it was not just a question against French champagne or

311
00:19:05,000 --> 00:19:09,240
Speaker 1: French wine. It was a European against the United States issue. Eventually,

312
00:19:09,560 --> 00:19:12,680
Speaker 1: so and what happened they both agreed that they would

313
00:19:12,720 --> 00:19:15,720
Speaker 1: give multilateral solutions a chance. That means to the o

314
00:19:15,840 --> 00:19:18,080
Speaker 1: e c D the mandate to work on a final

315
00:19:18,160 --> 00:19:21,240
Speaker 1: solution on digital taxation, so Europe can come together. So

316
00:19:21,400 --> 00:19:23,480
Speaker 1: how can the O c D come together on this? Well,

317
00:19:23,920 --> 00:19:27,280
Speaker 1: because we have a hundred and thirty seven countries working

318
00:19:27,359 --> 00:19:30,240
Speaker 1: on this solution, not just Europe, and by the way,

319
00:19:30,480 --> 00:19:34,400
Speaker 1: a nightmare. We had pretty strong support from practically every

320
00:19:34,440 --> 00:19:39,879
Speaker 1: European country and the US have been participating rather enthusiastically.

321
00:19:39,960 --> 00:19:43,240
Speaker 1: Why because there are a number of elements of the

322
00:19:43,320 --> 00:19:46,800
Speaker 1: package that we're proposing on digital taxation that are very

323
00:19:47,040 --> 00:19:52,160
Speaker 1: akin to the to the tax reform that was done

324
00:19:52,200 --> 00:19:53,760
Speaker 1: in the United States a couple of years ago. So

325
00:19:53,840 --> 00:19:57,159
Speaker 1: you think you'll be able to break a deal the

326
00:19:57,359 --> 00:20:01,320
Speaker 1: in in the time that has run seen the think

327
00:20:01,400 --> 00:20:06,280
Speaker 1: of the option instead of a multilateral solution which everybody

328
00:20:06,320 --> 00:20:09,600
Speaker 1: will embrace, and they're all willing to sunset their own

329
00:20:09,680 --> 00:20:14,400
Speaker 1: domestic laws and come to the multilateral solution. Imagine forty

330
00:20:14,760 --> 00:20:21,040
Speaker 1: five fifty whatever different legislations with different types of taxes,

331
00:20:21,080 --> 00:20:25,560
Speaker 1: et cetera. And remember Europe is not on taxes. It's

332
00:20:25,600 --> 00:20:29,280
Speaker 1: not Europe Brussels meaning the European Commission, every it's every

333
00:20:29,400 --> 00:20:34,120
Speaker 1: country on its own. So I think that the alternative

334
00:20:34,280 --> 00:20:37,960
Speaker 1: is so disruptive that they will all be trying very

335
00:20:38,040 --> 00:20:42,040
Speaker 1: hard to get a deal within the the bureaucracy of

336
00:20:42,119 --> 00:20:44,800
Speaker 1: the O E c D. Do you have a mercantile division?

337
00:20:45,000 --> 00:20:47,680
Speaker 1: I mean, are we back to mercantilism here? Every every

338
00:20:47,800 --> 00:20:51,800
Speaker 1: We have a trade division, we have a Trade Directorate,

339
00:20:51,920 --> 00:20:55,880
Speaker 1: and we also have a director that deals with enterprise

340
00:20:55,920 --> 00:20:58,960
Speaker 1: and financial affairs. So yes, the answers, yes, So where's

341
00:20:59,000 --> 00:21:01,520
Speaker 1: the you're the students, you taught a man or eight

342
00:21:01,600 --> 00:21:03,960
Speaker 1: years ago. This is really important. Are we back to

343
00:21:04,119 --> 00:21:08,400
Speaker 1: not multilateral, not back to bilateral trilateral? Are we back

344
00:21:08,440 --> 00:21:11,720
Speaker 1: to a mercantilistic every nation for itself? That's what I

345
00:21:11,840 --> 00:21:14,560
Speaker 1: heard from the President when he gave that press conference here.

346
00:21:15,600 --> 00:21:18,960
Speaker 1: How are we going to deal with things like international

347
00:21:19,040 --> 00:21:22,480
Speaker 1: trade if not multilaterally? How are we going to deal

348
00:21:22,880 --> 00:21:27,080
Speaker 1: with international investment flows if not multilaterally? How do we

349
00:21:27,200 --> 00:21:30,359
Speaker 1: deal with migration flows if not multilaterally? How do you

350
00:21:30,480 --> 00:21:33,520
Speaker 1: deal with things like climate? Are you predicting that the

351
00:21:33,560 --> 00:21:39,560
Speaker 1: president United States policies will impinge on us multi multinational investment?

352
00:21:39,920 --> 00:21:43,520
Speaker 1: Is he gonna limit the investment of Johnson and Johnson abroad?

353
00:21:44,160 --> 00:21:48,359
Speaker 1: It is already having an impact lowering the rate of

354
00:21:48,400 --> 00:21:51,080
Speaker 1: growth of the United States, just like it is having

355
00:21:51,160 --> 00:21:54,840
Speaker 1: an impact on China. So already we know the cost

356
00:21:55,640 --> 00:22:01,160
Speaker 1: of these trade tensions. They impinge directly on uh, the well,

357
00:22:01,440 --> 00:22:06,440
Speaker 1: they create uncertainty, they create they create you know, lower growth,

358
00:22:06,640 --> 00:22:10,359
Speaker 1: they create lower jobs. So if we know the consequences,

359
00:22:10,560 --> 00:22:12,480
Speaker 1: you know, and we know that there are better options,

360
00:22:12,800 --> 00:22:16,400
Speaker 1: let's go in that direction. But have we reached peak multilateralism?

361
00:22:16,520 --> 00:22:19,480
Speaker 1: Does it just go down from here? No? You never

362
00:22:19,600 --> 00:22:24,200
Speaker 1: reached peak multilateralism. Actually, I would say that today we

363
00:22:24,400 --> 00:22:28,760
Speaker 1: have to defend multilateralism. We have to prove that this

364
00:22:29,040 --> 00:22:32,800
Speaker 1: is no way, because otherwise there's gonna be a lot

365
00:22:32,840 --> 00:22:37,360
Speaker 1: of pressure against multilateralism. There already is, and we're trying

366
00:22:37,440 --> 00:22:40,000
Speaker 1: to push it back. And Gary as always, thank you

367
00:22:40,040 --> 00:22:42,159
Speaker 1: so much for joining us. He as the obviously the

368
00:22:42,359 --> 00:22:57,520
Speaker 1: Secretary General. And hell Guria was really eloquent off the

369
00:22:57,640 --> 00:23:01,920
Speaker 1: microphone about the differential between the I M FEW and

370
00:23:02,040 --> 00:23:06,320
Speaker 1: the grimmer oe us off the mic. No, no, but

371
00:23:06,440 --> 00:23:08,800
Speaker 1: this is published. It's published news that I M F

372
00:23:08,960 --> 00:23:11,000
Speaker 1: is more optimistic right now than O. E. C. D.

373
00:23:11,440 --> 00:23:14,080
Speaker 1: And all our good guests on Bloomberg Surveillance. We go

374
00:23:14,240 --> 00:23:16,760
Speaker 1: back home with a variance of opinion while the guest

375
00:23:16,840 --> 00:23:20,720
Speaker 1: coverage continues with Steve Paliuca Bank Capital C. Stephen. Great

376
00:23:20,760 --> 00:23:22,400
Speaker 1: to have you with us, Great to be here, fantastic

377
00:23:22,480 --> 00:23:23,600
Speaker 1: to have you with us in the studio. And I

378
00:23:23,640 --> 00:23:25,720
Speaker 1: finally tell you here let's talk about that. How's the

379
00:23:25,760 --> 00:23:28,320
Speaker 1: economy got a series of businesses through the U. S

380
00:23:28,359 --> 00:23:30,360
Speaker 1: economy at the moment worldwide for that matter, as well?

381
00:23:30,520 --> 00:23:32,960
Speaker 1: What do you say? You know, I agree with Telman,

382
00:23:33,000 --> 00:23:35,280
Speaker 1: it's kind of chugging along. Our businesses are doing well,

383
00:23:35,720 --> 00:23:39,320
Speaker 1: record on record low unemployment in the US. We've had

384
00:23:39,440 --> 00:23:41,879
Speaker 1: we've had kind of an oil dividend for six or

385
00:23:41,920 --> 00:23:45,679
Speaker 1: seven years now. Oil is very cheap. Energy is very cheap. Uh,

386
00:23:46,320 --> 00:23:49,000
Speaker 1: and so planes are full, you know, restaurants for fall

387
00:23:49,080 --> 00:23:50,960
Speaker 1: and things are going pretty well. What's the scale meter

388
00:23:51,160 --> 00:23:53,920
Speaker 1: right now for bank capital that everybody's out there? We

389
00:23:54,000 --> 00:23:56,960
Speaker 1: got to scale this scale, that defined scale and what

390
00:23:57,080 --> 00:23:59,879
Speaker 1: it means for you, Well, we really try to just

391
00:24:00,040 --> 00:24:01,840
Speaker 1: do the best transactions built. We wudn't want to be

392
00:24:01,840 --> 00:24:03,800
Speaker 1: the biggest, We want to be the best. We have

393
00:24:04,160 --> 00:24:06,600
Speaker 1: about a hundred and five billion dollars of assets today.

394
00:24:07,119 --> 00:24:08,920
Speaker 1: We think that brings us an advantage because we're a

395
00:24:08,920 --> 00:24:11,920
Speaker 1: global firm. We actually stem from a consulting firm. We

396
00:24:11,960 --> 00:24:14,720
Speaker 1: weren't really financial people, and the belief was back in

397
00:24:16,119 --> 00:24:18,159
Speaker 1: from started with Bill Bain and mid Romney in that

398
00:24:18,800 --> 00:24:21,480
Speaker 1: we could take the consulting skills and really transform business.

399
00:24:22,080 --> 00:24:24,440
Speaker 1: This is a really important point. I'm gonna stake this

400
00:24:24,520 --> 00:24:26,320
Speaker 1: and you tell me if I'm wrong. You're not slaves

401
00:24:26,359 --> 00:24:28,760
Speaker 1: to internal ready to return. You're looking at it from

402
00:24:28,800 --> 00:24:31,360
Speaker 1: a different view. Explain that, well, we try to take

403
00:24:31,359 --> 00:24:33,359
Speaker 1: a long term perspective. And the beauty of the model

404
00:24:33,400 --> 00:24:35,440
Speaker 1: and why the model I think generally has grown so

405
00:24:35,640 --> 00:24:38,600
Speaker 1: fast is that we don't have to coorely learnings. We

406
00:24:38,640 --> 00:24:42,000
Speaker 1: can invest in new products, invest in new software. UM

407
00:24:42,200 --> 00:24:44,679
Speaker 1: don't have that kind of pressure. So private equity has

408
00:24:44,680 --> 00:24:46,359
Speaker 1: grown from I don't know, ten or twelve companies back

409
00:24:46,359 --> 00:24:48,879
Speaker 1: when I started, to four thousand companies and as a

410
00:24:49,000 --> 00:24:51,280
Speaker 1: very significant factor in the economy right now and has

411
00:24:51,320 --> 00:24:53,280
Speaker 1: a real place in the economy because the business model

412
00:24:53,400 --> 00:24:56,399
Speaker 1: is working of kind of owner operators working in concert

413
00:24:56,480 --> 00:24:58,199
Speaker 1: management to build a great companies. That's the bottom line.

414
00:24:58,320 --> 00:25:00,600
Speaker 1: Let's talk about the business model because it comes under

415
00:25:00,640 --> 00:25:02,760
Speaker 1: five from a lot of people, as you know quite well. State,

416
00:25:03,040 --> 00:25:05,920
Speaker 1: I'm just wondering, how is it is sustainable at the moment,

417
00:25:06,000 --> 00:25:08,080
Speaker 1: given that there's so much more money in your industry

418
00:25:08,119 --> 00:25:10,840
Speaker 1: compared to say, whether we're when we were twenty thirty

419
00:25:10,920 --> 00:25:12,960
Speaker 1: years ago. Well, what's really interesting. I did an interview

420
00:25:13,000 --> 00:25:16,719
Speaker 1: in Yeah where that was the exact same state question, UM,

421
00:25:16,760 --> 00:25:18,080
Speaker 1: and then I did one in ninety nine. It was

422
00:25:18,119 --> 00:25:23,920
Speaker 1: the same statement and Ferrell guided from good good learner

423
00:25:24,160 --> 00:25:26,320
Speaker 1: and it's a legitimate question. But what's happened from in

424
00:25:26,359 --> 00:25:30,320
Speaker 1: the industry is in in eighty nine, it was mainly USA,

425
00:25:31,160 --> 00:25:34,200
Speaker 1: and then it expanded in the in the nineties into

426
00:25:34,200 --> 00:25:37,600
Speaker 1: global and then it expanded into technology and medicine and

427
00:25:37,680 --> 00:25:41,680
Speaker 1: other products. And so the the ability to kind of

428
00:25:41,720 --> 00:25:44,320
Speaker 1: put money to work and be global has expanded the industry.

429
00:25:44,720 --> 00:25:46,800
Speaker 1: So I actually think there's a lot of money out there,

430
00:25:47,080 --> 00:25:50,359
Speaker 1: but the returns the private equity are still world class

431
00:25:50,400 --> 00:25:54,280
Speaker 1: because the model has worked. Let's talk projects, patient capital,

432
00:25:54,400 --> 00:25:59,360
Speaker 1: getting together public private in Italy cruise ships Richard Branson.

433
00:25:59,480 --> 00:26:01,840
Speaker 1: All sounds very excelling. What are you talking about? This

434
00:26:02,040 --> 00:26:04,680
Speaker 1: is something you guys are doing right, But we're really excited. Uh.

435
00:26:05,600 --> 00:26:07,960
Speaker 1: Richard came to us about four years ago. My partner

436
00:26:08,080 --> 00:26:10,920
Speaker 1: Ryan Cotton and I and UH said he wanted to

437
00:26:10,960 --> 00:26:12,800
Speaker 1: start a brand new cruise line. It was gonna be

438
00:26:12,800 --> 00:26:15,720
Speaker 1: different from everyone out there, and we went on that

439
00:26:15,800 --> 00:26:18,480
Speaker 1: journey with him. It's been a great partnership. And right

440
00:26:18,520 --> 00:26:21,600
Speaker 1: now the first boat being built in Italy is going

441
00:26:21,640 --> 00:26:23,960
Speaker 1: to be delivered to the US and we'll start sailing

442
00:26:24,000 --> 00:26:27,280
Speaker 1: out of Miami. And this is in punishing the Italian government. Yes,

443
00:26:27,600 --> 00:26:30,600
Speaker 1: the town government is into job creation and These boats

444
00:26:30,680 --> 00:26:32,679
Speaker 1: create a lot of jobs, and so there's a they

445
00:26:32,760 --> 00:26:35,400
Speaker 1: give you a financing package. So our seven fifty million

446
00:26:35,440 --> 00:26:38,639
Speaker 1: equity plus a two point two billion financing package has increased.

447
00:26:38,720 --> 00:26:43,840
Speaker 1: What's what's gonna be the architectural or experiential distinction of

448
00:26:44,000 --> 00:26:47,280
Speaker 1: this boat versus the other boats. That's the stereotype of

449
00:26:47,359 --> 00:26:49,760
Speaker 1: the industry. These are very unique boats. That's going to

450
00:26:49,840 --> 00:26:52,200
Speaker 1: be all adult. First of all, the only cruise line

451
00:26:52,240 --> 00:26:54,640
Speaker 1: that's that's all adult. And then it has that Richard

452
00:26:54,640 --> 00:26:56,760
Speaker 1: Branson touch. It's just like Love Island on the water.

453
00:26:57,080 --> 00:27:00,639
Speaker 1: It's gonna be amazing. Love Island. Don't know what love?

454
00:27:01,280 --> 00:27:04,080
Speaker 1: Could you please explain to our radio and television office.

455
00:27:08,200 --> 00:27:10,359
Speaker 1: But we are going to have a kind of a

456
00:27:10,400 --> 00:27:13,280
Speaker 1: private island experience and in Bemity with the cruise and

457
00:27:13,400 --> 00:27:17,679
Speaker 1: the boats are designed so there's a huge outside spaces, hammocks, restaurants, clubs.

458
00:27:17,720 --> 00:27:20,560
Speaker 1: It's going to be incredible. The interview with you, Steve

459
00:27:20,720 --> 00:27:23,159
Speaker 1: is always with a shift of basketball at the end,

460
00:27:23,240 --> 00:27:25,760
Speaker 1: and we talked light about it, but this is really serious.

461
00:27:25,800 --> 00:27:28,360
Speaker 1: And I'm gonna give an example here with some lightness

462
00:27:28,400 --> 00:27:32,560
Speaker 1: and respect of Mr Stern. The giant has died in basketball,

463
00:27:32,680 --> 00:27:35,720
Speaker 1: but it's all of sport. John Farrell's A C. Milan

464
00:27:35,920 --> 00:27:38,520
Speaker 1: is so bad, They've got to go out and spend

465
00:27:38,640 --> 00:27:42,399
Speaker 1: a lot, a lot of money on talent. Mr Stern

466
00:27:42,720 --> 00:27:46,399
Speaker 1: invented that with the NBA. With Mr Jordan's explain what

467
00:27:46,600 --> 00:27:50,720
Speaker 1: David Stern did to the economics and the aspiration of

468
00:27:50,880 --> 00:27:54,000
Speaker 1: salary in the sport. David was a huge vision area,

469
00:27:54,520 --> 00:27:58,800
Speaker 1: not only in terms of introducing UH players split in

470
00:27:58,840 --> 00:28:01,919
Speaker 1: a salary cap, which is fair to everybody, but being

471
00:28:02,000 --> 00:28:05,240
Speaker 1: way out ahead of the game, going to China fifteen

472
00:28:05,320 --> 00:28:08,480
Speaker 1: years ago, going to going to Europe, having international offices

473
00:28:08,760 --> 00:28:10,840
Speaker 1: at that time, many of the NBA owners were saying, hey,

474
00:28:10,880 --> 00:28:12,800
Speaker 1: we're spending a lot of money and there's no basketball.

475
00:28:13,080 --> 00:28:14,879
Speaker 1: His view as best weall be a world game that

476
00:28:14,920 --> 00:28:18,360
Speaker 1: would expand, it would expand viewership, and that vision became fulfilled.

477
00:28:18,640 --> 00:28:20,520
Speaker 1: He was unique in that he had he was a

478
00:28:20,600 --> 00:28:22,720
Speaker 1: visionary but but also a micro manager, so he was

479
00:28:22,720 --> 00:28:24,879
Speaker 1: into every detail of the NBA to make sure it

480
00:28:24,960 --> 00:28:27,560
Speaker 1: was running well, great for fans and he will he'll

481
00:28:27,560 --> 00:28:28,840
Speaker 1: be really missed. It was a sad day at his

482
00:28:28,920 --> 00:28:30,840
Speaker 1: funeral on Tuesday. Step you co owner at the Salt

483
00:28:30,880 --> 00:28:34,080
Speaker 1: Sex Your friends are into European football. Mr Henry over

484
00:28:34,119 --> 00:28:37,640
Speaker 1: at Liverpool. Mr Pelatao at Roma in Italy. How much

485
00:28:37,760 --> 00:28:41,520
Speaker 1: harder is it to make it in European football just

486
00:28:41,640 --> 00:28:44,040
Speaker 1: in terms of how to franchisees run compared to say

487
00:28:44,120 --> 00:28:47,360
Speaker 1: something like basketball in America. Well, they've done a fantastic

488
00:28:47,480 --> 00:28:50,280
Speaker 1: job over there in Roma has really contended and hadn't

489
00:28:50,280 --> 00:28:53,000
Speaker 1: contended before, and John Henry has a fantastic team that

490
00:28:53,040 --> 00:28:56,200
Speaker 1: they built. The structure is a lot more difficult than

491
00:28:56,240 --> 00:28:59,480
Speaker 1: the USA sports structure because there really is not any

492
00:28:59,560 --> 00:29:03,840
Speaker 1: salary controls um and and you can get relegated, so

493
00:29:03,960 --> 00:29:05,680
Speaker 1: somebody can pay a lot of money for a franchise

494
00:29:05,720 --> 00:29:08,200
Speaker 1: and then be in the minor leagues. So it introduces

495
00:29:08,280 --> 00:29:09,840
Speaker 1: a new level of risks. So you have to be

496
00:29:10,320 --> 00:29:12,560
Speaker 1: really on top of those clubs and and and really

497
00:29:13,000 --> 00:29:15,560
Speaker 1: uh manage those titanings so you don't take too many risks.

498
00:29:15,640 --> 00:29:19,800
Speaker 1: Should we relegate in American sports to provide a new tension?

499
00:29:21,200 --> 00:29:23,719
Speaker 1: I don't think so. You know, the great news right

500
00:29:23,760 --> 00:29:27,600
Speaker 1: now is in both American football in basketball there's incredible parody.

501
00:29:28,040 --> 00:29:30,320
Speaker 1: So any there's many teams that can win the NBA Championship.

502
00:29:30,320 --> 00:29:31,560
Speaker 1: I hope it's gonna be the Celtics, but there are

503
00:29:31,600 --> 00:29:34,959
Speaker 1: many teams really win that championship. So so there's been

504
00:29:35,000 --> 00:29:37,560
Speaker 1: competitive attention in these cities, and I think relegation is

505
00:29:37,600 --> 00:29:39,240
Speaker 1: just a pressure of this night the Patriots in the

506
00:29:39,280 --> 00:29:43,360
Speaker 1: Super Bowl. Haw's it look not very good next year?

507
00:29:43,440 --> 00:29:45,000
Speaker 1: Could you give us a call on the Super Bowl

508
00:29:45,120 --> 00:29:48,160
Speaker 1: coming up? Period a bit? I think I think that

509
00:29:49,520 --> 00:29:52,720
Speaker 1: the forty Niners look good, but Kansas City looks like

510
00:29:52,760 --> 00:29:55,040
Speaker 1: a very very strong team. And that's a younger team

511
00:29:55,080 --> 00:29:57,400
Speaker 1: and it's more dynamic. I mean that game is changing.

512
00:29:57,480 --> 00:30:00,400
Speaker 1: With a gentleman from Kansas City is absolutely. They look

513
00:30:00,440 --> 00:30:03,240
Speaker 1: pretty devastating to me, and uh so it should be

514
00:30:03,280 --> 00:30:06,000
Speaker 1: really funny. Well, what's the style of basketball that's gonna change?

515
00:30:06,000 --> 00:30:08,680
Speaker 1: They're gonna ram the thirties three point line out further?

516
00:30:09,040 --> 00:30:10,520
Speaker 1: I don't think so. I think the fans like the

517
00:30:10,560 --> 00:30:12,560
Speaker 1: way it is now. The big change in the game

518
00:30:12,640 --> 00:30:16,520
Speaker 1: have been introducing more mobility and ability to shoot that three,

519
00:30:16,560 --> 00:30:18,640
Speaker 1: and it's been very exciting. That was a full segment

520
00:30:18,760 --> 00:30:21,640
Speaker 1: from Davila, Switzerland. It's David great to be here on

521
00:30:21,680 --> 00:30:25,760
Speaker 1: sports see Tarqua floor here at Davos. It's a parquet Florida.

522
00:30:26,520 --> 00:30:30,640
Speaker 1: Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and

523
00:30:30,800 --> 00:30:36,080
Speaker 1: listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast

524
00:30:36,160 --> 00:30:40,400
Speaker 1: platform you prefer. I'm on Twitter at Tom Keane before

525
00:30:40,440 --> 00:30:44,280
Speaker 1: the podcast. You can always catch us worldwide. I'm Bloomberg

526
00:30:44,360 --> 00:30:44,640
Speaker 1: Radio