Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane Jay Ley.
Speaker 1: We bring you insight from the best in economics, finance, investment,
Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, Sam Cloud,
Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. To
Speaker 1: those who think that it's autopilot, I think that's that's ridiculous. Um,
Speaker 1: there is a forward guidance which is strong, which is
Speaker 1: setting you know, a very clear timetable that is fact independent.
Speaker 1: But let's look at the facts. Let's look at how
Speaker 1: the economy evolves. That's what we do. We need to
Speaker 1: be fact driven. We need to be clear now communication
Speaker 1: and we will be. And I'm saying today don't assume
Speaker 1: that it will be on autopilot. Yesterday you talked to
Speaker 1: quite extensively about negative rates. He said, tearing is working well,
Speaker 1: but is there a point? Actually the side effects of
Speaker 1: negative rates means that you need to scale it back.
Speaker 1: We will be looking at the side effects as part
Speaker 1: of the strategy review. There's no question about that. We
Speaker 1: need to be attentive to that. Financial stability is not
Speaker 1: our first driver of concern and consideration, but we will.
Speaker 1: We will have to look at it, of course is
Speaker 1: and we need don't forget that, we need to have
Speaker 1: a banking sector in the your area that acts as
Speaker 1: a good channel of transmission, which means that, which means
Speaker 1: one that you could extend hearing or the multiple responses.
Speaker 1: It's not, as I said yesterday, we're not considering that
Speaker 1: at the moment. The President Trump left have also saying
Speaker 1: that actually still thinking about possible tariffs against Germany and
Speaker 1: Europe in general. You're seeing, you know, growth in Europe.
Speaker 1: How do you match up the two We're saying modest
Speaker 1: growth in Europe, we're saying a bit more modest downside
Speaker 1: risks as well. So that's probably the reason why it's
Speaker 1: it's kind of slightly balanced to the upside, but very
Speaker 1: slightly um you know, we we shall see. What I
Speaker 1: was pleased about is to see that there had been
Speaker 1: a good first meeting between Lay and President of the
Speaker 1: European Commission and President Trump. So that's that's, you know,
Speaker 1: it's better to start off on on on a good footing,
Speaker 1: and there would be difficult relationships going forward and points
Speaker 1: of negotiations that will be hard, you know, whether it's trade,
Speaker 1: whether it's tags, whether it's technology, whether it's energy, the
Speaker 1: multiple topics. But as a Usula said, Europe and the
Speaker 1: United States have been friends for a long long time.
Speaker 1: It will not go away. And in many instances they
Speaker 1: have joint interests. But Europe is different. Europe operates on
Speaker 1: different values with different systems and and that needs to
Speaker 1: be secured and preserved for the sake of the Europeans.
Speaker 1: There are our tears. The biggest concerned easy for for
Speaker 1: the European economy. It's a big concern. Let's face it. Um,
Speaker 1: don't get that there is trade intra Europe and that
Speaker 1: would not need be affected, but trade with the United States,
Speaker 1: which is an important trade partner, would would be affected
Speaker 1: if there was a sudden rise on on ontariff's yes,
Speaker 1: or a terry fools where you know it for that
Speaker 1: you you you tariff me, I'll terryf you. That's going
Speaker 1: to operate as a break on the economy for sure.
Speaker 1: You've done a number of public events in the last
Speaker 1: couple of weeks. What concerns that people raise with you? Um,
Speaker 1: you know it varies. UM. When I talked to when
Speaker 1: I talk to family members, they say, explain what you
Speaker 1: do mom? Please we don't really understand. And that's a
Speaker 1: real good signal for me that we need to to
Speaker 1: communicate in a more explicit way about what we procure.
Speaker 1: You know, because if we explain that exactly what we do,
Speaker 1: it's it's technically sound. The experts will understand, family members
Speaker 1: and that actually drivers, the hairdressers and the shopkeepers are
Speaker 1: not going to understand. But if we explain that what
Speaker 1: we do actually procures growth, facilitates investment, and creates jobs,
Speaker 1: then it means something. But we should not be the
Speaker 1: only one to try to do that. So is it
Speaker 1: reconnecting with the citizens or I think that's an important factor. Yeah,
Speaker 1: because you know, the people of Europe, particularly the your area,
Speaker 1: are quite bullish about the Euro. They're pleased to have
Speaker 1: the Euro as their currency, and we do everything we
Speaker 1: can to make sure that Euros can flow easily, that
Speaker 1: payments are secure, that what they have is solid stability. Um.
Speaker 1: But but I think we need we need to do
Speaker 1: a bit more And a lot of the focus here
Speaker 1: is on sustainability. You talked about sustainability. Is there a
Speaker 1: danger that we have outsized expectations about what central banks
Speaker 1: can do to tackle this? Possibly? But I think that nonetheless,
Speaker 1: each and everyone of us has to floor what he
Speaker 1: or she can do about the current risks. And I
Speaker 1: think that it has been under The risks caused by
Speaker 1: climate change on corporates, on the economy, on general stability
Speaker 1: have been largely underestimated, and for good reasons, because many
Speaker 1: risks are difficult to assess. We are talking about what
Speaker 1: happens in thirty years. It's not in the cards of
Speaker 1: a stress tester to anticipate what happens in thirty years.
Speaker 1: You know, you look at the immediate future, you do.
Speaker 1: You look at the market risks, you look at macro risks,
Speaker 1: but the climate risks in thirty years that need action. Now,
Speaker 1: if we want to remedy those risks, that's difficult, but
Speaker 1: we need We need to do it absolutely the start
Speaker 1: you of what's available, and that's really one of the
Speaker 1: great focuses for Christine Lagarde to assist her economists with
Speaker 1: the tools available, given how odd the times are a
Speaker 1: perfect person to speak to honest the limitations that constraints
Speaker 1: that we see with an economics, finance and particularly investment
Speaker 1: in Sheila Ptel, She's a golden Sax asset management. She
Speaker 1: is their chairman, and we're thrilled she could join us
Speaker 1: for what I wish was a four hour conversation, and
Speaker 1: we're not going to do that. Uh. Today, I have
Speaker 1: eight things to talk about and only a few times
Speaker 1: or two. I need to talk first of all about
Speaker 1: your core obligation to the Golden Sex company. Golden Sacks
Speaker 1: Asset Management for years has had not a stumble, But
Speaker 1: I need to be focused. You have had great acclaim
Speaker 1: for bringing a new focus to Golden Sex Asset Management
Speaker 1: to compete out there? What's the Patel focus for Golden
Speaker 1: Sex Asset Management? Look? As an investor, you focus a
Speaker 1: number one has to be your client needs. And what
Speaker 1: I would say we've tried to do is refocused our
Speaker 1: entire investing team on the questions clients are asking us.
Speaker 1: What are they asking you right now? They're asking us
Speaker 1: about E s G and sustainability. They're asking us about
Speaker 1: what to do in this low yield environment, and they're
Speaker 1: asking us how they should think about asset allocation in
Speaker 1: the broader context of all their stakeholders. What we heard
Speaker 1: this week and a Happy Valley is the arch question
Speaker 1: of the efficient frontier and asset allocation given low rates
Speaker 1: we've got boom bust, and I don't want to get
Speaker 1: into boom busted. You your your leader, David was quite
Speaker 1: it was quite good on that as well. Forget about that.
Speaker 1: Forget about I gotta put my money in the market
Speaker 1: after bonds up, yields down, stocks up, up, up up
Speaker 1: is your answer to buy more tesla? Well, it doesn't
Speaker 1: necessarily have to be Tesla, but I would say people
Speaker 1: have been penalized more for trying to guess when the
Speaker 1: market would go down, then by keeping to a steady
Speaker 1: core asset allocation, particularly with exposure to equities, when you
Speaker 1: believe that growth is stable. Do we think that growth
Speaker 1: is growing exponentially growing getting better over the next year. No,
Speaker 1: But do we think the US looks decent? There are
Speaker 1: hotspots in Europe of both growth and pain, and that
Speaker 1: we have interesting opportunities in em and particularly in Japan. Yes, Okay,
Speaker 1: your charm as you came up on the trading side,
Speaker 1: on the management side, on what I'm going to call
Speaker 1: the execution side. This isn't some Ivory Tower exercise for you.
Speaker 1: Even though you've got prodigious academics from an execution trading side,
Speaker 1: your expert in the observance of liquidity, is a liquidity
Speaker 1: there in the market's given shocks. Right now, I would
Speaker 1: say liquidity is there. We're certainly in a better place
Speaker 1: than we were a year ago at DAVAS. A year
Speaker 1: ago you had everyone worried about liquidity, extremely worried about
Speaker 1: where the markets went head and we were counseling carm
Speaker 1: and I think today you have people worried about liquidity
Speaker 1: given the mix of private to public that they have
Speaker 1: in their portfolios, particularly the way that various investors have
Speaker 1: leaned into things like private credit. Where we see the
Speaker 1: balance is by making sure that the overall portfolio has
Speaker 1: liquidity needed for the needs That will be different for
Speaker 1: a pension than a sovereign wealth fund and for an
Speaker 1: insurance company. Can I go off script on a Friday?
Speaker 1: We can do that, Shela Patil portfolio insurance. This is
Speaker 1: before your time. Our e t s the new portfolio insurance.
Speaker 1: This is beneath you to talk about. I get that
Speaker 1: everybody listening and watching should they be petrified of the
Speaker 1: certitude that ETFs are the only way to go. I
Speaker 1: don't think it's a new portfolio insurance, and I think
Speaker 1: there's a huge diversification of the options in the e
Speaker 1: t F markets, they span an incredible number. Well, it's
Speaker 1: a very very broad market. I think what we have
Speaker 1: to think about with e t s is really what
Speaker 1: is the purpose of having them in your portfolio? Is
Speaker 1: it the best exposure to a particular index is in
Speaker 1: an area where you just want beta versus alpha. And
Speaker 1: it goes back to the question of do you want
Speaker 1: active or passive in certain segments of the market. I
Speaker 1: think that's a question that investors need to answer themselves
Speaker 1: over and over again, and it's become very binary. We
Speaker 1: love binaries. It's easier to say choose air, choose be,
Speaker 1: But the reality is we see a bounce portfolio includes
Speaker 1: both passive and active, depending on where you think the
Speaker 1: opportunity set is in an asset class. Unfortunately, last night
Speaker 1: I was talking about c D e F. I wasn't
Speaker 1: binary last night. Sheila was right, that's a simpler in
Speaker 1: better world. What we're gona do today is trying to
Speaker 1: give you a recapitulation of the proper theory and foundation
Speaker 1: of this. Joining us later Robert Schiller, the Laureate of
Speaker 1: Yale University and joining us now someone as a claim
Speaker 1: Jacob Frankel joins as chairman of JP Morgan Chase International,
Speaker 1: former governor of the Bank of Israel and Chicago academic
Speaker 1: from just a few years ago as well. The uproar
Speaker 1: here is the sick locality of markets linked into your
Speaker 1: world of economics. Possibly is done and there will be
Speaker 1: a more leaden, non vollow a trend because central banks
Speaker 1: have dragged us down to the zero bound. I don't
Speaker 1: see this in the academic literature. Is it an original
Speaker 1: idea that needs to be tested to begin with? It
Speaker 1: is being tested, and frankly, I think that the zero bound,
Speaker 1: or the driving down on interest rate to zero was emphasized,
Speaker 1: has been emphasized as the way in which the crisis
Speaker 1: that emanated twelve years ago came to the system so
Speaker 1: called unconventional policies. But if we are talking now about
Speaker 1: a recovery, getting out of it, coming back to normalcy,
Speaker 1: I think that the zero interest rates has exhausted its
Speaker 1: benefits and it's time now to think again, how do
Speaker 1: we come to the highway from this particular detail, to
Speaker 1: return to the highway in which interest rates are at
Speaker 1: normal level, in which financial industry can perform well. Because
Speaker 1: at the present time, engining systems, insurance, life insurance, even
Speaker 1: banking have to redesign their business model to accommodate zero
Speaker 1: interest rates, which makes no sense. I think that at
Speaker 1: this stage we will need to bring back the other
Speaker 1: policy instruments. The other policy instruments have to do with
Speaker 1: fiscal policy, have to do with structure policy. Today, the
Speaker 1: greatest danger to the economy is growth comes from fragmentation.
Speaker 1: The world is global, policy making is local. The pressures
Speaker 1: on policy makers come from domestic pressures. And if you
Speaker 1: have great fragmentation within economies, you will end up having
Speaker 1: also great fugment fragmentations between economies and the bridges that
Speaker 1: are so essential for the functioning of the global economy.
Speaker 1: Maybe have your voice is so important. I have to
Speaker 1: get this on record. If we begin a path to normalcy,
Speaker 1: do we sustain a Latin non volatile state or do
Speaker 1: we maintain the normal historic boom and bus cycles. At
Speaker 1: Rogof and Rhiner, I've talked about which is it is
Speaker 1: a binomial? Is a bipolar? Almost? Which is it? It's no,
Speaker 1: it's not a law of nature that it will be
Speaker 1: either or it depends on the policy. Let me give
Speaker 1: you an example here the recovery started, and suddenly the
Speaker 1: trade wall came in. Trade wall means you break a
Speaker 1: bridge between important partners. This creates volatility. Then there is
Speaker 1: a glimpse of hope that this trade wall may be settled,
Speaker 1: at least as phase one. Then suddenly the markets like
Speaker 1: it again. Amusan coming down to Earth will say, hey,
Speaker 1: we have volatility. But let's understand that volatility is a
Speaker 1: reflection of the signals that policy makers give to markets,
Speaker 1: and in the market in which financial markets are important,
Speaker 1: that they are growing to be more and more important.
Speaker 1: That's the market in which expectations about the future transmitting
Speaker 1: itself to current behavior. So let's be very careful worlds metals,
Speaker 1: expectations metters, and if things are still not done but
Speaker 1: they are expected to be done, volatility already comes in
Speaker 1: to your claim on to on on the bank of Israel,
Speaker 1: and folks, let's make clear here as we more. In
Speaker 1: the late Paul Worker, people talk of Frankel as a
Speaker 1: vocal equivalent with the courage of what he did in
Speaker 1: Israel years ago. You had a tool kit. Then Legard
Speaker 1: this morning with Francine talks about tools or finities is
Speaker 1: written about this authoritatively at the FED. What's in the
Speaker 1: tool kit at the zero bound. Well, the tool kit
Speaker 1: today is much less potent than what it used to be,
Speaker 1: which is Bridgewater's point alately, but it is also not
Speaker 1: a cause of nature. It is again a policy maker making.
Speaker 1: What do I have in mind? The most important tool
Speaker 1: in the policy arsenal is interest rate. Of course, you
Speaker 1: can always speak about macroprudential policies. You can speak about guidance,
Speaker 1: how to manipulate expectations, you can speak about many things.
Speaker 1: But let's face it, it is the interest rates the
Speaker 1: central bank is setting, which is the jewel in the
Speaker 1: crown of policy making arsenal. If we think if it
Speaker 1: is being stuck at close to zero, in addition to
Speaker 1: the damage to the financial industry, it also projects that
Speaker 1: the monetary authority can do in the future less than
Speaker 1: what he did in the past, which is another reason
Speaker 1: to wake up other policy instruments. I think that the
Speaker 1: only game in town syndrome in which central banks have
Speaker 1: become two centered to the debate, has to be changed.
Speaker 1: It's a very very dubious compliment. The spirited conversation he
Speaker 1: or Jacob Franklin. Some of the themes that we're seeing
Speaker 1: here from central banks and praticularly from those after a
Speaker 1: bang up successful two thousand nineteen Dr Frankel, of course,
Speaker 1: with JP Morgan International Panels continue a very important panel
Speaker 1: UH this morning on central banking and on treasury as well.
Speaker 1: What I like about this panel, it's a mixture of
Speaker 1: the bankers and the finance officials together and has led
Speaker 1: to a spirited conversation about the mysteries. Of course, we
Speaker 1: can summarize that and maybe do better than five or
Speaker 1: six people talking at once to singularly talk to the
Speaker 1: gentleman from Mexico. I know Guria brings first rate academic
Speaker 1: economics to his job at the O E c D
Speaker 1: UH as their secretary General has held court for some times.
Speaker 1: And the good news here with Lawrence Boone and the
Speaker 1: other great analysts at the O E c D is
Speaker 1: very simply he can synthesize a lot for us. He
Speaker 1: takes the sunglasses off now so we can do TV.
Speaker 1: I wore my sunglasses one and Saturn. They said, don't
Speaker 1: ever do that again. Wonderful they have you here. But
Speaker 1: the themes are so important. There's Qi, there's boomer bus,
Speaker 1: or this is that you're gonna go back to your
Speaker 1: lawns Boon and say this is what I want you
Speaker 1: to research. What is it. Basically, we have to get
Speaker 1: back to productivity, we have to get back to skills,
Speaker 1: and we basically have to find a way to lower
Speaker 1: the trade tensions. They're still there. They've already cost us
Speaker 1: more than one percent of the world's GDP growth. Uh
Speaker 1: the rate of growth of trade went from five and
Speaker 1: a half percent to practically flat. The rate of growth
Speaker 1: of investment went from five six percent. Voices on held
Speaker 1: to the President of the United States, we're able to
Speaker 1: corner Donald Trump at the espresso bar and say, look,
Speaker 1: this is the way it is for the O. E c. D,
Speaker 1: if not for your America. We have said it in
Speaker 1: so many ways, written it, we've insisted, we published it,
Speaker 1: and basically saying the trade tensions are causing disruption. Why
Speaker 1: because they're causing uncertainty. Uncertainty killed investment. Investment, of course,
Speaker 1: is the seed of the growth of tomorrow. So basically,
Speaker 1: by by creating the trade tensions, you kill the investment,
Speaker 1: you kill the growth. How this is what has happened.
Speaker 1: How much of a headache is does the US and
Speaker 1: in particular does the US administration think that actually tears
Speaker 1: work and will they use them against Europe? Well, first
Speaker 1: of all, I hope that they don't use them against Europe.
Speaker 1: And I think there's when there's a will, there's a way.
Speaker 1: And yesterday we found a way. The French UH agreed
Speaker 1: to defer the action on their digital taxation law, and
Speaker 1: the Americans agreed to defer the actions on their three
Speaker 1: or one you know, potentially the sanctions, et cetera. Because
Speaker 1: it was not just a question against French champagne or
Speaker 1: French wine. It was a European against the United States issue. Eventually,
Speaker 1: so and what happened they both agreed that they would
Speaker 1: give multilateral solutions a chance. That means to the o
Speaker 1: e c D the mandate to work on a final
Speaker 1: solution on digital taxation, so Europe can come together. So
Speaker 1: how can the O c D come together on this? Well,
Speaker 1: because we have a hundred and thirty seven countries working
Speaker 1: on this solution, not just Europe, and by the way,
Speaker 1: a nightmare. We had pretty strong support from practically every
Speaker 1: European country and the US have been participating rather enthusiastically.
Speaker 1: Why because there are a number of elements of the
Speaker 1: package that we're proposing on digital taxation that are very
Speaker 1: akin to the to the tax reform that was done
Speaker 1: in the United States a couple of years ago. So
Speaker 1: you think you'll be able to break a deal the
Speaker 1: in in the time that has run seen the think
Speaker 1: of the option instead of a multilateral solution which everybody
Speaker 1: will embrace, and they're all willing to sunset their own
Speaker 1: domestic laws and come to the multilateral solution. Imagine forty
Speaker 1: five fifty whatever different legislations with different types of taxes,
Speaker 1: et cetera. And remember Europe is not on taxes. It's
Speaker 1: not Europe Brussels meaning the European Commission, every it's every
Speaker 1: country on its own. So I think that the alternative
Speaker 1: is so disruptive that they will all be trying very
Speaker 1: hard to get a deal within the the bureaucracy of
Speaker 1: the O E c D. Do you have a mercantile division?
Speaker 1: I mean, are we back to mercantilism here? Every every
Speaker 1: We have a trade division, we have a Trade Directorate,
Speaker 1: and we also have a director that deals with enterprise
Speaker 1: and financial affairs. So yes, the answers, yes, So where's
Speaker 1: the you're the students, you taught a man or eight
Speaker 1: years ago. This is really important. Are we back to
Speaker 1: not multilateral, not back to bilateral trilateral? Are we back
Speaker 1: to a mercantilistic every nation for itself? That's what I
Speaker 1: heard from the President when he gave that press conference here.
Speaker 1: How are we going to deal with things like international
Speaker 1: trade if not multilaterally? How are we going to deal
Speaker 1: with international investment flows if not multilaterally? How do we
Speaker 1: deal with migration flows if not multilaterally? How do you
Speaker 1: deal with things like climate? Are you predicting that the
Speaker 1: president United States policies will impinge on us multi multinational investment?
Speaker 1: Is he gonna limit the investment of Johnson and Johnson abroad?
Speaker 1: It is already having an impact lowering the rate of
Speaker 1: growth of the United States, just like it is having
Speaker 1: an impact on China. So already we know the cost
Speaker 1: of these trade tensions. They impinge directly on uh, the well,
Speaker 1: they create uncertainty, they create they create you know, lower growth,
Speaker 1: they create lower jobs. So if we know the consequences,
Speaker 1: you know, and we know that there are better options,
Speaker 1: let's go in that direction. But have we reached peak multilateralism?
Speaker 1: Does it just go down from here? No? You never
Speaker 1: reached peak multilateralism. Actually, I would say that today we
Speaker 1: have to defend multilateralism. We have to prove that this
Speaker 1: is no way, because otherwise there's gonna be a lot
Speaker 1: of pressure against multilateralism. There already is, and we're trying
Speaker 1: to push it back. And Gary as always, thank you
Speaker 1: so much for joining us. He as the obviously the
Speaker 1: Secretary General. And hell Guria was really eloquent off the
Speaker 1: microphone about the differential between the I M FEW and
Speaker 1: the grimmer oe us off the mic. No, no, but
Speaker 1: this is published. It's published news that I M F
Speaker 1: is more optimistic right now than O. E. C. D.
Speaker 1: And all our good guests on Bloomberg Surveillance. We go
Speaker 1: back home with a variance of opinion while the guest
Speaker 1: coverage continues with Steve Paliuca Bank Capital C. Stephen. Great
Speaker 1: to have you with us, Great to be here, fantastic
Speaker 1: to have you with us in the studio. And I
Speaker 1: finally tell you here let's talk about that. How's the
Speaker 1: economy got a series of businesses through the U. S
Speaker 1: economy at the moment worldwide for that matter, as well?
Speaker 1: What do you say? You know, I agree with Telman,
Speaker 1: it's kind of chugging along. Our businesses are doing well,
Speaker 1: record on record low unemployment in the US. We've had
Speaker 1: we've had kind of an oil dividend for six or
Speaker 1: seven years now. Oil is very cheap. Energy is very cheap. Uh,
Speaker 1: and so planes are full, you know, restaurants for fall
Speaker 1: and things are going pretty well. What's the scale meter
Speaker 1: right now for bank capital that everybody's out there? We
Speaker 1: got to scale this scale, that defined scale and what
Speaker 1: it means for you, Well, we really try to just
Speaker 1: do the best transactions built. We wudn't want to be
Speaker 1: the biggest, We want to be the best. We have
Speaker 1: about a hundred and five billion dollars of assets today.
Speaker 1: We think that brings us an advantage because we're a
Speaker 1: global firm. We actually stem from a consulting firm. We
Speaker 1: weren't really financial people, and the belief was back in
Speaker 1: from started with Bill Bain and mid Romney in that
Speaker 1: we could take the consulting skills and really transform business.
Speaker 1: This is a really important point. I'm gonna stake this
Speaker 1: and you tell me if I'm wrong. You're not slaves
Speaker 1: to internal ready to return. You're looking at it from
Speaker 1: a different view. Explain that, well, we try to take
Speaker 1: a long term perspective. And the beauty of the model
Speaker 1: and why the model I think generally has grown so
Speaker 1: fast is that we don't have to coorely learnings. We
Speaker 1: can invest in new products, invest in new software. UM
Speaker 1: don't have that kind of pressure. So private equity has
Speaker 1: grown from I don't know, ten or twelve companies back
Speaker 1: when I started, to four thousand companies and as a
Speaker 1: very significant factor in the economy right now and has
Speaker 1: a real place in the economy because the business model
Speaker 1: is working of kind of owner operators working in concert
Speaker 1: management to build a great companies. That's the bottom line.
Speaker 1: Let's talk about the business model because it comes under
Speaker 1: five from a lot of people, as you know quite well. State,
Speaker 1: I'm just wondering, how is it is sustainable at the moment,
Speaker 1: given that there's so much more money in your industry
Speaker 1: compared to say, whether we're when we were twenty thirty
Speaker 1: years ago. Well, what's really interesting. I did an interview
Speaker 1: in Yeah where that was the exact same state question, UM,
Speaker 1: and then I did one in ninety nine. It was
Speaker 1: the same statement and Ferrell guided from good good learner
Speaker 1: and it's a legitimate question. But what's happened from in
Speaker 1: the industry is in in eighty nine, it was mainly USA,
Speaker 1: and then it expanded in the in the nineties into
Speaker 1: global and then it expanded into technology and medicine and
Speaker 1: other products. And so the the ability to kind of
Speaker 1: put money to work and be global has expanded the industry.
Speaker 1: So I actually think there's a lot of money out there,
Speaker 1: but the returns the private equity are still world class
Speaker 1: because the model has worked. Let's talk projects, patient capital,
Speaker 1: getting together public private in Italy cruise ships Richard Branson.
Speaker 1: All sounds very excelling. What are you talking about? This
Speaker 1: is something you guys are doing right, But we're really excited. Uh.
Speaker 1: Richard came to us about four years ago. My partner
Speaker 1: Ryan Cotton and I and UH said he wanted to
Speaker 1: start a brand new cruise line. It was gonna be
Speaker 1: different from everyone out there, and we went on that
Speaker 1: journey with him. It's been a great partnership. And right
Speaker 1: now the first boat being built in Italy is going
Speaker 1: to be delivered to the US and we'll start sailing
Speaker 1: out of Miami. And this is in punishing the Italian government. Yes,
Speaker 1: the town government is into job creation and These boats
Speaker 1: create a lot of jobs, and so there's a they
Speaker 1: give you a financing package. So our seven fifty million
Speaker 1: equity plus a two point two billion financing package has increased.
Speaker 1: What's what's gonna be the architectural or experiential distinction of
Speaker 1: this boat versus the other boats. That's the stereotype of
Speaker 1: the industry. These are very unique boats. That's going to
Speaker 1: be all adult. First of all, the only cruise line
Speaker 1: that's that's all adult. And then it has that Richard
Speaker 1: Branson touch. It's just like Love Island on the water.
Speaker 1: It's gonna be amazing. Love Island. Don't know what love?
Speaker 1: Could you please explain to our radio and television office.
Speaker 1: But we are going to have a kind of a
Speaker 1: private island experience and in Bemity with the cruise and
Speaker 1: the boats are designed so there's a huge outside spaces, hammocks, restaurants, clubs.
Speaker 1: It's going to be incredible. The interview with you, Steve
Speaker 1: is always with a shift of basketball at the end,
Speaker 1: and we talked light about it, but this is really serious.
Speaker 1: And I'm gonna give an example here with some lightness
Speaker 1: and respect of Mr Stern. The giant has died in basketball,
Speaker 1: but it's all of sport. John Farrell's A C. Milan
Speaker 1: is so bad, They've got to go out and spend
Speaker 1: a lot, a lot of money on talent. Mr Stern
Speaker 1: invented that with the NBA. With Mr Jordan's explain what
Speaker 1: David Stern did to the economics and the aspiration of
Speaker 1: salary in the sport. David was a huge vision area,
Speaker 1: not only in terms of introducing UH players split in
Speaker 1: a salary cap, which is fair to everybody, but being
Speaker 1: way out ahead of the game, going to China fifteen
Speaker 1: years ago, going to going to Europe, having international offices
Speaker 1: at that time, many of the NBA owners were saying, hey,
Speaker 1: we're spending a lot of money and there's no basketball.
Speaker 1: His view as best weall be a world game that
Speaker 1: would expand, it would expand viewership, and that vision became fulfilled.
Speaker 1: He was unique in that he had he was a
Speaker 1: visionary but but also a micro manager, so he was
Speaker 1: into every detail of the NBA to make sure it
Speaker 1: was running well, great for fans and he will he'll
Speaker 1: be really missed. It was a sad day at his
Speaker 1: funeral on Tuesday. Step you co owner at the Salt
Speaker 1: Sex Your friends are into European football. Mr Henry over
Speaker 1: at Liverpool. Mr Pelatao at Roma in Italy. How much
Speaker 1: harder is it to make it in European football just
Speaker 1: in terms of how to franchisees run compared to say
Speaker 1: something like basketball in America. Well, they've done a fantastic
Speaker 1: job over there in Roma has really contended and hadn't
Speaker 1: contended before, and John Henry has a fantastic team that
Speaker 1: they built. The structure is a lot more difficult than
Speaker 1: the USA sports structure because there really is not any
Speaker 1: salary controls um and and you can get relegated, so
Speaker 1: somebody can pay a lot of money for a franchise
Speaker 1: and then be in the minor leagues. So it introduces
Speaker 1: a new level of risks. So you have to be
Speaker 1: really on top of those clubs and and and really
Speaker 1: uh manage those titanings so you don't take too many risks.
Speaker 1: Should we relegate in American sports to provide a new tension?
Speaker 1: I don't think so. You know, the great news right
Speaker 1: now is in both American football in basketball there's incredible parody.
Speaker 1: So any there's many teams that can win the NBA Championship.
Speaker 1: I hope it's gonna be the Celtics, but there are
Speaker 1: many teams really win that championship. So so there's been
Speaker 1: competitive attention in these cities, and I think relegation is
Speaker 1: just a pressure of this night the Patriots in the
Speaker 1: Super Bowl. Haw's it look not very good next year?
Speaker 1: Could you give us a call on the Super Bowl
Speaker 1: coming up? Period a bit? I think I think that
Speaker 1: the forty Niners look good, but Kansas City looks like
Speaker 1: a very very strong team. And that's a younger team
Speaker 1: and it's more dynamic. I mean that game is changing.
Speaker 1: With a gentleman from Kansas City is absolutely. They look
Speaker 1: pretty devastating to me, and uh so it should be
Speaker 1: really funny. Well, what's the style of basketball that's gonna change?
Speaker 1: They're gonna ram the thirties three point line out further?
Speaker 1: I don't think so. I think the fans like the
Speaker 1: way it is now. The big change in the game
Speaker 1: have been introducing more mobility and ability to shoot that three,
Speaker 1: and it's been very exciting. That was a full segment
Speaker 1: from Davila, Switzerland. It's David great to be here on
Speaker 1: sports see Tarqua floor here at Davos. It's a parquet Florida.
Speaker 1: Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and
Speaker 1: listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast
Speaker 1: platform you prefer. I'm on Twitter at Tom Keane before
Speaker 1: the podcast. You can always catch us worldwide. I'm Bloomberg
Speaker 1: Radio