1 00:00:00,240 --> 00:00:05,000 Speaker 1: This is Bloomberg Wall Street Week. Market shruggle, higher consumer prices, 2 00:00:05,040 --> 00:00:07,400 Speaker 1: The economy is in the process of rebounding. Will the 3 00:00:07,400 --> 00:00:10,479 Speaker 1: Federal Reserve have its own digital currency? The financial stories 4 00:00:10,520 --> 00:00:12,879 Speaker 1: that cheap hard work. Many people think the eels are 5 00:00:12,880 --> 00:00:15,080 Speaker 1: just going to keep marching up. We have more spending 6 00:00:15,120 --> 00:00:17,200 Speaker 1: coming out of Congress. One of the big questions I 7 00:00:17,200 --> 00:00:19,880 Speaker 1: think on investor's minds inflation through the eyes of the 8 00:00:19,920 --> 00:00:24,280 Speaker 1: most influential voices, Larry Summers, the former Treasury Secretary, Bryan Wynhan, 9 00:00:24,400 --> 00:00:28,280 Speaker 1: a backup America Will CEO of Charlie Sharp. Bloomberg wool 10 00:00:28,320 --> 00:00:32,720 Speaker 1: Street Week with David Weston from Bloomberg Radio, Politics from 11 00:00:32,800 --> 00:00:36,240 Speaker 1: U S elections, pros from copy and a poetry high 12 00:00:36,320 --> 00:00:40,000 Speaker 1: coup from the Federal Reserve. This is Bloomberg Wall Street Week. 13 00:00:40,159 --> 00:00:43,320 Speaker 1: I'm David Weston. Just about everyone got their licks in 14 00:00:43,400 --> 00:00:46,280 Speaker 1: this week from US voters telling the Democratic Party to 15 00:00:46,479 --> 00:00:51,640 Speaker 1: think again, as described graphically by Democratic strategist Howard Wolfson. 16 00:00:53,159 --> 00:00:56,200 Speaker 1: I mean it was a bloodbaths to European Commission President 17 00:00:56,280 --> 00:00:59,120 Speaker 1: Vander Lyon telling the world it needs to pick up 18 00:00:59,120 --> 00:01:03,560 Speaker 1: the pace on climate action. We all must speed up 19 00:01:03,720 --> 00:01:06,959 Speaker 1: our race to at zero we're running out of time. 20 00:01:07,840 --> 00:01:09,880 Speaker 1: But in the end, it all came down once again 21 00:01:10,080 --> 00:01:13,120 Speaker 1: to the Federal Reserve and its Chair J. Powell, who 22 00:01:13,120 --> 00:01:15,880 Speaker 1: went out of his way to calm the markets, announcing 23 00:01:16,040 --> 00:01:19,480 Speaker 1: finally that the Fed would begin to taper its bond 24 00:01:19,520 --> 00:01:22,640 Speaker 1: buying program, but that it is in no rush to 25 00:01:22,800 --> 00:01:26,440 Speaker 1: raise rates. Our decision today to begin our tapering our 26 00:01:26,480 --> 00:01:30,240 Speaker 1: asset purchases does not imply any direct signal regarding our 27 00:01:30,280 --> 00:01:33,840 Speaker 1: interest rate policy. We continue to articulate a different and 28 00:01:33,840 --> 00:01:37,040 Speaker 1: more stringent test for the economic conditions that would need 29 00:01:37,080 --> 00:01:40,280 Speaker 1: to be met before raising the federal funds rate. When 30 00:01:40,280 --> 00:01:42,800 Speaker 1: we heard from Chair Poal on Wednesday, he said our 31 00:01:42,840 --> 00:01:45,760 Speaker 1: monetary policy ultimately depends on the labor market. And then 32 00:01:45,800 --> 00:01:49,120 Speaker 1: on Friday we got surprisingly strong numbers for jobs growth, 33 00:01:49,240 --> 00:01:52,680 Speaker 1: adding over five thousand in October and revising up the 34 00:01:52,720 --> 00:01:55,960 Speaker 1: numbers for September to over three. The markets took the 35 00:01:56,000 --> 00:01:59,200 Speaker 1: week overall as pointing to risk. The SMP was up 36 00:01:59,240 --> 00:02:01,520 Speaker 1: two percent, the fifth week in a row, that's the 37 00:02:01,560 --> 00:02:04,880 Speaker 1: longest streaking over a year, and the NASDAK grows even more, 38 00:02:04,960 --> 00:02:08,639 Speaker 1: up three percent. But all that equity action didn't hurt 39 00:02:08,720 --> 00:02:11,280 Speaker 1: the demand for bonds, as the yield on the tenure 40 00:02:11,360 --> 00:02:14,320 Speaker 1: fell six basis points to end under one point four 41 00:02:14,400 --> 00:02:17,560 Speaker 1: or five. To give us an investor's perspective on all this, 42 00:02:17,639 --> 00:02:20,280 Speaker 1: we welcome down of Sunny Specialist. She's founder and CEO 43 00:02:20,320 --> 00:02:22,160 Speaker 1: of Rock Creek, So of Sonning. Great to have you 44 00:02:22,200 --> 00:02:24,440 Speaker 1: back with us always is. So it give us a sense. 45 00:02:24,480 --> 00:02:26,079 Speaker 1: It sounds like right now we can have our cake 46 00:02:26,120 --> 00:02:30,600 Speaker 1: and eat it too. It's great to be with you today, David. There. 47 00:02:30,800 --> 00:02:33,600 Speaker 1: It was really interesting because what Chairman Pal said was 48 00:02:33,720 --> 00:02:38,000 Speaker 1: exactly what the markets expected, right, and he said what 49 00:02:38,360 --> 00:02:40,560 Speaker 1: we had been waiting for a long time with the 50 00:02:40,639 --> 00:02:45,040 Speaker 1: fifteen billion tapering every month. At the same time, he 51 00:02:45,080 --> 00:02:48,720 Speaker 1: made it quite clear that other market expectation that you know, 52 00:02:48,760 --> 00:02:53,080 Speaker 1: when tapering is done in July, we would uh probably 53 00:02:53,160 --> 00:02:55,560 Speaker 1: start having the rat increases may or may not be 54 00:02:55,639 --> 00:02:58,160 Speaker 1: the case. Um. So I think in terms of eating 55 00:02:58,240 --> 00:03:01,919 Speaker 1: our cake, absolutely we can continue having growth. We can. 56 00:03:02,440 --> 00:03:05,520 Speaker 1: You know, as you said, we had the yield curve, 57 00:03:06,000 --> 00:03:09,160 Speaker 1: uh Stephen, we had the markets you know up um 58 00:03:09,400 --> 00:03:13,760 Speaker 1: six times in a row. That was quite exceptional. But 59 00:03:14,240 --> 00:03:16,360 Speaker 1: I think what a lot of people did not maybe 60 00:03:16,440 --> 00:03:19,320 Speaker 1: paid a lot of attention to, is what happened over 61 00:03:19,440 --> 00:03:22,000 Speaker 1: in the UK with the Bank of England, which has 62 00:03:22,040 --> 00:03:25,600 Speaker 1: I think some relevance to what German Power maybe having 63 00:03:25,680 --> 00:03:28,480 Speaker 1: in mind as we get into next year, and that 64 00:03:28,600 --> 00:03:33,160 Speaker 1: was the markets expected interest rates to be increased in 65 00:03:33,200 --> 00:03:36,120 Speaker 1: the UK and that did not happen um this week 66 00:03:36,720 --> 00:03:39,400 Speaker 1: and they were a lot of people lost their shirt. 67 00:03:39,880 --> 00:03:42,320 Speaker 1: And I think what Terman Pal is saying is he 68 00:03:42,440 --> 00:03:47,520 Speaker 1: does see the one condition of inflation where he expected 69 00:03:47,560 --> 00:03:49,240 Speaker 1: it to be, which is more than two percent, and 70 00:03:49,320 --> 00:03:52,640 Speaker 1: it is and there are lots of lots of conversations 71 00:03:52,640 --> 00:03:55,320 Speaker 1: whether it's going to be higher or not by a 72 00:03:55,360 --> 00:03:58,840 Speaker 1: lot because of the supply chain problems. But more importantly 73 00:03:59,400 --> 00:04:02,280 Speaker 1: he I think in the past Janet Yellen are two 74 00:04:02,280 --> 00:04:05,560 Speaker 1: FED chairman who have really really talked about not just 75 00:04:05,640 --> 00:04:08,360 Speaker 1: the numbers that we see, like the ones you mentioned 76 00:04:08,360 --> 00:04:11,360 Speaker 1: the five thousand, which by the way had two hundred 77 00:04:11,360 --> 00:04:14,840 Speaker 1: thousand women in it, and that's very important because women 78 00:04:14,880 --> 00:04:17,560 Speaker 1: are starting to go back as schools are opening, but 79 00:04:17,839 --> 00:04:20,200 Speaker 1: a lot of people are still sitting on the sidelines. 80 00:04:20,360 --> 00:04:25,160 Speaker 1: And he talks about maximized employment, so he's looking at 81 00:04:25,200 --> 00:04:29,320 Speaker 1: it much more from a maximizing employment looking at lots 82 00:04:29,320 --> 00:04:34,360 Speaker 1: of different dots, and also we should really watch what 83 00:04:34,400 --> 00:04:37,680 Speaker 1: they're saying much more carefully. Just like I think we 84 00:04:37,680 --> 00:04:40,880 Speaker 1: were surprised by UK if May, if you let me, 85 00:04:41,120 --> 00:04:45,400 Speaker 1: I just was, you know, reminded of a stand Fisher 86 00:04:45,440 --> 00:04:48,560 Speaker 1: coat because he gave this great lecture at m I 87 00:04:48,640 --> 00:04:54,120 Speaker 1: t and stand who was formal FED vice chair, once 88 00:04:54,120 --> 00:04:57,840 Speaker 1: said that central bankers are it's a dangerous place to 89 00:04:57,880 --> 00:05:00,640 Speaker 1: be a central banker because they can print my But 90 00:05:00,680 --> 00:05:04,400 Speaker 1: he also said central banking is something like a pointless painting. 91 00:05:04,560 --> 00:05:08,080 Speaker 1: You have all those dots of data and you're trying 92 00:05:08,120 --> 00:05:11,440 Speaker 1: to figure out what on earth is the picture. And 93 00:05:11,480 --> 00:05:13,720 Speaker 1: I think that is the problem. And when you're talking 94 00:05:13,720 --> 00:05:16,760 Speaker 1: without people as sidelines, it points to participation numbers which 95 00:05:16,800 --> 00:05:20,320 Speaker 1: are stubbornly not going up particularly well. But if you're 96 00:05:20,320 --> 00:05:23,000 Speaker 1: an investor, it's not just the yield, it's the real yield. 97 00:05:23,120 --> 00:05:25,000 Speaker 1: You have to take into account inflation. And one of 98 00:05:25,000 --> 00:05:28,240 Speaker 1: the questions I have is we had shairp how masterfully 99 00:05:28,320 --> 00:05:31,000 Speaker 1: keep the markets nice and calm? Is that really what 100 00:05:31,080 --> 00:05:32,719 Speaker 1: he wants to do? Is he could have fight inflation 101 00:05:32,760 --> 00:05:36,040 Speaker 1: by doing that, because actually financial conditions actually loosened rather 102 00:05:36,080 --> 00:05:40,120 Speaker 1: than tightened when he said he would taper, they did 103 00:05:40,760 --> 00:05:43,400 Speaker 1: and I think he will be much more careful. But 104 00:05:43,480 --> 00:05:48,120 Speaker 1: again this focus on what he has said very clearly employment. 105 00:05:48,400 --> 00:05:52,200 Speaker 1: I think it's sort of really really up there for him, 106 00:05:52,600 --> 00:05:55,920 Speaker 1: and so he will be watching inflation at the same time. 107 00:05:55,960 --> 00:05:58,960 Speaker 1: But if we do think that with the supply chain 108 00:05:59,040 --> 00:06:02,120 Speaker 1: problems that are there, we will have less of a 109 00:06:02,160 --> 00:06:05,080 Speaker 1: problem one because growth rates will be lower next year 110 00:06:05,160 --> 00:06:07,000 Speaker 1: in the US and the rest of the world, in 111 00:06:07,040 --> 00:06:10,479 Speaker 1: the in Europe um and in China UM, you may 112 00:06:10,600 --> 00:06:14,159 Speaker 1: not have as big a problem. And so you're real yield, 113 00:06:14,200 --> 00:06:16,920 Speaker 1: which is what you're talking about, may not may may 114 00:06:16,960 --> 00:06:21,040 Speaker 1: actually do better because you know, inflation may start going 115 00:06:21,120 --> 00:06:23,800 Speaker 1: the other way around. So I think that's sort of 116 00:06:23,839 --> 00:06:27,200 Speaker 1: the way he's implying his thinking is, and that's the 117 00:06:27,240 --> 00:06:29,440 Speaker 1: way we actually think at Rock Creek. Two. That's a 118 00:06:29,480 --> 00:06:33,400 Speaker 1: sunny bachelist Rock Creek founder and CEO coming up. Former 119 00:06:33,440 --> 00:06:36,680 Speaker 1: Bank of England Governor Mark Karney on enlisting the banks 120 00:06:36,680 --> 00:06:39,760 Speaker 1: to fight climate change. That's next. This is Wall Street 121 00:06:39,800 --> 00:06:55,719 Speaker 1: Week on Bloomberg. This is Bloomberg Wall Street Week with 122 00:06:55,880 --> 00:07:00,360 Speaker 1: David Weston from Bloomberg Radio. Top twenty six. Movings were dominated, 123 00:07:00,400 --> 00:07:03,039 Speaker 1: of course, by heads of state this week but a 124 00:07:03,080 --> 00:07:04,640 Speaker 1: lot of the big news came out of the financial 125 00:07:04,640 --> 00:07:07,800 Speaker 1: sector and a huge effort of the financial industry to 126 00:07:07,880 --> 00:07:11,000 Speaker 1: really support the goals of zero emissions. Those efforts were 127 00:07:11,080 --> 00:07:13,560 Speaker 1: led by Mark Karney, the former governor of the Bank 128 00:07:13,560 --> 00:07:17,200 Speaker 1: of England. He's now vice chair of Brookville Asset Management 129 00:07:17,240 --> 00:07:19,800 Speaker 1: and as important a special ONVOI the United Nations. So 130 00:07:19,840 --> 00:07:22,200 Speaker 1: we welcome now Mark Arney to Wall Street Week. Thank 131 00:07:22,240 --> 00:07:25,280 Speaker 1: you so much for being with us today. Um, start 132 00:07:25,320 --> 00:07:28,760 Speaker 1: with exactly how the world changed because of those huge initiatives. 133 00:07:28,760 --> 00:07:31,200 Speaker 1: So I understand you have four hundred fifty institutions something 134 00:07:31,240 --> 00:07:34,800 Speaker 1: like a hundred and thirty trillion dollars and assets represented. 135 00:07:35,200 --> 00:07:37,000 Speaker 1: But if I work at one of those institutions and 136 00:07:37,080 --> 00:07:40,120 Speaker 1: asset management firm or a bank, how are the decisions 137 00:07:40,120 --> 00:07:43,320 Speaker 1: I make today different from the ones I made yesterday? Well, 138 00:07:43,400 --> 00:07:45,480 Speaker 1: first off, David, thank you for having me on. You 139 00:07:45,520 --> 00:07:48,120 Speaker 1: know I love the show. You're an absolute institution and 140 00:07:48,160 --> 00:07:50,880 Speaker 1: I'm gonna take it, if you will from a Wall 141 00:07:50,920 --> 00:07:54,680 Speaker 1: Street perspective, because in full credit to the biggest firms 142 00:07:54,680 --> 00:07:58,680 Speaker 1: on Wall Street, largest banks, global banks, largest asset managers, 143 00:07:58,720 --> 00:08:01,320 Speaker 1: others who were part of this initial active there's an 144 00:08:01,320 --> 00:08:03,720 Speaker 1: acronym that comes with everything. It's called g fans, but 145 00:08:04,080 --> 00:08:05,800 Speaker 1: that they bring a lot of that a hundred and 146 00:08:05,840 --> 00:08:08,520 Speaker 1: thirty trillion dollars. And what is going to mean for 147 00:08:08,640 --> 00:08:10,800 Speaker 1: people working there and a number of them are already 148 00:08:10,800 --> 00:08:14,240 Speaker 1: doing this, but it's going to go across the organization. 149 00:08:14,960 --> 00:08:17,800 Speaker 1: Is they're going to look, uh when they're making it 150 00:08:17,880 --> 00:08:20,360 Speaker 1: loan or they're making an investment, they're buying a bond, 151 00:08:20,520 --> 00:08:24,000 Speaker 1: even trading a derivative. UH, They're gonna start taking into 152 00:08:24,040 --> 00:08:28,800 Speaker 1: account uh, the underlying credit, the underlying company. Where is 153 00:08:28,840 --> 00:08:31,920 Speaker 1: it on the transition towards net zero because after all, 154 00:08:32,000 --> 00:08:36,480 Speaker 1: what the objective of countries is to get to net 155 00:08:36,559 --> 00:08:40,719 Speaker 1: zero um net zero greenhouse gas emissions and so this 156 00:08:40,800 --> 00:08:44,240 Speaker 1: is going to become, uh, you know, a competitive advantage 157 00:08:44,240 --> 00:08:48,200 Speaker 1: for companies that are moving faster towards that, companies that 158 00:08:48,240 --> 00:08:50,000 Speaker 1: are part of a solution, and it's going to be 159 00:08:50,000 --> 00:08:52,600 Speaker 1: a challenge for those companies who have it. So this 160 00:08:52,800 --> 00:08:57,080 Speaker 1: lends on climate and climate competitiveness, if you will. UH 161 00:08:57,320 --> 00:09:01,079 Speaker 1: is going to be applied across for actually all assets, 162 00:09:01,400 --> 00:09:03,200 Speaker 1: and that's going to be part of the skill set 163 00:09:03,400 --> 00:09:06,760 Speaker 1: of the individuals who were making those portfolio decisions. So 164 00:09:06,880 --> 00:09:10,120 Speaker 1: you know, this industry is so terribly well uh distinguish, 165 00:09:10,160 --> 00:09:12,440 Speaker 1: if you would, defense from offense, and this is what 166 00:09:12,480 --> 00:09:14,520 Speaker 1: I mean by that. It's one thing to say, if 167 00:09:14,520 --> 00:09:16,720 Speaker 1: I'm working for a bank or an asset management firm, 168 00:09:16,960 --> 00:09:19,800 Speaker 1: I'm gonna really shy away from some of the fossil 169 00:09:19,840 --> 00:09:22,320 Speaker 1: fuel companies. I understand that. I'll call that defense win. 170 00:09:22,840 --> 00:09:25,280 Speaker 1: But does this encourage companies to go on the offense, 171 00:09:25,320 --> 00:09:29,880 Speaker 1: for example, to invest in green steel? Look, David, absolutely, um, 172 00:09:29,960 --> 00:09:33,800 Speaker 1: And that's the big shift here. I think that, Um, 173 00:09:33,920 --> 00:09:36,480 Speaker 1: We've been aware of the risks around climate, and you 174 00:09:36,520 --> 00:09:39,760 Speaker 1: know the most obvious ones are you know, when New 175 00:09:39,840 --> 00:09:42,840 Speaker 1: York gets hit by extreme weather event and there's big 176 00:09:42,880 --> 00:09:47,640 Speaker 1: property losses or supply chains are disrupted by by another 177 00:09:47,679 --> 00:09:49,720 Speaker 1: event on the other side of the world, and you know, 178 00:09:49,760 --> 00:09:52,719 Speaker 1: we have those effects and we have to manage those. Um. 179 00:09:52,760 --> 00:09:56,760 Speaker 1: But there are huge, huge opportunities in being part of 180 00:09:56,760 --> 00:10:02,079 Speaker 1: the solution. And so the offense here is very very broad. Uh. 181 00:10:02,120 --> 00:10:04,640 Speaker 1: It of course it includes and you know in my 182 00:10:04,880 --> 00:10:08,120 Speaker 1: professional life I do a lot of this at Brookfield 183 00:10:08,160 --> 00:10:10,520 Speaker 1: of one of the largest renewable producers in the world. 184 00:10:10,520 --> 00:10:14,760 Speaker 1: It includes building out wind, solar, hydro eventually hydrogen and 185 00:10:14,800 --> 00:10:19,319 Speaker 1: other technologies that produce electricity with no emissions and are 186 00:10:19,360 --> 00:10:23,760 Speaker 1: part of very much central to our future. But almost 187 00:10:23,800 --> 00:10:29,439 Speaker 1: as interesting and really more valuable is going to companies 188 00:10:29,480 --> 00:10:33,319 Speaker 1: that have high emissions today. You rightly mentioned the steel industry, 189 00:10:33,440 --> 00:10:36,840 Speaker 1: or the auto industry, or the cement industry, the building industry, 190 00:10:36,840 --> 00:10:40,319 Speaker 1: commercial real estate others, and helping them get emissions down. Now, 191 00:10:40,360 --> 00:10:42,760 Speaker 1: it takes a lot of capital in order to do that, 192 00:10:43,120 --> 00:10:45,400 Speaker 1: but it's going to pay off in terms of a 193 00:10:45,480 --> 00:10:48,080 Speaker 1: huge amount of value and so on the range of 194 00:10:48,480 --> 00:10:53,319 Speaker 1: solutions and investment opportunities. Here you have technologies that are 195 00:10:53,360 --> 00:10:57,480 Speaker 1: just going to take existing activities of you know, whether 196 00:10:57,520 --> 00:11:01,640 Speaker 1: it's h fact opinion ventilation length UH in buildings or 197 00:11:02,080 --> 00:11:05,480 Speaker 1: um grid optimization for electricity grid and just get the 198 00:11:05,480 --> 00:11:09,800 Speaker 1: emissions down from existing plant. Next to that is putting 199 00:11:09,840 --> 00:11:14,360 Speaker 1: in place new technologies new investment that itself gets emissions 200 00:11:14,480 --> 00:11:17,360 Speaker 1: much more dramatically down. And then farther out the risk 201 00:11:17,400 --> 00:11:21,360 Speaker 1: spectrum are those technologies that will be very much part 202 00:11:21,400 --> 00:11:24,800 Speaker 1: of our And I referenced green hydrogen a moment ago, 203 00:11:24,840 --> 00:11:28,720 Speaker 1: and and that would be a classic example the more 204 00:11:28,720 --> 00:11:32,240 Speaker 1: extreme breakthrough technologies. I put it in the venture capital camp. 205 00:11:32,559 --> 00:11:37,120 Speaker 1: Are technologies around, for example, direct air capture, sustainable aviation fuels, 206 00:11:37,320 --> 00:11:41,119 Speaker 1: So the whole range of the investment spectrum is available. 207 00:11:41,280 --> 00:11:45,360 Speaker 1: And look, your question is very on point. This is 208 00:11:45,520 --> 00:11:48,720 Speaker 1: much much more about offense. It's much much more about 209 00:11:48,720 --> 00:11:52,800 Speaker 1: getting capital to solution and candidly, that's why we need 210 00:11:52,880 --> 00:11:56,240 Speaker 1: something like a hundred and thirty trillion dollars to be 211 00:11:56,280 --> 00:11:58,840 Speaker 1: focused on addressing this issue. If I can make one 212 00:11:58,840 --> 00:12:02,480 Speaker 1: other point, David, to put this in context. Look, there's 213 00:12:02,520 --> 00:12:04,360 Speaker 1: a lot of estimates of how much it's going to 214 00:12:04,440 --> 00:12:06,440 Speaker 1: cost to move the world to where it needs to 215 00:12:06,440 --> 00:12:10,200 Speaker 1: get to, but they center around somewhere in that hundred 216 00:12:10,200 --> 00:12:13,960 Speaker 1: trillion dollar rain forty years. That it's a big, big number, 217 00:12:13,960 --> 00:12:17,000 Speaker 1: it's a big increase in investment um, but it's doable. 218 00:12:17,080 --> 00:12:19,360 Speaker 1: And that's one of the messages that's coming out of Glasgow. 219 00:12:19,360 --> 00:12:22,560 Speaker 1: I mean, it's in many respects it's a watershed Wall 220 00:12:22,600 --> 00:12:26,040 Speaker 1: Street and UH and the global financial sector has stood 221 00:12:26,120 --> 00:12:29,199 Speaker 1: up and said, look, we'll put capital behind these solutions. 222 00:12:29,679 --> 00:12:32,319 Speaker 1: And one of the reasons again why they're doing it 223 00:12:32,600 --> 00:12:34,240 Speaker 1: they want to be part of solutions. They want to 224 00:12:34,240 --> 00:12:37,520 Speaker 1: help their clients, but they see a lot of offensive 225 00:12:37,640 --> 00:12:40,480 Speaker 1: opportunities and only more to come in the future. So, Mark, 226 00:12:40,559 --> 00:12:42,920 Speaker 1: as you say, this is a program for global Wall 227 00:12:42,960 --> 00:12:46,000 Speaker 1: Street and for investors in particular. So speak to those 228 00:12:46,040 --> 00:12:49,080 Speaker 1: investors as you describe this what we're calling offense investing 229 00:12:49,080 --> 00:12:52,360 Speaker 1: in things like green steel and the like. Uh. Do 230 00:12:52,200 --> 00:12:54,720 Speaker 1: you do investors have to get used to lower returns 231 00:12:54,800 --> 00:12:57,959 Speaker 1: as a practical matter. No, I don't think so, and 232 00:12:58,080 --> 00:13:00,320 Speaker 1: certainly not on a risk adjusted basis. One of the 233 00:13:00,400 --> 00:13:02,920 Speaker 1: things now for a moment, David, I'm gonna speak about 234 00:13:02,960 --> 00:13:07,520 Speaker 1: defense unfortunately, which is one thing investors increasingly will need 235 00:13:07,559 --> 00:13:11,960 Speaker 1: to do is think about terminal value. Think about where 236 00:13:12,559 --> 00:13:16,920 Speaker 1: certain assets um are going to lose value and potentially 237 00:13:16,960 --> 00:13:21,400 Speaker 1: lose value quite rapidly because they're not decarbonizing fast enough 238 00:13:21,840 --> 00:13:24,720 Speaker 1: or they're just not suited for a low and zero 239 00:13:24,800 --> 00:13:28,720 Speaker 1: carbon economy. You referenced a part of the energy sector, 240 00:13:28,760 --> 00:13:31,400 Speaker 1: fossil fuels. Uh. You know, there's elements of that which 241 00:13:31,440 --> 00:13:34,400 Speaker 1: will not be there um or certainly can't be there 242 00:13:34,440 --> 00:13:36,120 Speaker 1: if we're going to get to where we need to go. 243 00:13:36,280 --> 00:13:39,280 Speaker 1: So uh, investors need to look at that. On the 244 00:13:39,320 --> 00:13:43,160 Speaker 1: offensive side, UM, you know, just a range of a 245 00:13:43,280 --> 00:13:47,320 Speaker 1: range of opportunities, as I say UM looking into UM. 246 00:13:48,920 --> 00:13:50,840 Speaker 1: I'll put it this way in terms of an overall 247 00:13:50,880 --> 00:13:53,520 Speaker 1: framework first, which and this is something that will become 248 00:13:54,040 --> 00:13:59,280 Speaker 1: increasingly common to think about, which is what's the company's 249 00:13:59,360 --> 00:14:03,439 Speaker 1: emissions today, not just their own emissions from their operations, 250 00:14:03,480 --> 00:14:06,319 Speaker 1: but also from their suppliers and and from those people 251 00:14:06,320 --> 00:14:09,360 Speaker 1: who use the product. So I mean the most complex 252 00:14:09,400 --> 00:14:12,439 Speaker 1: example really is the auto industry. Huge range of suppliers 253 00:14:12,480 --> 00:14:14,960 Speaker 1: from around the world, and of course when we drive 254 00:14:15,000 --> 00:14:18,920 Speaker 1: around in our cars, we're burning fossil fuels and there's emissions. UM, 255 00:14:19,000 --> 00:14:21,600 Speaker 1: So what were their emissions today across that whole value 256 00:14:21,640 --> 00:14:24,520 Speaker 1: chain and where are they going tomorrow? That's former Bank 257 00:14:24,560 --> 00:14:28,520 Speaker 1: of England Governor Mark Karney coming up. Lizard CEO Ken 258 00:14:28,600 --> 00:14:31,680 Speaker 1: Jacobs describes how his business is changing because of E 259 00:14:31,880 --> 00:14:35,680 Speaker 1: s G. That's next. This is Wall Street Week on Bloomberg. 260 00:14:45,520 --> 00:14:49,480 Speaker 1: This is Bloomberg Wall Street Week with David Weston from 261 00:14:49,640 --> 00:14:53,640 Speaker 1: Bloomberg Radio. Zero carbon Emissions. It was all the talk 262 00:14:53,760 --> 00:14:56,000 Speaker 1: this week at the CUP twenty six meetings in Glasgow, 263 00:14:56,240 --> 00:15:00,560 Speaker 1: with European Commission President vonder lyon urging faster at shouldn't 264 00:15:00,600 --> 00:15:04,480 Speaker 1: we all must speed up our race? Tint zero we're 265 00:15:04,560 --> 00:15:07,320 Speaker 1: running out of time, and President Biden saying the United 266 00:15:07,320 --> 00:15:10,080 Speaker 1: States will lead the way. The United States is not 267 00:15:10,120 --> 00:15:14,440 Speaker 1: only back at the table, but hopefully leading by the 268 00:15:14,440 --> 00:15:17,760 Speaker 1: power of our example. My administration is working over time 269 00:15:18,360 --> 00:15:22,360 Speaker 1: to show that our climate commitment is action, not words. 270 00:15:22,400 --> 00:15:24,680 Speaker 1: But if we're going to have any hope of making 271 00:15:24,760 --> 00:15:27,800 Speaker 1: real progress on emissions, it will take more than governments. 272 00:15:27,920 --> 00:15:30,440 Speaker 1: It will take a massive effort of the private sector. 273 00:15:30,880 --> 00:15:33,800 Speaker 1: Bank of America's Brian moynihan says banks like his are 274 00:15:33,920 --> 00:15:36,040 Speaker 1: feeling the pressure. There's a lot of pressure on banks 275 00:15:36,080 --> 00:15:38,840 Speaker 1: because our clients are demanding this. You know, our investors 276 00:15:38,880 --> 00:15:42,560 Speaker 1: are demanding this. The politicians of world's demanding this. And 277 00:15:42,680 --> 00:15:45,920 Speaker 1: Luke Ellis of the Man Group says that with more guidance, 278 00:15:46,080 --> 00:15:49,720 Speaker 1: the private sector and especially hedge funds like his, can 279 00:15:49,800 --> 00:15:52,400 Speaker 1: help get us where we need to go. And this 280 00:15:52,520 --> 00:15:56,120 Speaker 1: is really anybody that's investing in liquid stocks. So you're 281 00:15:56,120 --> 00:15:59,200 Speaker 1: an owner of a company, you know, and that gives 282 00:15:59,200 --> 00:16:01,880 Speaker 1: you the challenge doing gage with management and to make 283 00:16:01,920 --> 00:16:05,000 Speaker 1: sure that they have a serious plan, not just a 284 00:16:05,080 --> 00:16:08,480 Speaker 1: sort of fluffy handwaving plan. What matters is people with 285 00:16:08,640 --> 00:16:11,560 Speaker 1: actual plans, actual movement, actual things, going on. And you know, 286 00:16:11,600 --> 00:16:14,040 Speaker 1: hedge funds do a good job, can do a good 287 00:16:14,120 --> 00:16:17,400 Speaker 1: job of engaging with companies. Lazard Freres on the front 288 00:16:17,480 --> 00:16:21,320 Speaker 1: lines in arranging acquisitions and mergers, also in managing nearly 289 00:16:21,400 --> 00:16:24,480 Speaker 1: three hundred billion dollars in assets. So when it comes 290 00:16:24,480 --> 00:16:26,800 Speaker 1: to figure out how the lofty goals of Top twenty 291 00:16:26,800 --> 00:16:29,520 Speaker 1: six may translating to the real world, there's nobody better 292 00:16:29,600 --> 00:16:32,120 Speaker 1: than Lazard Frere. And we're joined now by the chairman 293 00:16:32,200 --> 00:16:35,400 Speaker 1: and CEOs are for is Mr ken Jacobs. Welcome to Walter. 294 00:16:35,520 --> 00:16:36,880 Speaker 1: We thank you have you here. Thank you, it's a 295 00:16:36,880 --> 00:16:39,000 Speaker 1: pleasure to be here. So we've heard these lofty goals. 296 00:16:39,000 --> 00:16:41,840 Speaker 1: Every is signing up for them. But what does it 297 00:16:41,880 --> 00:16:43,960 Speaker 1: mean in the real world as you're doing deals, as 298 00:16:44,000 --> 00:16:47,640 Speaker 1: you're managing assets. Is it changing what you do on 299 00:16:47,680 --> 00:16:50,640 Speaker 1: the asset management side of the business? Absolutely, um that 300 00:16:50,880 --> 00:16:54,080 Speaker 1: that's changing rapidly. On the advisory side of the business, 301 00:16:54,080 --> 00:16:57,360 Speaker 1: which is arranging mergers and acquisitions. Uh, that's on the 302 00:16:57,400 --> 00:16:59,560 Speaker 1: comp so to speak. We're seeing the beginning of it, 303 00:16:59,600 --> 00:17:01,600 Speaker 1: but it's but it's not quite there yet. Let me 304 00:17:01,600 --> 00:17:04,120 Speaker 1: speak to the asset management side. To begin with, one 305 00:17:04,160 --> 00:17:06,000 Speaker 1: has to step back and realize this has been in 306 00:17:06,119 --> 00:17:08,640 Speaker 1: play now for several years. The first thing that happened 307 00:17:08,720 --> 00:17:12,560 Speaker 1: is the core demographic that drives activity in the economy 308 00:17:12,800 --> 00:17:16,040 Speaker 1: started spending their values. That was a couple of years ago, 309 00:17:16,080 --> 00:17:17,960 Speaker 1: and three, four or five years ago in the United States, 310 00:17:18,000 --> 00:17:20,520 Speaker 1: longer in Europe. Over the last couple of years, everybody, 311 00:17:20,760 --> 00:17:22,920 Speaker 1: it is shifted now so that the same demographic is 312 00:17:22,960 --> 00:17:25,560 Speaker 1: starting to invest their values and that's playing through in 313 00:17:25,600 --> 00:17:27,679 Speaker 1: the asset owners and it's really having a big impact 314 00:17:27,760 --> 00:17:29,960 Speaker 1: on the asset management business. So when you talk about 315 00:17:30,040 --> 00:17:33,520 Speaker 1: investing in assets, uh, is it defense or offense? By that, 316 00:17:33,560 --> 00:17:35,200 Speaker 1: I mean this it's one thing to say I don't 317 00:17:35,200 --> 00:17:37,680 Speaker 1: want to invest, for example, in a fossil fuels company. Okay, 318 00:17:37,680 --> 00:17:40,119 Speaker 1: I get that, But what about a firmly investing in 319 00:17:40,200 --> 00:17:44,200 Speaker 1: a green steel company. UM, I think in the beginning 320 00:17:44,280 --> 00:17:47,320 Speaker 1: it's going to be defensive because at this moment in time, 321 00:17:47,560 --> 00:17:52,840 Speaker 1: there's very little that that kind of ties uh green performance, 322 00:17:52,920 --> 00:17:57,200 Speaker 1: whether you are your omissions policy, your social policies, there's 323 00:17:57,280 --> 00:18:00,440 Speaker 1: very little that actually ties that performance in the stock 324 00:18:00,480 --> 00:18:04,000 Speaker 1: market or cost of capital. That's at its very early stages. 325 00:18:04,240 --> 00:18:06,840 Speaker 1: But scoring companies is there. So I'd say at this 326 00:18:06,920 --> 00:18:10,280 Speaker 1: moment in time, we're probably doing I would say most 327 00:18:10,320 --> 00:18:14,840 Speaker 1: of asset management is investing defensively around around E S G. 328 00:18:15,119 --> 00:18:17,239 Speaker 1: And I think that's going to shift over time. We 329 00:18:17,320 --> 00:18:19,520 Speaker 1: had we heard from a former Vice president, Al Gore 330 00:18:19,600 --> 00:18:21,920 Speaker 1: this week saying that we have something of a think 331 00:18:21,920 --> 00:18:25,480 Speaker 1: he called a climate subprime crisis coming because there's trillions 332 00:18:25,480 --> 00:18:28,200 Speaker 1: of dollars in assets in coal and in fossil other 333 00:18:28,200 --> 00:18:31,439 Speaker 1: fossil fuels that may not be worth actually what we 334 00:18:31,520 --> 00:18:34,159 Speaker 1: think they're worth because they'll never get used. Is there 335 00:18:34,200 --> 00:18:37,879 Speaker 1: alluming problem with that in the long run? Yes, in 336 00:18:37,920 --> 00:18:39,919 Speaker 1: the short run, In the medium term, we're gonna have 337 00:18:39,960 --> 00:18:42,520 Speaker 1: many ups and downs. You know, a year, a year 338 00:18:42,560 --> 00:18:45,439 Speaker 1: and a half ago, when when oil was trading at 339 00:18:45,440 --> 00:18:47,359 Speaker 1: a negative value, who would have predicted close to a 340 00:18:47,400 --> 00:18:49,320 Speaker 1: hundred dollar or oil price a year year and a 341 00:18:49,320 --> 00:18:51,959 Speaker 1: half away. So I think what we're gonna see is 342 00:18:52,440 --> 00:18:55,080 Speaker 1: a lot of UM what I would almost describe as 343 00:18:55,720 --> 00:19:00,280 Speaker 1: uncertainty and UM system and and UM an out fer 344 00:19:00,480 --> 00:19:02,880 Speaker 1: kinds of experiences over the next several years. I think 345 00:19:02,880 --> 00:19:04,760 Speaker 1: in the long running is probably right as we make 346 00:19:04,840 --> 00:19:09,399 Speaker 1: that transition to UH, the energy transition to renewables and 347 00:19:09,560 --> 00:19:13,880 Speaker 1: to more green types of energy that will happen, But 348 00:19:14,080 --> 00:19:15,920 Speaker 1: in the met short and medium term we could have 349 00:19:15,960 --> 00:19:17,439 Speaker 1: a lot of ups and downs. So what do you 350 00:19:17,480 --> 00:19:19,480 Speaker 1: do as an asset manager in that circumstance? Because we 351 00:19:19,520 --> 00:19:21,960 Speaker 1: have a short term supply problem, for example, natural gas 352 00:19:22,000 --> 00:19:24,720 Speaker 1: in Europe, and we've seen the prices spike up, and 353 00:19:24,760 --> 00:19:27,280 Speaker 1: we've seen energy company stock actually go up. So in 354 00:19:27,320 --> 00:19:29,000 Speaker 1: the short run you actually might be able to make 355 00:19:29,080 --> 00:19:31,719 Speaker 1: some money because the money market may have overly discounted 356 00:19:31,760 --> 00:19:33,640 Speaker 1: the value of those stocks. Yeah. Well, I don't think 357 00:19:33,640 --> 00:19:36,160 Speaker 1: it's as black and white today is that asset managers 358 00:19:36,200 --> 00:19:39,080 Speaker 1: can't invest in oil and gas and energy stocks. I 359 00:19:39,080 --> 00:19:42,240 Speaker 1: think we're slowly, maybe even more rapidly than some would like, 360 00:19:42,359 --> 00:19:45,240 Speaker 1: moving in a direction where becomes less attractive to do that. 361 00:19:45,440 --> 00:19:48,479 Speaker 1: At this point. Are there enough really attractive alternatives on 362 00:19:48,560 --> 00:19:50,920 Speaker 1: the green front? And now I'm talking about the offensive part, 363 00:19:51,640 --> 00:19:54,720 Speaker 1: whether it's solar or whether it's new technology. I've talked 364 00:19:54,720 --> 00:19:56,400 Speaker 1: to some people who manage a fair amount of money 365 00:19:56,400 --> 00:19:58,080 Speaker 1: and say, you don't even though I want to invest 366 00:19:58,119 --> 00:19:59,880 Speaker 1: a lot of money, there aren't that many good deal 367 00:20:00,080 --> 00:20:02,600 Speaker 1: to be done. Well, I think that's gonna again. I 368 00:20:02,600 --> 00:20:04,800 Speaker 1: think it's going to evolve as as you start to 369 00:20:04,880 --> 00:20:07,680 Speaker 1: build in the incentives both from the standpoint of where 370 00:20:07,680 --> 00:20:11,720 Speaker 1: a capital goes and I mean, if, as an example, UH, 371 00:20:11,920 --> 00:20:15,640 Speaker 1: there's a real incentive for people to invest in green projects, 372 00:20:15,640 --> 00:20:17,920 Speaker 1: then the cost of capital for those projects goes down 373 00:20:18,160 --> 00:20:20,600 Speaker 1: and those projects become more attractive to invest in. And 374 00:20:20,640 --> 00:20:22,080 Speaker 1: I think we're going to see more and more in 375 00:20:22,200 --> 00:20:25,440 Speaker 1: that as time goes on. Also, the investment that's taking 376 00:20:25,440 --> 00:20:30,119 Speaker 1: place in technology, everything from storage to wind solar that 377 00:20:30,160 --> 00:20:32,399 Speaker 1: have taken place over the last couple of decades have 378 00:20:32,480 --> 00:20:35,760 Speaker 1: made an enormous difference in creating opportunities in this area, 379 00:20:35,760 --> 00:20:37,600 Speaker 1: and I think that's just going to continue. That's Lazard 380 00:20:37,680 --> 00:20:40,800 Speaker 1: CEO Ken Jacobs coming up. We wrap up the week 381 00:20:40,880 --> 00:20:43,960 Speaker 1: as we always do with Larry Summers of Harvard. That's 382 00:20:44,000 --> 00:20:52,560 Speaker 1: next on Wall Street Week on Bloomberg. This is Bloomberg 383 00:20:52,600 --> 00:20:56,600 Speaker 1: Wall Street Week with David Weston from Bloomberg Radio. This 384 00:20:56,680 --> 00:20:58,640 Speaker 1: is Wall Free Week on David Weston, and we turn 385 00:20:58,720 --> 00:21:01,119 Speaker 1: once again this week to our very special contribute he 386 00:21:01,200 --> 00:21:03,880 Speaker 1: Larry Summers of Harvard to take us through the week. First, 387 00:21:03,960 --> 00:21:05,760 Speaker 1: let's start at the end of the week. Larry, we 388 00:21:05,840 --> 00:21:08,680 Speaker 1: got the jobs numbers after the United States better than expected, 389 00:21:08,720 --> 00:21:11,520 Speaker 1: pretty robust, not just for last month, but also revising 390 00:21:11,560 --> 00:21:13,119 Speaker 1: for the prior month. What do you make of these 391 00:21:13,160 --> 00:21:17,040 Speaker 1: jobs numbers? Look, it fits the what I thought for 392 00:21:17,080 --> 00:21:20,840 Speaker 1: a while now, David. We've got a very very strong 393 00:21:20,920 --> 00:21:24,600 Speaker 1: economy on the demand side, and not a very strong 394 00:21:24,680 --> 00:21:30,040 Speaker 1: economy on the supply side, and that's risking and overheating. 395 00:21:30,720 --> 00:21:33,880 Speaker 1: You saw a lot of job creation, you didn't see 396 00:21:33,880 --> 00:21:38,639 Speaker 1: an increase in UH labor force participation. You saw a 397 00:21:38,800 --> 00:21:42,399 Speaker 1: rapid average hourly earnings figure, But if you adjusted for 398 00:21:42,440 --> 00:21:45,160 Speaker 1: the fact that most of the people coming back were 399 00:21:45,200 --> 00:21:49,239 Speaker 1: in leisure and hospitality, where wages are relatively low, it 400 00:21:49,280 --> 00:21:54,560 Speaker 1: was an even stronger UH wage figure. I think we're 401 00:21:54,720 --> 00:22:00,879 Speaker 1: still not running policies that are consistent with the reality 402 00:22:00,920 --> 00:22:04,800 Speaker 1: of the economy. The reality of the economy is that 403 00:22:04,840 --> 00:22:08,920 Speaker 1: we've got to interest rate far below the neutral interest rate, 404 00:22:09,440 --> 00:22:12,159 Speaker 1: and we've got a tight labor market, and that's a 405 00:22:12,240 --> 00:22:18,360 Speaker 1: prescription for rising inflation, not a prescription for falling inflation. 406 00:22:18,840 --> 00:22:23,600 Speaker 1: So I continue to be very concerned about the outlook 407 00:22:24,560 --> 00:22:28,040 Speaker 1: going out a year or so, as the economy starts 408 00:22:28,080 --> 00:22:32,040 Speaker 1: hitting fly constraints and hitting them hard. Given all the 409 00:22:32,080 --> 00:22:35,119 Speaker 1: pressure on demand. So Larry hook that up as you 410 00:22:35,160 --> 00:22:37,240 Speaker 1: can with what we heard from the Federal Reserve this week. 411 00:22:37,280 --> 00:22:40,320 Speaker 1: Continuity from the chair j Powe. He certainly seemed to 412 00:22:40,359 --> 00:22:42,200 Speaker 1: say in the news conference that really, when it comes 413 00:22:42,240 --> 00:22:45,760 Speaker 1: to the question of tapering, he's begun, but particularly rate hikes, 414 00:22:45,840 --> 00:22:47,879 Speaker 1: that's going to be determined by what happens with the 415 00:22:47,960 --> 00:22:50,359 Speaker 1: labor force. Is he right about that? And is it 416 00:22:50,440 --> 00:22:53,800 Speaker 1: possible for actually to be too gentle in the message 417 00:22:53,840 --> 00:22:57,080 Speaker 1: he's sending to the markets, because certainly the financial conditions 418 00:22:57,119 --> 00:23:01,159 Speaker 1: did not tighten at all. Look, the Fed controls as 419 00:23:01,240 --> 00:23:05,240 Speaker 1: financial conditions. If you look at financial conditions is measured 420 00:23:05,280 --> 00:23:08,560 Speaker 1: by real interest rates. If you look at financial conditions 421 00:23:08,640 --> 00:23:12,320 Speaker 1: is measured by asset prices. They are looser than they 422 00:23:12,320 --> 00:23:16,800 Speaker 1: were before Jay spoke on Wednesday. They are looser than 423 00:23:16,840 --> 00:23:22,040 Speaker 1: they were a month or two ago. We've got rising 424 00:23:22,080 --> 00:23:28,280 Speaker 1: inflation and we're not tightening UH financial conditions. That's why 425 00:23:28,359 --> 00:23:34,959 Speaker 1: I fear that we are on a risky course. Now. 426 00:23:35,280 --> 00:23:40,560 Speaker 1: The argument that thoughtful people like my UH friend, former 427 00:23:40,840 --> 00:23:47,359 Speaker 1: classmate Paul Krugman UH make is that there's some risk 428 00:23:47,400 --> 00:23:51,679 Speaker 1: aversion principle that we've got to do this because it 429 00:23:51,720 --> 00:23:58,400 Speaker 1: would be so catastrophic to um run a recession, and 430 00:23:58,680 --> 00:24:03,160 Speaker 1: inflation is a manner chuble problem. I agree that we've 431 00:24:03,200 --> 00:24:07,240 Speaker 1: got to guard against risks, but here's my view. My 432 00:24:07,359 --> 00:24:11,960 Speaker 1: view is if we let inflation accelerate, there's almost no 433 00:24:12,160 --> 00:24:16,560 Speaker 1: proven ability of the Central Bank to engineer a soft landing, 434 00:24:17,480 --> 00:24:20,800 Speaker 1: and so in order to squeeze out an extra bit 435 00:24:20,960 --> 00:24:25,320 Speaker 1: of hope for labor market tightness, I think we're taking 436 00:24:25,359 --> 00:24:30,760 Speaker 1: a real risk that we're setting up for a very 437 00:24:30,760 --> 00:24:35,199 Speaker 1: serious problem. You know, if you look ahead of you 438 00:24:36,280 --> 00:24:41,320 Speaker 1: and you see that there might be all the traffic stopped, 439 00:24:42,240 --> 00:24:46,120 Speaker 1: you start breaking your car as early as you can, 440 00:24:47,160 --> 00:24:49,159 Speaker 1: even if it means that it's going to slow you 441 00:24:49,240 --> 00:24:53,920 Speaker 1: down in the event that there is no traffic, yam. 442 00:24:53,960 --> 00:24:56,560 Speaker 1: And that's I think the right way to think about 443 00:24:56,600 --> 00:25:01,240 Speaker 1: the central banks problem right now. Learn another big development 444 00:25:01,320 --> 00:25:03,399 Speaker 1: through the course of the week, who was with respect 445 00:25:03,400 --> 00:25:06,200 Speaker 1: to the infrastructure Bipartisan Infrastructure Bill as well as the 446 00:25:06,240 --> 00:25:09,520 Speaker 1: so called Build Back Better Plan. It's not quite there yet, 447 00:25:09,560 --> 00:25:11,600 Speaker 1: it's not finalized, but we have a pretty good sense 448 00:25:11,640 --> 00:25:13,639 Speaker 1: of where it's going. What do you make of what 449 00:25:13,640 --> 00:25:16,560 Speaker 1: we're seeing both on the what we're spending side and 450 00:25:16,600 --> 00:25:20,280 Speaker 1: how we're paying for its side. Look, I hope we 451 00:25:20,320 --> 00:25:24,960 Speaker 1: get this done. I hope both bills pass, the Bipartisan 452 00:25:25,040 --> 00:25:31,679 Speaker 1: Infrastructure Bill and some version of the so called reconciliation 453 00:25:32,320 --> 00:25:35,720 Speaker 1: UH bill. There's sure a lot of effort going into 454 00:25:36,200 --> 00:25:41,080 Speaker 1: building better, build back, build back better, and I hope 455 00:25:41,080 --> 00:25:43,600 Speaker 1: it works out. I also hope people are going to 456 00:25:43,720 --> 00:25:47,560 Speaker 1: keep a very very close eye on this, since uh 457 00:25:47,680 --> 00:25:52,119 Speaker 1: at the very last stage that's when abusive provisions or 458 00:25:52,160 --> 00:25:57,200 Speaker 1: misprovisions or sometimes uh putty in. I'm glad to see 459 00:25:57,200 --> 00:26:02,600 Speaker 1: that the provisions on salt deduction look like uh they're 460 00:26:02,640 --> 00:26:07,679 Speaker 1: being uh modified uh somewhat. It would have been a 461 00:26:07,720 --> 00:26:12,800 Speaker 1: real tragedy, David. I think uh if the provisions and 462 00:26:13,040 --> 00:26:16,119 Speaker 1: ended up being written in a way where people in 463 00:26:16,160 --> 00:26:18,720 Speaker 1: the top tenth of a percent of the income distribution 464 00:26:19,280 --> 00:26:23,600 Speaker 1: got a substantial tax cut. I think we're moving towards 465 00:26:24,119 --> 00:26:29,240 Speaker 1: uh fixing uh that. But look, these are investments that 466 00:26:29,280 --> 00:26:34,600 Speaker 1: our country UH should be making. It's also not too 467 00:26:34,640 --> 00:26:38,000 Speaker 1: early to say that it's not the amount of money 468 00:26:38,040 --> 00:26:41,800 Speaker 1: you spend and the nobility of the cause you spend 469 00:26:41,840 --> 00:26:44,879 Speaker 1: it on it, but it's how well you spend the 470 00:26:44,960 --> 00:26:49,560 Speaker 1: money that matters. You know, his money for childcare and 471 00:26:49,720 --> 00:26:53,400 Speaker 1: pre K going to help kids or is it going 472 00:26:53,440 --> 00:26:57,560 Speaker 1: to help provide help the providers of child care services. 473 00:26:57,560 --> 00:27:02,919 Speaker 1: Our infrastructure projects going to produce a better infrastructure or 474 00:27:02,920 --> 00:27:07,119 Speaker 1: are they just going to help the businesses that provide 475 00:27:07,560 --> 00:27:13,480 Speaker 1: UH infrastructure services. It's gonna be really important both in 476 00:27:13,600 --> 00:27:17,400 Speaker 1: terms of the effectiveness of the investments and in terms 477 00:27:17,440 --> 00:27:22,080 Speaker 1: of the American people's confidence in government that this money 478 00:27:22,640 --> 00:27:26,320 Speaker 1: be spent well as well as being spent on a 479 00:27:26,359 --> 00:27:30,199 Speaker 1: significant scale. Learn one last one. Last week you and 480 00:27:30,240 --> 00:27:32,239 Speaker 1: I talked about the COP twenty six talks which were 481 00:27:32,320 --> 00:27:35,440 Speaker 1: upcoming Glasgow. We've now had them. You expressed some concern, 482 00:27:35,560 --> 00:27:38,159 Speaker 1: even doubt last week that they would be able to 483 00:27:38,240 --> 00:27:40,439 Speaker 1: do enough to really get us on the course we 484 00:27:40,480 --> 00:27:47,440 Speaker 1: need to go. Did they I'm still I'm still worried, Uh, David. 485 00:27:48,480 --> 00:27:53,240 Speaker 1: You know, I I learned UH as a fundraiser that 486 00:27:53,280 --> 00:27:57,160 Speaker 1: when people wanted to say a really polite no, what 487 00:27:57,200 --> 00:27:59,920 Speaker 1: they would do is talk about a much longer horizon 488 00:28:00,840 --> 00:28:04,000 Speaker 1: and a much more ambitious goal. And I felt like 489 00:28:04,040 --> 00:28:06,040 Speaker 1: there was a fair amount of that going on in 490 00:28:06,320 --> 00:28:10,000 Speaker 1: UH Glasgow. And I'd like to judge things a little 491 00:28:10,040 --> 00:28:13,159 Speaker 1: more by what people are actually going to get done 492 00:28:13,320 --> 00:28:17,080 Speaker 1: and committed in the next five years, rather than the 493 00:28:17,160 --> 00:28:21,560 Speaker 1: aspirations that are gonna set for decades from now. It's 494 00:28:21,600 --> 00:28:24,560 Speaker 1: such an important lesson, just briefly at the end, what 495 00:28:24,600 --> 00:28:26,879 Speaker 1: do we need to do to have concrete things to 496 00:28:26,920 --> 00:28:31,240 Speaker 1: be done in the near future. I think how rapidly 497 00:28:31,520 --> 00:28:38,720 Speaker 1: we uh we're moving to uh in a very supportive way. 498 00:28:39,560 --> 00:28:44,520 Speaker 1: Replace uh CaAl fired power plants with renewables is going 499 00:28:44,560 --> 00:28:49,040 Speaker 1: to be an absolutely critical test. I think globally we 500 00:28:49,120 --> 00:28:53,080 Speaker 1: are still spending trillions of dollars on fossil fuel subsidies, 501 00:28:53,600 --> 00:28:56,240 Speaker 1: and the single most important thing I would be looking 502 00:28:56,280 --> 00:28:59,680 Speaker 1: at is not the credits that we give to renewables, 503 00:29:00,440 --> 00:29:04,360 Speaker 1: not the penalties we impose on fossil fuels, but just 504 00:29:04,440 --> 00:29:08,800 Speaker 1: the pace at which we reduce those fossil fuel subsidies. 505 00:29:09,200 --> 00:29:10,920 Speaker 1: Such an important way to look at it. Thank you 506 00:29:11,040 --> 00:29:13,800 Speaker 1: very much. That's Larry summer Sees, our very special contributor 507 00:29:13,880 --> 00:29:17,800 Speaker 1: right here on Wall Street week. Finally, one more thought, 508 00:29:18,280 --> 00:29:23,400 Speaker 1: Hotel California moves to Shanghai. None of us anticipated how 509 00:29:23,440 --> 00:29:26,960 Speaker 1: long this COVID thing would last. Certainly President Trump didn't 510 00:29:26,960 --> 00:29:28,520 Speaker 1: when we talked about getting rid of it in April 511 00:29:29,880 --> 00:29:35,280 Speaker 1: and by the way, the virus they're working hard, looks 512 00:29:35,320 --> 00:29:37,280 Speaker 1: like by April, you know in theory when it gets 513 00:29:37,320 --> 00:29:40,680 Speaker 1: a little warmer, miraculously goes and I hope that's true. 514 00:29:40,920 --> 00:29:43,200 Speaker 1: But coming up on two years later, it feels sometimes 515 00:29:43,280 --> 00:29:45,720 Speaker 1: like this will never end. We've now lost over seven 516 00:29:45,760 --> 00:29:48,239 Speaker 1: and fifty thousand people here in the United States and 517 00:29:48,280 --> 00:29:52,240 Speaker 1: around five million around the world, while the economic disruption 518 00:29:52,280 --> 00:29:54,840 Speaker 1: just continues right to the present day. As FED chair J. 519 00:29:54,960 --> 00:29:58,160 Speaker 1: Powe admitted again just this week, a lot of what 520 00:29:58,160 --> 00:30:00,120 Speaker 1: we're seeing in the last ninety days is because is 521 00:30:00,120 --> 00:30:01,760 Speaker 1: of delta. We were on a path to a very 522 00:30:01,800 --> 00:30:06,000 Speaker 1: different place. Delta put us on a different path. And inflation, well, 523 00:30:06,080 --> 00:30:09,000 Speaker 1: Crystallina Georgieva of the i M says, it's really just 524 00:30:09,600 --> 00:30:16,200 Speaker 1: a vaccination problem. Preferably we should see tampering inflation, and 525 00:30:16,280 --> 00:30:19,720 Speaker 1: how can we do that, well, focus on reducing these divergence. 526 00:30:20,120 --> 00:30:23,120 Speaker 1: Vaccinate the world. Vaccinate the world so we can see 527 00:30:23,320 --> 00:30:27,880 Speaker 1: production everywhere stepping up. Nothing could compare with the loss 528 00:30:27,920 --> 00:30:31,680 Speaker 1: of life and the economic dislocation. But let's be honest, 529 00:30:31,880 --> 00:30:34,840 Speaker 1: there's also the sheer annoyance is still having to deal 530 00:30:34,880 --> 00:30:37,320 Speaker 1: with it all the wearing the masks that leads the 531 00:30:37,320 --> 00:30:40,840 Speaker 1: airline passengers to become violent and as ad bashing of 532 00:30:40,920 --> 00:30:44,640 Speaker 1: Delta tells us, get banned from traveling permanently. We've had 533 00:30:44,680 --> 00:30:47,880 Speaker 1: a few incidents, not a lot on Delta, but anyone 534 00:30:47,960 --> 00:30:50,560 Speaker 1: that that doesn't want to wear a mask and they're 535 00:30:50,600 --> 00:30:52,400 Speaker 1: on board, you know, we give them the option to 536 00:30:52,440 --> 00:30:54,240 Speaker 1: either wear the mask or they're taken off the flight 537 00:30:54,280 --> 00:30:55,920 Speaker 1: and put on our no fly list. And we've had 538 00:30:55,920 --> 00:30:58,760 Speaker 1: about two thousand people that we've put on the no 539 00:30:58,920 --> 00:31:01,240 Speaker 1: fly list, the permanent no fly list, over the course 540 00:31:01,240 --> 00:31:03,800 Speaker 1: of the pandemic. But as frustrated as you might be, 541 00:31:04,200 --> 00:31:06,120 Speaker 1: you can take heart. You probably don't have it as 542 00:31:06,120 --> 00:31:09,040 Speaker 1: bad as a thirty four thousand people who went to 543 00:31:09,160 --> 00:31:12,360 Speaker 1: visit the Disney theme park in Shanghai. They all went 544 00:31:12,600 --> 00:31:15,840 Speaker 1: with their small children for a magical day, but one 545 00:31:15,960 --> 00:31:19,320 Speaker 1: person tested positive for COVID. They closed the park, wouldn't 546 00:31:19,360 --> 00:31:22,000 Speaker 1: let anyone leave until every single one of the thirty 547 00:31:22,040 --> 00:31:25,080 Speaker 1: four thousand people have been tested. It took until about midnight. 548 00:31:25,160 --> 00:31:27,080 Speaker 1: You can imagine what that would have been like with 549 00:31:27,200 --> 00:31:29,480 Speaker 1: your five or six year old child. And to add 550 00:31:29,520 --> 00:31:32,960 Speaker 1: insult to injury, in the end, no one else tested positive. 551 00:31:33,720 --> 00:31:37,560 Speaker 1: I guess better safe than sorry. But like the Hotel California, 552 00:31:37,640 --> 00:31:40,880 Speaker 1: you can check in, but you can never leave, at 553 00:31:40,960 --> 00:31:44,640 Speaker 1: least not until you've had yet another COVID test. That 554 00:31:44,720 --> 00:31:46,520 Speaker 1: does it. For this episode of Wall Street Week, I'm 555 00:31:46,600 --> 00:31:53,800 Speaker 1: David Weston. This is Bloomberg. See you next week.