1
00:00:00,240 --> 00:00:02,440
Speaker 1: This is Bloomberg Wall Street Week.

2
00:00:02,480 --> 00:00:04,400
Speaker 2: I mean may not have an overall recesion. We're having

3
00:00:04,400 --> 00:00:06,680
Speaker 2: a rolling recession. A kind of role looks pretty strongly

4
00:00:06,680 --> 00:00:08,840
Speaker 2: it is when it comes to jobs. The financial stories

5
00:00:08,920 --> 00:00:11,920
Speaker 2: that shape our world. Three major regional bank failures send

6
00:00:12,000 --> 00:00:14,680
Speaker 2: shockwaves through the banking system. We're all trying to figure

7
00:00:14,680 --> 00:00:17,320
Speaker 2: out what to make of generative AI through.

8
00:00:17,160 --> 00:00:19,320
Speaker 1: The eyes of the most influential voices.

9
00:00:19,440 --> 00:00:22,400
Speaker 2: Welcome down, Doctor Paul Krugman, Ryan Moynihan, a Bank of America,

10
00:00:22,520 --> 00:00:25,320
Speaker 2: Zebra Lair of the Paulson Institute, Glenn Hubbard of the

11
00:00:25,320 --> 00:00:26,280
Speaker 2: Columbia Business School.

12
00:00:26,280 --> 00:00:30,120
Speaker 1: Bloomberg Wall Street Week with David Weston from Bloomberg Radio.

13
00:00:30,520 --> 00:00:34,560
Speaker 2: A war intensifies, an election, hints at what lies ahead,

14
00:00:34,920 --> 00:00:38,720
Speaker 2: a startup Darling goes bankrupt, and a king lays out

15
00:00:38,760 --> 00:00:42,360
Speaker 2: his commitment to fight inflation. This is Bloomberg Wall Street Week.

16
00:00:42,479 --> 00:00:46,600
Speaker 2: I'm David Weston. This week Nobel Laureate Michael Spence on

17
00:00:46,680 --> 00:00:48,559
Speaker 2: the promise of generative AI.

18
00:00:49,520 --> 00:00:54,040
Speaker 3: Generative AI is mainly, not exclusively, but mainly going to

19
00:00:54,120 --> 00:00:56,960
Speaker 3: turn out to be a powerful digital assistant.

20
00:00:57,600 --> 00:01:00,800
Speaker 2: Rock Creek Asny Bacheloss, explains how to make money investing

21
00:01:00,840 --> 00:01:02,280
Speaker 2: in climate in China.

22
00:01:03,040 --> 00:01:05,480
Speaker 4: While a lot of countries in the West talked about it,

23
00:01:05,600 --> 00:01:10,360
Speaker 4: the Chinese actually became more than eighty percent of solar.

24
00:01:10,360 --> 00:01:13,440
Speaker 2: And Melissa Karney is the Aspen Economic Strategy Group on

25
00:01:13,600 --> 00:01:16,679
Speaker 2: building economic resilience by addressing the deficit.

26
00:01:17,120 --> 00:01:19,440
Speaker 5: It's important that people are now paying attention to this.

27
00:01:19,800 --> 00:01:22,360
Speaker 5: I mean, we're really on an unsustainable path.

28
00:01:35,640 --> 00:01:39,360
Speaker 2: Global Wall Street spent another week watching Israel's war with

29
00:01:39,400 --> 00:01:43,959
Speaker 2: Hamas unfold as Israeli forces surrounded Gaza City and the

30
00:01:43,959 --> 00:01:45,240
Speaker 2: fighting intensify.

31
00:01:46,040 --> 00:01:50,000
Speaker 6: Ground oppressions by the israel Defense Forces and continued bombardments

32
00:01:50,680 --> 00:01:54,560
Speaker 6: are hitting civilians. At the same time, Hamas and other

33
00:01:54,640 --> 00:01:58,880
Speaker 6: militants use civilians as human shields and continue to launch

34
00:01:58,960 --> 00:02:02,200
Speaker 6: rockets in these streme in its league towards Israel, and.

35
00:02:02,160 --> 00:02:04,240
Speaker 2: The United States joined much of the rest of the

36
00:02:04,240 --> 00:02:07,480
Speaker 2: world in calling for a humanitarian pause.

37
00:02:08,360 --> 00:02:12,120
Speaker 7: I don't think you know Israel is interested in a

38
00:02:12,160 --> 00:02:16,280
Speaker 7: cease fire at this point, but they are perhaps willing

39
00:02:16,320 --> 00:02:18,680
Speaker 7: to have what we do call humanitarian pauses.

40
00:02:19,200 --> 00:02:23,320
Speaker 2: Off Your elections in Ohio, Kentucky, and Virginia tipped decidedly

41
00:02:23,400 --> 00:02:24,440
Speaker 2: toward the Democrats.

42
00:02:24,880 --> 00:02:28,919
Speaker 8: What's fascinating about this series of elections and the ones

43
00:02:28,960 --> 00:02:32,160
Speaker 8: we had in November of twenty twenty two for the

44
00:02:32,200 --> 00:02:35,239
Speaker 8: midterm election is that they're saying the same.

45
00:02:35,040 --> 00:02:39,440
Speaker 2: Thing, suggesting maybe that abortion rights could play a role

46
00:02:39,480 --> 00:02:42,640
Speaker 2: in the presidential election less than one year away.

47
00:02:43,400 --> 00:02:46,160
Speaker 9: If you look at from the midterms to last night,

48
00:02:46,800 --> 00:02:53,680
Speaker 9: from California to Kansas, Ohio to Virginia, the voters said, look,

49
00:02:54,360 --> 00:02:56,280
Speaker 9: the government should not be telling a woman what.

50
00:02:56,240 --> 00:02:57,000
Speaker 4: To do with her body.

51
00:02:57,600 --> 00:03:00,679
Speaker 2: In two short years, the real estate startup work went

52
00:03:00,720 --> 00:03:05,400
Speaker 2: for a huge potential IPO to asspack to bankruptcy. I

53
00:03:05,520 --> 00:03:07,079
Speaker 2: think billions in the process.

54
00:03:07,720 --> 00:03:11,720
Speaker 4: As a company, we need to accept this reality and

55
00:03:11,840 --> 00:03:15,480
Speaker 4: also or need to learn the lesson from this for

56
00:03:15,600 --> 00:03:17,280
Speaker 4: our future investment activity.

57
00:03:18,120 --> 00:03:21,480
Speaker 2: On Wednesday, the picket lines came down in Hollywood as

58
00:03:21,520 --> 00:03:24,840
Speaker 2: the studios reached a tentative agreement with SAG after raising

59
00:03:24,919 --> 00:03:28,560
Speaker 2: hopes that movies and TV shows would get back into production.

60
00:03:29,680 --> 00:03:34,400
Speaker 7: This and a very clear message that union's work, labor movements.

61
00:03:34,040 --> 00:03:37,280
Speaker 2: Work, and no less than the King of England weighed

62
00:03:37,360 --> 00:03:40,480
Speaker 2: in on the need to fight for an economic soft landing.

63
00:03:41,360 --> 00:03:45,400
Speaker 10: My government will continue to take action to bring down

64
00:03:45,440 --> 00:03:50,240
Speaker 10: inflation to ease the cost of living for families. And

65
00:03:50,360 --> 00:03:54,080
Speaker 10: help businesses fund new jobs and investments.

66
00:03:55,480 --> 00:03:59,240
Speaker 2: And then after the equity markets closed on Friday, Movies

67
00:03:59,280 --> 00:04:02,200
Speaker 2: cut the US credit outlook to negative as the country

68
00:04:02,240 --> 00:04:05,720
Speaker 2: looks at yet another government funding deadline next Friday. Through

69
00:04:05,760 --> 00:04:07,600
Speaker 2: the week, the bond market was on something of a

70
00:04:07,680 --> 00:04:10,040
Speaker 2: roller coaster, with the yield on the ten year ranging

71
00:04:10,080 --> 00:04:12,240
Speaker 2: as low as four point four to seven, and then

72
00:04:12,280 --> 00:04:15,000
Speaker 2: it shot up again late Friday after the Moody's news

73
00:04:15,120 --> 00:04:17,880
Speaker 2: to end the week at four point sixty five. Stocks

74
00:04:17,920 --> 00:04:19,720
Speaker 2: were a bit more upbeat as the S and P

75
00:04:19,800 --> 00:04:22,200
Speaker 2: five hundred added another one point three percent to come

76
00:04:22,360 --> 00:04:25,159
Speaker 2: within thirty points of the year end median number of

77
00:04:25,200 --> 00:04:28,120
Speaker 2: four four three five that our Bloomberg elves are projecting

78
00:04:28,200 --> 00:04:31,600
Speaker 2: right now, while the NASDAD gained nearly two point four percent.

79
00:04:31,880 --> 00:04:34,120
Speaker 2: To explain it all to us, we welcome back now

80
00:04:34,160 --> 00:04:37,279
Speaker 2: to Sonatasai. She is Franklin Temple and chief investment officer

81
00:04:37,279 --> 00:04:39,080
Speaker 2: for fixed income. So thank you so much for being

82
00:04:39,120 --> 00:04:41,200
Speaker 2: back with us. So before we get to what happened

83
00:04:41,200 --> 00:04:42,960
Speaker 2: over all in the week, what about there right at

84
00:04:42,960 --> 00:04:47,120
Speaker 2: the end on Friday with the Moody's downgraded US credit,

85
00:04:47,360 --> 00:04:48,599
Speaker 2: How material is that?

86
00:04:50,160 --> 00:04:53,440
Speaker 11: So you know, material is they're talking about, does it

87
00:04:53,600 --> 00:04:58,039
Speaker 11: have an important impact on people's desire or ability to

88
00:04:58,080 --> 00:05:01,080
Speaker 11: hold US debt. It's not going to be so important,

89
00:05:01,160 --> 00:05:07,160
Speaker 11: but as a signal of how dysfunctional the US policy

90
00:05:07,200 --> 00:05:10,080
Speaker 11: making is right now, it's very important, I'd say. I mean,

91
00:05:10,120 --> 00:05:15,240
Speaker 11: it's a reminder that we are looking at an extremely

92
00:05:15,360 --> 00:05:20,240
Speaker 11: serious fiscal problem between the debt and the deficit, and

93
00:05:20,520 --> 00:05:24,080
Speaker 11: the way we are operating right now is not very reasonable.

94
00:05:24,400 --> 00:05:28,640
Speaker 11: So it's a good reminder that fiscal policy is an

95
00:05:28,680 --> 00:05:32,520
Speaker 11: issue and markets should pay potentially more attention than they

96
00:05:32,560 --> 00:05:34,360
Speaker 11: are to fiscal issues.

97
00:05:34,800 --> 00:05:36,720
Speaker 2: And it comes against the backdrop of a fair amount

98
00:05:36,720 --> 00:05:38,680
Speaker 2: of volatility in your neck of the woods, that is

99
00:05:38,720 --> 00:05:41,880
Speaker 2: fixed income. We saw again this week the ups and downs.

100
00:05:41,920 --> 00:05:43,960
Speaker 2: They may not have been quite as big, the amplitude

101
00:05:43,960 --> 00:05:46,440
Speaker 2: maybe a litle less than it has been, but it's

102
00:05:46,440 --> 00:05:48,719
Speaker 2: still a fair amount of volatility because I'm not sure

103
00:05:48,760 --> 00:05:50,520
Speaker 2: the markets know where it's going.

104
00:05:51,839 --> 00:05:52,320
Speaker 12: I think that.

105
00:05:52,320 --> 00:05:55,120
Speaker 11: Actually, if you look at what's happening that markets, what

106
00:05:55,160 --> 00:06:01,440
Speaker 11: we saw last week really was once again, we've been

107
00:06:01,520 --> 00:06:04,440
Speaker 11: to this show, David right, We've done this before many

108
00:06:04,520 --> 00:06:08,080
Speaker 11: times over the last year and a half. You have

109
00:06:08,120 --> 00:06:11,279
Speaker 11: a FED meeting, the market here's what it wants to

110
00:06:11,320 --> 00:06:15,719
Speaker 11: hear from what the Fed is saying, and runs with it.

111
00:06:16,160 --> 00:06:19,479
Speaker 11: So what I think that Japowell was trying to do,

112
00:06:20,240 --> 00:06:22,560
Speaker 11: not this week, but the week before, was to give

113
00:06:22,600 --> 00:06:26,120
Speaker 11: the market a gentle nudge in the direction of a

114
00:06:26,320 --> 00:06:30,920
Speaker 11: slightly more dubvish message. The market took that slightly dubbsh

115
00:06:31,040 --> 00:06:34,040
Speaker 11: message and simply ran with it. We had a close

116
00:06:34,120 --> 00:06:38,200
Speaker 11: to forty basis points rally in the tenure on the

117
00:06:38,240 --> 00:06:42,240
Speaker 11: back of the Fed, on the back of slightly different

118
00:06:42,720 --> 00:06:47,680
Speaker 11: than anticipated a schedule from Treasury in terms of issuance,

119
00:06:47,960 --> 00:06:50,440
Speaker 11: and a slightly softer job market report.

120
00:06:50,640 --> 00:06:52,360
Speaker 12: The three of them together do.

121
00:06:52,480 --> 00:06:56,960
Speaker 11: Not change enough of what's happening on the ground to

122
00:06:57,200 --> 00:07:00,320
Speaker 11: justify the type of rally we saw. And indeed, this

123
00:07:00,360 --> 00:07:02,599
Speaker 11: week we've seen a bit of a sell off that

124
00:07:02,680 --> 00:07:05,479
Speaker 11: roller coaster you were talking about. I think the market's

125
00:07:05,480 --> 00:07:09,560
Speaker 11: still really really focused on trying to figure out whether

126
00:07:09,600 --> 00:07:14,720
Speaker 11: the Fed or the Treasury can swoop in and make

127
00:07:14,760 --> 00:07:18,600
Speaker 11: it all okay again so that rates can rally and

128
00:07:18,640 --> 00:07:20,080
Speaker 11: we can go back to the races.

129
00:07:20,480 --> 00:07:22,800
Speaker 2: Given that situation, So now, what's an investor to do?

130
00:07:23,400 --> 00:07:25,280
Speaker 2: How do you try to protect yourself and actually make

131
00:07:25,360 --> 00:07:28,080
Speaker 2: some money in this environment right now, cash is actually

132
00:07:28,080 --> 00:07:30,880
Speaker 2: worth something. Now when your cash is worth something, but

133
00:07:31,720 --> 00:07:34,680
Speaker 2: what do you do with your bond Portfoliot's talk about

134
00:07:34,680 --> 00:07:35,440
Speaker 2: that specifically.

135
00:07:36,480 --> 00:07:38,080
Speaker 12: So actually, you know you're right.

136
00:07:38,200 --> 00:07:41,720
Speaker 11: Cash has been very good, good for people this year.

137
00:07:42,040 --> 00:07:45,960
Speaker 11: You're getting a very good, very good, good return on cash. However,

138
00:07:46,320 --> 00:07:49,160
Speaker 11: as we get towards the end of this year, I

139
00:07:49,200 --> 00:07:51,320
Speaker 11: said that I've been saying for a while that the

140
00:07:51,320 --> 00:07:54,720
Speaker 11: FED is likely to maintain higher rates for somewhat longer

141
00:07:54,760 --> 00:07:56,240
Speaker 11: than the market is anticipating.

142
00:07:56,520 --> 00:07:57,920
Speaker 12: We're not getting ready.

143
00:07:57,640 --> 00:08:00,960
Speaker 11: We are certainly not forecasting a hundred basis points of

144
00:08:01,040 --> 00:08:03,560
Speaker 11: rape cuts starting already from the middle of next year,

145
00:08:04,040 --> 00:08:05,160
Speaker 11: as is being.

146
00:08:05,000 --> 00:08:06,760
Speaker 12: Now priced by the market.

147
00:08:07,360 --> 00:08:11,360
Speaker 11: Nonetheless, as we get towards the next several months, I

148
00:08:11,400 --> 00:08:14,680
Speaker 11: think the time to start moving away from that very

149
00:08:14,800 --> 00:08:19,280
Speaker 11: very short duration and cash in fixed income. It's coming

150
00:08:19,680 --> 00:08:22,600
Speaker 11: because we are looking once you get ten years at

151
00:08:22,680 --> 00:08:25,880
Speaker 11: RAM five, once you look at high quality investment, great

152
00:08:25,960 --> 00:08:31,040
Speaker 11: credits and mortgages areas like this are yielding over six percent.

153
00:08:31,600 --> 00:08:36,560
Speaker 11: These are actually pretty attractive for attractive yields. To start

154
00:08:36,679 --> 00:08:40,000
Speaker 11: slowly averaging into a little bit of duration is how

155
00:08:40,040 --> 00:08:42,400
Speaker 11: I would put it. I don't think we chase the

156
00:08:42,480 --> 00:08:45,439
Speaker 11: yield because the type of volatility we've seen it's.

157
00:08:45,320 --> 00:08:46,080
Speaker 12: Not gone away.

158
00:08:46,480 --> 00:08:48,640
Speaker 11: I do think we're going to probably see five again,

159
00:08:48,960 --> 00:08:50,199
Speaker 11: so there's time to.

160
00:08:50,200 --> 00:08:51,920
Speaker 12: Start factoring that in.

161
00:08:52,400 --> 00:08:56,760
Speaker 11: But averaging in a true fixed income portfolio, where you

162
00:08:56,840 --> 00:09:01,040
Speaker 11: start adding a little bit of duration, it's a good

163
00:09:01,080 --> 00:09:03,920
Speaker 11: idea to do it right now, around now, over the

164
00:09:03,920 --> 00:09:07,920
Speaker 11: next three months, over the next six months, and I'm

165
00:09:07,960 --> 00:09:11,560
Speaker 11: looking forward to fixed income actually playing that traditional role

166
00:09:12,040 --> 00:09:15,400
Speaker 11: of delivering income rather than equity like returns.

167
00:09:15,880 --> 00:09:16,840
Speaker 12: Looking at next.

168
00:09:16,640 --> 00:09:20,360
Speaker 11: Year, I'm not looking for massive capital gains out of

169
00:09:20,360 --> 00:09:21,000
Speaker 11: fixed income.

170
00:09:21,280 --> 00:09:25,000
Speaker 2: What about trend? Sorry? What about what side? The United States? Europe? Japan?

171
00:09:26,120 --> 00:09:27,959
Speaker 12: So that's a really interesting point.

172
00:09:28,000 --> 00:09:30,840
Speaker 11: So in Europe, we actually think that the underlying growth

173
00:09:30,880 --> 00:09:35,320
Speaker 11: fundamentals make duration plays in Europe potentially more attractive even

174
00:09:35,800 --> 00:09:39,320
Speaker 11: than the US. So that's one area because growth in

175
00:09:39,360 --> 00:09:43,040
Speaker 11: the euro area is simply not as well supported as

176
00:09:43,040 --> 00:09:45,040
Speaker 11: it continues to be in the US. We're slowing in

177
00:09:45,080 --> 00:09:48,240
Speaker 11: the US, but we're starting from a very good place. Japan,

178
00:09:48,400 --> 00:09:52,160
Speaker 11: to me is the really fascinating one because Japan and

179
00:09:52,280 --> 00:09:56,360
Speaker 11: Japanese investors have actually been a major source of support

180
00:09:56,440 --> 00:09:58,880
Speaker 11: for the long end of the US yield cup because

181
00:09:58,960 --> 00:10:03,160
Speaker 11: rates have been so low, and Japan within the G three,

182
00:10:02,840 --> 00:10:08,040
Speaker 11: the BOG is very much behind the FED and the ECB.

183
00:10:07,960 --> 00:10:10,400
Speaker 12: In terms of changing its Montrey policy stunts.

184
00:10:10,600 --> 00:10:12,600
Speaker 2: Thank you so much to snaw this. I always great

185
00:10:12,600 --> 00:10:19,120
Speaker 2: to have you with us. She's from Franklin Templeton. Coming up,

186
00:10:19,120 --> 00:10:22,240
Speaker 2: what generative AI will mean for our jobs and whether

187
00:10:22,360 --> 00:10:26,360
Speaker 2: we get to decide the Nobel Laureate Michael Spence of Stanford.

188
00:10:27,240 --> 00:10:31,320
Speaker 3: You can influence the direction of technology and development, and

189
00:10:31,360 --> 00:10:33,960
Speaker 3: I think you know within Santas and so on, and

190
00:10:34,000 --> 00:10:35,439
Speaker 3: you should be influenced in.

191
00:10:35,400 --> 00:10:38,559
Speaker 13: The direction of collaboration and augmentation.

192
00:10:39,760 --> 00:10:42,199
Speaker 2: That's next on Wall Street Week on Bloomberg.

193
00:10:43,640 --> 00:10:47,880
Speaker 1: This is Bloomberg Wall Street Week with David Weston from

194
00:10:48,000 --> 00:10:53,480
Speaker 1: Bloomberg Radio.

195
00:10:55,640 --> 00:10:57,840
Speaker 2: This is Wall Street Week. I'm David Weston. We know

196
00:10:57,960 --> 00:11:00,360
Speaker 2: it's coming and we're told it's going to be big,

197
00:11:00,520 --> 00:11:03,240
Speaker 2: But what generative AI will mean to our economy and

198
00:11:03,320 --> 00:11:06,240
Speaker 2: our lives is yet to be determined, including what it

199
00:11:06,280 --> 00:11:09,560
Speaker 2: will be doe to what jobs and productivity. For his analysis,

200
00:11:09,600 --> 00:11:12,680
Speaker 2: we welcome now Michael Spence. He's Nobel Prize winner in economics.

201
00:11:12,760 --> 00:11:15,360
Speaker 2: Diana Maritis of the Stanford Business School and co author

202
00:11:15,400 --> 00:11:18,480
Speaker 2: with Gordon Brown and Muhammad al Area of Permacrisis, A

203
00:11:18,520 --> 00:11:21,480
Speaker 2: Plan to fix a fractured world. So, doctor Spence, thank

204
00:11:21,520 --> 00:11:23,960
Speaker 2: you so much for being with us. You've written an article,

205
00:11:24,120 --> 00:11:26,880
Speaker 2: co author and article in Foreign Affairs, specifically the coming

206
00:11:26,920 --> 00:11:30,640
Speaker 2: AI Economic Revolution. So you've thought through these things. First

207
00:11:30,679 --> 00:11:32,840
Speaker 2: of I'll start with what the challenges are that we

208
00:11:32,920 --> 00:11:35,400
Speaker 2: have in terms of the size of workforce and productivity

209
00:11:35,600 --> 00:11:37,200
Speaker 2: that perhaps AI could help us on.

210
00:11:37,559 --> 00:11:39,720
Speaker 3: So we have a lot of what I what we

211
00:11:39,800 --> 00:11:44,520
Speaker 3: call secular headwinds to growth. So we lived for three decades, David,

212
00:11:44,559 --> 00:11:48,520
Speaker 3: in a world that produced massive amounts of incremental productive

213
00:11:48,559 --> 00:11:52,199
Speaker 3: capacity made mainly in the emerging economies. As a result,

214
00:11:52,280 --> 00:11:55,320
Speaker 3: we had a deflationary kind of you know pattern in

215
00:11:55,400 --> 00:11:58,960
Speaker 3: the economy of inflation wasn't much of a problem.

216
00:11:59,120 --> 00:12:02,480
Speaker 13: And all that's that force is fading rapidly.

217
00:12:03,160 --> 00:12:06,559
Speaker 3: Then you've got aging in the global economy. More than

218
00:12:06,600 --> 00:12:09,480
Speaker 3: seventy five percent of the global economy is in a

219
00:12:09,559 --> 00:12:13,080
Speaker 3: serious pattern of aging, you know, declining workforces in some cases,

220
00:12:13,640 --> 00:12:16,120
Speaker 3: you have big changes in labor market behavior. You have

221
00:12:16,200 --> 00:12:22,120
Speaker 3: shortages in all the major employment sectors in the American economy, uh,

222
00:12:22,480 --> 00:12:25,880
Speaker 3: the big ones. And then and then you know, you

223
00:12:25,960 --> 00:12:31,720
Speaker 3: have geopolitical tensions and shocks coming from multiple sources like pandemics, climate,

224
00:12:32,720 --> 00:12:37,560
Speaker 3: and a pattern of diversification initiated both by businesses, you know,

225
00:12:37,640 --> 00:12:41,560
Speaker 3: in pursuit of kind of resilience and longer term you know, profitability,

226
00:12:41,880 --> 00:12:46,760
Speaker 3: but also now by by economic policy and multiple jurisdictions.

227
00:12:46,800 --> 00:12:50,160
Speaker 3: And when you combine all those forces and the declining

228
00:12:50,200 --> 00:12:54,160
Speaker 3: productivity trend, which has been fairly dramatic in the last decade,

229
00:12:54,600 --> 00:12:58,960
Speaker 3: you've got a world that switched relatively rapidly from you know,

230
00:12:59,160 --> 00:13:03,880
Speaker 3: demand constraint to supply constraint growth patterns, and so we're

231
00:13:03,920 --> 00:13:08,200
Speaker 3: looking for solutions to the supply side issues that are

232
00:13:08,360 --> 00:13:11,160
Speaker 3: that are creating not only problems for growth, but you know,

233
00:13:11,280 --> 00:13:16,160
Speaker 3: problems for the reappearance of inflation, you know, for higher

234
00:13:16,160 --> 00:13:20,960
Speaker 3: interest rates, higher lower valuations, higher costs of capital and

235
00:13:21,000 --> 00:13:23,720
Speaker 3: so on. And we're doing it in an environment where

236
00:13:23,720 --> 00:13:27,160
Speaker 3: we have to make enormous investments and things like sustainability.

237
00:13:27,600 --> 00:13:30,800
Speaker 3: So it's when I stand back and look at it, it's,

238
00:13:31,000 --> 00:13:33,920
Speaker 3: you know, it's a big challenge. And so that led

239
00:13:34,000 --> 00:13:37,480
Speaker 3: me and others to try to start looking for well

240
00:13:37,480 --> 00:13:40,720
Speaker 3: what tools and technologies do we have to try to

241
00:13:40,760 --> 00:13:41,760
Speaker 3: solve this problem.

242
00:13:42,360 --> 00:13:44,959
Speaker 2: We all live through something of digital revolution in the

243
00:13:45,040 --> 00:13:47,560
Speaker 2: late nineties and the early oughts in the move to

244
00:13:47,640 --> 00:13:50,599
Speaker 2: the Internet, and there was a real growth impetus from that.

245
00:13:50,760 --> 00:13:53,360
Speaker 2: Is our call. In what ways does this new move

246
00:13:53,440 --> 00:13:57,080
Speaker 2: to digital revolution through AI compared to that. Maybe it's

247
00:13:57,120 --> 00:13:58,960
Speaker 2: similar to or maybe different from.

248
00:13:59,320 --> 00:14:02,000
Speaker 13: So we did get a productivity surge.

249
00:14:02,000 --> 00:14:04,320
Speaker 3: It came, you know, in the late nineteen nineties after

250
00:14:04,440 --> 00:14:07,560
Speaker 3: everybody got access to the Internet and the Worldwide Web

251
00:14:07,640 --> 00:14:11,319
Speaker 3: came in, you know, into its own and that lasted

252
00:14:11,360 --> 00:14:14,559
Speaker 3: into the early two thousands, and some of that is ongoing,

253
00:14:14,600 --> 00:14:18,520
Speaker 3: you know, the digitalization of supply chains and so on.

254
00:14:19,520 --> 00:14:25,560
Speaker 3: That was pretty powerful and it had had noticeable effects.

255
00:14:25,600 --> 00:14:30,640
Speaker 3: It produced decline in middle class jobs in the advanced

256
00:14:30,680 --> 00:14:35,680
Speaker 3: economies like ours. It produced what David Otter calls job

257
00:14:35,720 --> 00:14:39,640
Speaker 3: and income polarization. There was a lot of automation in it.

258
00:14:39,760 --> 00:14:42,560
Speaker 3: You know, we automated things like you know, the keeping

259
00:14:42,640 --> 00:14:44,960
Speaker 3: of the General Ledger. Most of the most of the

260
00:14:45,000 --> 00:14:48,840
Speaker 3: information systems that a corporation runs on are now sort.

261
00:14:48,640 --> 00:14:52,120
Speaker 13: Of digital and fairly automated and so on.

262
00:14:52,200 --> 00:14:56,240
Speaker 3: So, you know, it was powerful but it feels to

263
00:14:56,280 --> 00:14:59,760
Speaker 3: me at least very different from the current round.

264
00:15:00,040 --> 00:15:01,560
Speaker 2: One of the things you point out in your paper

265
00:15:02,000 --> 00:15:05,800
Speaker 2: in Foreign Affairs is the effect that this new genera

266
00:15:05,800 --> 00:15:08,480
Speaker 2: of AI could have on so called knowledge economy, which

267
00:15:08,520 --> 00:15:11,600
Speaker 2: is different from the automation referred to from the Internet.

268
00:15:12,440 --> 00:15:15,840
Speaker 2: That may well affect a different strata of jobs as

269
00:15:15,880 --> 00:15:16,640
Speaker 2: I understand it.

270
00:15:16,840 --> 00:15:20,080
Speaker 3: Yeah, I mean, you know, the knowledge economy, when you

271
00:15:20,120 --> 00:15:22,800
Speaker 3: think about it carefully, kind of runs through and across

272
00:15:23,560 --> 00:15:27,880
Speaker 3: the entire economy. So even in what we think of

273
00:15:28,360 --> 00:15:31,480
Speaker 3: as sectors that are sort of largely blue collar, you know,

274
00:15:31,520 --> 00:15:34,000
Speaker 3: there's a fair amount of knowledge, you know that goes

275
00:15:34,040 --> 00:15:36,920
Speaker 3: into these skills, knowledge and so on. I mean, take

276
00:15:37,000 --> 00:15:41,320
Speaker 3: something like nursing. You know, nurses are pretty highly trained people.

277
00:15:41,320 --> 00:15:44,440
Speaker 3: They have to respond in intelligent ways to the signals

278
00:15:44,440 --> 00:15:48,840
Speaker 3: they get from you know, the equipment that patients are

279
00:15:49,320 --> 00:15:50,840
Speaker 3: using and they're.

280
00:15:50,560 --> 00:15:51,800
Speaker 13: Looking after and so on.

281
00:15:52,360 --> 00:15:56,200
Speaker 3: But you know, but yes, I mean, the CEO of

282
00:15:56,840 --> 00:15:58,880
Speaker 3: Google when asked you know, where is this going to

283
00:15:58,920 --> 00:16:00,000
Speaker 3: have its immediate impact.

284
00:16:00,040 --> 00:16:01,680
Speaker 13: It's going to be in the knowledge economy.

285
00:16:02,120 --> 00:16:04,720
Speaker 3: But I think, you know, we tend to think of

286
00:16:04,800 --> 00:16:08,680
Speaker 3: that as sort of white collar work, and there's an

287
00:16:08,720 --> 00:16:10,800
Speaker 3: element of truth in that, but I think it actually

288
00:16:10,800 --> 00:16:14,320
Speaker 3: does run right across the entire economy. Maybe not to

289
00:16:14,360 --> 00:16:20,400
Speaker 3: the same depth in every sector, but nevertheless it's very

290
00:16:20,400 --> 00:16:21,040
Speaker 3: broad based.

291
00:16:21,440 --> 00:16:23,320
Speaker 2: Do we have a sense and I understand this may

292
00:16:23,360 --> 00:16:25,560
Speaker 2: not be determinate, I mean that is to say, it

293
00:16:25,600 --> 00:16:27,560
Speaker 2: may differ as on what we do, but do we

294
00:16:27,600 --> 00:16:29,520
Speaker 2: have a sense of the extent to which this general

295
00:16:29,600 --> 00:16:33,400
Speaker 2: AI will displace jobs? They will go away as opposed

296
00:16:33,440 --> 00:16:34,880
Speaker 2: to transform jobs.

297
00:16:35,200 --> 00:16:40,080
Speaker 13: Look, I mean we're in a period of intense expiration

298
00:16:40,240 --> 00:16:44,920
Speaker 13: and experimentation. So you know, people often say, you know

299
00:16:45,320 --> 00:16:47,960
Speaker 13: that it's important to acknowledge it. You know, real.

300
00:16:47,800 --> 00:16:50,880
Speaker 3: Uncertainty when you're in the early stages of this, and

301
00:16:50,920 --> 00:16:55,080
Speaker 3: that's certainly characteristic of this. Having said that, James and I,

302
00:16:55,440 --> 00:17:00,000
Speaker 3: our best guess is that generative AI is mainly, not exclusively,

303
00:17:00,120 --> 00:17:02,960
Speaker 3: but mainly going to turn out to be, you know,

304
00:17:03,640 --> 00:17:05,480
Speaker 3: a powerful digital assistant.

305
00:17:05,800 --> 00:17:08,000
Speaker 2: One of the points you make in the paper is that,

306
00:17:08,040 --> 00:17:10,520
Speaker 2: as I say, this is not predestined to some extent.

307
00:17:10,560 --> 00:17:12,800
Speaker 2: How this ends up depends upon us and what we

308
00:17:12,880 --> 00:17:15,320
Speaker 2: decide to do about it. Explain to us, well, what

309
00:17:15,400 --> 00:17:18,080
Speaker 2: you think needs to be done or should be done,

310
00:17:18,320 --> 00:17:20,880
Speaker 2: so that we get the most good out of generative AI,

311
00:17:21,560 --> 00:17:24,320
Speaker 2: and as a subpoint, how much of that can be

312
00:17:24,320 --> 00:17:26,720
Speaker 2: trusted to the markets as opposed to governments.

313
00:17:27,119 --> 00:17:29,399
Speaker 3: So, you know, I think the markets in government and

314
00:17:29,440 --> 00:17:32,359
Speaker 3: attitudes and what and biases you know, are all part

315
00:17:32,359 --> 00:17:34,600
Speaker 3: of the mix. So I think the first order of

316
00:17:34,640 --> 00:17:39,040
Speaker 3: business is to avoid what Eric Bridenelson calls that an

317
00:17:39,040 --> 00:17:43,800
Speaker 3: influential paper that the touring trap. So Alan Turing proposed

318
00:17:43,880 --> 00:17:49,040
Speaker 3: that we evaluate progress with digital machines by using.

319
00:17:48,800 --> 00:17:51,240
Speaker 13: The following tests. Can we build a machine that.

320
00:17:51,400 --> 00:17:54,120
Speaker 3: Interacts with the human and the human thinks that it's

321
00:17:54,160 --> 00:17:55,560
Speaker 3: interacting with another human?

322
00:17:56,280 --> 00:17:58,720
Speaker 13: Is a fairly small step, and.

323
00:17:58,680 --> 00:18:01,880
Speaker 3: This is common in the AI world to evaluate progress

324
00:18:01,920 --> 00:18:06,000
Speaker 3: in AI by determining how well machines do relative to

325
00:18:06,160 --> 00:18:09,800
Speaker 3: human performance. So we do that in language recognition, we

326
00:18:09,880 --> 00:18:12,240
Speaker 3: do it in the image recognition, which is a huge

327
00:18:12,280 --> 00:18:15,720
Speaker 3: breakthrough in the you know, in the last six seven years.

328
00:18:17,200 --> 00:18:19,480
Speaker 3: And we do it, you know, with the generative AI.

329
00:18:19,680 --> 00:18:22,359
Speaker 3: Does the generative AI do better than the average human?

330
00:18:22,440 --> 00:18:24,520
Speaker 3: On the l s at the law school have to

331
00:18:24,560 --> 00:18:29,919
Speaker 3: do tests. That's okay, but there's a very small step

332
00:18:30,200 --> 00:18:34,080
Speaker 3: from that to thinking that, you know, well, once the

333
00:18:34,119 --> 00:18:35,320
Speaker 3: machine passes the human.

334
00:18:35,359 --> 00:18:38,080
Speaker 13: Why don't we get rid of the human And that

335
00:18:38,520 --> 00:18:39,280
Speaker 13: leads you to.

336
00:18:39,359 --> 00:18:42,679
Speaker 3: What you might call the automation bias, and that I

337
00:18:42,720 --> 00:18:45,840
Speaker 3: think we do have to resist. And that's not government,

338
00:18:45,920 --> 00:18:49,480
Speaker 3: that's not business, that's got any particular sector, it's just

339
00:18:49,520 --> 00:18:50,800
Speaker 3: the way we think about it.

340
00:18:51,160 --> 00:18:53,280
Speaker 13: So I think that's step one.

341
00:18:53,640 --> 00:18:57,600
Speaker 3: Step two is, you know, you can influence the direction

342
00:18:57,680 --> 00:19:01,280
Speaker 3: of technology and development, and I think you know, with

343
00:19:01,440 --> 00:19:03,960
Speaker 3: incentives and so on, and you should be influenced in

344
00:19:04,000 --> 00:19:07,200
Speaker 3: the direction of collaboration and augmentation.

345
00:19:07,840 --> 00:19:09,960
Speaker 13: And then third, with the way James and.

346
00:19:09,920 --> 00:19:12,320
Speaker 3: I thought of it, we don't want to repeat that

347
00:19:12,359 --> 00:19:16,600
Speaker 3: pattern of you know, sort of high adoption rates and

348
00:19:17,200 --> 00:19:19,840
Speaker 3: very low adoption rates that we saw in earlier rounds

349
00:19:19,840 --> 00:19:22,440
Speaker 3: of digital you know adoption.

350
00:19:23,240 --> 00:19:25,399
Speaker 2: Doctor Spence, thank you so much for being here on

351
00:19:25,440 --> 00:19:27,680
Speaker 2: Wall Street Week, really appreciate That's not to Michael Spence

352
00:19:27,920 --> 00:19:32,240
Speaker 2: of the Stanford Business School. Coming up, as we count

353
00:19:32,359 --> 00:19:35,600
Speaker 2: down the months until next year's elections, our colleague Michael

354
00:19:35,680 --> 00:19:38,760
Speaker 2: McKee takes us back through what happened to some other

355
00:19:38,920 --> 00:19:44,720
Speaker 2: incumbent presidents when the economy was in flux. That's next

356
00:19:44,760 --> 00:19:45,600
Speaker 2: on Wall Street Week.

357
00:19:45,760 --> 00:19:51,280
Speaker 1: On Bloomberg, this is Bloomberg Wall Street Week with David

358
00:19:51,280 --> 00:19:53,359
Speaker 1: Weston from Bloomberg Radio.

359
00:20:01,119 --> 00:20:05,440
Speaker 2: China and climate investing two destinations that were once all

360
00:20:05,560 --> 00:20:06,080
Speaker 2: the rage.

361
00:20:06,400 --> 00:20:08,720
Speaker 3: If I had to bet on one market or the

362
00:20:08,800 --> 00:20:12,520
Speaker 3: other over the next several years, I would bet on China's.

363
00:20:12,720 --> 00:20:15,800
Speaker 8: If you're global investor, you've got to be watching and

364
00:20:15,840 --> 00:20:17,000
Speaker 8: investing here in China.

365
00:20:17,359 --> 00:20:21,240
Speaker 7: ESG investing has gone from niche to mainstream.

366
00:20:21,359 --> 00:20:26,200
Speaker 2: We're integrating ESG environmental, social and governance into every aspect

367
00:20:26,240 --> 00:20:29,720
Speaker 2: of our investment decisions and across our investment workfelows, but

368
00:20:29,760 --> 00:20:32,520
Speaker 2: there recently have given up some of their momentum as

369
00:20:32,600 --> 00:20:35,000
Speaker 2: foreign direct investment in China has dropped off.

370
00:20:35,520 --> 00:20:38,919
Speaker 14: The big question will be whether she jmping pivots and

371
00:20:39,040 --> 00:20:42,560
Speaker 14: focus is more on market opening and creating the confidence

372
00:20:42,680 --> 00:20:46,560
Speaker 14: and the conditions to continue to attract foreign business, which

373
00:20:46,600 --> 00:20:49,359
Speaker 14: is necessary if he's going to continue to grow his economy,

374
00:20:49,400 --> 00:20:53,000
Speaker 14: he can't do it without foreign business being present.

375
00:20:53,680 --> 00:20:57,159
Speaker 2: And green investing has gotten increasingly controversial.

376
00:20:57,840 --> 00:21:02,720
Speaker 15: Energy transition is very much misguided in my opinion. It's

377
00:21:02,760 --> 00:21:06,359
Speaker 15: based on politics and emotion, it's not based on sciences.

378
00:21:06,480 --> 00:21:09,720
Speaker 15: Back we're really all we're doing is we're substituting one

379
00:21:09,840 --> 00:21:13,639
Speaker 15: form of mineral extraction for another.

380
00:21:14,040 --> 00:21:16,680
Speaker 2: But now there's reason to take a second look as

381
00:21:16,720 --> 00:21:19,399
Speaker 2: technology may be taking the place of real estate in

382
00:21:19,440 --> 00:21:20,560
Speaker 2: the Chinese economy.

383
00:21:21,000 --> 00:21:23,520
Speaker 16: Yes, there are excesses in parts of the Chinese economy

384
00:21:23,520 --> 00:21:29,160
Speaker 16: in real estate, but their technological process is really strong.

385
00:21:29,760 --> 00:21:34,680
Speaker 16: The entire clean energy economy cannot exist without Chinese components

386
00:21:34,720 --> 00:21:36,520
Speaker 16: and Chinese raw materials.

387
00:21:36,359 --> 00:21:39,080
Speaker 2: And China races ahead of the West and extracting the

388
00:21:39,160 --> 00:21:41,600
Speaker 2: minerals that drive the move away from carbon.

389
00:21:42,040 --> 00:21:46,240
Speaker 17: China has been developing this industry for twenty or thirty years,

390
00:21:46,240 --> 00:21:49,880
Speaker 17: so they're really ahead of most Western democracies. It's now

391
00:21:49,880 --> 00:21:53,080
Speaker 17: important for us to make sure we have diversified supply

392
00:21:53,240 --> 00:21:55,439
Speaker 17: chains because no matter what the product, whether it's critical

393
00:21:55,480 --> 00:21:58,719
Speaker 17: minerals or rares, having options.

394
00:21:58,240 --> 00:22:01,160
Speaker 12: Around where you get these things to be really important.

395
00:22:01,320 --> 00:22:04,200
Speaker 2: Leading Western investors to take a second look at parts

396
00:22:04,200 --> 00:22:07,840
Speaker 2: of the Chinese economy that may be opportunities even as

397
00:22:07,920 --> 00:22:09,240
Speaker 2: other parts slow down.

398
00:22:09,760 --> 00:22:11,320
Speaker 3: What I would say is, I think the story on

399
00:22:11,359 --> 00:22:13,680
Speaker 3: what's growing in China's actually misunderstood.

400
00:22:14,040 --> 00:22:15,680
Speaker 13: Right One is that housing.

401
00:22:15,840 --> 00:22:18,000
Speaker 3: I think people know that it's not growing, and I

402
00:22:18,000 --> 00:22:19,399
Speaker 3: think that's been well documented.

403
00:22:19,760 --> 00:22:23,000
Speaker 13: What they're ment missing though, is the growth drivers.

404
00:22:23,040 --> 00:22:26,000
Speaker 5: What you're seeing is a huge growth surge in the

405
00:22:26,080 --> 00:22:28,160
Speaker 5: decarbonization or the energy transition.

406
00:22:33,240 --> 00:22:35,600
Speaker 2: And to give us her sense of investing in China

407
00:22:35,720 --> 00:22:37,640
Speaker 2: and investing in greed at the same time. And welcome

408
00:22:37,680 --> 00:22:39,800
Speaker 2: back a very special friend of Wall Street Week. She

409
00:22:39,880 --> 00:22:42,120
Speaker 2: is a Sonny Bechalist of Rock Creek. Welcome back. Great

410
00:22:42,119 --> 00:22:42,879
Speaker 2: to have you have, Sonny.

411
00:22:42,880 --> 00:22:44,320
Speaker 4: Thank you, David, It's great to be here.

412
00:22:44,440 --> 00:22:47,840
Speaker 2: So in general, you hear people are less enthusiastic these

413
00:22:47,920 --> 00:22:51,159
Speaker 2: days about investing in China, but what about investing in

414
00:22:51,240 --> 00:22:52,399
Speaker 2: climate in China.

415
00:22:53,520 --> 00:22:58,040
Speaker 4: So you're absolutely right, David, investing in China. You put

416
00:22:58,080 --> 00:23:00,600
Speaker 4: it very nicely. But I think a lot of people

417
00:23:00,680 --> 00:23:03,800
Speaker 4: are taking out their money from China. We've seen now

418
00:23:04,200 --> 00:23:08,679
Speaker 4: from FDI going down, to equity flows going out, to

419
00:23:08,800 --> 00:23:13,919
Speaker 4: companies repatriating their profits in China, and a lot of

420
00:23:13,920 --> 00:23:16,800
Speaker 4: people are actually not even making overt noises that there

421
00:23:16,840 --> 00:23:19,520
Speaker 4: are because they want to build the next factory somewhere

422
00:23:19,520 --> 00:23:22,119
Speaker 4: else before they say they're taking it out. So I think,

423
00:23:22,160 --> 00:23:25,280
Speaker 4: if anything, what we've seen is the beginning of a

424
00:23:25,320 --> 00:23:30,240
Speaker 4: process of reducing outside money going into China. And of

425
00:23:30,280 --> 00:23:33,320
Speaker 4: course the biggest problems. We've talked about this before is

426
00:23:33,359 --> 00:23:38,520
Speaker 4: the demographics, the big loans that the banks have, and

427
00:23:38,680 --> 00:23:41,720
Speaker 4: also the fact that people are still saving so much

428
00:23:41,840 --> 00:23:45,520
Speaker 4: and not consuming and that has not changed even yesterday's numbers,

429
00:23:45,520 --> 00:23:49,520
Speaker 4: So there's deflation in the consumer area. So coming to

430
00:23:49,640 --> 00:23:54,000
Speaker 4: the whole area of green energy, Interestingly, while a lot

431
00:23:54,080 --> 00:23:56,680
Speaker 4: of countries in the West talked about it, the Chinese

432
00:23:56,680 --> 00:24:01,840
Speaker 4: actually became more than eighty percent of solar production solar

433
00:24:02,240 --> 00:24:06,560
Speaker 4: power production. When people talked about EV they're now fifty

434
00:24:06,600 --> 00:24:10,840
Speaker 4: percent of EV exports into the world, apart from also

435
00:24:11,440 --> 00:24:15,359
Speaker 4: buying EV's in China. So there is this contradiction in

436
00:24:15,480 --> 00:24:18,439
Speaker 4: the broader economy in China. And I think while we

437
00:24:18,520 --> 00:24:22,679
Speaker 4: are still discussing whether whether there is you know, ESG,

438
00:24:22,920 --> 00:24:26,719
Speaker 4: or whether whether whether we should have renewable energy or not,

439
00:24:27,080 --> 00:24:30,400
Speaker 4: they're not really looking at ESG. They're just looking at economics.

440
00:24:31,080 --> 00:24:35,320
Speaker 4: They're looking at the fact that the uh these evs

441
00:24:35,359 --> 00:24:38,760
Speaker 4: and and solar energy is cheaper. They are big, they

442
00:24:38,760 --> 00:24:41,359
Speaker 4: have huge reliance themselves on imported.

443
00:24:40,960 --> 00:24:42,439
Speaker 2: Oil and coal.

444
00:24:42,920 --> 00:24:46,160
Speaker 4: So from their own point in terms of geopolitically, they

445
00:24:46,160 --> 00:24:49,199
Speaker 4: have made a better plus when they went to all

446
00:24:49,240 --> 00:24:52,840
Speaker 4: the cop meetings they heard loud and clear that the

447
00:24:52,880 --> 00:24:55,760
Speaker 4: West is talking about this. The interesting thing is they

448
00:24:55,800 --> 00:24:59,200
Speaker 4: did more than the West in terms of investments in.

449
00:24:59,119 --> 00:25:02,159
Speaker 2: This area on this program before you said it's the

450
00:25:02,200 --> 00:25:04,520
Speaker 2: second largest economy in the world. You can't talk about

451
00:25:04,560 --> 00:25:07,560
Speaker 2: just ignoring China. You have to deal with China. So

452
00:25:07,640 --> 00:25:09,160
Speaker 2: if you're going to have to deal with China as

453
00:25:09,200 --> 00:25:13,320
Speaker 2: an investor, some of the issues you identify are directly

454
00:25:13,400 --> 00:25:16,520
Speaker 2: or in directly titan the government, even consumer purchasing in

455
00:25:16,560 --> 00:25:19,240
Speaker 2: parties because of a loss of confidence. It appears certainly

456
00:25:19,280 --> 00:25:21,480
Speaker 2: in the tech sector because of what the Chinese cars are.

457
00:25:21,720 --> 00:25:23,600
Speaker 2: But given what you just said about climate, is that

458
00:25:23,680 --> 00:25:27,119
Speaker 2: a relatively safer sector because the Chinese government is so

459
00:25:27,280 --> 00:25:28,360
Speaker 2: committed to the area.

460
00:25:28,480 --> 00:25:31,520
Speaker 4: So Chinese gun is committed. It's still continuing to invest

461
00:25:31,560 --> 00:25:33,960
Speaker 4: a lot in this area. But at the same time,

462
00:25:34,400 --> 00:25:37,359
Speaker 4: as Janet Dellen said in her piece yesterday, they're also

463
00:25:37,400 --> 00:25:42,800
Speaker 4: subsidizing a lot the energy sector. So what they have

464
00:25:42,880 --> 00:25:46,960
Speaker 4: done with news sectors, as China has entered any new sector,

465
00:25:47,000 --> 00:25:50,000
Speaker 4: whether it was originally tech, whether it was infrastructure, whether

466
00:25:50,040 --> 00:25:53,520
Speaker 4: it is now clean energy, huge subsidies going into it.

467
00:25:53,960 --> 00:25:57,080
Speaker 4: So if you can find companies that are well run

468
00:25:57,200 --> 00:25:59,600
Speaker 4: that are profitable. I think it's a great area just

469
00:25:59,640 --> 00:26:03,320
Speaker 4: because they are very good. But you have to be

470
00:26:03,480 --> 00:26:07,120
Speaker 4: very careful to invest in companies that are really riding

471
00:26:07,240 --> 00:26:12,200
Speaker 4: the low wage, the subsidized wage and subsidized subsidized loans

472
00:26:12,200 --> 00:26:12,880
Speaker 4: from the government.

473
00:26:13,200 --> 00:26:15,120
Speaker 2: And given what's gone on with the stock market over there,

474
00:26:15,320 --> 00:26:17,639
Speaker 2: do you want to look at private companies rather than

475
00:26:17,680 --> 00:26:18,800
Speaker 2: publicly traded companies.

476
00:26:19,520 --> 00:26:23,919
Speaker 4: So I think maybe a few years ago, yes, But

477
00:26:24,000 --> 00:26:27,080
Speaker 4: I think in private investments the biggest issue is the

478
00:26:27,160 --> 00:26:30,560
Speaker 4: rule of law and certainty of whether you can take

479
00:26:30,600 --> 00:26:33,199
Speaker 4: your money out in If you invested today in a

480
00:26:33,240 --> 00:26:36,080
Speaker 4: private investment, you would assume you're taking your money out

481
00:26:36,160 --> 00:26:40,680
Speaker 4: maybe ten years maybe later. So I think what the

482
00:26:40,800 --> 00:26:45,800
Speaker 4: environment that President g has created unfortunately makes people much

483
00:26:45,880 --> 00:26:51,640
Speaker 4: less comfortable making private investments. If anything, Chinese very successful

484
00:26:51,720 --> 00:26:56,560
Speaker 4: private investors and tech and venture investors are starting to

485
00:26:56,600 --> 00:27:00,400
Speaker 4: invest much more in Chinese companies that are investing outside

486
00:27:00,400 --> 00:27:05,280
Speaker 4: of China or in Japan because they are concerned themselves

487
00:27:05,720 --> 00:27:09,200
Speaker 4: that if they become too successful, the fate of Jackman

488
00:27:09,240 --> 00:27:12,879
Speaker 4: and others may faund them. But also if they're not

489
00:27:13,080 --> 00:27:16,440
Speaker 4: super successful, then what's the point. So the entrepreneurial spirit,

490
00:27:16,520 --> 00:27:19,359
Speaker 4: which has been super important really in the last twenty

491
00:27:19,440 --> 00:27:22,600
Speaker 4: years in China, particularly the last ten years. I think

492
00:27:22,760 --> 00:27:25,679
Speaker 4: that is waning, and it is I think something to

493
00:27:25,720 --> 00:27:28,800
Speaker 4: really watch for any kind of investment in China.

494
00:27:28,960 --> 00:27:31,840
Speaker 2: Talk about more globally, we have COP twenty eight coming

495
00:27:31,920 --> 00:27:34,280
Speaker 2: up at the end of this month now, and there

496
00:27:34,280 --> 00:27:36,200
Speaker 2: are discussions going on even as we speak. This week,

497
00:27:36,240 --> 00:27:38,760
Speaker 2: there were discussions between US and China to try to

498
00:27:38,800 --> 00:27:43,000
Speaker 2: come to terms on some basic issues, including funding for

499
00:27:43,119 --> 00:27:45,840
Speaker 2: some of the lower income countries. Thrilled to deal with it.

500
00:27:46,160 --> 00:27:48,600
Speaker 2: If in fact, and it's a big if, if the

501
00:27:48,640 --> 00:27:50,680
Speaker 2: United States and China could come to terms, if COP

502
00:27:50,680 --> 00:27:54,760
Speaker 2: twenty eight could come up with some meaningful global really agreements,

503
00:27:55,440 --> 00:27:58,000
Speaker 2: would that be an investment opportunity potentially because it could

504
00:27:58,160 --> 00:28:00,560
Speaker 2: really jump start a lot of the green economy.

505
00:28:00,960 --> 00:28:03,280
Speaker 4: I think it would be really really helpful if there

506
00:28:03,440 --> 00:28:06,280
Speaker 4: was agreement. And I think starting with next week's meetings,

507
00:28:06,320 --> 00:28:09,359
Speaker 4: the EPECH meetings here with a lot of Asian leaders

508
00:28:09,400 --> 00:28:11,800
Speaker 4: in the US, that will be sort of the start

509
00:28:11,840 --> 00:28:14,480
Speaker 4: of those conversations, and I think we should watch those

510
00:28:14,560 --> 00:28:18,359
Speaker 4: to see what kind of agreements or lack of agreements

511
00:28:18,359 --> 00:28:22,200
Speaker 4: there are next week in terms in terms of climate,

512
00:28:22,240 --> 00:28:25,880
Speaker 4: because that is military and a climate are the two

513
00:28:25,920 --> 00:28:29,320
Speaker 4: areas that people are looking for different kinds of agreements

514
00:28:29,359 --> 00:28:31,719
Speaker 4: next week. So if that happens, I think we can

515
00:28:31,800 --> 00:28:33,840
Speaker 4: be hopeful that when we get to cop there'll be

516
00:28:33,880 --> 00:28:38,440
Speaker 4: more positive, more positive environment for some sort of agreement.

517
00:28:39,000 --> 00:28:42,920
Speaker 4: My sense though is that there is the economics of

518
00:28:43,520 --> 00:28:46,280
Speaker 4: renewable energy has changed a lot. So if you look

519
00:28:46,320 --> 00:28:49,280
Speaker 4: at it, for example, on any given day in Texas

520
00:28:49,400 --> 00:28:53,400
Speaker 4: versus California, one is ahead of the other in terms

521
00:28:53,400 --> 00:28:58,160
Speaker 4: of solar production of power. So that is all based

522
00:28:58,200 --> 00:29:00,840
Speaker 4: on economics, not politics of E.

523
00:29:01,000 --> 00:29:01,160
Speaker 10: S G.

524
00:29:01,520 --> 00:29:03,440
Speaker 4: Or all the other words that we hear. So if

525
00:29:03,440 --> 00:29:06,520
Speaker 4: we're taking that line, if we're going to a lot

526
00:29:06,520 --> 00:29:09,920
Speaker 4: of other countries, you're seeing that people want to want

527
00:29:09,960 --> 00:29:12,400
Speaker 4: to move to eb cars just because they're cheaper at

528
00:29:12,400 --> 00:29:15,080
Speaker 4: the moment in terms of running them. So if you

529
00:29:15,120 --> 00:29:18,080
Speaker 4: look at that, it will be the consumers. It will

530
00:29:18,080 --> 00:29:20,720
Speaker 4: be the private sector that I think will be bigger

531
00:29:20,800 --> 00:29:25,000
Speaker 4: leaders in this public sector leaders have not really been

532
00:29:25,160 --> 00:29:28,520
Speaker 4: while lots of you know, speeches have been made have

533
00:29:28,640 --> 00:29:31,600
Speaker 4: been less uh less helpful in terms.

534
00:29:31,440 --> 00:29:34,160
Speaker 2: Of executing of signing always wonderful to have you on

535
00:29:34,240 --> 00:29:36,600
Speaker 2: Wall Street? Thank you so much. That's a Sonny Bachelist

536
00:29:36,880 --> 00:29:42,560
Speaker 2: of Rock Creek coming up, building a more resilient economy.

537
00:29:42,840 --> 00:29:45,600
Speaker 2: We talk with Aspen Economic Strategy Group Director of Melissa

538
00:29:45,640 --> 00:29:47,960
Speaker 2: Carney about the subject at this year's meetings.

539
00:29:48,760 --> 00:29:53,200
Speaker 5: These reforms really need to have bipartisan buy in so

540
00:29:53,520 --> 00:29:54,360
Speaker 5: they're lasting.

541
00:29:54,840 --> 00:29:57,040
Speaker 2: That's next on Wall Street Week on Bloomberg.

542
00:29:58,400 --> 00:30:03,680
Speaker 1: This is Bloomberg Street Week with David Weston from Bloomberg Radio.

543
00:30:09,840 --> 00:30:13,680
Speaker 2: Finally, one more thought. Children cannot rest till they get

544
00:30:13,760 --> 00:30:16,320
Speaker 2: rid of their money, or as we say it, burns

545
00:30:16,360 --> 00:30:19,760
Speaker 2: in their pockets. According to the Oxford English Dictionary, that's

546
00:30:19,800 --> 00:30:22,800
Speaker 2: the first reference to money burning holes in pockets, and

547
00:30:22,840 --> 00:30:26,000
Speaker 2: it dates back to seventeen sixty eight. These days, it

548
00:30:26,040 --> 00:30:29,520
Speaker 2: seems that there are quite a few children with burning pockets.

549
00:30:29,520 --> 00:30:32,760
Speaker 2: Starting with we Work only two short years ago, investors

550
00:30:32,800 --> 00:30:36,760
Speaker 2: including the legendary Maseoshi Son couldn't wait to get money

551
00:30:36,760 --> 00:30:39,240
Speaker 2: into the pockets that the real estate startup and JP

552
00:30:39,360 --> 00:30:41,920
Speaker 2: Morgan couldn't wait to get tens of millions of dollars

553
00:30:41,960 --> 00:30:45,320
Speaker 2: into the pockets of founder Adam Newman to buy luxury homes.

554
00:30:45,600 --> 00:30:48,160
Speaker 18: They have a long standing relationship with Adam Newman himself.

555
00:30:48,360 --> 00:30:50,840
Speaker 18: So JP Morgan has been leading something akin to a

556
00:30:50,840 --> 00:30:53,520
Speaker 18: margin loan where he's been taking out loans based on

557
00:30:53,600 --> 00:30:54,320
Speaker 18: his private staff.

558
00:30:54,440 --> 00:30:56,920
Speaker 2: But then questions were raised about the wee Work business

559
00:30:56,920 --> 00:30:59,959
Speaker 2: plan and a massive IPO turned into a much more

560
00:31:00,080 --> 00:31:00,959
Speaker 2: or modest spack.

561
00:31:01,280 --> 00:31:04,080
Speaker 18: It had to undergo a major restructuring. Well, that restructuring

562
00:31:04,080 --> 00:31:06,880
Speaker 18: has just been complete. It did go publicly aspack in

563
00:31:07,000 --> 00:31:11,040
Speaker 18: October of twenty twenty one. Sandy Mathroni took over and

564
00:31:11,120 --> 00:31:12,560
Speaker 18: he did try to write the shift.

565
00:31:13,040 --> 00:31:15,880
Speaker 2: Now even that's gone by the wayside as we Work

566
00:31:15,960 --> 00:31:19,280
Speaker 2: made it official and declared bankruptcy this week, leaving Masseosha,

567
00:31:19,400 --> 00:31:23,200
Speaker 2: son of SoftBank, about eleven point five billion dollars later

568
00:31:23,520 --> 00:31:24,400
Speaker 2: in his pockets.

569
00:31:24,600 --> 00:31:28,040
Speaker 19: We Work at his p twenty nineteen, here's a company

570
00:31:28,040 --> 00:31:30,880
Speaker 19: that gets valued in private markets of what forty seven billion?

571
00:31:31,200 --> 00:31:33,280
Speaker 19: And here we are four years later when the company's

572
00:31:33,320 --> 00:31:36,800
Speaker 19: filing for bankruptcy. And in the meantime we know, based

573
00:31:36,800 --> 00:31:39,160
Speaker 19: on reports that Adam Newman, the founder of the company,

574
00:31:39,480 --> 00:31:41,959
Speaker 19: has managed to take in hundreds and hundreds of millions

575
00:31:42,000 --> 00:31:42,920
Speaker 19: of dollars.

576
00:31:42,880 --> 00:31:45,840
Speaker 2: Twenty years ago. Donald Trump, long before it was president,

577
00:31:45,960 --> 00:31:48,240
Speaker 2: was eager to get money in his own pockets to

578
00:31:48,280 --> 00:31:50,640
Speaker 2: buy the Durrel Golf Club in Florida, as well as

579
00:31:50,640 --> 00:31:54,360
Speaker 2: a hotel and skyscraper in Chicago, and Deutsche Bank seemed

580
00:31:54,400 --> 00:31:56,880
Speaker 2: eager to give him his wish, loaning him a total

581
00:31:56,920 --> 00:31:59,680
Speaker 2: of two hundred and thirty two million dollars, backed by

582
00:31:59,720 --> 00:32:02,600
Speaker 2: his telling them he had assets worth four point three

583
00:32:02,640 --> 00:32:05,480
Speaker 2: billion dollars. A New York State judge ruled that his

584
00:32:05,560 --> 00:32:09,160
Speaker 2: assets were actually worth far less, and this week mister

585
00:32:09,160 --> 00:32:12,480
Speaker 2: Trump appeared before a New York City court deciding how

586
00:32:12,560 --> 00:32:15,640
Speaker 2: much he owes in damages, which may leave a bit

587
00:32:15,720 --> 00:32:18,840
Speaker 2: less money in the former president's pockets, despite his spending

588
00:32:18,960 --> 00:32:21,719
Speaker 2: much of his time on the witness stand, badgering counsul

589
00:32:21,840 --> 00:32:24,480
Speaker 2: and even the judge himself. But in the end it

590
00:32:24,560 --> 00:32:26,960
Speaker 2: may all have been worth it, as Bloomberg reported this

591
00:32:26,960 --> 00:32:29,560
Speaker 2: week that mister Trump's net worth has actually gone up

592
00:32:29,760 --> 00:32:32,720
Speaker 2: half a billion dollars since he left office, and that

593
00:32:32,760 --> 00:32:35,440
Speaker 2: brings us to what may be the biggest pockets of all.

594
00:32:35,880 --> 00:32:38,320
Speaker 2: We learned this week that the most famous investor of

595
00:32:38,360 --> 00:32:40,960
Speaker 2: them all, Warren Buffett of Berkshire Hathaway, as a master

596
00:32:41,080 --> 00:32:44,000
Speaker 2: record one hundred and fifty seven billion dollars in cash,

597
00:32:44,320 --> 00:32:46,240
Speaker 2: an amount that would burn a hole in just about

598
00:32:46,240 --> 00:32:49,680
Speaker 2: anyone's pockets. It appears that mister Buffett can't find any

599
00:32:49,720 --> 00:32:51,920
Speaker 2: deals that make sense at the price is on offer,

600
00:32:52,320 --> 00:32:54,880
Speaker 2: leading us to wonder how long he can wait before

601
00:32:54,880 --> 00:32:57,760
Speaker 2: deploying some of that huge pile of dry powder.

602
00:32:58,000 --> 00:32:59,800
Speaker 13: I am curious about that cash pile.

603
00:33:00,040 --> 00:33:02,200
Speaker 3: When do you think, Gregory, it will be the right

604
00:33:02,240 --> 00:33:04,600
Speaker 3: time to really try to deploy a big chunk of

605
00:33:04,600 --> 00:33:06,280
Speaker 3: one hundred and fifty seven billion dollars.

606
00:33:06,400 --> 00:33:09,400
Speaker 2: But if we've learned anything at all about Warren Buffett,

607
00:33:09,400 --> 00:33:11,880
Speaker 2: it's that he never feels the burn of money in

608
00:33:11,920 --> 00:33:14,440
Speaker 2: his big pocket. He'd rather keep it where it is

609
00:33:14,480 --> 00:33:17,000
Speaker 2: than invest in things like we works or loans to

610
00:33:17,120 --> 00:33:19,120
Speaker 2: real estate developers with uneven records.

611
00:33:19,640 --> 00:33:23,520
Speaker 13: All of a sausage muffin with Egan Jays three scuteen,

612
00:33:23,800 --> 00:33:25,960
Speaker 13: is a bacon egg, and Jee's biscuit.

613
00:33:26,080 --> 00:33:28,880
Speaker 15: The market's down this morning, so I can go pass

614
00:33:28,960 --> 00:33:31,120
Speaker 15: up to three seventeen ag over the two twenty five.

615
00:33:31,360 --> 00:33:34,000
Speaker 2: That's why he's Warren Buffett and the rest of us

616
00:33:34,120 --> 00:33:36,320
Speaker 2: are not. That does it for this episode of Wall

617
00:33:36,320 --> 00:33:38,920
Speaker 2: Street Week, I'm David Weston. This is Bloomberg. See you

618
00:33:39,000 --> 00:33:39,400
Speaker 2: next week,