1 00:00:05,120 --> 00:00:09,200 Speaker 1: Welcome to the Bloomberg Surveillance podcast name Tom Keene. Along 2 00:00:09,240 --> 00:00:13,200 Speaker 1: with Jonathan Ferrell and Lisa Brownwitz Jailey, we bring you 3 00:00:13,320 --> 00:00:18,600 Speaker 1: insight from the best and economics, finance, investment, and international relations. 4 00:00:18,960 --> 00:00:23,840 Speaker 1: Find Bloomberg Surveillance, an Apple podcast, SoundCloud, Bloomberg dot Com, 5 00:00:23,920 --> 00:00:30,840 Speaker 1: and of course on the Bloomberg terminal. We've caught up 6 00:00:31,200 --> 00:00:33,320 Speaker 1: with the British Prime Minister Boris Johnson, John Michael the 7 00:00:33,320 --> 00:00:35,880 Speaker 1: way the Bloomberg News, the editor in chief sitting down 8 00:00:36,080 --> 00:00:39,680 Speaker 1: with a British leader's take a listen. China is a 9 00:00:39,720 --> 00:00:44,800 Speaker 1: gigantic part of our economic life and will be for 10 00:00:44,840 --> 00:00:48,360 Speaker 1: a for a long time, for for our lifetimes and that. 11 00:00:48,440 --> 00:00:52,920 Speaker 1: But that does not mean that we should be a 12 00:00:53,159 --> 00:00:57,160 Speaker 1: naive in the way that we look at our our 13 00:00:57,200 --> 00:00:59,640 Speaker 1: critical natural infrastructure, the way we look at You mentioned 14 00:00:59,680 --> 00:01:04,840 Speaker 1: nuclear power, you mentioned five G technology. Those are all 15 00:01:04,920 --> 00:01:08,839 Speaker 1: legitimate concerns at any government, many many other governments around 16 00:01:08,880 --> 00:01:12,640 Speaker 1: the world have. But I am I want to be 17 00:01:12,760 --> 00:01:15,000 Speaker 1: I've said this many times, it's worth repeating. I am 18 00:01:15,120 --> 00:01:18,280 Speaker 1: no sinophobe, very far from it. I think you think 19 00:01:18,280 --> 00:01:21,840 Speaker 1: you're the last sinophile in the cabinet. No, I expect 20 00:01:21,880 --> 00:01:26,760 Speaker 1: there are lots of looks China's China is great about 21 00:01:26,760 --> 00:01:29,400 Speaker 1: wind power? Would you let them buy offshore wind power? 22 00:01:29,400 --> 00:01:31,640 Speaker 1: That's think I think you'd have to with You'd have 23 00:01:31,720 --> 00:01:34,240 Speaker 1: to look at as you'd have to look at what 24 00:01:34,319 --> 00:01:39,840 Speaker 1: was your defining as strategic or critical. But I certainly 25 00:01:39,880 --> 00:01:44,199 Speaker 1: think that having a know our trading relationship with China, 26 00:01:44,200 --> 00:01:46,480 Speaker 1: if you look at it, what's what it's it's in 27 00:01:46,520 --> 00:01:49,000 Speaker 1: spite of all the difficulties, in spite of you know, 28 00:01:49,040 --> 00:01:53,680 Speaker 1: all the angry conversations about or the difficult conversations about 29 00:01:53,720 --> 00:01:56,800 Speaker 1: the Dalai lam Or or Hong Kong or or the Wakers, 30 00:01:56,880 --> 00:01:59,560 Speaker 1: and where where we will continue to stick to our points, right, 31 00:02:00,160 --> 00:02:02,080 Speaker 1: we will continue to stick to our to our views. 32 00:02:03,040 --> 00:02:06,920 Speaker 1: But actually trade with China has continued to expand for 33 00:02:06,960 --> 00:02:09,519 Speaker 1: a very long time and I think probably will continue 34 00:02:09,520 --> 00:02:12,160 Speaker 1: to expand, as I say, for for the rest of 35 00:02:12,160 --> 00:02:16,360 Speaker 1: our lives. That doesn't mean that we should be um, 36 00:02:16,440 --> 00:02:19,280 Speaker 1: you know, we should be also we should be cautious 37 00:02:19,680 --> 00:02:22,360 Speaker 1: about how we had at our cn I and about 38 00:02:22,360 --> 00:02:26,280 Speaker 1: how we handle FDI from China into some of our 39 00:02:27,160 --> 00:02:29,200 Speaker 1: That's why we brought in some of the legislation that 40 00:02:29,240 --> 00:02:32,320 Speaker 1: we have. The Prime Minister of the United Kingdom getting 41 00:02:32,360 --> 00:02:35,919 Speaker 1: to greet those at copy in Glasgow, joining us now 42 00:02:35,960 --> 00:02:38,800 Speaker 1: the other in chief of Bloomberg News, John michaels Wade, 43 00:02:38,800 --> 00:02:40,520 Speaker 1: I put on a new shirt and sat up straight 44 00:02:40,560 --> 00:02:45,160 Speaker 1: today for this discussion. John. There will be Johnson, Thank you. 45 00:02:45,240 --> 00:02:48,400 Speaker 1: There will be Johnson, there will be Scotland, and there 46 00:02:48,400 --> 00:02:51,400 Speaker 1: will also be the hope for a future perfect. You're 47 00:02:51,440 --> 00:02:54,720 Speaker 1: wonderful book of too many years ago two thousand three. 48 00:02:54,720 --> 00:02:57,120 Speaker 1: We need to redo, John, and I want to talk 49 00:02:57,160 --> 00:03:00,280 Speaker 1: at the back end of that book about the back ash. 50 00:03:00,320 --> 00:03:03,840 Speaker 1: You mentioned the backlash of globalization. What's going to be 51 00:03:03,919 --> 00:03:07,720 Speaker 1: the backlash of climate change at the Prime Minister in 52 00:03:07,880 --> 00:03:12,480 Speaker 1: others face at Glasgow. I think that's actually quite a 53 00:03:12,520 --> 00:03:15,000 Speaker 1: good comparison. In fact, I think if you look at 54 00:03:15,400 --> 00:03:19,480 Speaker 1: the issue in Britain of heat heat pumps, which is 55 00:03:19,560 --> 00:03:21,639 Speaker 1: from a green point of view, people are trying to 56 00:03:21,680 --> 00:03:23,880 Speaker 1: put in much more kind of low energy heat pumps 57 00:03:23,880 --> 00:03:27,080 Speaker 1: into their houses and everyone thinks that's wonderful and green. 58 00:03:27,200 --> 00:03:29,959 Speaker 1: But what's happening is consumers, who are generally quite keen 59 00:03:30,000 --> 00:03:31,640 Speaker 1: on green things, they're saying, no, God, these are going 60 00:03:31,680 --> 00:03:34,119 Speaker 1: to cost. It could cost five thou dollars they could 61 00:03:34,160 --> 00:03:36,640 Speaker 1: cost huge amounts of money. And I think that what 62 00:03:36,800 --> 00:03:39,880 Speaker 1: is happening with greenery is a little bit similar to globalization. 63 00:03:39,920 --> 00:03:42,640 Speaker 1: It's something that everyone generally thinks is a good idea. 64 00:03:43,080 --> 00:03:45,040 Speaker 1: And remember there was an era where people thought that 65 00:03:45,120 --> 00:03:47,760 Speaker 1: generally opening up economies were great, and everyone approved of 66 00:03:47,760 --> 00:03:52,240 Speaker 1: globalization until it happened to them. Everyone approves of fighting 67 00:03:52,280 --> 00:03:55,160 Speaker 1: climate change until suddenly it means the price of petrol 68 00:03:55,720 --> 00:04:00,480 Speaker 1: or gas as you mistaken they call it rises. That 69 00:04:00,200 --> 00:04:02,600 Speaker 1: that's where that's where it hurts. It's when you're heating 70 00:04:02,640 --> 00:04:05,560 Speaker 1: for your house hurts. It's where things that really affect 71 00:04:05,680 --> 00:04:08,920 Speaker 1: people particularly, and Johnson is kind of caught in the 72 00:04:08,960 --> 00:04:10,720 Speaker 1: middle of that as Indeed, you know, you can look 73 00:04:10,760 --> 00:04:13,400 Speaker 1: at what's happening with the Democrats in Congress. Do the 74 00:04:13,480 --> 00:04:18,080 Speaker 1: elites know there's a cup twenty six they have to 75 00:04:18,160 --> 00:04:23,680 Speaker 1: sell to a public that's hugely skeptical. I think, well 76 00:04:23,760 --> 00:04:26,520 Speaker 1: that one example of the elites is her Majesty Queen 77 00:04:26,520 --> 00:04:30,520 Speaker 1: Elizabeth and she she was caught on caught on the 78 00:04:30,520 --> 00:04:33,320 Speaker 1: recorder the other day talking about that that nobody was 79 00:04:33,360 --> 00:04:36,280 Speaker 1: coming and that it all looked very difficult. Um. So 80 00:04:36,320 --> 00:04:37,920 Speaker 1: I think some people are aware of that, but I 81 00:04:38,000 --> 00:04:40,120 Speaker 1: think in general, no, I think that it's one of 82 00:04:40,160 --> 00:04:43,800 Speaker 1: those zip areas where there is a divide that opens 83 00:04:43,880 --> 00:04:46,640 Speaker 1: up and you look around the world. Every time it's 84 00:04:46,680 --> 00:04:49,400 Speaker 1: come up, it's always sort of hit the elites harder. 85 00:04:49,440 --> 00:04:52,000 Speaker 1: You might remember that example a bit ago where Macron 86 00:04:52,480 --> 00:04:55,680 Speaker 1: suddenly ray you know, changed the speed limits on various 87 00:04:55,760 --> 00:04:58,159 Speaker 1: roads in part for kind of green reasons, and you 88 00:04:58,200 --> 00:05:01,919 Speaker 1: suddenly end up with the La Jean. There's few things 89 00:05:01,960 --> 00:05:04,960 Speaker 1: that make people more annoyed than something directly hitting part 90 00:05:05,000 --> 00:05:08,040 Speaker 1: of their pocketbook. You look around parts of America as 91 00:05:08,040 --> 00:05:10,720 Speaker 1: well in the debates now about what happens with infrastructure 92 00:05:10,720 --> 00:05:13,000 Speaker 1: bills and so on. So I do think it's I 93 00:05:13,040 --> 00:05:15,560 Speaker 1: think it's a worrying area from the point of view 94 00:05:15,560 --> 00:05:18,960 Speaker 1: of a kind of global elite view. Meanwhile, they are 95 00:05:19,040 --> 00:05:22,000 Speaker 1: hosting a Copper twenty six at a time when there's 96 00:05:22,040 --> 00:05:24,440 Speaker 1: a lot of questions around how much to open your borders. 97 00:05:24,640 --> 00:05:28,320 Speaker 1: It's been an issue of serious disagreement and frankly a 98 00:05:28,360 --> 00:05:31,960 Speaker 1: lot of consternation. However, at this moment in time, UK's 99 00:05:32,279 --> 00:05:36,200 Speaker 1: hospitalization and death rate for from COVID has actually been 100 00:05:36,240 --> 00:05:38,479 Speaker 1: going up. After being celebrated as one of the big 101 00:05:38,480 --> 00:05:43,040 Speaker 1: winners from the whole pandemic. How do you respond to that, Well, 102 00:05:43,040 --> 00:05:47,599 Speaker 1: it's interesting you look at the numbers for COVID. You know, sufferers, 103 00:05:47,600 --> 00:05:50,120 Speaker 1: people who caughts over COVID, those have been rising very 104 00:05:50,200 --> 00:05:53,680 Speaker 1: rapidly in Britain. You're right, the hospitalization and death rates 105 00:05:53,720 --> 00:05:56,599 Speaker 1: have gone up, but so far, at least, at least 106 00:05:56,720 --> 00:05:59,440 Speaker 1: as far as you can see, the sort of vaccine 107 00:05:59,480 --> 00:06:03,000 Speaker 1: protection thing is sort of holding the current levels. I 108 00:06:03,000 --> 00:06:05,760 Speaker 1: thinks around forty a day people are catching it. You 109 00:06:05,800 --> 00:06:08,360 Speaker 1: would expect to see many more people dying and in 110 00:06:08,400 --> 00:06:11,120 Speaker 1: the rather gruesome way in which this works, and it 111 00:06:11,160 --> 00:06:13,880 Speaker 1: doesn't seem to be happening because it's it's really ripping 112 00:06:13,960 --> 00:06:17,840 Speaker 1: through especially young people. Everyone who's got schools, people were 113 00:06:17,880 --> 00:06:20,000 Speaker 1: working with here, you know, they they've got people are 114 00:06:20,040 --> 00:06:22,680 Speaker 1: stuck at home because their children are suddenly got it. 115 00:06:23,040 --> 00:06:25,159 Speaker 1: And so there is there's a degree of that, but 116 00:06:25,200 --> 00:06:27,920 Speaker 1: there is also the sort of general sense that back 117 00:06:27,920 --> 00:06:29,720 Speaker 1: to what you said earlier, these things to do with 118 00:06:30,160 --> 00:06:34,080 Speaker 1: opening up economies, people being there, they are taking in 119 00:06:34,120 --> 00:06:37,520 Speaker 1: this in COVID. You know that Johnson is going a 120 00:06:37,560 --> 00:06:40,240 Speaker 1: little bit back to his more liberal routes in that interview, 121 00:06:40,320 --> 00:06:44,120 Speaker 1: I talk about the fact that we're in Margaret Thatcher's study. 122 00:06:44,560 --> 00:06:46,640 Speaker 1: There's a picture of her glowering down on us and 123 00:06:46,760 --> 00:06:49,400 Speaker 1: a copy of High X Road to serve to a 124 00:06:49,560 --> 00:06:52,640 Speaker 1: key part of the Tom Keen booklist, staring down at us. 125 00:06:53,240 --> 00:06:56,200 Speaker 1: That that was the culture from which Boris Johnson came 126 00:06:57,000 --> 00:07:00,480 Speaker 1: and he still has some quite strong libertarian stinks at 127 00:07:00,480 --> 00:07:02,800 Speaker 1: the same time as that he is, by any measure, 128 00:07:02,839 --> 00:07:05,520 Speaker 1: increasing the size of government fairly formidably. He blames that 129 00:07:05,560 --> 00:07:08,200 Speaker 1: on cop COVID, and he's also trying to sort of, 130 00:07:08,360 --> 00:07:11,360 Speaker 1: I suppose do a version of industrial policy to push 131 00:07:11,400 --> 00:07:15,160 Speaker 1: the British economy, especially towards the North, towards manufacturing, towards 132 00:07:15,240 --> 00:07:18,120 Speaker 1: things like that. The football stadiums are full again, John. 133 00:07:18,360 --> 00:07:21,960 Speaker 1: The important questions, sir, Were you at lester Manchester United 134 00:07:22,440 --> 00:07:27,360 Speaker 1: last weekend? No, very, very sadly I missed that. My 135 00:07:27,440 --> 00:07:30,200 Speaker 1: life is happy because I saw Brendan Rodgers in a restaurant, 136 00:07:30,440 --> 00:07:32,559 Speaker 1: didn't you. None of this will mean anything to people 137 00:07:32,640 --> 00:07:38,520 Speaker 1: like sometimes you know Tom Night. John, Thank you, sir, 138 00:07:39,080 --> 00:07:41,760 Speaker 1: great work as always. John Mchothwaite. There Bloomberg News editor 139 00:07:41,760 --> 00:07:44,480 Speaker 1: in chief sitting down with the Prime Minister in the 140 00:07:44,600 --> 00:07:51,920 Speaker 1: UK Tom, I'm delighted to be here in the Science 141 00:07:52,000 --> 00:07:53,960 Speaker 1: Museum where we also just run from the Prime Minister 142 00:07:54,040 --> 00:07:56,560 Speaker 1: of doing a big speech on innovation and he wants 143 00:07:56,560 --> 00:07:59,239 Speaker 1: to attract the big box around the world. One person 144 00:07:59,280 --> 00:08:01,240 Speaker 1: who was in the room and who I believe also 145 00:08:01,320 --> 00:08:03,640 Speaker 1: had dinner with the Prime Minister yesterday, is David Solomon. 146 00:08:03,680 --> 00:08:06,000 Speaker 1: He's the chief executive of Goldman SAX. Thank you so 147 00:08:06,080 --> 00:08:07,880 Speaker 1: much for joining us. It's been a while since we 148 00:08:07,880 --> 00:08:09,800 Speaker 1: saw you in London. It's it's been a while since 149 00:08:09,800 --> 00:08:12,440 Speaker 1: I've been in London. I'm thrilled to be back in London. Um. 150 00:08:12,480 --> 00:08:15,640 Speaker 1: It's really been since March um and to be back, 151 00:08:15,760 --> 00:08:17,240 Speaker 1: it's good. It's good to be back, and it's good 152 00:08:17,240 --> 00:08:19,040 Speaker 1: to be spending time with people. And and the pitch 153 00:08:19,080 --> 00:08:22,320 Speaker 1: from the UK government is come here, invest to be 154 00:08:22,520 --> 00:08:26,800 Speaker 1: green and you know invest the more. Have they been persuasive, 155 00:08:26,920 --> 00:08:29,600 Speaker 1: What has the government been able to tell executives? Well, 156 00:08:29,640 --> 00:08:31,360 Speaker 1: I you know, I think they have a good pitch. 157 00:08:31,400 --> 00:08:33,079 Speaker 1: But as you know, we've been very, very committed to 158 00:08:33,120 --> 00:08:36,319 Speaker 1: the UK for a long time. We have people here 159 00:08:36,320 --> 00:08:38,760 Speaker 1: in the UK and in fact even you know Preak 160 00:08:38,800 --> 00:08:41,360 Speaker 1: Panbamic going back to team We've built a new building 161 00:08:41,880 --> 00:08:44,320 Speaker 1: here plump Tree Court, which is a billion dollar commitment. 162 00:08:44,760 --> 00:08:48,199 Speaker 1: We've been growing up, you know, up also in Birmingham, 163 00:08:48,200 --> 00:08:50,640 Speaker 1: where we now have expanded our presence in the UK. 164 00:08:51,000 --> 00:08:53,679 Speaker 1: So we've seen the UK as a tremendous opportunity for 165 00:08:53,760 --> 00:08:56,480 Speaker 1: us to have a significant outpost, serve our clients you know, 166 00:08:56,559 --> 00:09:00,439 Speaker 1: both here and also provide resources across the continent. Has 167 00:09:00,480 --> 00:09:02,320 Speaker 1: that changed at all because of Brexit? We have the 168 00:09:02,360 --> 00:09:04,800 Speaker 1: energy crisis, there's a lack of drivers. Is there anything 169 00:09:04,840 --> 00:09:07,360 Speaker 1: that you need to ask authorities to do better or 170 00:09:07,400 --> 00:09:09,600 Speaker 1: that you clients want the UK to do better? Well? 171 00:09:09,640 --> 00:09:11,880 Speaker 1: I think we're at a moment in time where we're 172 00:09:11,880 --> 00:09:13,720 Speaker 1: coming out of the pandemic and there are a handful 173 00:09:13,720 --> 00:09:15,760 Speaker 1: of things going on. I think all over the world. 174 00:09:16,240 --> 00:09:19,400 Speaker 1: There are labor issues that are really a reflection of 175 00:09:19,400 --> 00:09:22,800 Speaker 1: the transition out of the pandemic. There are supply chain issues. 176 00:09:23,320 --> 00:09:26,040 Speaker 1: Some of this stuff is transitory. There are some secular 177 00:09:26,080 --> 00:09:28,760 Speaker 1: trends that we have to watch closely. Um. But I 178 00:09:28,760 --> 00:09:32,200 Speaker 1: think we're adjusting and dealing with it as anybody else's 179 00:09:32,240 --> 00:09:34,120 Speaker 1: and I you know, I think leaders here are thinking 180 00:09:34,160 --> 00:09:35,920 Speaker 1: about it the same way leaders are around the world. 181 00:09:36,120 --> 00:09:37,600 Speaker 1: When you look at the UK and of course some 182 00:09:37,640 --> 00:09:39,760 Speaker 1: of these green investments that the UK and the City 183 00:09:39,760 --> 00:09:42,800 Speaker 1: of London particularly has been really trying to pitch. You've 184 00:09:42,800 --> 00:09:46,280 Speaker 1: been extremely involved in carbon off setting. Can London really 185 00:09:46,320 --> 00:09:50,240 Speaker 1: spearhead that movement? Well, I think it's important that governments 186 00:09:50,280 --> 00:09:53,000 Speaker 1: around the world partner with the private sector to try 187 00:09:53,040 --> 00:09:56,680 Speaker 1: to get capital directed toward innovation in a way that 188 00:09:56,720 --> 00:09:59,120 Speaker 1: we can accelerate the climate transition. And you know, I 189 00:09:59,120 --> 00:10:03,080 Speaker 1: want to emphasize it's early transition. Um. We need thoughtful policy. 190 00:10:03,400 --> 00:10:05,040 Speaker 1: In my opinion, we need to put a price on 191 00:10:05,080 --> 00:10:07,040 Speaker 1: carbon um and I think this is something that is 192 00:10:07,120 --> 00:10:11,640 Speaker 1: very important. There's an enormous premium for certain green technologies. 193 00:10:11,720 --> 00:10:14,880 Speaker 1: We can invest in technology that can collapse that premium 194 00:10:15,120 --> 00:10:17,960 Speaker 1: and allow us to deliver a much more sustainable future. 195 00:10:18,160 --> 00:10:19,760 Speaker 1: But this is something that's going to take some time, 196 00:10:19,760 --> 00:10:23,680 Speaker 1: and I think it requires both good public policy from 197 00:10:23,720 --> 00:10:26,960 Speaker 1: from our governments and then active involvement from the private sector. 198 00:10:27,400 --> 00:10:29,440 Speaker 1: We're trying to do our part. I think, you know, 199 00:10:29,520 --> 00:10:33,320 Speaker 1: we've made a big pledge towards seven fifty billion dollars 200 00:10:33,360 --> 00:10:38,720 Speaker 1: of sustainable financing, investment advisory services. We're working toward that 201 00:10:39,000 --> 00:10:40,320 Speaker 1: and we try to spend a lot of time with 202 00:10:40,320 --> 00:10:43,560 Speaker 1: our clients thinking about how we can support them in 203 00:10:43,880 --> 00:10:46,559 Speaker 1: their individual transitions. And so this is getting a lot 204 00:10:46,559 --> 00:10:48,760 Speaker 1: of attention, as you would expect it should mean. There's 205 00:10:48,760 --> 00:10:51,240 Speaker 1: also quite a lot of regulation going aheads and we've 206 00:10:51,240 --> 00:10:54,640 Speaker 1: heard yesterday, for example about E S G derivatives exactly 207 00:10:54,679 --> 00:10:58,160 Speaker 1: you know, where does that end? And can can London 208 00:10:58,200 --> 00:11:01,480 Speaker 1: as a capital be the green finance capital of Europe 209 00:11:01,480 --> 00:11:04,640 Speaker 1: and the world? Well, I think there's a real you know, 210 00:11:04,679 --> 00:11:07,080 Speaker 1: we heard very very clearly from the Prime Minister, a 211 00:11:07,200 --> 00:11:11,119 Speaker 1: real sense of trying to spur on in this economy. 212 00:11:11,200 --> 00:11:15,640 Speaker 1: Here an opportunity to create less regulatory structure and therefore 213 00:11:15,720 --> 00:11:18,280 Speaker 1: more incentives to spur more of that investment. And there's 214 00:11:18,320 --> 00:11:21,160 Speaker 1: a great center of excellent and investment here, certainly around 215 00:11:21,160 --> 00:11:24,120 Speaker 1: the vaccines. There was a bunch that happened here in 216 00:11:24,120 --> 00:11:26,800 Speaker 1: the UK and so you know, I'm optimistic the UK 217 00:11:26,880 --> 00:11:29,520 Speaker 1: will play apart. But when you think broadly about these issues, 218 00:11:30,000 --> 00:11:33,640 Speaker 1: this is a global issue, and particularly in the developing world. 219 00:11:33,920 --> 00:11:35,760 Speaker 1: You know, we in the developed parts of the world 220 00:11:35,800 --> 00:11:38,120 Speaker 1: are going to have to help to bring the world 221 00:11:38,120 --> 00:11:41,560 Speaker 1: along and get capital focused on technologies that can move 222 00:11:41,600 --> 00:11:44,160 Speaker 1: this transition over time, and it's really it's not just 223 00:11:44,280 --> 00:11:47,040 Speaker 1: here or there, it's everywhere, and talk to me about China. 224 00:11:47,120 --> 00:11:49,319 Speaker 1: So we had exciting news from Golden Sex. I think 225 00:11:49,320 --> 00:11:51,679 Speaker 1: in the last couple of days. How committed are you 226 00:11:51,840 --> 00:11:53,920 Speaker 1: to China or how where we are you of things 227 00:11:54,000 --> 00:11:56,319 Speaker 1: changing quite quickly given some of the economic posts he's 228 00:11:56,320 --> 00:11:58,480 Speaker 1: put in place by the President. Sure, we take a 229 00:11:58,559 --> 00:12:01,200 Speaker 1: very long term view, um and we take this view, 230 00:12:01,720 --> 00:12:04,200 Speaker 1: you know, rooted largely in the fact that we have many, 231 00:12:04,240 --> 00:12:06,320 Speaker 1: many clients that have been doing business in China for 232 00:12:06,320 --> 00:12:08,920 Speaker 1: a long time. They want our support in our involvement. 233 00:12:09,280 --> 00:12:12,000 Speaker 1: We're extremely pleased that after a long period of time, 234 00:12:12,080 --> 00:12:14,760 Speaker 1: seventeen years since we started our joint venture, that we 235 00:12:14,840 --> 00:12:17,320 Speaker 1: actually now have ownership and control of our joint venture 236 00:12:17,320 --> 00:12:20,400 Speaker 1: in China. So we're thankful for that. We have a 237 00:12:20,440 --> 00:12:22,920 Speaker 1: long term plan to continue to grow in China. We've 238 00:12:22,920 --> 00:12:26,840 Speaker 1: recently announced a wealth management joint venture there. There's no 239 00:12:26,960 --> 00:12:30,959 Speaker 1: question that the bilateral relationship between the US and China 240 00:12:31,559 --> 00:12:34,520 Speaker 1: is complex and it's going to continue to evolve. We're 241 00:12:34,520 --> 00:12:37,800 Speaker 1: watching it closely, but with a long term lens. China 242 00:12:37,840 --> 00:12:40,240 Speaker 1: is an important part of the global economy. Goldman Sex 243 00:12:40,320 --> 00:12:43,440 Speaker 1: operates as a global player with businesses around the world 244 00:12:43,480 --> 00:12:46,319 Speaker 1: that are participating in global growth, and so we think 245 00:12:46,320 --> 00:12:48,120 Speaker 1: in the long term that presence there will be very 246 00:12:48,120 --> 00:12:51,360 Speaker 1: important for us. Is it risk you're being alone or 247 00:12:51,440 --> 00:12:53,240 Speaker 1: is it safe for being a joint venture? Like, what 248 00:12:53,280 --> 00:12:56,679 Speaker 1: does it mean in terms of regulatory risks? Well, I 249 00:12:55,800 --> 00:13:00,000 Speaker 1: I think there are always regulatory risks um and all markets. 250 00:13:00,080 --> 00:13:02,960 Speaker 1: And I think that you know, we've shown that ability 251 00:13:03,040 --> 00:13:06,360 Speaker 1: to adapt to regulatory change and adapt our business appropriately 252 00:13:06,720 --> 00:13:09,240 Speaker 1: to the degree that our regulatory challenges will deal with them. 253 00:13:09,240 --> 00:13:12,480 Speaker 1: The big reason that we like controlling our joint venture 254 00:13:12,520 --> 00:13:14,520 Speaker 1: is when we didn't own our joint venture, we own 255 00:13:14,559 --> 00:13:17,280 Speaker 1: thirty three of our business in China. Every dollar of 256 00:13:17,320 --> 00:13:20,120 Speaker 1: investment we made, we only own thirty three cents of it. 257 00:13:20,240 --> 00:13:22,920 Speaker 1: So this allows us to continue to invest for the 258 00:13:23,000 --> 00:13:25,640 Speaker 1: long term and growing our franchise in our business and 259 00:13:25,720 --> 00:13:28,160 Speaker 1: serving our clients in China, and we're excited about that. 260 00:13:28,200 --> 00:13:30,720 Speaker 1: And again, you know, my job in stewarding this a 261 00:13:30,760 --> 00:13:33,600 Speaker 1: hundred and fifty three year old institution is to take 262 00:13:33,640 --> 00:13:35,920 Speaker 1: a very you know, a very very long term view, 263 00:13:36,520 --> 00:13:38,480 Speaker 1: and that's how we think about it. When we're when 264 00:13:38,480 --> 00:13:40,360 Speaker 1: we're investing in building there. Did how much do you 265 00:13:40,360 --> 00:13:41,960 Speaker 1: want to grow in China the next five years? I 266 00:13:41,960 --> 00:13:44,440 Speaker 1: think there's I think there's a big opportunity. We've put 267 00:13:44,480 --> 00:13:46,440 Speaker 1: forward a five year China plan. We haven't put the 268 00:13:46,480 --> 00:13:49,200 Speaker 1: details of that five year China plan how publicly, but 269 00:13:49,240 --> 00:13:52,320 Speaker 1: we run a relatively big business in China, although it's 270 00:13:52,320 --> 00:13:56,280 Speaker 1: a very small part of overall Goldmen Sex. Our growth 271 00:13:56,400 --> 00:13:58,360 Speaker 1: is correlated to where there's growth in the world, and 272 00:13:58,400 --> 00:14:02,720 Speaker 1: there's certainly good growth in China. UM access to UM, 273 00:14:02,880 --> 00:14:05,880 Speaker 1: the wealth of individuals and wealth management platform, given our 274 00:14:05,920 --> 00:14:09,720 Speaker 1: broad wealth management platform, is something that's very attractive to us. 275 00:14:10,000 --> 00:14:12,920 Speaker 1: Corporate activity has been quite high there. UM. There's no 276 00:14:13,000 --> 00:14:16,600 Speaker 1: question that that that's something that that corporates there turned 277 00:14:16,640 --> 00:14:20,080 Speaker 1: to our expertise and capital markets and advisory services. So 278 00:14:20,120 --> 00:14:22,320 Speaker 1: I think there's a good opportunity set for us to 279 00:14:22,400 --> 00:14:25,640 Speaker 1: prosecute over time. How painful have these high energy prices 280 00:14:25,680 --> 00:14:29,360 Speaker 1: been in customers in China but elsewhere in the world. Well, 281 00:14:29,400 --> 00:14:33,200 Speaker 1: I think there's there's no question that we're going to 282 00:14:33,240 --> 00:14:36,080 Speaker 1: go through a period where there's more inflationary pressure on 283 00:14:36,120 --> 00:14:39,560 Speaker 1: commodities prices. And this goes back to why when we 284 00:14:39,560 --> 00:14:42,880 Speaker 1: were talking about sustainability broadly, I said, we have to 285 00:14:42,920 --> 00:14:46,520 Speaker 1: balance good public policy, you know, with the short term implications. 286 00:14:46,520 --> 00:14:49,440 Speaker 1: And that's why it's a transition. If we're too aggressive 287 00:14:49,440 --> 00:14:51,880 Speaker 1: in the context of how we direct capital or the 288 00:14:51,920 --> 00:14:55,560 Speaker 1: private sector, that can be more inflationary, and obviously that 289 00:14:55,640 --> 00:14:59,160 Speaker 1: makes its way down to the end users individuals um 290 00:14:59,200 --> 00:15:01,680 Speaker 1: and the cost of their energy or their gasoline, etcetera. 291 00:15:01,720 --> 00:15:04,800 Speaker 1: And there's a balance in that. If that goes too quickly, um, 292 00:15:05,080 --> 00:15:07,160 Speaker 1: you know, that's that's something that that's something that people 293 00:15:07,160 --> 00:15:09,200 Speaker 1: are not going to be happy about, and for politicians 294 00:15:09,240 --> 00:15:11,160 Speaker 1: that will be certainly something that they'll have to wrestle with. 295 00:15:11,320 --> 00:15:13,080 Speaker 1: But what do you say to a climate change activists 296 00:15:13,080 --> 00:15:15,560 Speaker 1: that says, actually, we have the energy prices. But it's 297 00:15:15,560 --> 00:15:18,480 Speaker 1: also a good excuse for big banks, big companies, big 298 00:15:18,520 --> 00:15:22,200 Speaker 1: finance to delay the transition, so to go through a transition, 299 00:15:22,280 --> 00:15:25,440 Speaker 1: but actually not as be as aggressive in stopping, for example, 300 00:15:25,520 --> 00:15:28,080 Speaker 1: funding some of the fossil fuel companies. I think this 301 00:15:28,200 --> 00:15:30,520 Speaker 1: is all balance. And you know, I've said clearly that 302 00:15:30,600 --> 00:15:33,160 Speaker 1: Goldman Sachs is going to be in a position where 303 00:15:33,200 --> 00:15:35,880 Speaker 1: we're going to be doing business with fossil fuel companies 304 00:15:35,880 --> 00:15:38,480 Speaker 1: and financing certain fossil fuel companies. But it's it's a 305 00:15:38,480 --> 00:15:40,560 Speaker 1: direction of transition. We want to be in business with 306 00:15:40,600 --> 00:15:44,280 Speaker 1: people that are investing in their transition. We want good 307 00:15:44,280 --> 00:15:46,640 Speaker 1: public policy. I said to you earlier, we have to 308 00:15:46,680 --> 00:15:49,280 Speaker 1: put a price on carbon and my opinion because that 309 00:15:49,320 --> 00:15:53,640 Speaker 1: will allow us to therefore accelerate the transition. But all 310 00:15:53,640 --> 00:15:56,720 Speaker 1: of this is a balance the most aggressive point of 311 00:15:56,800 --> 00:15:59,600 Speaker 1: view on the transition and the least aggressive art right. 312 00:16:00,080 --> 00:16:03,800 Speaker 1: It's a constructive partnership between governments and the private sector 313 00:16:03,840 --> 00:16:06,800 Speaker 1: to make sure, you know, we protect our society and 314 00:16:06,840 --> 00:16:09,880 Speaker 1: get capital into technologies that can evolve and help us 315 00:16:09,880 --> 00:16:12,440 Speaker 1: make the world greener. And I firmly believe that something 316 00:16:12,480 --> 00:16:15,040 Speaker 1: we can do. But it's something that's going to require 317 00:16:15,080 --> 00:16:17,240 Speaker 1: a lot of focus and a little bit of patients, 318 00:16:17,240 --> 00:16:20,720 Speaker 1: but with appropriate intention and energy and commitment um and 319 00:16:20,760 --> 00:16:24,400 Speaker 1: we certainly have that. What happens if a failure, I 320 00:16:24,400 --> 00:16:26,760 Speaker 1: I don't see it as as as I don't see 321 00:16:26,760 --> 00:16:28,640 Speaker 1: it as black and white as being a you know, 322 00:16:29,360 --> 00:16:32,040 Speaker 1: a failure. I know, you know, the Prime Minister was 323 00:16:32,080 --> 00:16:34,520 Speaker 1: asked this morning, you know, what do you expect and 324 00:16:34,600 --> 00:16:37,080 Speaker 1: what's a win? I think part of this and I 325 00:16:37,120 --> 00:16:39,000 Speaker 1: think this is one of the constructive things about being 326 00:16:39,000 --> 00:16:41,960 Speaker 1: a part of the session here today, this Global Investment Summit, 327 00:16:42,000 --> 00:16:44,080 Speaker 1: and I know what will be the same with copy. 328 00:16:44,680 --> 00:16:47,160 Speaker 1: You need to create dialogue. People need to have debates. 329 00:16:47,160 --> 00:16:50,680 Speaker 1: We have to be willing to debate, discuss, learn and 330 00:16:50,720 --> 00:16:53,960 Speaker 1: therefore make good policy decisions as we move forward. And 331 00:16:54,000 --> 00:16:56,520 Speaker 1: this is all constructive part of the process. So I 332 00:16:56,880 --> 00:16:59,120 Speaker 1: I see the fact that these dialogues are occurring is 333 00:16:59,120 --> 00:17:02,120 Speaker 1: pushing us forward. I think that's a very very important 334 00:17:02,160 --> 00:17:05,080 Speaker 1: part of the transition journey that we're on. But it's 335 00:17:05,119 --> 00:17:07,199 Speaker 1: not a it's not a yes or no to me 336 00:17:07,280 --> 00:17:09,159 Speaker 1: that there's a win or a failure. This is going 337 00:17:09,200 --> 00:17:11,320 Speaker 1: to be a process that we're all invested heavily in. 338 00:17:11,680 --> 00:17:13,800 Speaker 1: Thank you so much, David Solomon. I want to talk 339 00:17:13,840 --> 00:17:15,560 Speaker 1: about your music, but we'll have to do another time. 340 00:17:15,600 --> 00:17:18,760 Speaker 1: I don't know if there's anything really really happy to 341 00:17:18,800 --> 00:17:20,280 Speaker 1: be with you and just happy to be back in 342 00:17:20,320 --> 00:17:22,280 Speaker 1: London today. Yeah, it's nice to have you back. With that. 343 00:17:22,320 --> 00:17:23,600 Speaker 1: We're going to send it back to you in New 344 00:17:23,680 --> 00:17:32,240 Speaker 1: York right now to the parlor games. Subrato or Jampa 345 00:17:32,320 --> 00:17:34,720 Speaker 1: joins us head of the US rates Strategy at SoC 346 00:17:34,800 --> 00:17:37,320 Speaker 1: Gen's world. We could get an update heres. So Brad, 347 00:17:37,680 --> 00:17:40,919 Speaker 1: how important is the adjustment in the FED message? Do 348 00:17:41,000 --> 00:17:43,320 Speaker 1: they have to catch up where the market is on 349 00:17:43,480 --> 00:17:47,639 Speaker 1: maybe a slower growth and maybe a more controlled inflation 350 00:17:50,160 --> 00:17:52,280 Speaker 1: um Not really. I think I think that for the 351 00:17:52,320 --> 00:17:55,159 Speaker 1: most part, you're going to consistently here the same message 352 00:17:55,160 --> 00:17:58,119 Speaker 1: from all the feed speakers that they're probably going to 353 00:17:58,160 --> 00:18:01,919 Speaker 1: be very careful and cautious on heights because of the 354 00:18:01,920 --> 00:18:03,920 Speaker 1: fact that they just don't have enough information on the 355 00:18:03,960 --> 00:18:08,000 Speaker 1: inflation front for them to sort of guide the markets 356 00:18:08,040 --> 00:18:10,640 Speaker 1: towards rate heights. And that's why I think you're seeing 357 00:18:10,640 --> 00:18:12,040 Speaker 1: a little bit of an adjustment in the in the 358 00:18:12,040 --> 00:18:14,600 Speaker 1: two year part of the curve. This morning, we did 359 00:18:14,680 --> 00:18:17,280 Speaker 1: see the market fully priced in three hikes by the 360 00:18:17,359 --> 00:18:19,800 Speaker 1: end of three and now you're going to see a 361 00:18:19,800 --> 00:18:22,880 Speaker 1: little bit of adjustment based on what the fense say. 362 00:18:23,119 --> 00:18:26,520 Speaker 1: Equities are on a tear. What does that signal to 363 00:18:26,640 --> 00:18:32,840 Speaker 1: you in an overarching strategy, and particularly in fixed income, well, 364 00:18:32,880 --> 00:18:34,880 Speaker 1: I think that low yields are here to stay. As 365 00:18:34,880 --> 00:18:38,440 Speaker 1: long as yields are low, real yields remain low, then 366 00:18:38,640 --> 00:18:40,879 Speaker 1: you have to go out the respectrum and invest in 367 00:18:41,520 --> 00:18:44,959 Speaker 1: higher yielding assets. So if you look at the bond 368 00:18:45,040 --> 00:18:49,199 Speaker 1: market complex, whether it be high yield or or treasuries 369 00:18:49,240 --> 00:18:51,960 Speaker 1: on the other end of the spectrum, your real returns 370 00:18:51,960 --> 00:18:54,480 Speaker 1: are very very low. I mean, in treasuries are getting 371 00:18:54,600 --> 00:18:57,640 Speaker 1: negative ninety basis points. So it just doesn't make any 372 00:18:57,640 --> 00:19:01,200 Speaker 1: sense to be in bonds, and you're better investing out 373 00:19:01,240 --> 00:19:03,080 Speaker 1: the respectrum. And that's why you're seeing more and more 374 00:19:03,200 --> 00:19:06,320 Speaker 1: demand if you will, for risky assets as well as 375 00:19:06,720 --> 00:19:09,959 Speaker 1: corporate bonds and high yielding bonds, an environment where tragedy 376 00:19:09,960 --> 00:19:12,159 Speaker 1: als are going to potentially remain low for the receiver 377 00:19:12,160 --> 00:19:13,919 Speaker 1: of future. So about I want to sit on the 378 00:19:13,920 --> 00:19:16,439 Speaker 1: federal reserve for a minute. The idea here that very 379 00:19:16,480 --> 00:19:19,359 Speaker 1: inevitably will push back as of the right rate hiking 380 00:19:19,400 --> 00:19:23,199 Speaker 1: expectations that are being built into markets. Would they embrace this? 381 00:19:23,400 --> 00:19:26,520 Speaker 1: I mean, markets are still chugging along even as traders 382 00:19:26,560 --> 00:19:29,119 Speaker 1: price in two rate hikes. Don't they want to propagate 383 00:19:29,160 --> 00:19:31,600 Speaker 1: that because it gives them, frankly, more ammunition down the 384 00:19:31,640 --> 00:19:34,399 Speaker 1: line to either ease without even moving the rate just 385 00:19:34,480 --> 00:19:37,800 Speaker 1: by verbal intervention, or down the line it does leave 386 00:19:37,840 --> 00:19:40,040 Speaker 1: them the ability to cut because rates will not be 387 00:19:40,119 --> 00:19:44,080 Speaker 1: at zero um. So I think the way I would 388 00:19:44,119 --> 00:19:47,639 Speaker 1: look at it is I think montreal policy, especially rate hikes, 389 00:19:47,720 --> 00:19:50,360 Speaker 1: is a very blunt tool in this environment. Right You're 390 00:19:50,400 --> 00:19:54,439 Speaker 1: looking at a very unusual inflationary environment that's driven by 391 00:19:54,440 --> 00:19:59,200 Speaker 1: supply chain instructions and labor shortages, you know, higher rents, 392 00:19:59,520 --> 00:20:02,200 Speaker 1: and you know, the the FED can't really meaningfully do 393 00:20:02,280 --> 00:20:06,480 Speaker 1: anything by raising rates to sort of fix the inflation 394 00:20:06,560 --> 00:20:09,120 Speaker 1: problem that we're going through right now. So I think 395 00:20:09,160 --> 00:20:11,280 Speaker 1: the best course of action for the FED is to 396 00:20:11,320 --> 00:20:14,960 Speaker 1: remain patient until it really really needs to raise rates. 397 00:20:15,040 --> 00:20:17,200 Speaker 1: So that's why I think they're gonna err on the 398 00:20:17,240 --> 00:20:19,040 Speaker 1: side of the caution, because they know they can pivot 399 00:20:19,119 --> 00:20:22,399 Speaker 1: easily to guiding the markets towards rate hexs if they 400 00:20:22,440 --> 00:20:25,080 Speaker 1: need to. If they do it now, then what you're 401 00:20:25,119 --> 00:20:27,080 Speaker 1: gonna see is is this sort of price action you're 402 00:20:27,119 --> 00:20:29,280 Speaker 1: seeing in the bar market, where the bar market things, 403 00:20:29,280 --> 00:20:30,800 Speaker 1: and the FED is going to be able to raise 404 00:20:30,920 --> 00:20:34,200 Speaker 1: rates soon, sooner faster, kind of prompload the rate HEGs, 405 00:20:34,240 --> 00:20:37,560 Speaker 1: if you will, which would imply a much slower trajectory 406 00:20:37,560 --> 00:20:40,000 Speaker 1: for growth over the longer run, and that's causing this 407 00:20:40,080 --> 00:20:42,880 Speaker 1: extreme flattening of the curve. They don't really want that either, 408 00:20:43,560 --> 00:20:45,959 Speaker 1: steeping of the curve is is healthy for a variety 409 00:20:45,960 --> 00:20:48,879 Speaker 1: of the sectors of the economy, So they just aren't 410 00:20:48,920 --> 00:20:50,640 Speaker 1: They shouldn't really be in a Russia, if you will, 411 00:20:50,920 --> 00:20:53,720 Speaker 1: to sort of guide the markets towards rate heights. There's 412 00:20:53,720 --> 00:20:55,679 Speaker 1: also the idea of political risk, but this is the 413 00:20:56,080 --> 00:20:59,440 Speaker 1: perhaps view of the Federal Reserve as it is composed today. Yeah, 414 00:20:59,480 --> 00:21:02,199 Speaker 1: we really have heard from President Biden in terms of 415 00:21:02,200 --> 00:21:05,399 Speaker 1: replacing FED Chair J Powell. An increasing question if you 416 00:21:05,400 --> 00:21:07,800 Speaker 1: look at predicted the odds have actually been going down. 417 00:21:08,160 --> 00:21:11,399 Speaker 1: What's your view of the of the potential market risk 418 00:21:11,840 --> 00:21:16,680 Speaker 1: of turmoil at the top of the FED. Um. Yes, 419 00:21:16,880 --> 00:21:20,720 Speaker 1: there's there's more uncertainty now than there was probably even 420 00:21:20,760 --> 00:21:23,320 Speaker 1: a few weeks back about who's going to be sharing 421 00:21:23,359 --> 00:21:26,320 Speaker 1: the FED and what the composition of the committee is 422 00:21:26,359 --> 00:21:29,399 Speaker 1: going to be next year. But broadly speaking, I think 423 00:21:29,480 --> 00:21:33,000 Speaker 1: that regardless of the choices that I mean, I think 424 00:21:33,280 --> 00:21:36,000 Speaker 1: you know, any and most presidents want a very devilish FED. 425 00:21:36,040 --> 00:21:39,199 Speaker 1: They want policy to be accommodative so that you know, 426 00:21:39,720 --> 00:21:43,960 Speaker 1: invested in certain seed robust growth trajectory, and the labor 427 00:21:44,000 --> 00:21:46,879 Speaker 1: market is strong and inflation is not a concern. So 428 00:21:46,920 --> 00:21:49,520 Speaker 1: I think broadly speaking, you know, the composition is going 429 00:21:49,560 --> 00:21:52,880 Speaker 1: to remain somewhat doublish even if there are new choices 430 00:21:53,000 --> 00:21:54,560 Speaker 1: made for the chair as well as some of the 431 00:21:54,600 --> 00:21:58,359 Speaker 1: committee members. So I'm I'm I think that policy, especially 432 00:21:58,400 --> 00:22:00,919 Speaker 1: with the FED, tends to be somewhat stay able. Uh 433 00:22:01,040 --> 00:22:02,959 Speaker 1: So I think that they that I'm just I'm not 434 00:22:03,080 --> 00:22:06,960 Speaker 1: nearly as concerned about the change in leadership, if you will. 435 00:22:07,880 --> 00:22:11,919 Speaker 1: What how does this devolve into the equity market. I 436 00:22:12,000 --> 00:22:16,440 Speaker 1: know it's off your remit, but the gloom crew sabad 437 00:22:16,680 --> 00:22:21,840 Speaker 1: has been absolutely crushed in the last ten days. How 438 00:22:21,880 --> 00:22:27,760 Speaker 1: do you adapt to that? How does it change your perspective? Um? 439 00:22:27,800 --> 00:22:30,119 Speaker 1: You know, by by gloom creamy, the people that are 440 00:22:30,200 --> 00:22:33,840 Speaker 1: that that expect the equity marketing narratives here that fear, 441 00:22:34,040 --> 00:22:37,320 Speaker 1: whatever the fears are in bonds or stocks, they've been 442 00:22:37,359 --> 00:22:42,680 Speaker 1: they've been obliterated. You know. It's interesting because it has 443 00:22:42,760 --> 00:22:46,480 Speaker 1: happened within the context of the bond market being concerned 444 00:22:46,520 --> 00:22:50,119 Speaker 1: about very higher trajectory to inflation. The bondmark could be 445 00:22:50,240 --> 00:22:53,840 Speaker 1: concerned about the FED raising grades. So the equity market, 446 00:22:53,880 --> 00:22:56,840 Speaker 1: for the most part, is dismissing all the signals that 447 00:22:56,840 --> 00:22:59,199 Speaker 1: that the bond market sending on the fact that the 448 00:22:59,240 --> 00:23:02,080 Speaker 1: front and yields have gone up with a faster case 449 00:23:02,119 --> 00:23:06,200 Speaker 1: of rate heights, there's probably uh, you know, a potential 450 00:23:06,240 --> 00:23:08,919 Speaker 1: store down in growth. So I think the equity market 451 00:23:09,000 --> 00:23:11,240 Speaker 1: is going to wait. I mean, I'm not an equity strategist, 452 00:23:11,240 --> 00:23:13,920 Speaker 1: but I think that really the signal that I'm getting 453 00:23:13,960 --> 00:23:16,520 Speaker 1: from the equity market is that they want to see 454 00:23:17,280 --> 00:23:19,679 Speaker 1: and here from the Fed before they start pricing in 455 00:23:19,720 --> 00:23:22,840 Speaker 1: sort of this this doomsday scenario, and the bond market 456 00:23:22,840 --> 00:23:25,360 Speaker 1: always tends to lead, if you will, in some respects, 457 00:23:25,400 --> 00:23:27,760 Speaker 1: so the signal from the bond market is going to 458 00:23:27,760 --> 00:23:30,160 Speaker 1: be very key for all the other risky assets. It's 459 00:23:30,160 --> 00:23:32,399 Speaker 1: a battery. You are perfectly entitled to talk about the 460 00:23:32,400 --> 00:23:34,760 Speaker 1: equity market since equity strategist to spend the whole of 461 00:23:34,760 --> 00:23:37,880 Speaker 1: this year pretending to be bond market strategists, pretty much 462 00:23:38,160 --> 00:23:40,600 Speaker 1: all of this year. Spatter thank you as always a 463 00:23:40,680 --> 00:23:48,679 Speaker 1: bat out for there of skin. On radio out of 464 00:23:48,720 --> 00:23:52,080 Speaker 1: New York and of course Boston, Washington, San franciscoing all 465 00:23:52,119 --> 00:23:55,120 Speaker 1: across the nation and truly around the world, we say 466 00:23:55,160 --> 00:23:58,320 Speaker 1: good morning and on radio and TV it's about okay, 467 00:23:58,440 --> 00:24:02,440 Speaker 1: now what French shooting is Chief investment officer. Okay, now, 468 00:24:02,480 --> 00:24:06,600 Speaker 1: what if the Northwestern Mutual Company Brett, What is the 469 00:24:06,680 --> 00:24:13,439 Speaker 1: mood of your institutional and retail clientele that's worried, cautious, 470 00:24:13,640 --> 00:24:17,000 Speaker 1: or flat out scared. Yeah, we think there's been worries 471 00:24:17,000 --> 00:24:18,840 Speaker 1: in the market's about mid May. So if you think 472 00:24:18,880 --> 00:24:21,800 Speaker 1: back then, everything was going well in this country. Everything 473 00:24:21,800 --> 00:24:23,320 Speaker 1: that we had tried to do over the prior year 474 00:24:23,560 --> 00:24:26,000 Speaker 1: was kind of coming to fruition. So we had rising vaccination, 475 00:24:26,040 --> 00:24:29,399 Speaker 1: declining COVID cases, and economic growth was strong, and I 476 00:24:29,440 --> 00:24:32,560 Speaker 1: think people sat around and wondered what could go wrong? 477 00:24:33,119 --> 00:24:34,760 Speaker 1: And so you had to worry about too much. I 478 00:24:34,800 --> 00:24:36,840 Speaker 1: think the inflation commentary that we still have today, and 479 00:24:36,880 --> 00:24:38,680 Speaker 1: what would the FED do you had the two little 480 00:24:38,680 --> 00:24:43,200 Speaker 1: crowd China? Evergrand would the economy roll over? And then valuations? 481 00:24:43,200 --> 00:24:46,480 Speaker 1: Are stocks too strong? Have they rallied too much? And 482 00:24:46,520 --> 00:24:48,800 Speaker 1: we think that's really driven trading over the past few months. 483 00:24:48,840 --> 00:24:51,080 Speaker 1: And we think that as you move towards the end 484 00:24:51,119 --> 00:24:55,840 Speaker 1: of the year, investors will refocus on economic and earnings fundamentals, 485 00:24:55,880 --> 00:24:58,439 Speaker 1: which will push stocks higher. And I think that's what 486 00:24:58,440 --> 00:25:00,600 Speaker 1: you're seeing right now. Earnings are coming in strong, the 487 00:25:00,640 --> 00:25:03,520 Speaker 1: economy is still strong. Certainly there has been a weak 488 00:25:03,520 --> 00:25:05,919 Speaker 1: patch because of COVID, but I think that alleviates and 489 00:25:05,920 --> 00:25:08,439 Speaker 1: I think you're left with an economy that's moving higher, 490 00:25:08,560 --> 00:25:11,520 Speaker 1: earnings that are strong, in a tenure treasury still setting 491 00:25:11,520 --> 00:25:14,280 Speaker 1: around one sixty. Where are you going to put your money? 492 00:25:14,359 --> 00:25:16,879 Speaker 1: How important is that one six in all of this? 493 00:25:17,800 --> 00:25:19,359 Speaker 1: It's important? I mean, if you think right now, I 494 00:25:19,520 --> 00:25:21,159 Speaker 1: find the narrative kind of odd when people come on 495 00:25:21,200 --> 00:25:24,159 Speaker 1: worried about inflation, saying that is going to do nothing, uh, 496 00:25:24,200 --> 00:25:26,879 Speaker 1: and then they tell you to invest in bonds. To me, 497 00:25:27,119 --> 00:25:29,720 Speaker 1: I still think there's plenty of rooman equities. I think 498 00:25:29,840 --> 00:25:32,280 Speaker 1: especially in the more cyclical areas, which I think we've 499 00:25:32,320 --> 00:25:35,080 Speaker 1: all given up on after a brief six months rally. 500 00:25:35,080 --> 00:25:38,240 Speaker 1: In those versus things like the apple nineteen dollar cloth 501 00:25:38,280 --> 00:25:40,240 Speaker 1: that you were talking about, I think that you're in 502 00:25:40,280 --> 00:25:42,159 Speaker 1: now and oil in places like that is where you 503 00:25:42,200 --> 00:25:44,720 Speaker 1: want to invest, more so than the secular growers like 504 00:25:44,760 --> 00:25:47,480 Speaker 1: you just mentioned. I've been asking guests over the last week, Brent, 505 00:25:47,560 --> 00:25:49,760 Speaker 1: what are the pillars of support that will persist we 506 00:25:49,800 --> 00:25:51,679 Speaker 1: can lean on through next year as well, not just 507 00:25:51,720 --> 00:25:54,119 Speaker 1: into year round. Black Rock gave me too, they said 508 00:25:54,160 --> 00:25:57,280 Speaker 1: pence up demand that will persist and pricing Papa, Do 509 00:25:57,320 --> 00:25:59,760 Speaker 1: you share that view, Brent? I do if you look 510 00:25:59,840 --> 00:26:02,080 Speaker 1: right now. For example, on the consumer side of the equation, 511 00:26:02,280 --> 00:26:04,879 Speaker 1: the consumer has spent the prior thirteen years deleveraging their 512 00:26:04,880 --> 00:26:07,000 Speaker 1: balance sheet. Their debt to net worth has gone from 513 00:26:07,000 --> 00:26:09,840 Speaker 1: twenty four to twelve, the cost of that debt has 514 00:26:09,880 --> 00:26:12,560 Speaker 1: gone from eighteen to twelve. And so the consumer is healthy, 515 00:26:12,640 --> 00:26:14,560 Speaker 1: they have pent up demand, and I think you're gonna 516 00:26:14,600 --> 00:26:16,600 Speaker 1: continue to see spending. The question is going to be 517 00:26:16,640 --> 00:26:19,640 Speaker 1: on the supply chains. Can those snarls kind of alleviate 518 00:26:19,680 --> 00:26:21,199 Speaker 1: a bit? And I think they will as you move 519 00:26:21,280 --> 00:26:23,199 Speaker 1: into the new year, And so I think you have 520 00:26:23,240 --> 00:26:25,639 Speaker 1: a setup where equities continue to push higher. There certainly 521 00:26:25,640 --> 00:26:27,920 Speaker 1: are risk and I don't expect to the same push 522 00:26:27,960 --> 00:26:30,119 Speaker 1: that you had post COVID, But I think on a 523 00:26:30,160 --> 00:26:32,680 Speaker 1: relative basis, stocks are still attractive relative to bonds just 524 00:26:32,720 --> 00:26:34,800 Speaker 1: given the economic Outlooking where the fet is brom when 525 00:26:34,800 --> 00:26:36,800 Speaker 1: you were saying that there is a lot of pessimism 526 00:26:36,880 --> 00:26:40,639 Speaker 1: in markets, where are you seeing that pessimism? Yeah? For example, 527 00:26:40,800 --> 00:26:43,840 Speaker 1: just the uh full client visits I The questions that 528 00:26:43,880 --> 00:26:45,080 Speaker 1: I get are not what could go right, it's what 529 00:26:45,119 --> 00:26:46,960 Speaker 1: could go wrong? And that's kind of a continual question 530 00:26:46,960 --> 00:26:48,720 Speaker 1: that I get all the time because things have gone 531 00:26:48,720 --> 00:26:51,000 Speaker 1: fairly well. Um, but if you look at the A 532 00:26:51,000 --> 00:26:54,080 Speaker 1: A AII Bullish Sentiment Survey, it peaked around May. We 533 00:26:54,200 --> 00:26:55,919 Speaker 1: kind of had all the meme stocks moving higher, we 534 00:26:55,960 --> 00:26:58,440 Speaker 1: had people trading on a daily basis. We had optimism 535 00:26:58,480 --> 00:27:00,840 Speaker 1: actually go above fifty, which is kind of rare air 536 00:27:01,160 --> 00:27:03,880 Speaker 1: during the past thirteen years. And it's spent the next 537 00:27:03,920 --> 00:27:06,080 Speaker 1: three or four months falling too. I believe twenty two 538 00:27:06,359 --> 00:27:09,080 Speaker 1: in September, it's starting to rise a bit again, and 539 00:27:09,080 --> 00:27:10,560 Speaker 1: I think people are gonna get warmed up to the 540 00:27:10,560 --> 00:27:13,040 Speaker 1: fact that the economy is still pushing along and that 541 00:27:13,080 --> 00:27:15,159 Speaker 1: typically pulls markets with it, and I don't expect this 542 00:27:15,200 --> 00:27:17,040 Speaker 1: time to be any different. When you talk to clients 543 00:27:17,160 --> 00:27:20,080 Speaker 1: and they hear from asset manager after asset manager, it's 544 00:27:20,080 --> 00:27:22,359 Speaker 1: a stock pickers market. What do you tell them. Do 545 00:27:22,400 --> 00:27:24,439 Speaker 1: you say, look, the index is doing pretty well. It's 546 00:27:24,440 --> 00:27:27,480 Speaker 1: supported by a number of different pillars, or do you say, yeah, 547 00:27:27,560 --> 00:27:29,800 Speaker 1: you should be very selective, or you should just pay 548 00:27:29,920 --> 00:27:32,600 Speaker 1: very big fees to somebody to invest your money. On 549 00:27:32,680 --> 00:27:36,080 Speaker 1: a stock level, we attempt to pull both lovers, and 550 00:27:36,119 --> 00:27:39,040 Speaker 1: so we attempt to add value through security selection and 551 00:27:39,160 --> 00:27:42,040 Speaker 1: asset allocations. So we are overweighted small caps, for example, 552 00:27:42,480 --> 00:27:45,119 Speaker 1: and we certainly do try to tilt our portfolio towards 553 00:27:45,160 --> 00:27:47,439 Speaker 1: those cyclical names that I mentioned kind of in my 554 00:27:47,480 --> 00:27:50,280 Speaker 1: opening comments. And always fantastic to catch up with you said, 555 00:27:50,480 --> 00:27:53,119 Speaker 1: very calm and constructive on the outlook French shooting, that 556 00:27:53,400 --> 00:27:57,600 Speaker 1: of northweston Mutchell. This is the Bloomberg Surveillance Podcast. Thanks 557 00:27:57,600 --> 00:28:00,920 Speaker 1: for listening. Join us live weekday from seven to ten 558 00:28:01,000 --> 00:28:05,440 Speaker 1: am Eastern on Bloomberg Radio and on Bloomberg Television each 559 00:28:05,560 --> 00:28:09,280 Speaker 1: day from six to nine am for insight from the 560 00:28:09,320 --> 00:28:14,520 Speaker 1: best in economics, finance, investment, and international relations. And subscribe 561 00:28:14,560 --> 00:28:19,480 Speaker 1: to the Surveillance podcast on Apple podcast, SoundCloud, Bloomberg dot com, 562 00:28:19,560 --> 00:28:22,800 Speaker 1: and of course on the terminal. I'm Tom Keene, and 563 00:28:22,960 --> 00:28:24,840 Speaker 1: this is Bloomberg