WEBVTT - Bloomberg Wall Street Week: Clayton, Cantor, Baicker 0:00:00.160 --> 0:00:03.360 This is Bloomberg Wall Street Week. What's the state of 0:00:03.400 --> 0:00:06.360 corporate governance? The deficit is a real issue. To use 0:00:06.400 --> 0:00:09.800 economy continues to send mixed signals to the financial stories 0:00:09.800 --> 0:00:12.680 that cheap our world fed action to con concerns over 0:00:12.760 --> 0:00:16.240 dollar liquidity and encouraging China data the five hundred wealthiest 0:00:16.239 --> 0:00:18.360 people in the world. Through the eyes of the most 0:00:18.480 --> 0:00:22.520 influential voices Larry Summers, the former Treasury Secretary, star Ward CEO, 0:00:22.640 --> 0:00:26.360 Kevin Johnson sec Chairman J Clayton. Bloomberg Wall Street Week 0:00:26.480 --> 0:00:30.440 with David Weston from Bloomberg Radio. Another week of waiting 0:00:30.720 --> 0:00:34.920 for stimulus, for Brexit, and for COVID to peak. Welcome 0:00:34.960 --> 0:00:38.320 to Bloomberg Wall Street Week. I'm David Weston. Getting a 0:00:38.400 --> 0:00:41.120 vaccine that works in so short a time maybe nothing 0:00:41.159 --> 0:00:43.559 short of a miracle, but now that we're on the 0:00:43.600 --> 0:00:46.479 cusp of getting it, Katherine Baker, dean of the Harris 0:00:46.520 --> 0:00:49.200 School of Public Policy at the University of Chicago, says, 0:00:49.240 --> 0:00:51.879 we made in another miracle to get it distributed to 0:00:51.920 --> 0:00:55.040 those who need it. It would be a herculean task 0:00:55.280 --> 0:00:58.080 under any circumstances, but I think it's made all the 0:00:58.120 --> 0:01:00.520 more challenging by the fact that this is the same 0:01:00.560 --> 0:01:02.880 health care system that's going to have to be caring 0:01:02.960 --> 0:01:06.360 for lots and lots of people who still get COVID. 0:01:06.720 --> 0:01:08.560 We're gonna need to do all that we can to 0:01:08.600 --> 0:01:12.800 suppress transmission of the disease during this period and also 0:01:12.959 --> 0:01:16.520 to introduce new therapeutics. It's going to be months and 0:01:16.560 --> 0:01:21.240 months and months before everyone is vaccinated, and in that time, unfortunately, 0:01:21.440 --> 0:01:24.119 hundreds of thousands of people are going to be getting 0:01:24.160 --> 0:01:27.280 COVID at this point, two hundred thousand a day. What 0:01:27.480 --> 0:01:30.440 is that require of the system? I mean, is that money. 0:01:30.560 --> 0:01:33.720 There's talk about further money coming from Congress. Is it people? 0:01:34.000 --> 0:01:37.040 Do we have enough trained personnel to actually be administering 0:01:37.280 --> 0:01:39.360 this kind of system, As you say, it's vaccines plus 0:01:39.440 --> 0:01:42.520 your therapeutics plus dealing with people who have the disease. Yeah, 0:01:42.560 --> 0:01:44.560 I think it takes money, but I think you're right 0:01:44.640 --> 0:01:47.160 that people are probably going to be in the shortest 0:01:47.160 --> 0:01:51.280 supply right now. Our healthcare system is incredibly strained just 0:01:51.520 --> 0:01:55.120 caring for the people who have COVID, So adding on 0:01:55.400 --> 0:01:58.040 the layer of distribution of vaccine is going to be 0:01:58.040 --> 0:02:01.600 an added complication by unfortunately, the kind of trainting that's 0:02:01.640 --> 0:02:06.160 required to administer a vaccine is not nearly as intensive 0:02:06.200 --> 0:02:08.560 as the kind of training that's required to be qualified 0:02:08.560 --> 0:02:10.840 to care for somebody in the I see you. So 0:02:10.880 --> 0:02:13.280 the hope is that we're going to be reducing the 0:02:13.360 --> 0:02:15.800 number of people in the hospital at the same time 0:02:15.800 --> 0:02:19.280 that we're ramping up vaccine distribution. But we can't take 0:02:19.320 --> 0:02:24.639 our eyes off of suppressing transmission, the masking, the washing hands, 0:02:24.639 --> 0:02:27.799 and keeping distance. If we forget about those while we 0:02:27.919 --> 0:02:30.840 focus on vaccine administration, we're going to be in big problem. 0:02:31.200 --> 0:02:34.840 I also wonder whether, as happened last spring, frankly, some 0:02:35.000 --> 0:02:37.200 of the people who are most vulnerable, most hit, are 0:02:37.200 --> 0:02:39.080 the people with the least resources to deal with it. 0:02:39.360 --> 0:02:42.400 We're talking about low income people, we're talking about noority groups, 0:02:42.400 --> 0:02:45.760 particularly in urban centers, but also for that matter, Native Americans. 0:02:45.919 --> 0:02:48.440 We've had disproportionate problems. These people didn't have that great 0:02:48.520 --> 0:02:51.320 healthcare system supporting them to begin with, didn'y. This is 0:02:51.440 --> 0:02:55.120 compounding all sorts of disparities in our system. Of course, 0:02:55.160 --> 0:02:58.800 in healthcare, where the people with the most health vulnerabilities 0:02:59.040 --> 0:03:03.239 such as diet, abetes, high blood pressure, they're the most 0:03:03.320 --> 0:03:06.840 likely to get COVID and the least likely to have 0:03:07.000 --> 0:03:10.480 access to the healthcare resources. But that's only part of it. 0:03:10.520 --> 0:03:13.640 There are also the economic disparities that line up as well. 0:03:14.040 --> 0:03:16.720 People who are least likely to be able to do 0:03:16.760 --> 0:03:20.240 their jobs from their homes are also and that's more 0:03:20.280 --> 0:03:22.360 likely to be exposed to the disease. Are also the 0:03:22.400 --> 0:03:25.080 ones with the biggest disease burden and then the fewest 0:03:25.120 --> 0:03:29.840 economic resources to weather a recession that's been generated by 0:03:29.919 --> 0:03:32.639 the pandemics. So people who are losing their jobs, maybe 0:03:32.720 --> 0:03:37.320 losing their health insurance. This is all exacerbating disparities that 0:03:37.400 --> 0:03:40.840 line up for the most vulnerable populations. They may also 0:03:40.880 --> 0:03:44.520 be the people least likely to take a vaccine. There 0:03:44.640 --> 0:03:48.360 is some longstanding distrust of the health care system that 0:03:48.480 --> 0:03:53.160 has been well justified by past inequities that I think 0:03:53.160 --> 0:03:56.000 will make people differentially likely to take up a vaccine 0:03:56.000 --> 0:03:58.440 that's offered. What do you make of the team that 0:03:58.880 --> 0:04:02.800 president elected is now announced? So for the people, even 0:04:02.800 --> 0:04:06.080 now he's announced, have clearly demonstrated that they take the 0:04:06.080 --> 0:04:09.760 pandemic very seriously and that they're very concerned with addressing 0:04:09.840 --> 0:04:13.880 the inequities in the system. I think the concerted attention 0:04:14.320 --> 0:04:18.880 to the message that people receive about how to prevent transmission, 0:04:19.400 --> 0:04:22.799 the efficacy of a vaccine, as well as the focus 0:04:22.839 --> 0:04:26.359 on the economic disparities that have been exacerbated by the disease, 0:04:26.560 --> 0:04:30.560 is bound to be helpful for addressing some of the 0:04:30.680 --> 0:04:34.000 challenges that vulnerable populations have based over the last months. 0:04:34.240 --> 0:04:37.120 How big a difference can they make at this point, Well, 0:04:37.160 --> 0:04:40.120 I wish that somebody had a magic wand to make 0:04:40.160 --> 0:04:42.440 all of this go away, but that is clearly just 0:04:42.600 --> 0:04:46.080 not possible, and so I think we're in under the 0:04:46.120 --> 0:04:51.039 best of circumstances for many months more of wrestling with 0:04:51.120 --> 0:04:56.279 the pandemic. My hope is that by spring things will 0:04:56.360 --> 0:04:59.080 start to look better on the disease front, and that 0:04:59.080 --> 0:05:02.839 that will enable war economic activity. I also think all 0:05:02.880 --> 0:05:07.799 along the way to maximize economic activity, to keep businesses open, 0:05:07.839 --> 0:05:11.599 to keep people at work, paying attention to the disease 0:05:12.200 --> 0:05:15.600 helps with that. And so if we had been more 0:05:15.760 --> 0:05:21.400 consistently reducing transmission by having people keep social distance and 0:05:21.480 --> 0:05:24.480 wearing masks, we could have had a lot more economic 0:05:24.520 --> 0:05:27.880 activity without the surge that we're wrestling with right now. 0:05:28.040 --> 0:05:30.800 As an expert in this area, what worries you the 0:05:30.880 --> 0:05:33.039 most over the next two to three months. You said 0:05:33.080 --> 0:05:34.640 until we get to the spring. People are talking to 0:05:34.680 --> 0:05:36.760 two or three months. It's going to get worse before 0:05:36.760 --> 0:05:38.760 it gets better. What is the thing that worries you 0:05:38.800 --> 0:05:42.440 the very most. I think it is the fatigue with 0:05:42.560 --> 0:05:45.240 the pandemic and with the restrictions that we've all been 0:05:45.279 --> 0:05:48.120 talking about so much. I think it's real, and I 0:05:48.160 --> 0:05:51.840 think that people are letting their guard down, especially around 0:05:51.839 --> 0:05:56.520 the holidays as people focus on the coming vaccine. I 0:05:56.640 --> 0:05:59.040 worry that the spike that we're seeing is going to 0:05:59.160 --> 0:06:01.479 overwhelm the healthcare system and we're gonna end up with 0:06:01.640 --> 0:06:04.359 much more loss of life and well being that we 0:06:04.400 --> 0:06:06.800 otherwise would have had. We also don't know what the 0:06:06.880 --> 0:06:10.680 long term consequences of COVID are there. We're learning more 0:06:10.760 --> 0:06:15.440 about the long haulers, people who wrestle with u symptoms 0:06:15.480 --> 0:06:20.320 of the disease, or downstream consequences for months afterwards. It's 0:06:20.360 --> 0:06:22.960 been around for less than a year, so we don't 0:06:23.040 --> 0:06:26.680 know what two, three, four years out looks like. So 0:06:27.040 --> 0:06:30.280 the more we can reduce the spread of the disease now, 0:06:30.720 --> 0:06:34.200 not only the more economic activity and well being can 0:06:34.200 --> 0:06:37.440 we have now, but perhaps health consequences in the future 0:06:37.480 --> 0:06:39.960 can be a birth thanks to Dean Katherine Baker of 0:06:40.000 --> 0:06:43.279 the Harris School of Public Policy at the University of Chicago. 0:06:44.040 --> 0:06:47.560 Coming up, SEC Chairman j Clayton on what he's accomplished 0:06:47.600 --> 0:06:50.480 during his tenure and what is left to be done 0:06:51.080 --> 0:06:59.440 That's next on Wall Street Weight on Bloomberg. This is 0:06:59.440 --> 0:07:03.839 Bloomberg Wall Street Week with David Weston from Bloomberg Radio. 0:07:04.120 --> 0:07:06.760 Jay Clayton is nearing the end of his four years 0:07:06.800 --> 0:07:09.840 as Chairman of the SEC, leaving behind a record number 0:07:09.840 --> 0:07:14.200 of new regulations and over fourteen billion dollars in monetary remedies. 0:07:14.680 --> 0:07:17.640 One of his goals was to reinforce the attractiveness of 0:07:17.640 --> 0:07:20.560 the public markets in raising capital. So it's only fitting 0:07:20.600 --> 0:07:23.520 that even as he counts down the days until his departure, 0:07:23.800 --> 0:07:26.440 he saw this week the remarkable I d os of 0:07:26.520 --> 0:07:30.600 door Dash and then Airbnb, something we asked about even 0:07:30.640 --> 0:07:34.120 as they were happening. Well, David, in this in this job, 0:07:34.280 --> 0:07:37.160 you always have to be active, because our markets are 0:07:37.200 --> 0:07:42.200 ever active. If we're not modifying, updating, modernizing, as I 0:07:42.280 --> 0:07:46.400 like to say, our regulations, we're falling behind. And so 0:07:46.840 --> 0:07:49.440 you have to be activists. And what we've what we've 0:07:49.480 --> 0:07:52.280 tried to do is be activists for the benefit of 0:07:52.280 --> 0:07:57.480 our main street investors, really getting main street investors better products, cheaper, 0:07:58.160 --> 0:08:01.480 making sure they have better protections, and in the event 0:08:01.600 --> 0:08:06.360 that our main street investors unfortunately fall victim UH to fosters, 0:08:06.440 --> 0:08:09.760 getting them their money back as quickly as we can UM. 0:08:09.840 --> 0:08:13.520 And in addition, trying to modernize our our framework around 0:08:13.520 --> 0:08:17.400 the functioning of markets so that markets function efficiently UM 0:08:17.400 --> 0:08:19.720 in a modern age. And you know, yeah, you have 0:08:19.800 --> 0:08:21.800 to be you have to be engaged to do those 0:08:21.840 --> 0:08:25.440 things you've put down as one of your principles. That 0:08:25.600 --> 0:08:27.960 really a protection of the main street investor as you 0:08:28.000 --> 0:08:31.640 call them. You also sometimes say long term main street investor. 0:08:31.680 --> 0:08:34.480 You add that in there. What can the SEC do 0:08:34.840 --> 0:08:38.640 to address the issue of long term versus short term? 0:08:38.880 --> 0:08:41.240 It's a terrific question. It's a it's a question not 0:08:41.320 --> 0:08:45.600 just for the SEC, but but across our economy. UM. Look, 0:08:45.800 --> 0:08:49.080 markets thirst for information, the thirst for information by the 0:08:49.160 --> 0:08:52.120 micro second. So markets are always going to be focusing 0:08:52.160 --> 0:08:56.280 on short term changes. The culture of investing for the 0:08:56.320 --> 0:09:00.160 long term is something that we need to foster across 0:09:00.200 --> 0:09:04.480 are regulatory infrastructure. The SEC is is here to help 0:09:04.520 --> 0:09:07.720 with the way that we try to talk about trends 0:09:07.760 --> 0:09:11.720 on certainties, opportunities, getting companies to disclose that kind of 0:09:11.760 --> 0:09:14.720 forward looking information. I think disclosure of that type of 0:09:14.760 --> 0:09:19.600 forward looking information helps foster a long term attitude. But David, 0:09:19.640 --> 0:09:21.600 one thing I've learned in Washington is that is that 0:09:21.679 --> 0:09:23.720 this needs to be sort of a whole of government 0:09:23.720 --> 0:09:27.880 approach to more long term ism. Uh. For for investment, 0:09:28.400 --> 0:09:30.760 are you concerned at all about the growth of private 0:09:31.240 --> 0:09:34.079 h private capital as opposed to public capital, because there's 0:09:34.080 --> 0:09:35.880 an awful lot that's being done on the private side 0:09:35.880 --> 0:09:38.400 now that used to be done in publicly. Well, let 0:09:38.400 --> 0:09:41.199 me say this. People talk about that as a dichotomy. 0:09:41.360 --> 0:09:44.600 It's not a dichotomy. If you're a company that say, 0:09:44.679 --> 0:09:47.640 under pick a number, David, a hundred million, two hundred million, 0:09:48.240 --> 0:09:52.280 the private markets are really your only viable source of 0:09:52.720 --> 0:09:56.440 growth capity. So we need to preserve that private market 0:09:56.520 --> 0:09:59.480 and foster that private market. It is part of the 0:09:59.559 --> 0:10:02.800 dynam ism of America. It's part of innovation. Then you 0:10:02.840 --> 0:10:05.800 get above that two hundred million dollar valuation level, you 0:10:05.800 --> 0:10:08.040 get up into the types of companies that you were 0:10:08.120 --> 0:10:12.640 just talking about there, you do want to encourage those 0:10:12.640 --> 0:10:15.760 companies to become public companies for the reasons we talked 0:10:15.800 --> 0:10:20.079 about greater participation UM from the American retail investor, and 0:10:20.280 --> 0:10:22.480 and that's how I look at it. You, but we 0:10:22.679 --> 0:10:27.280 need vibrant private markets up through and well above that 0:10:27.360 --> 0:10:30.520 two hundred million dollar level. It's so contributes to the 0:10:30.640 --> 0:10:34.800 nimble nature of American capitalism as you pursued your goal 0:10:34.960 --> 0:10:38.160 of really protecting the long term mainstream investor. One thing 0:10:38.200 --> 0:10:39.720 you talked about was I think you referred to as 0:10:39.760 --> 0:10:43.320 corporate hygiene, one aspect of which is insider trading. And 0:10:43.320 --> 0:10:44.839 I have a very specific question because you had to 0:10:44.880 --> 0:10:48.120 deal with a COVID uh pandemic which none of us 0:10:48.240 --> 0:10:50.680 ever thought we'd anticipate, and affects your business as well. 0:10:50.840 --> 0:10:53.520 Have you seen instances of questions at least being raised 0:10:53.559 --> 0:10:56.960 about insiders perhaps selling securities and some of the companies 0:10:57.040 --> 0:11:01.120 that could benefit from vaccine or treatment. Sure, David, Look, 0:11:01.200 --> 0:11:04.199 when you have any time you have UM a new 0:11:04.280 --> 0:11:08.199 information environment, and COVID has certainly created a new information 0:11:08.360 --> 0:11:13.080 environment across many companies, including UM, most notably pharmaceutical companies. 0:11:13.440 --> 0:11:17.920 You have the much greater risk that there's an asymmetry 0:11:17.960 --> 0:11:21.920 of information between the company's insiders and the market more generally, 0:11:22.280 --> 0:11:25.559 and in those circumstances, you know, companies need to up 0:11:25.559 --> 0:11:28.240 their game. They need to up up their controls to 0:11:28.480 --> 0:11:32.000 ensure that no one is taking advantage of or I 0:11:32.000 --> 0:11:35.559 would say, even be perceived to be taking advantage of 0:11:35.760 --> 0:11:39.000 that kind of information asymmetry. And now we've been very 0:11:39.080 --> 0:11:43.240 vocal about this. Follow your internal procedures, you know, have 0:11:43.440 --> 0:11:45.800 your have your checks with your general counsel's office on 0:11:45.840 --> 0:11:47.960 whether it's appropriate to be selling stock. And then just 0:11:48.000 --> 0:11:51.240 ask yourself, does this look right or not? I mean, look, 0:11:51.520 --> 0:11:54.240 we're going to get through this, I believe, um, you know, 0:11:54.440 --> 0:11:57.400 and if you're in it for the long term. Um. 0:11:57.440 --> 0:11:59.439 Now I'm not telling people you have to, but think 0:11:59.440 --> 0:12:02.080 about stay for the long term. M John. I want 0:12:02.120 --> 0:12:03.720 to look forward here just a little bit and some 0:12:03.800 --> 0:12:06.480 things that will actually come up after you've left office, 0:12:06.720 --> 0:12:08.200 and one of them is in the area of E. 0:12:08.360 --> 0:12:11.040 S G. You've spoken out about that quite a few times, environmental, social, 0:12:11.040 --> 0:12:13.000 and government, saying they're not all the same sort of thing. 0:12:13.040 --> 0:12:15.840 You refer to Kevin Kenneth Arrow, your favorite economist in 0:12:15.840 --> 0:12:18.120 that connection. But I want to talk actually about governance, 0:12:18.200 --> 0:12:21.240 not the environmental part. There's a proposal now from Nasdaq 0:12:21.320 --> 0:12:24.920 basically to impose some diversity requirements on board. That's not 0:12:24.960 --> 0:12:26.720 gonna come up in your tenure. But if you were 0:12:26.720 --> 0:12:29.120 giving some private advice to your successor, would you be 0:12:29.160 --> 0:12:31.160 inclined to say that's a good idea. It would be 0:12:31.200 --> 0:12:34.079 inappropriate for me to comment on it order to bind 0:12:34.080 --> 0:12:37.120 in any way, UM, about my successor. But what I 0:12:37.200 --> 0:12:39.959 do want to say is, UM, this is this is 0:12:40.000 --> 0:12:42.640 an area that we we have decided at the Commission. 0:12:42.679 --> 0:12:44.880 We are focused on this, and we've actually focused on 0:12:45.000 --> 0:12:48.920 here at the Commission diversity, inclusion and opportunity and making 0:12:48.920 --> 0:12:51.120 sure that we're cognizant of it through all of our 0:12:51.200 --> 0:12:55.400 hiring decisions, UM, and the way we approached the marketplace. UM. 0:12:55.480 --> 0:12:58.040 And I believe that we've done a good job of 0:12:58.120 --> 0:13:00.640 shining a spotlight on the fact that in the asset 0:13:00.720 --> 0:13:04.960 management industry, UM. You know, uh, it's not as inclusive 0:13:04.960 --> 0:13:07.760 as it should be. Actually, the numbers are stock and 0:13:07.880 --> 0:13:10.880 we need to do a better job of having our 0:13:10.920 --> 0:13:16.920 asset management industry reflect UM. Uh, the diversity in our society. 0:13:17.360 --> 0:13:20.080 You sort of mentioned this obliquely just the moment, is 0:13:20.080 --> 0:13:23.160 it equally important for the leadership of the SEC, whoever 0:13:23.200 --> 0:13:26.880 it is, to also reflect America more broadly. Look, I 0:13:26.920 --> 0:13:30.079 think I think these types of things, uh, you you 0:13:30.440 --> 0:13:32.640 have to have them in your mind as you're making 0:13:32.679 --> 0:13:36.200 decisions that no one who's been in a in a 0:13:36.240 --> 0:13:39.640 diverse board room or a diverse decision making body um 0:13:39.640 --> 0:13:43.520 comes away with it without understanding that it adds um, 0:13:43.559 --> 0:13:47.240 it enhances decision making, it makes for better decisions, and 0:13:47.280 --> 0:13:49.800 so of course anybody who's forming that kind of body 0:13:50.200 --> 0:13:54.560 wants a diversity of experience and perspective. Mr Sherman, I'm 0:13:54.559 --> 0:13:57.520 gonna save the toughest one for last, I suspect, and 0:13:57.559 --> 0:14:01.319 that's money market underformed. Because we've heard a lot about 0:14:01.320 --> 0:14:04.520 short term funding. There's been various attempts to try to 0:14:04.520 --> 0:14:06.400 address it. We had it as a crisis. Really, I 0:14:06.400 --> 0:14:07.959 think it's fair to say this spring again with a 0:14:08.000 --> 0:14:09.920 FETE had to step in. We don't seem to have 0:14:10.040 --> 0:14:11.640 arms arms right. I talked with Dan to Roll, a 0:14:11.720 --> 0:14:14.800 former fit UH member, recently, and he said he thinks 0:14:14.800 --> 0:14:16.400 it's up to the SEC in the next round to 0:14:16.400 --> 0:14:19.120 do that. What could be done on the short term 0:14:19.120 --> 0:14:24.040 funding front, Well, you know, you as usual you you 0:14:24.120 --> 0:14:26.480 frame this in the right way, which is, you know, 0:14:26.600 --> 0:14:29.120 the short term funding markets and the money markets are 0:14:29.160 --> 0:14:33.480 inexplicably length. The short term funding markets um are different 0:14:33.760 --> 0:14:38.600 depending on the underlying instrument. So our our treasury market 0:14:38.920 --> 0:14:42.080 and there are money market treasury funds, is far different 0:14:42.480 --> 0:14:47.040 from the short term municipal paper market, which also has 0:14:47.320 --> 0:14:50.360 money money market funds. That was Jake Layton, Chairman of 0:14:50.400 --> 0:14:54.360 the SEC. Coming up, former House Majority Leader Eric Canter 0:14:54.760 --> 0:14:57.680 on how prospects of our recovery are affecting his business 0:14:57.840 --> 0:15:01.120 at Molis and Company. That's next on Wall Street Week 0:15:01.280 --> 0:15:09.880 on Bloomberg. This is Bloomberg Wall Street Week with David 0:15:09.920 --> 0:15:13.440 Weston from Bloomberg Radio. Those who thought that if anything 0:15:13.560 --> 0:15:16.320 so horrible as the election of a Democrat should occur, 0:15:17.040 --> 0:15:20.840 the bond market would panic and gold would soar turned 0:15:20.880 --> 0:15:24.920 out to be suffering from just another superstition. That was 0:15:25.000 --> 0:15:28.840 Lewis Ruckheiser on Wall Street Week back in just after 0:15:28.960 --> 0:15:32.440 Bill Clinton was elected president. Now we have a different 0:15:32.480 --> 0:15:35.640 Democrat elected to the presidency in a very different time. 0:15:36.040 --> 0:15:39.280 But once again reports of possible adverse effects on business 0:15:39.440 --> 0:15:43.080 or the markets appear to have been greatly exaggerated, as 0:15:43.120 --> 0:15:46.680 reported by a Republican former House Majority Leader Eric Canter, 0:15:46.800 --> 0:15:50.040 now vice chairman of Molus and Company. We had seen 0:15:50.040 --> 0:15:54.840 a dramatic resurgence of M ANDEG globally and has been 0:15:54.880 --> 0:15:59.200 across sectors. Uh, it is in our view and which 0:15:59.200 --> 0:16:01.840 has been dominant about what we're calling the power middle. 0:16:02.160 --> 0:16:04.880 You know, these are the mid marketing companies, the seven 0:16:04.960 --> 0:16:07.840 eight hundred million dollars to four or five billion dollar companies. 0:16:08.400 --> 0:16:11.320 Things are just very active. Obviously, there's a lot of 0:16:11.360 --> 0:16:15.840 activity amongst the sponsors, product equity community, and really the 0:16:15.920 --> 0:16:19.640 breadth of participation has been, as you suggest, beyond just 0:16:19.840 --> 0:16:23.600 the COVID winners, beyond just the digital and the tech arena. 0:16:23.720 --> 0:16:26.120 We're seeing it in the chemical arena. We're seeing in 0:16:26.200 --> 0:16:30.560 the energy utility arena, we're seeing in TMT. So it 0:16:30.720 --> 0:16:34.160 is broad participation. And I think the striking thing about 0:16:34.240 --> 0:16:37.440 what we're seeing is the timing um has been a 0:16:37.520 --> 0:16:41.040 huge factor in terms of the process, and what we're 0:16:41.040 --> 0:16:45.240 seeing is deals get to exclusivity a lot faster than 0:16:45.280 --> 0:16:47.200 what was otherwise the case. A lot of it is 0:16:47.280 --> 0:16:50.960 sort of brought about by the digital infusion of communications 0:16:51.000 --> 0:16:53.960 and the way people are interacting right now and I 0:16:54.000 --> 0:16:56.760 also think you can attribute some of the resurgence back 0:16:56.800 --> 0:16:59.200 to the cost of cattle and the cost of capital 0:16:59.400 --> 0:17:02.280 is extremely low. We saw the federal reserves step in 0:17:02.400 --> 0:17:06.359 immediately after the pandemic really hit UM. That's can that 0:17:06.480 --> 0:17:09.879 effect has continued to benefit. I think some of this activity. 0:17:10.200 --> 0:17:13.840 We are seeing a shift to U from stock back 0:17:13.840 --> 0:17:16.320 to cash because of this and many of the deals 0:17:16.320 --> 0:17:18.960 that we're involved with, and and on the upside for 0:17:19.040 --> 0:17:22.640 investors and certainly for our clients UM, what we're seeing 0:17:22.680 --> 0:17:26.200 is evaluations continue to go up, and evaluations that we're 0:17:26.200 --> 0:17:30.000 seeing are even exceeding those from pre COVID level. So 0:17:30.160 --> 0:17:32.760 all of this is sort of it's it's very interesting 0:17:32.800 --> 0:17:35.440 given the fact that we are in this unpressed and 0:17:35.600 --> 0:17:39.480 in one under year pandemic. And I don't I don't 0:17:39.520 --> 0:17:41.880 say this likely, but I do think that for many 0:17:42.240 --> 0:17:45.120 UM times seem to be very promising as people are 0:17:45.119 --> 0:17:48.280 looking beyond the pandemic, but there is a reality here. 0:17:48.440 --> 0:17:51.199 There are many small businesses that are really suffering. And 0:17:51.240 --> 0:17:54.560 I do think that the sort of aftermath of all 0:17:54.640 --> 0:17:58.479 this and maybe UM continued sort of collapse in certain 0:17:58.520 --> 0:18:01.840 sectors UH and the ability to go and restructure to 0:18:01.920 --> 0:18:04.159 try and allow folks to get back on their feet. 0:18:04.600 --> 0:18:06.840 Do you see any frothiness? I mean, as you say, 0:18:06.880 --> 0:18:09.880 the cost of capital is approaching zero's breaco matter, that's 0:18:09.920 --> 0:18:11.680 really great if you own an asset, if you want 0:18:11.680 --> 0:18:14.720 to buy an asset. Is there any sticker shock? There's 0:18:14.760 --> 0:18:18.000 no question valuations. And when I speak to my partners 0:18:18.040 --> 0:18:21.000 at Molis and Company who have been in the market's 0:18:21.040 --> 0:18:24.160 a lot longer than I have, and in these sectors 0:18:24.200 --> 0:18:27.280 that are surgeon um, you know, they do say, look, 0:18:27.359 --> 0:18:30.840 things are definitely very competitive in these deals out there. 0:18:31.080 --> 0:18:32.600 I think a lot of that has to do with 0:18:32.680 --> 0:18:36.720 the supply of capital. That they reduced costs of capital um. 0:18:36.800 --> 0:18:39.960 That's fueling the fact that money has got to go somewhere, 0:18:40.400 --> 0:18:43.240 and there's plenty of potential. I think that people see 0:18:43.520 --> 0:18:48.800 beyond just this pandemic you indicated earlier in the economy, 0:18:48.840 --> 0:18:52.840 the fact that vaccines, you know, are here, and I 0:18:52.920 --> 0:18:54.520 do think that light is going to be at the 0:18:54.600 --> 0:18:57.040 end of the tunnel. Let's hope that we can minimize 0:18:57.080 --> 0:19:00.240 the actual human casualty and focus on the act that 0:19:00.320 --> 0:19:03.159 we can see an economy going again, and hopefully the 0:19:03.200 --> 0:19:06.040 policymakers in Washington will be able to wrestle with this 0:19:06.119 --> 0:19:09.200 notion of getting some of those who have been laid 0:19:09.240 --> 0:19:12.280 off from work back into the workforce. I do think 0:19:12.320 --> 0:19:15.040 that that's gonna be a big challenge given the transformation 0:19:15.840 --> 0:19:19.520 that this pandemic has brought about economically. And finally, Eric, 0:19:19.520 --> 0:19:21.280 are you picking up in any concern in the c 0:19:21.440 --> 0:19:24.480 suite about what might happen with regulation or with taxation 0:19:24.760 --> 0:19:27.920 in a Biden administration with David, I think that's thought 0:19:28.000 --> 0:19:30.160 on and a lot of our conversations with our client 0:19:30.240 --> 0:19:32.120 have to do with the fact and what to expect 0:19:32.160 --> 0:19:35.320 in this next congress. Uh. Clearly there's been a side 0:19:35.359 --> 0:19:39.159 of relief on the taxation issue. Again, assuming the Republicans 0:19:39.200 --> 0:19:42.240 maintain control of the Senate, we'll see, I think, for 0:19:42.280 --> 0:19:44.560 the rest of the two years, no significant changes in 0:19:44.640 --> 0:19:47.760 taxes when most people expect them to go up. But 0:19:47.880 --> 0:19:51.200 there will be some regulatory actions undertaken by the Biden 0:19:51.200 --> 0:19:55.919 administration immediately, very analogous to those moves made by the 0:19:55.920 --> 0:20:01.280 Trump administration in seventeen the Obio administration nine, which basically 0:20:01.320 --> 0:20:04.919 will undo the prior administration's regulations. And we'll see a 0:20:05.000 --> 0:20:08.000 real shift left word in terms of things like the environment, 0:20:08.080 --> 0:20:13.440 the labor laws, financial institution oversight, and the rest. Very briefly, 0:20:13.600 --> 0:20:16.960 and do you have hopes for that that unicorn we've 0:20:16.960 --> 0:20:20.760 been searching for, which is of course infrastructure. Well, you know, 0:20:21.040 --> 0:20:25.280 I would hope that we could probably have some some 0:20:25.440 --> 0:20:29.040 effort to try and promote more public private partnerships because 0:20:29.040 --> 0:20:32.440 there's so much capital and sidelines waiting to invest in 0:20:32.440 --> 0:20:35.800 in some of the infrastructure that's needed just so desperately 0:20:35.840 --> 0:20:39.240 across our country. Again, I'll have to see whether there's 0:20:39.280 --> 0:20:42.040 going to be some agreement. Real questionnaire is whether the 0:20:42.080 --> 0:20:46.480 Congress will reinstate earmarks. If the Congress reinstates earmarks, I 0:20:46.520 --> 0:20:49.159 think that the potential for an infrastructure bill will go 0:20:49.240 --> 0:20:52.439 up pretty dramatically. That was Eric Cantor, vice chairman of 0:20:52.560 --> 0:20:55.080 Mullus in Company. Coming up, we wrap up the week 0:20:55.200 --> 0:20:58.200 as we always do, with our special contributor Larry Summers 0:20:58.200 --> 0:21:06.640 of Harvard. This is wal Free Week on Bloomberg. This 0:21:07.000 --> 0:21:11.480 is Bloomberg Wall Street Week with David Weston from Bloomberg Radio. 0:21:11.640 --> 0:21:13.760 We're gonna wrap up the week as we do every week, 0:21:13.800 --> 0:21:16.840 with our special contributor Larry Summers of Harvard. So, Larry, 0:21:16.960 --> 0:21:19.840 maybe the biggest story on Wall Street this week were 0:21:19.880 --> 0:21:22.080 these I p o S. We had door Dash first, 0:21:22.280 --> 0:21:24.879 then we have Airbnb come out. Airbnb ends up with 0:21:24.920 --> 0:21:28.520 a market kevil like a hundred billion dollars, just astronomical numbers. 0:21:28.680 --> 0:21:31.119 What is that telling us about our economy as well 0:21:31.160 --> 0:21:35.200 as our financial system. Look, the fact that we're creating 0:21:35.280 --> 0:21:40.160 these very valuable, terrific companies says something very special about 0:21:40.200 --> 0:21:46.480 American capitalism, and that's a strength. The process coveted shares 0:21:46.600 --> 0:21:50.479 of I p o S popping by seventy dollars to share, 0:21:51.000 --> 0:21:56.600 people getting rich very quick, flipping the stock. That's a travesty. 0:21:57.040 --> 0:21:59.960 That's why people don't like the morality of our financial 0:22:00.080 --> 0:22:05.119 services industry, and this kind of gilded age stuff in 0:22:05.160 --> 0:22:08.440 the midst of COVID. When children in our country are 0:22:08.480 --> 0:22:12.560 going hungry, when mothers aren't able to take care of 0:22:12.600 --> 0:22:17.720 their kids and support uh their families, this is a 0:22:17.760 --> 0:22:24.280 symptom of terrible excess. And I hope that those who 0:22:24.760 --> 0:22:29.600 support entrepreneurship will want to have a much better process 0:22:29.680 --> 0:22:35.199 than the process we have today. It's a very unseemly 0:22:35.240 --> 0:22:39.760 and ugly spectacle what we're watching, even if it is 0:22:39.880 --> 0:22:45.399 surrounding really impressive achievements in the form of companies like 0:22:45.480 --> 0:22:48.960 Airbnb and DoorDash. So so you make a really powerful point. 0:22:49.000 --> 0:22:51.320