Speaker 1: This is Bloomberg Wall Street Week.
Speaker 2: We may not have an overall recession, We're having a
Speaker 2: rolling recession. To KNYE, roll looks pretty strongly. It is
Speaker 2: when it comes to jobs, the financial stories that shape
Speaker 2: our world. Three major regional bank failures send shockwaves through
Speaker 2: the banking system. We're all trying to figure out what
Speaker 2: to make of generative AI.
Speaker 1: Through the eyes of the most influential voices.
Speaker 2: Welcome down, Doctor Paul Krugman, Ryan moynihan, Bank of America,
Speaker 2: deebro Laiir of the Paulson Institute, Welen Hubbard of the
Speaker 2: Columbia Business School.
Speaker 1: Bloomberg Wall Street Week with David Weston from Bloomberg Radio.
Speaker 2: Are we going forward backward or just marching in place?
Speaker 2: This is Bloomberg Wall Street Week. I'm David Weston. This
Speaker 2: week's special contributor Larry Summers On renewing his campaign with
Speaker 2: Bono on behalf of the world's poorest nations.
Speaker 3: This is a moment when show me the money.
Speaker 2: Marty schav has a Six Street Partners on what AI
Speaker 2: could mean for the world of finance.
Speaker 4: At some fundamental level, it's just math. This time it
Speaker 4: actually is different.
Speaker 2: And former President of Brown Ruth Simmons, I'm making sure
Speaker 2: we're giving our future workforce what they need to succeed.
Speaker 5: I believe firmly that corporations have to be along with
Speaker 5: the universities leading this struggle.
Speaker 2: It was a week of movement, but not always in
Speaker 2: the same direction, and sometimes not in any particular direction
Speaker 2: at all. ECV took a modest step forward in its
Speaker 2: battle with inflation by raising another twenty five basis points.
Speaker 6: The focus is probably going to move a bit more
Speaker 6: to the duration, but it is not to say, because
Speaker 6: we can't say that now that we are at peak.
Speaker 2: ARM took a big step forward as it went to
Speaker 2: market with it. You can't really run AI without ARM.
Speaker 2: The auto industry took a big step backward as the
Speaker 2: UAW failed to come to terms of Detroit Big three
Speaker 2: automakers and moved to strike.
Speaker 3: If we need to go all out, we will.
Speaker 7: Everything is on the table.
Speaker 5: From job security, we have jobs for all of our
Speaker 5: people as we make this transformation.
Speaker 2: The US economy more or less continue to march in place.
Speaker 2: As CPI numbers came in just about as expected, with
Speaker 2: inflation higher than the FED once but lower than some
Speaker 2: ad feared.
Speaker 8: The level of inflation that we're going to be forecasting
Speaker 8: for the year is well above what people forecast at
Speaker 8: the beginning.
Speaker 2: And maybe the biggest step of all this week, at
Speaker 2: least for New York football and for a future Hall
Speaker 2: of Famer, was the one Aaron Rodgers took on Monday
Speaker 2: Night's game against the Bills when he tore his achilles
Speaker 2: tendon and ended his season only three plays into his
Speaker 2: New York Jets career were all.
Speaker 5: His contract was about one hundred and twelve millions, so
Speaker 5: we even if you can't play like he's going to be.
Speaker 2: Okay in the end. The equity Americans took a step
Speaker 2: back this week, with the S and P five hundred
Speaker 2: giving up just under two tenths of percent, ending the
Speaker 2: week at forty four fifty. That is still nicely above
Speaker 2: where our Bloomberg Elves predicted will end up the year.
Speaker 2: The Nasdaq had a bit rougher time, down nearly four
Speaker 2: tenths of percent. For her views on what the market
Speaker 2: action told us about our investments, we welcome back now
Speaker 2: one of our Bloomberg Alves, Savina Supermania, and she's Blank
Speaker 2: of America's Securities, Head of US Equity and quantitative strategy.
Speaker 2: So Cee Vidiot, welcome. Great to have you here in
Speaker 2: the studio.
Speaker 9: To be here, and I love the moniker, I love
Speaker 9: having you.
Speaker 2: So give us your take on where we are right now.
Speaker 2: The actually was doing pretty well till Friday and then
Speaker 2: backed off some. But did we learn anything this week
Speaker 2: about exactly where we think we're headed?
Speaker 9: I think this week was well.
Speaker 10: This week was a week where we heard a lot
Speaker 10: of really negative headlines around put potentially sticky wage inflation,
Speaker 10: I mean, the the auto worker strike. We're seeing signs of,
Speaker 10: you know, kind of trends that we were expecting to
Speaker 10: mean revert very quickly remaining high. So our view is
Speaker 10: we're not necessarily out of the woods yet in terms
Speaker 10: of the FED controlling inflation, and we think that the
Speaker 10: the mistake to be made at this point is betting
Speaker 10: that the FED will start cutting aggressively next year. We
Speaker 10: we don't necessarilyssarily see that as a slam dunk, and
Speaker 10: that's what a lot of investors that we speak to
Speaker 10: are expecting. So there's this this theme around resumption to
Speaker 10: what happened over the last ten years, and our view
Speaker 10: is that we're at a break point where we may
Speaker 10: never see these low rates of the last ten years
Speaker 10: ever again. And in fact, I think it's important to
Speaker 10: remember that what we saw over the last ten years
Speaker 10: was an anomaly. Negative real rates are not the norm,
Speaker 10: they're the exception, and where we are now just feels
Speaker 10: a little bit more like firm footing.
Speaker 2: What does that tell you at equity valuation?
Speaker 10: So I feel like the SMP five hundred right now
Speaker 10: is kind of a tale of two cities, and there's
Speaker 10: you know, the benchmark isn't a broad market composite like
Speaker 10: it normally is. It's a top heavy benchmark where thirty
Speaker 10: percent of it roughly is made up of seven big
Speaker 10: companies that play this megacab tech growth theme, and that
Speaker 10: area of the market is relatively pricey. Perhaps that's where
Speaker 10: we will see the greatest growth over.
Speaker 9: The long term.
Speaker 10: But I think what has yet to happen as these
Speaker 10: companies need to recalibrate to an environment where the hurdle
Speaker 10: rate is no longer zero, it's a lot higher than zero.
Speaker 10: We just saw the FED move us from zero to
Speaker 10: five very quickly. I think that when you take the
Speaker 10: broader market index, you see a very different valuation story,
Speaker 10: a very different growth expectation story. And I feel really
Speaker 10: bullish about the equal weighted SMP five hundred because I
Speaker 10: think what a lot of companies are doing right now
Speaker 10: is smart. They've done the right things over the last
Speaker 10: ten years. They haven't necessarily taken on a lot of
Speaker 10: floating rate risk, They've paid down debt in many industries,
Speaker 10: energy industrials, materials, a lot of these manufacturing exposed sectors
Speaker 10: have been starved of capital and have gotten leader and
Speaker 10: meaner and now look like they're focused on efficiency, which
Speaker 10: I think is the best bowl case for the next
Speaker 10: ten years.
Speaker 9: And we can talk more about that.
Speaker 2: Well, does that suggest, perhaps, Sevita, that there will be
Speaker 2: some separation of the companies who can really get their
Speaker 2: head around increasing productivity, being more efficient, as you say,
Speaker 2: cutting costs, and ones that may have a tougher time
Speaker 2: at that because some people do that better than others.
Speaker 3: Yeah.
Speaker 10: Absolutely, it's a story of the haves and the have nots,
Speaker 10: who gets it right and who doesn't. And I think
Speaker 10: that's where fundamental analysis, which hasn't really.
Speaker 9: Mattered for a very long time.
Speaker 10: It feels like all you wanted to do is buy
Speaker 10: the rip, focus on the index, and now I think
Speaker 10: it's the time to get in the weeds into the fundamentals,
Speaker 10: and that's where you can figure out which CEOs and
Speaker 10: CTOs are figured out, how to use technology to replace
Speaker 10: more expensive workers, how to make markets more efficient. We're
Speaker 10: seeing this already in a lot of industries, like, for example, restaurants.
Speaker 10: Our analysts have been writing about how today's kitchen looks
Speaker 10: so different from the kitchen ten years ago in terms
Speaker 10: of automating and getting a lot more labor light, if
Speaker 10: you will.
Speaker 2: So that's automation. What about labor? I mean, we did
Speaker 2: have that UAW strike yees specific plants. Yes, we don't
Speaker 2: know where that's going exactly, but it's against a backdrop
Speaker 2: of larger pattern of labor unrest and demands for workers.
Speaker 2: Could that cut into some of those margins that maybe productivity.
Speaker 10: Would give you, Oh absolutely, I think that right now
Speaker 10: there is a tension between real inflation and financial asset inflation.
Speaker 10: And what we saw for the last you know, during
Speaker 10: post financial crisis, was this wonderful frictionless environment where there
Speaker 10: was barely any inflation to speak of. If something got
Speaker 10: expensive in the US, we could move it somewhere else,
Speaker 10: or we could import from anywhere we wanted to, and
Speaker 10: now we're in a very different setup. The disparity between
Speaker 10: the wealthy and and the.
Speaker 9: Poor has just grown larger.
Speaker 10: We all talk about this, but I think what we're
Speaker 10: seeing now is real evidence of closing that gap. So
Speaker 10: that's going to be bad for some corporations. And I
Speaker 10: think where it's going to get difficult is for companies
Speaker 10: that haven't been able to really think about how to navigate.
Speaker 9: A higher interest rate environment.
Speaker 10: And again, when I think about the indices within the market,
Speaker 10: the S and P five hundred is this top heavy benchmark,
Speaker 10: and then the Russell two thousand, which are smaller companies.
Speaker 10: A lot of the companies that are in the Russell
Speaker 10: today aren't necessarily these economically sensitive growth companies. It's a
Speaker 10: lot of these so called zombie companies that have you know,
Speaker 10: we're iPod in a much friendlier environment and are no
Speaker 10: longer able to handle this rising rate shock, if you will.
Speaker 2: So, Vita, taking a look at all of that analysis,
Speaker 2: what is it indicate to you about where we're going next?
Speaker 2: Is we look toward twenty twenty four. I mean, as
Speaker 2: one of our l's you're at forty three hundred, which
Speaker 2: is by the way, right at the median number right now, Oh,
Speaker 2: that's proverty good, probably right, But what can you tell
Speaker 2: us what where you think we may be headed as
Speaker 2: we go into twenty twenty four.
Speaker 10: Yeah, so, I mean I think that we're we're what
Speaker 10: we're facing right now is again a market that's likely
Speaker 10: to right size technology. I think that tech shrinks as
Speaker 10: a percentage of the S and P five hundred, and
Speaker 10: we see leadership broadened out to other old economy sectors
Speaker 10: that are actually using these new tools to.
Speaker 9: Get more efficient.
Speaker 10: Next year I think could be a good year for earnings.
Speaker 10: It could be a good year for nomenal growth. I
Speaker 10: think the trick is figuring out which companies are doing
Speaker 10: it right and which companies are are going to become
Speaker 10: you know, obsolete, and that's that's where the challenges remain.
Speaker 10: So it's really a stock pickers market. But I think
Speaker 10: that if you want to buy an index, the equal
Speaker 10: weighted SMP five hundred to me looks pretty interesting. These
Speaker 10: are companies that are relatively cheap. The trading value is
Speaker 10: I think something like fifteen times earnings, which is, you know,
Speaker 10: a relatively average valuation, not expensive, not cheap. And my
Speaker 10: sense is that we've all gotten used to just one
Speaker 10: sector and one theme driving equities, but we could be
Speaker 10: in an environment where the themes broaden out and we
Speaker 10: see different stories for different sectors.
Speaker 2: One last quick one, if I could, are we as
Speaker 2: divers about it as we think we are given going
Speaker 2: on in the INDIAXES.
Speaker 9: So this is where it gets interesting.
Speaker 10: I think that portfolio managers and active managers are in
Speaker 10: a tough spot because we've been in a market where
Speaker 10: seven stocks have been driving the index and they're almost
Speaker 10: forced to own these companies. We're now at a point
Speaker 10: where one out of ten active managers has more than
Speaker 10: forty percent of their portfolio in five companies, not diversified
Speaker 10: at all.
Speaker 2: Peter, thank you so much for being a CEVIA super
Speaker 2: nion of Bank of America. Coming up, we're told artificial
Speaker 2: intelligen will take over the world. What can we be
Speaker 2: for finans? We talked on Martyschow as a Six Street partners.
Speaker 1: This is Bloomberg Wall Street Week with David Weston from
Speaker 1: Bloomberg Radio.
Speaker 2: This is Wall Street Week. I'm David Weston. Generative AI
Speaker 2: may be here already, but we're told that we ain't
Speaker 2: seen nothing yet. That it will change much of our world,
Speaker 2: including potentially the world of finance. Here to give us
Speaker 2: a sneak peek of what that world might look like
Speaker 2: is Marty Schavez. He is a vice chairman of Six
Speaker 2: Street Partners. Marty, welcome back to Wall Street.
Speaker 4: Great to have you here, pleasure to be here. Thank you, David.
Speaker 2: And we're talking about changing the world. Start with the
Speaker 2: world of Six Street Partners. How is potentially AI changing
Speaker 2: your world?
Speaker 4: The first thing I noticed about AI is that all
Speaker 4: of our limited partners, our investors, and all of our
Speaker 4: portfolio companies to first approximation, want to understand it, and
Speaker 4: they're also looking to us to have some thoughts that
Speaker 4: are differentiated, not just to understand it, but to understand
Speaker 4: what to do about it and what to do with it.
Speaker 4: So there's a lot of conversations going on.
Speaker 2: So will help us a little bit as if we
Speaker 2: were one of your clients. Okay, give us a sense
Speaker 2: a little bit of understanding.
Speaker 4: Here.
Speaker 2: We hear a lot of things that are wonderful potentially
Speaker 2: about gender, some things that are pretty scary about it
Speaker 2: as well. What do you tell them about the upside potential?
Speaker 4: So I tend to be rather calm about it, maybe
Speaker 4: in part because I've been working on AI in one
Speaker 4: form or another for a long time. My PhD from
Speaker 4: a million years ago nineteen ninety one was on AI
Speaker 4: and an early iteration of AI when we didn't really
Speaker 4: get that far, and the techniques that have now become
Speaker 4: really valuable were techniques that actually was pretty skeptical about
Speaker 4: thirty years ago. But what happened is the computers got
Speaker 4: way faster, doubling about every eighteen months, and enough doubling
Speaker 4: between nineteen ninety one and now, and now you are
Speaker 4: seeing some amazing things. And so yet I would also say,
Speaker 4: at some fundamental level, it's just math. These neural networks
Speaker 4: are doing some really interesting math, but they're just doing
Speaker 4: some calculations. The calculations are letting us do pattern matching
Speaker 4: statistical recognition in an unprecedented way, and that is really powerful. So,
Speaker 4: having seen so many ups and downs of AI, I believe,
Speaker 4: and I think many people share this belief that this
Speaker 4: time it actually is different and you can see it.
Speaker 4: You can go to bard or chat GPT and ask
Speaker 4: it some questions and get some pretty amazing things coming back. Now,
Speaker 4: it's also got problems. There's the hallucinations that are much
Speaker 4: talked about, and so what are we going to do
Speaker 4: to ground those hallucinations? I think is one interesting topic.
Speaker 4: Another interesting topic is as the doubling continues, and I
Speaker 4: can tell you that every three months, I'm seeing something
Speaker 4: that's not more twice as interesting as what I saw
Speaker 4: three months before, but ten times more interesting. We are
Speaker 4: in some crazy exponential inflection point. So looking out into
Speaker 4: the future, we're starting to ask ourselves, when are these
Speaker 4: computers going to be as smart as we are. We
Speaker 4: don't think they're going to be conscious in any way,
Speaker 4: but they might be intelligent. They might be as intelligent,
Speaker 4: they might be more intelligent. What kind of things will
Speaker 4: happen once we can tell the AIS? Go read every
Speaker 4: book ever written, especially all the textbooks. If that can
Speaker 4: be done in a way that respects intellectual property. Go
Speaker 4: read all the textbooks and learn everything in them, and
Speaker 4: tell us everything that is implied by what's in them,
Speaker 4: and feed that back into the AI and train the
Speaker 4: next generation of yourself. As this sloop gets going, we
Speaker 4: can see the prospects for some really interesting things. It
Speaker 4: wouldn't surprise me if in a few years we can
Speaker 4: tell the computers, please invent a commercially effective nuclear fusion
Speaker 4: reactor that's safe, and they might just go and do it.
Speaker 4: And you can imagine the computers doing the same thing.
Speaker 4: For climate change, we're already seeing and they can talk
Speaker 4: about a company I'm working with, Recursion Pharmaceuticals. We're already
Speaker 4: seeing what the computers can do for really hard problems
Speaker 4: such as drug discovery. So there's no question in my
Speaker 4: mind that they're going to make a huge difference. There's
Speaker 4: also some concerns, and so delivering AI in a way
Speaker 4: that is bold and also responsible and safe and ethical
Speaker 4: is a huge area of concern.
Speaker 2: Put those two things together, the AI and its potential
Speaker 2: for good and potentially some risks as well. With the
Speaker 2: financial world. I mean, when you talk about, for example, hallucinations,
Speaker 2: that doesn't sound very good to me if that's part
Speaker 2: of what's running the financial systems.
Speaker 4: Right. So I started working on Wall Street in ninety three,
Speaker 4: and in ninety three, when people like me showed up
Speaker 4: on Wall Street, I often got asked, could you help
Speaker 4: me figure out how to print this document or turn
Speaker 4: my computer on and off? R What is this kind
Speaker 4: of quant math and software guy doing here? So it
Speaker 4: took a little while where we people like me, could
Speaker 4: find the problems that we could actually solve that would
Speaker 4: help us make better markets for our clients and manage
Speaker 4: our risk more effectively. That's something we've been working on
Speaker 4: for a very long time, bringing math to Wall Street.
Speaker 4: And so I've had an opportunity to see many iterations
Speaker 4: of this movie, of this movie. So initially one of
Speaker 4: the things I might work on would be, we've got
Speaker 4: a complicated book of risk. How do we hedge it?
Speaker 4: We've got thirty seconds to make a phone call and
Speaker 4: construct the first order hedge of the book. All right,
Speaker 4: so we do that lots of math and software. We
Speaker 4: want to do it reliably, don't want to make mistakes.
Speaker 4: We certainly don't want to hoose to me and get
Speaker 4: the wrong hedge and maybe make the risk position worse.
Speaker 4: And we got pretty good at that. But I remember
Speaker 4: thinking even then, Okay, so now we're calculating this hedge
Speaker 4: and the person next to me is calling the exchange
Speaker 4: and saying buy or sell that many futures. I remember thinking,
Speaker 4: even as a kid, well, we could do that part too,
Speaker 4: But it took a long time. Eventually we got there,
Speaker 4: especially in equities markets that were exchange traded where there
Speaker 4: was a lot of data, and we could close that loop.
Speaker 4: You could do some analysis, and then you could say
Speaker 4: this is the trade we should do, and then you
Speaker 4: could have the computers just do that trade. And at
Speaker 4: the time that began, there was a lot of concerns,
Speaker 4: how could that go wrong? What if the computer puts
Speaker 4: in the wrong trade? And then the whole loop got
Speaker 4: faster and faster, and computers were putting in orders with
Speaker 4: a latency of sub one millisecond, much faster than a
Speaker 4: trader could ever operate. And then we actually had some
Speaker 4: train wrecks. There was a company night Trading where the
Speaker 4: algos run amok and kept putting orders into the exchange
Speaker 4: that were at the wrong price, and so all the
Speaker 4: orders got taken out on the other side, and they
Speaker 4: eroded their capital in forty five minutes, and then they
Speaker 4: were bankrupt. So some things have gone horribly wrong we
Speaker 4: learned from those episodes. I'm in the camp that sees
Speaker 4: AI as essentially wonderful, but still more of the same,
Speaker 4: So more math, more analysis, things going faster and faster,
Speaker 4: and yet I think there are some principles that are
Speaker 4: stable in time. So here's one. I remember a town
Speaker 4: hall years ago where I was talking and I said,
Speaker 4: there's really three strategies that I see when it comes
Speaker 4: to computers. Number one is, you could be a person
Speaker 4: who tells the computers what to do. That's my strategy,
Speaker 4: and it's working pretty well for me, it's not for everybody.
Speaker 4: Number Two, you could collaborate effectively with the computers and
Speaker 4: the people who tell the computers what to do. And
Speaker 4: I recommend that to everybody. Everybody can embrace that strategy
Speaker 4: and use the computers to give yourself a force multiplier,
Speaker 4: leverage a superpower, and then go on and do more
Speaker 4: interesting things that the computers can't do. And you always worry, well,
Speaker 4: maybe we won't be needed at all and the computers
Speaker 4: will take over. I've never seen that happen. The third strategy,
Speaker 4: which I have also seen, is stand in the way
Speaker 4: of progress. See if, in the name of your job security,
Speaker 4: you can stop the computers, and that is really dumb,
Speaker 4: and don't do that, and some people do do that.
Speaker 4: I think that that advice applies today. I think everybody
Speaker 4: needs to be looking at computers and generative AI and
Speaker 4: thinking how can I use this to be more productive.
Speaker 2: Mario, It's such a treat you have here on Wall Street.
Speaker 2: We thank you so much. As Marie Chavez of Six
Speaker 2: Street Partners coming up. Is a college degree still a
Speaker 2: ticket to a better life? And if so, what can
Speaker 2: we do to make sure everyone has a shot at
Speaker 2: that ticket? We asked Ruth Simmons, former president of Brown University.
Speaker 5: I want those elite institutions to stop it, to stop
Speaker 5: saying we are so much better.
Speaker 2: This is Wall Street Week on Bloomberg.
Speaker 1: This is Bloomberg Wall Street Week with David Weston from
Speaker 1: Bloomberg Radio.
Speaker 2: A college diploma. The GI Bill sent soldiers returning from
Speaker 2: World War Two off to get their degrees, and ever
Speaker 2: since that higher education has been seen as the ticket
Speaker 2: to a better life in the United States, helping not
Speaker 2: just those getting the opportunity, but driving the economic force
Speaker 2: of the United States as well.
Speaker 11: There's not an of college educated white men to drive
Speaker 11: the economy in the next thirty or forty years as demographics,
Speaker 11: so you need blacks to start businesses, you need Latinos
Speaker 11: and women to be part of the economy.
Speaker 2: But over time, the cost of going to college has skyrocketed,
Speaker 2: putting increased pressure on the system to make sure young
Speaker 2: people can get there.
Speaker 12: We've got to find a way to break the back
Speaker 12: of the education system and make it more accessible, cheaper,
Speaker 12: get more people into college, get higher graduation rates. That's
Speaker 12: I think a societal thing that we have to face them.
Speaker 12: It's going to be very critical in the next ten years.
Speaker 2: And once in college that they can find the resources
Speaker 2: they need to stay there.
Speaker 13: People that are going to college today still have to
Speaker 13: pay significant amount of tuition and they're going to need financing.
Speaker 13: So far is one of the companies that can provide that,
Speaker 13: But there's a number of companies in the ecosystem that
Speaker 13: haven't been able to withstand what's happened over the last
Speaker 13: three years, and they've dropped out in helping people pay
Speaker 13: for their college or refinance the.
Speaker 2: College, creating what Ray MacGuire of Lizard calls a pipeline
Speaker 2: of talent, a pipeline as diverse as the nation it's
Speaker 2: being prepared to lead.
Speaker 14: You have to make sure that we have a robust pipeline.
Speaker 14: That pipeline needs to have sponsorship, That pipeline needs to
Speaker 14: be trained, it needs to be encouraged, and it also
Speaker 14: needs to have visible examples of people who look like
Speaker 14: the pipeline, so that it gives a pipeline some confidence
Speaker 14: that they too can get there.
Speaker 2: All of which feeds the American dream of enlisting all
Speaker 2: the talent we have for the benefit of us.
Speaker 15: All I benefited from living in a country that believed
Speaker 15: in my potential, and even though I was a poor
Speaker 15: kid living in a rural community, America cheered me on.
Speaker 15: This country wanted me to win and succeed, and that
Speaker 15: manifest in the ways in which all of this made
Speaker 15: it possible for me to get on the mobility escalator
Speaker 15: and write it as far as I could, and my
Speaker 15: talent would bring.
Speaker 2: Me and here to take us through the state of
Speaker 2: higher education. Today, we welcome to somebody who really knows
Speaker 2: it backwards and forwards. She's Ruth Set. She has served
Speaker 2: as president of Smith, She's served as president of Brown
Speaker 2: University and then as president of Prairie A and M.
Speaker 2: Thank you so much for being with thous welcome roofs.
Speaker 2: Thank you for having me a lot of debate right
Speaker 2: now about the value of college education. There was a
Speaker 2: time that was indispensable to really move forward and move
Speaker 2: up in this country. Is it as important today as
Speaker 2: it was a generation ago.
Speaker 5: It's far more important today than it was when I
Speaker 5: started out. When you think about the complexity of the world,
Speaker 5: when you think about the mirriad things that people have
Speaker 5: to absorb from an intellectual standpoint, when you think about
Speaker 5: the difficulty of making a happy, fulfilling life, Oh my goodness,
Speaker 5: do we ever need a higher education?
Speaker 2: So it raises in my mind is the question, how
Speaker 2: do we make sure that the people who can benefit
Speaker 2: from that, the talent that we have in this country,
Speaker 2: get the education because it's gotten harder, it's gotten more
Speaker 2: expensive and more difficult, particularly for people who are not
Speaker 2: from privileged backgrounds.
Speaker 5: My own view, and I've espoused this for many, many years,
Speaker 5: is that we've become too segmented in higher education in
Speaker 5: this country. And that is to say, there are eleit
Speaker 5: institutions that pull themselves up as being so much better,
Speaker 5: so much more privileged than other institutions. There are the
Speaker 5: haves and have nots. And furthermore, we've pulled apart significantly
Speaker 5: because the rich have gotten extraordinarily richer and the poorer
Speaker 5: have stayed poor or gotten much worse. But here's the thing,
Speaker 5: and I so want in my book for people to
Speaker 5: understand this, and that is I had the education that
Speaker 5: I could get. I grew up at segnated country. I
Speaker 5: grew up when we didn't have access as African Americans
Speaker 5: to the quality of education that whites had. And I
Speaker 5: went to a black college that was still a wonderful
Speaker 5: experience for me and beneficial for me. And I was
Speaker 5: able to take that and go to Harvard to graduate
Speaker 5: school and then make my way in the world. So
Speaker 5: what I advocate is that people use every avenue for education,
Speaker 5: and community colleges are a good place to start. So
Speaker 5: are state colleges that have a teaching mission. You don't
Speaker 5: have to go to a research university. You may want
Speaker 5: to do that, but it isn't necessary at all. But
Speaker 5: more than anything, I want those elite institutions to stop it,
Speaker 5: to stop saying we are so much better. And if
Speaker 5: you don't come to Brown and if you don't come
Speaker 5: to Harvard, well, og, you're not going to be successful
Speaker 5: in life.
Speaker 4: It's just not true.
Speaker 2: You grew up in a segregated environment. Yes, a very
Speaker 2: different environment, I hope, than what we really have today.
Speaker 2: Your book, you write, I believe about actually being with
Speaker 2: white students for the first time in Mexico. He went
Speaker 2: to Mexico to study Spanish.
Speaker 5: Yes, isn't that odd?
Speaker 2: You mentioned the exactly what a story, But you mentioned
Speaker 2: the importance of teachers. What about your classmates? Does it
Speaker 2: make a difference in your experience now to have a
Speaker 2: diverse group of students around you, not just teachers who
Speaker 2: believe in you.
Speaker 5: Of course it does, and it doesn't know where you are.
Speaker 4: You can be in a tribal college.
Speaker 5: Or a minority serving institution or an HBCU. You need
Speaker 5: to have experiences with people of all backgrounds. So let
Speaker 5: me tell you this story. If I May, I was
Speaker 5: did an exchange program with Wellesley when I was a junior,
Speaker 5: and I was taking an ancient philosophy class. And in
Speaker 5: the middle of this class, the question turned to apartheid,
Speaker 5: which was still going on in South Africa, and so
Speaker 5: we started a conversation, and of course everybody in the
Speaker 5: classroom decried the situation in South Africa. But there was
Speaker 5: one girl who raised her hand and who spoke up
Speaker 5: to say that she wanted to defend apartheid. She was
Speaker 5: South African and she talked about her life as a
Speaker 5: white South African. Of course, she didn't convince me that
Speaker 5: apartheid was a just system. But when I heard her.
Speaker 4: Speak, I have never forgotten this girl.
Speaker 5: I wish I could find her, because I cannot remember
Speaker 5: a single other student in that class. But I remember
Speaker 5: her and I remember the lesson she taught me, which is,
Speaker 5: whenever you have an opportunity to hear different points of.
Speaker 4: View, even if you don't agree with them, you.
Speaker 5: Learn something from it. And I think she set me
Speaker 5: on a course in my studies that I never would
Speaker 5: have had without that encounter.
Speaker 2: So finally, this is Bloomberg, this is Wall Street. We
Speaker 2: speak to people in places of leadership in the financial
Speaker 2: world and incorporations. What can those leaders in the financial
Speaker 2: and business world do to make sure that we have
Speaker 2: all the talent that we need that we can develop
Speaker 2: wherever they come from, whatever their origin, really on the team,
Speaker 2: as it were, helping move our economy forward.
Speaker 5: Well, I certainly believe that universities have a special role
Speaker 5: to play, but I believe firmly that corporations have to
Speaker 5: be along with universities, leading this struggle to make sure
Speaker 5: that we're tapping into the talent and ability of all
Speaker 5: segments of the US population.
Speaker 4: Imagine that we have.
Speaker 5: A country so rich in diversity and so rich in
Speaker 5: talent in all these areas, and we're not availing ourselves
Speaker 5: of that. That doesn't make any sense. It's illogical. So
Speaker 5: you know, as you may know, I've been on a
Speaker 5: number of corporate boards and in the in the boardroom,
Speaker 5: I'm often advocating for inclusion of executives from different perspectives,
Speaker 5: including women, because it adds immeasurably to the corporation's understanding
Speaker 5: of their customers, understanding what the opportunities will be for
Speaker 5: them as a business going forward. So no CEOs need
Speaker 5: to be playing a very visible role in this, and
Speaker 5: I've been very fortunate in the last few years to
Speaker 5: see many CEOs step into this space and say no,
Speaker 5: I'm going to lead in this space because it's important
Speaker 5: for the country.
Speaker 2: Doctor Simmons, thank you so much for spending time with us.
Speaker 2: As Ruth Simmons, she's the author of Uphome, a Girl's
Speaker 2: Journey coming up. They did it once? Can they repeat
Speaker 2: their performance? Likely duo of YouTube's Bono and Larry Summers
Speaker 2: take on relief for the world's poorest countries once again.
Speaker 16: We need to take a flow of capital to the
Speaker 16: global South.
Speaker 2: That's next on Wall Street Week on Bloomberg.
Speaker 1: This is Bloomberg Wall Street Week with David Weston from
Speaker 1: Bloomberg Radio.
Speaker 2: Here to put in perspective what a major auto strike
Speaker 2: can mean is Bloomberg's International Economics and Policy correspondent Michael McKee.
Speaker 17: For the automakers and their employees, this may be as
Speaker 17: existential a labor conflict as we've seen since the days
Speaker 17: of Roger Smith. Gm Ford and Stilantis have made big
Speaker 17: profits in recent years, and union members now want a
Speaker 17: piece of those, given the concessions they made in two
Speaker 17: thousand and eight to keep the automakers alive. Both sides
Speaker 17: also want to set the work rules for the new
Speaker 17: World electronic vehicles. That's why an lists say this could
Speaker 17: be a long strike. We don't know who will win
Speaker 17: the faceof but we can make a pretty educated guess
Speaker 17: as to who loses equity investors. History shows auto strikes
Speaker 17: don't have a big impact on the macroeconomy. This walkout
Speaker 17: could effect up to one hundred forty six thousand workers,
Speaker 17: which would represent only about one percent of manufacturing employment.
Speaker 17: Go back to nineteen ninety eight when the numbers were similar.
Speaker 17: Twelve seven hundred workers are picketing today, then it was
Speaker 17: nine thousand, two hundred at two plants in Flint, Michigan.
Speaker 17: Their walkout shut down GM production nationwide, putting two hundred
Speaker 17: thousand in total out of work for fifty four days.
Speaker 17: You can see the dramatic impact on the auto industry
Speaker 17: production numbers and employment in the third quarter of nineteen
Speaker 17: ninety eight, but you can't see it in the GDP numbers.
Speaker 17: The losses were made up in the ensuing months, but
Speaker 17: there can be a big ripple effect in the markets.
Speaker 17: The nineteen ninety eight stri I cost GM two point
Speaker 17: three billion dollars in profits, and of course the stock plunged.
Speaker 17: Shares of parts makers like paid producer H. B. Fuller
Speaker 17: also fell, as did steelmakers, but the impact was felt
Speaker 17: far beyond the rust belt. The New York Times saw
Speaker 17: revenue fall as auto advertising dried up. A lot of
Speaker 17: the impact today will, of course depend on how many
Speaker 17: end up off the job and for how long. Given
Speaker 17: this strike is for the first time against all of
Speaker 17: the Big Three. At the same time, there is reason
Speaker 17: for investors to be concerned.
Speaker 2: David finally, one more thought, getting the band back together.
Speaker 2: That's what you two lead singer Bonow has proposed with
Speaker 2: our special contributor Larry Summers. It turns out that they
Speaker 2: worked together back when Larry was President Clinton's Secretary of
Speaker 2: the Treasury, and Bonou got a meeting with him to
Speaker 2: talk about relieving the debt of the poorest countries around
Speaker 2: the world.
Speaker 8: Bono is an unlikely but very close friend. I will
Speaker 8: confess it. I'd never heard of him before war. We
Speaker 8: had our meeting.
Speaker 2: And so we turned to Larry Summers this week for
Speaker 2: our one more thought.
Speaker 8: Twenty three years ago, at the time of the Millennium,
Speaker 8: Bno and I got together because at that time Africa's
Speaker 8: economic prospects and poorest countries outside of Africa looked very
Speaker 8: dim because of the debt burdens.
Speaker 3: Today, the problems are much graver than they were.
Speaker 4: Then.
Speaker 3: The great news is that we have.
Speaker 8: Staggering capacities with technology to address these problems of a
Speaker 8: kind we could not have imagined a decade ago.
Speaker 7: We couldn't have imagined that a vaccine could be created
Speaker 7: in a year against a new disease. We could not
Speaker 7: imagine that in many parts of the country's electricity was
Speaker 7: going to be cheaper in the world solar electricity was
Speaker 7: going to be cheaper than coal electricity. But if these
Speaker 7: technologies are going to find application, we.
Speaker 16: Need to take the flow of capital to the global South,
Speaker 16: to developing countries up by a dimensional factor, not just
Speaker 16: in an incremental way.
Speaker 3: But this is a moment when show me the money,
Speaker 3: when we need to move