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Speaker 1: Who you put your trust in matters. Investors have put

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Speaker 1: their trust and independent registered investment advisors to the two

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Speaker 1: and four trillion dollars. Why learn more at find your

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Speaker 1: Independent Advisor dot com. Welcome to the Bloomberg Surveillance Podcast.

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Speaker 1: I'm Tom Keene with David Gura. Daily we bring you

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Speaker 1: insight from the best in economics, finance, investment, and international relations.

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Speaker 1: Find Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg dot com, and

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Speaker 1: of course, on the Bloomberg Abbey Joseph Cohen Senior investment

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Speaker 1: Strategists at Goldman Sachs, But that barely describes her commitment

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Speaker 1: to the education of those within the investment community, or

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Speaker 1: work at the cf A Institute, her work for years

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Speaker 1: with Goldman Sacks, of course, with David Costan following on

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Speaker 1: with the day to day going what's the difference, Abbey,

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Speaker 1: between what you do and what David Coustan does every

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Speaker 1: day at Golden Sex, I spend most of my time

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Speaker 1: thinking about the intermediate to long term outlook. David and

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Speaker 1: many of my other colleagues at Goldman Sachs really focus

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Speaker 1: in shorter term because we're trying to be helpful to

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Speaker 1: our clients, and many of our clients do need that

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Speaker 1: regular hourly daily update. I try to step away and

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Speaker 1: work with our longer term horizon clients, including individuals, endowments,

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Speaker 1: sovereign wealth funds, and so on. Many people looking into

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Speaker 1: two thousand seventeen are huge Abbey Joseph Cohen fans, and

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Speaker 1: those are like, well, she's always bullish and you and

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Speaker 1: I know that's not true, but the idea of approvable

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Speaker 1: for starters. You look brilliant this year, I think you

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Speaker 1: look brilliant last year, you look brilliant in the seven

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Speaker 1: or eight year bullmarker. Just as a general statement, can

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Speaker 1: you be brilliant and be the permeable for next year

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Speaker 1: or is there more caution? I think it's going to

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Speaker 1: be more difficult in two thousand and seventeen because there

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Speaker 1: are so many unknowns. Two thousand and sixteen turned out

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Speaker 1: to be a good year for the economy, and that

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Speaker 1: was the basis for being optimistic about the equity market

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Speaker 1: in two thousand sixteen. Economy, growing profits, increasing labor markets,

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Speaker 1: stabilizing wages beginning to rise. That's a great combination for

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Speaker 1: the equity market. In two thousand seventeen, base will be good.

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Speaker 1: The real question surrounds policy a new administration, and quite frankly,

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Speaker 1: there are so many unknowns that we will be adjusting

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Speaker 1: views as the year goes on based upon changes in policy,

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Speaker 1: like the idea of a flexible two thousand seventeen. And

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Speaker 1: will discuss Mr Trump here uh in a bit. Help

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Speaker 1: me here with a chart I've been using a lot,

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Speaker 1: which is the Ibbotson chart Roger Ibbotson and Yale University,

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Speaker 1: a chart that goes back to the depression. I call

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Speaker 1: it the Guadalcanal low of ninety one. Maybe the Carter

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Speaker 1: Malay's completely miss uh attached to President Carter, which is

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Speaker 1: maybe unfair to him. And then there's this great bull

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Speaker 1: market again placed in historic perspective, the bullmarket we've lived

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Speaker 1: since early two thousand nine. We have actually had two

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Speaker 1: bull markets. One of course, has been the equity bull

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Speaker 1: market that began in earnest in the springtime of two

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Speaker 1: thousand and nine, after the financial crisis was calming down.

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Speaker 1: We began to see a very significant rise in equity

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Speaker 1: prices by most counts of tripling of those prices. But

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Speaker 1: we've also had a multi decade bull market in bonds,

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Speaker 1: and I think that that bull market in bonds is

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Speaker 1: now over, and so much of what investors need to

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Speaker 1: think about, business people and so on. What are the

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Speaker 1: implications of having hit the bottom of inflation, having hit

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Speaker 1: the bottom of interest rates, and how do we adjust

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Speaker 1: for that? This is critical known. This is where you

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Speaker 1: can really add value. I think of the the idea

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Speaker 1: that I say, equities, bonds, currencies, commodities. There's that relationship

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Speaker 1: between equities and bonds. Let's suggest it was broken in

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Speaker 1: the great distortion. Are we back to our equities and

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Speaker 1: bonds are in sync, like they were saying Frank Fobose's textbook.

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Speaker 1: Not yet. When we apply our valuation models to fixed income,

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Speaker 1: what we find is that despite the rise in yields

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Speaker 1: since the election, those yields are probably still too low.

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Speaker 1: You and I have witnessed any number of bond bear markets.

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Speaker 1: Remember the old days of the standard course bluebook and

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Speaker 1: your your grandfather showed you Boise Cascade bonds with a

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Speaker 1: four percent coupon. Those days are gone. But what is

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Speaker 1: unchanged is everybody goes yield yield yield yield, yield, yields

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Speaker 1: go up, price goes down, and all of a sudden

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Speaker 1: it's price, price price on bonds. Are we anywhere near

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Speaker 1: the definition of a bond bear market where people see

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Speaker 1: significant price erosion. I believe that has already begun, and

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Speaker 1: we've certainly seen that in treasuries and other high quality bonds,

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Speaker 1: where we have seen more price decline than we've seen

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Speaker 1: in things like corporate bonds, because corporate bonds had a

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Speaker 1: margin built in if you will um So we are

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Speaker 1: seeing yield spreads coming narrower, and I do think it's

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Speaker 1: going to be a problem for fixed income. But one

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Speaker 1: other point, we are at an unusual stage right now

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Speaker 1: where the yield on stocks in many cases exceeds the

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Speaker 1: yield on bonds, and typically this has been an extremely

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Speaker 1: bullish long term valuation metric. I know you're optimistic about

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Speaker 1: the markets. I know you're optimistic that we will move forward,

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Speaker 1: But are we going to move forward for America? Or

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Speaker 1: can we begin to shift the inequalities as Laguard mentioned

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Speaker 1: here at a Bloomberg Can we shift our Genie coefficient? Cyclically?

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Speaker 1: We're much better now than we were two years ago,

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Speaker 1: four years ago, eight years ago. Job creation is their

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Speaker 1: wages arising. Structurally, we haven't really done the job. We're

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Speaker 1: not investing more in education, either K through twelve or

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Speaker 1: vocational training, and we see that the likelihood that a

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Speaker 1: young man is going to finish college is actually lower

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Speaker 1: today than it would have been fifteen years. Clearly, when

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Speaker 1: you look at the employment data, the family income data,

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Speaker 1: people who are well educated, people who live in urban areas,

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Speaker 1: by and large have done far better. So the question

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Speaker 1: for us in two thousand and seventeen is what will

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Speaker 1: the policy direction be um. Will the policies be favorable

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Speaker 1: towards middle income people, including perhaps increases in the minimum wage?

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Speaker 1: Will it include protections for workers, both workers safety and

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Speaker 1: other things. I want to jump ahead here to a

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Speaker 1: new FED chairman in this massive battle to come over

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Speaker 1: rules and discretion. John B. Taylor, Stanford University, Alan Greenspan

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Speaker 1: on the other side, talking about discretion, Where are you

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Speaker 1: on rules and discretion and the efficacy of that strategy

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Speaker 1: for any given central bank? The word that I think

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Speaker 1: is most critical here, Tom is FED independence. I think

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Speaker 1: that to look ahead to two thousand seventeen, one of

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Speaker 1: the big political football's may prove to be the independence

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Speaker 1: of the FED, which I think must be sacrosanct in

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Speaker 1: this country now when we talk about something like the

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Speaker 1: tailor rule and so on. I think it's a good

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Speaker 1: starting point. The FED obviously uses many different mathematical models

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Speaker 1: to try to determine where they want to be, where

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Speaker 1: they think interest rates will be. But the tail a

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Speaker 1: ruled by itself, is just one tool, in my view.

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Speaker 1: In the larger toolbag, are the checks and balances within

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Speaker 1: the Washington system to give us William mc McChesney Martin's

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Speaker 1: miracle of n one, you served in a very independent FED,

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Speaker 1: relatively independent FED twenty five years on from mc chesney Martin,

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Speaker 1: we want to drive that for it. Everyone agrees with you,

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Speaker 1: we want an independent FED. Are the checks and balances

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Speaker 1: there to push back the mood of so many to

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Speaker 1: support the president? I think it is important that it

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Speaker 1: be not just the President, but also the Congress that

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Speaker 1: acknowledge that the FED should be independent. You know, when

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Speaker 1: the Federal Reserve Chair comes and gives testimony before Congress,

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Speaker 1: it's important that that be an open dialogue rather than

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Speaker 1: the chair being berated for things that may or may

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Speaker 1: not come under FED control. You ask piercing questions. The

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Speaker 1: Economic Club of New York this year and is always,

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Speaker 1: and there was the emotion of Vice Chairman Fisher coining

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Speaker 1: that phrase ultra accommodative. As we go into two thousand seventeen,

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Speaker 1: not so much. How many of the parlor game? How

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Speaker 1: many rate rises will we need? How distant are we

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Speaker 1: from neutral or even, heaven forbid, how distant are we

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Speaker 1: from a restrictive FED. I think we still have quite

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Speaker 1: a ways to go before we have restrictive monetary policy.

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Speaker 1: Keep in mind that the United States, in our view,

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Speaker 1: will be moving forward with policy rate increases. But what

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Speaker 1: we've already seen is that the intermediate long yields that

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Speaker 1: get controlled by market participants have already moved higher. The

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Speaker 1: yield curve has already steepened. It's an indication that investors

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Speaker 1: are looking not just at demand for these funds, but

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Speaker 1: also in terms of the inflation outlook and so on.

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Speaker 1: When we talk about ultra accommodative, the story isn't really

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Speaker 1: the FED, It's really the European Central Bank, the b

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Speaker 1: o J and others that continue to follow negative interest rates.

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Speaker 1: Is you know, so well, the idea and working with

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Speaker 1: the CFA Institute and just simply the day to day

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Speaker 1: grind of golden Sex. There's nothing like the manufacture of

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Speaker 1: a chart to intuitively understand those times series. There's something

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Speaker 1: about a pencil or a Bloomberg terminal. The fact as

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Speaker 1: you put the chart together it works for me. It

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Speaker 1: was balance sheet of a given fed to g d P.

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Speaker 1: Japan is out of control with the expansion of their

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Speaker 1: balance sheet. But the real surprises Europe in the e

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Speaker 1: c B tell me about the pressures on MR dragging

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Speaker 1: next year to right size his e c B. MR

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Speaker 1: DRO has a problem that we see in terms of

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Speaker 1: other central banks as well, and that is fiscal policy

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Speaker 1: has been asleep and it has been largely inactive from

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Speaker 1: most of the period since the financial crisis. We've seen

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Speaker 1: more stimulus in the United States two thousand nine two

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Speaker 1: thousand ten. Then was the case elsewhere, especially in Europe,

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Speaker 1: where they had the constraints that were very considerable in

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Speaker 1: terms of deficit relative to g d P. So when

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Speaker 1: we talk about MR DRO, we talk about other central banks.

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Speaker 1: Let's not do it in a vacuum. Let's recognize that

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Speaker 1: we have asked central banks around the world to do

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Speaker 1: way too much, and that's because fiscal policy largely has

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Speaker 1: been absent. In two thousand seventeen, the E c B

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Speaker 1: is going to be looking not just an interest rate policy,

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Speaker 1: but also in terms of their approach to q E

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Speaker 1: quantitative ease, And what Mr drog has said most recently

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Speaker 1: is that he doesn't plan to taper any time soon.

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Speaker 1: But what we have to keep in mind is that

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Speaker 1: this is not a long term opportunity. Our questionnaire and

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Speaker 1: this goes back to your work with the cf A Institute,

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Speaker 1: the late Peter Bernstein's work with the cf A Institute,

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Speaker 1: armor conversations with with Folks Landolf, Deutsche Bank, and his

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Speaker 1: work with Duly Focus, Landau and Garber all the other

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Speaker 1: research that pulls in history. What is the fragility of

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Speaker 1: the European financial experiment in the next year, What is

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Speaker 1: your measurement of how Europe gets to two thousand and

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Speaker 1: eighteen or even gets to two thousand nineteen. We have

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Speaker 1: to recognize that Europe is facing notable structural impediments to growth.

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Speaker 1: If we take a look at the potential growth rate

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Speaker 1: of most European economies, take the average, it's just about

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Speaker 1: one percent. Is that eurosclerosis? That that is eurosclerosis that

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Speaker 1: has been in place for several decades. We see an

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Speaker 1: extremely low birth rate. If you don't have labor force growth,

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Speaker 1: you don't have economic growth. We see productivity gains that

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Speaker 1: have been anemic. And so when we take a look

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Speaker 1: at Europe, they really are struggling very hard against their

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Speaker 1: structural problems. Monetary policy doesn't address structural issues. Fisk policy does,

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Speaker 1: regulatory policy, trade policies not monetary Sure, I get this

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Speaker 1: in for this important year and show if we get

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Speaker 1: the rate rise, you're talking about the reflation that is

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Speaker 1: assumed quickly here rates rise in Japan, and yet that's

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Speaker 1: been the multidecade fear, hasn't it. Where's the tipping point

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Speaker 1: for Japan? The tipping point for Japan has shifted, and interestingly,

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Speaker 1: it's because they've been trying desperately to get inflation up.

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Speaker 1: When we talk about rates, we often talk about nominal

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Speaker 1: interest rates. We don't adjust for inflation. One of the

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Speaker 1: big problems in Japan has been ongoing deflation. As prices

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Speaker 1: begin to move somewhat higher in Japan, they can tolerate

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Speaker 1: higher interest rates. And we think that in Japan we're

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Speaker 1: seeing benefits not just from monetary policy, but from what's

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Speaker 1: referred to as abonomics. Who you put your trust in

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Speaker 1: matters investors have put their trust in independent registered investment

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Speaker 1: advisors to the two and of four trillion dollars. Why

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Speaker 1: they see their roles to serve, not sell. That's why

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Speaker 1: Charles Schwab is committed to the success over seven thousand

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Speaker 1: independent financial advisors who passionately dedicate themselves to helping people

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Speaker 1: achieve their financial goals. Learn more and find your independent

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Speaker 1: advisor dot com. Christine Leaguard, with their new tenure at

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Speaker 1: the International Monetary Fund, really addresses women within finance, within investment,

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Speaker 1: and frankly within our world economy. That's a good topic

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Speaker 1: to speak to. Abby Joseph coming about Golden Sex senior

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Speaker 1: investment strategists, and I go back. I mean, I think

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Speaker 1: if your tenure of the FED years ago, what was

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Speaker 1: your first day like a Drexel Burnham Lambert. It was

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Speaker 1: actually wonderful, Tom, because I was hired by the director

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Speaker 1: of Research who during the recruitment process specifically said to me,

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Speaker 1: I have three daughters and I want to make sure

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Speaker 1: that women Attrectel have every opportunity to succeed. We see

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Speaker 1: it on Wall Street, whether it's it's Madame mcguard or frankly,

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Speaker 1: Madam Joseph Cohen. I think of Sally crawl Check and

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Speaker 1: how she did with an executive management firms with the

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Speaker 1: serious chops of securities analysis. My perception of it is

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Speaker 1: women not so much work harder, but work smarter towards

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Speaker 1: that marginal effort to gain on Wall Street. Where are

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Speaker 1: we within the investment firms right now? Are the women

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Speaker 1: out doing the men well? I have to disagree with you, Tom,

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Speaker 1: I do think women work harder. UM. I think women

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Speaker 1: work harder. They're often better prepared. And what we basically

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Speaker 1: find is that women are succeeding most in categories that

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Speaker 1: are easily measured. So whether it's investment, reserve, your portfolio management,

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Speaker 1: where there are numbers that can measure performance, we see

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Speaker 1: that women are doing quite well. One of the concerns

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Speaker 1: we have had has been that we lost a whole

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Speaker 1: cadre of people post financial crisis. So many of the

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Speaker 1: young people male and female, who came to Wall Street

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Speaker 1: UM in the period preceding lost their jobs or decided

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Speaker 1: to leave the industry, and so we're missing some of

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Speaker 1: those people who should now be moving into important middle

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Speaker 1: management positions. How do you respond, and this is of

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Speaker 1: course with your first rate effort at Cornell University and

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Speaker 1: your full disclosure your work with Cornell afterwards. How do

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Speaker 1: you respond to the lecture you give to parents who

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Speaker 1: have picked up the zeitgeist of two thousand seventeen STEMS, STEMS, STEMS,

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Speaker 1: STEMS STEM. My experience is that doesn't work. It works,

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Speaker 1: but you've got to have the broader education as well.

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Speaker 1: When you lecture at Goldman Sex to the interns, to

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Speaker 1: the new employees, what do you say on that. I

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Speaker 1: think I'd be saying the same thing you are, Tom,

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Speaker 1: and that is STEMS should not be viewed, first of all,

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Speaker 1: as an independent area. This economy will move forward when

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Speaker 1: STEM gets incorporated into the things that we do. So,

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Speaker 1: for example, about a third of the workforce at Goldman

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Speaker 1: Sachs are people who are technologists. UM, and I believe

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Speaker 1: that in almost any field right now, people who have

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Speaker 1: the background in math, who understand what computers can do

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Speaker 1: and so on, really have an advantage. But that's not all.

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Speaker 1: One of the things I really do worry about is

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Speaker 1: the way we have devalued liberal arts. UM. Think of

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Speaker 1: liberal arts as literature, history, learning to think in different ways.

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Speaker 1: So we need the analytical skill of STEM. But we

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Speaker 1: also need the more qualitative approach that can move out

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Speaker 1: of a paradigm more easily from liberal arts. And what

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Speaker 1: you have done within your work for decades is to

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Speaker 1: pull history into our finance analysis. Nobody does that anyway.

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Speaker 1: It's important to understand the nuances and distinctions of nineteen

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Speaker 1: o seven versus nine nine versus ninety seven and on.

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Speaker 1: I see it coming back. I'm optimistic about a new history.

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Speaker 1: I think you are correct, but let's be careful how

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Speaker 1: we describe this. With the power of the data systems

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Speaker 1: that we have, including the Bloomberg terminals on our desks,

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Speaker 1: all of our people experienced and the younger people can say, ah,

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Speaker 1: look what happened in two but what's often missing is

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Speaker 1: the understanding of why it happened. And sometimes the data

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Speaker 1: alone don't tell the full story. So to your point,

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Speaker 1: it's the understanding of political economy, not just quantitative economics,

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Speaker 1: that I think will make a big difference. One of

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Speaker 1: the lessons quickly that I learned from is when you

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Speaker 1: see people advance. I've always followed people's careers. It's given

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Speaker 1: me confidence as well. Ruth Poor at working at an

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Speaker 1: the evil empire known as Morgan Stanley. She goes out

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Speaker 1: to Google and transform I believe transforms Google. I mean

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Speaker 1: there's an example of somebody going for a woman, going

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Speaker 1: across the industry and having profound effect. Yes, and Ruth

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Speaker 1: is also somebody who was involved in the community. Both

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Speaker 1: you and I are engaged with Economic Club of New York,

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Speaker 1: which is an important place, an important forum for conversation

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Speaker 1: about economics, conversation about the economy and business in history

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Speaker 1: and looking forward. And Ruth served as vice chair of

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Speaker 1: that organization. I want to talk to Abby Joseph Cohen

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Speaker 1: about where this nation is going in for that matter,

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Speaker 1: folding the world economy as well. Abby Joseph Cohen on

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Speaker 1: American exceptionalism the book last year Robert Gordon, Northwestern University.

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Speaker 1: We did it in the twentieth century, Maybe we're not

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Speaker 1: going to do it now. I had a wonderful conversation

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Speaker 1: with Professor Gordon. Were re nuanced that discussion. Are we

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Speaker 1: reliving the glory days from a previous time? We haven't

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Speaker 1: been keeping up our end of the bar again. In

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Speaker 1: my view, the glory days had to do with a

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Speaker 1: dramatic increase in educational attainment, not just for the elite

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Speaker 1: of the nation, but for everyone. There were also substantial

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Speaker 1: investments made not just by corporations but also by the

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Speaker 1: federal government. During those glory days nineteen fifties nineteen sixties,

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Speaker 1: four and a half percent of US g d P

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Speaker 1: was in the form of R and D, a good

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Speaker 1: deal of that coming from the federal government. We're now

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Speaker 1: down to two and a half percent, which puts US

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Speaker 1: in the middle of the O E C D pack

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Speaker 1: instead of being far out front as we are. At

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Speaker 1: the middle of the pack. Is not exceptionalism, not not

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Speaker 1: at all, particularly since we could be doing much better

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Speaker 1: within Within This is the idea of jump starting us

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Speaker 1: to something new. Where does it come from? Does it

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Speaker 1: come from government, government policy? Does it come from crisis?

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Speaker 1: What we have to understand is that crisis in the

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Speaker 1: United Dates often pushes us in the right direction, not

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Speaker 1: just in terms of the corporate response, but also the

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Speaker 1: government response. And one of the things that has been disappointing,

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Speaker 1: I think, has been that as a nation we have

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Speaker 1: not made the investments in the future that we have

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Speaker 1: seen in the past. Infrastructure spending, of course, is something

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Speaker 1: that has bipartisan support. Would it have been better to

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Speaker 1: have done it during the worst part of the financial crisis, Yes,

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Speaker 1: when unemployment was higher, but that's not a reason not

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Speaker 1: to do it now. What we have to recognize, though,

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Speaker 1: is that some of the discussions about infrastructure are talking

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Speaker 1: about it being privately financed, and that's not what long

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Speaker 1: term public investment is about the government. When we go

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Speaker 1: back and we look at centuries of analysis, the government

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Speaker 1: contributes most spending on things where there is no profit motive,

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Speaker 1: those really big projects where there may not be a

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Speaker 1: revenue at the end of the day. Whether it was

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Speaker 1: Eisenhower's highway system, whether it was the space program, and

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Speaker 1: so on. That's how the United States establishes itself. Help

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Speaker 1: me with the dollar. We haven't talked about the U. S. Dollar.

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Speaker 1: I think of Barry Keen Green at Berkeley University is wonderful,

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Speaker 1: small book, important book a few years ago. Exorbitant privilege.

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Speaker 1: That's our exorbitant privilege, and it is part of American exceptionalism.

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Speaker 1: Whether the dollar as the standard bearer for the global

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Speaker 1: economy two thousand seventeen and onward, are we really at risk?

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Speaker 1: I don't buy Joseph Night doesn't buy it. I know

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Speaker 1: that the United States dollar um is the world's reserve

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Speaker 1: currency and will remain the dollar the world's reserve currency.

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Speaker 1: But let's keep in mind that China has already stepped

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Speaker 1: up to become an increasingly important regional reserve currency in Asia.

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Speaker 1: A few years back, of all trade in Asia was

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Speaker 1: done in the form of dollars, though the United States

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Speaker 1: was only ten percent of that trade. China has moved in.

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Speaker 1: But let's keep in mind the following. Over the last

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Speaker 1: three years, the trade weighted dollar has risen about twenty

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Speaker 1: five or While we feel good that it says something

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Speaker 1: about the US being strong, it also is an impediment

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Speaker 1: to economic growth. Single fastest growing sector of the US

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Speaker 1: economy has been exports for the last decade, but with

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Speaker 1: our cost up, that makes it much more difficult for

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Speaker 1: exports to grow and help me then, with the dollar

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Speaker 1: dynamics and this concept of American exceptionalism or a good capitalism,

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Speaker 1: if you will, in what we've just witnessed in the

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Speaker 1: campaign tpp down in flames both both candidates, and the

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Speaker 1: idea of a new isolation is zero sum, neo mercantile America.

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Speaker 1: Is that a genuine fear for every Joseph going It

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Speaker 1: is a concern for me, and history would bear out

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Speaker 1: that those sorts of utles don't work except in the

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Speaker 1: very short term intermediate to long term. They harm not

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Speaker 1: just the country imposing those policies, but it tends to

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Speaker 1: hurt world trade as well, particularly for such a large

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Speaker 1: economy like that of the United States. Do we have

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Speaker 1: a fear that China or someone else for that matter,

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Speaker 1: takes the vacuum of our not isolationism, but just our

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Speaker 1: reticence to move abroad? Now? Is there a fear that

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Speaker 1: China comes right in and takes our place? I think

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Speaker 1: we're already seeing the signs that China is very anxious

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Speaker 1: to become even more important on the world stage, both

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Speaker 1: economically and politically. Uh and we see it most clearly

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Speaker 1: among their specific trade partners in Asia, but also in

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Speaker 1: Latin America. Keep in mind that t p P was

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Speaker 1: designed to help Pacific rim trade partners in the Americas

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Speaker 1: in Asia, but did not include China, and the idea

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Speaker 1: was to create a trade alliance among nations that did

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Speaker 1: not include China. I want to sum up here, and

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Speaker 1: you mentioned this, and I've heard Mr blank find mentioned

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Speaker 1: this before about Golden Sacks as a technology company. I

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Speaker 1: think of what Jeff Immolts doing with the Internet over

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Speaker 1: general electric One of the hallmark moments of December was

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Speaker 1: a passing of John Glenn. You and I both grew

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Speaker 1: up in space families, if you will. I was up

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Speaker 1: in Rochester with East Kodak, and you were wrapped around

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Speaker 1: the grumming people of Long Island. Here was the icon

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Speaker 1: of a generation, truly, and it meant fearless innovation testing.

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Speaker 1: And I mean this with immense respect for all risks taken.

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Speaker 1: Have we lost the risk, the fear to take the

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Speaker 1: risk as a nation? I fear as a nation we

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Speaker 1: have lost a great deal of that. Consider, for example,

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Speaker 1: that many of the large expenses by the government going

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Speaker 1: back to the early portion of the nineteenth century had

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Speaker 1: to do with funding research that may or may not

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Speaker 1: pan out, the basic research and so on. We don't

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Speaker 1: do that in the same we used to. We're not

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Speaker 1: willing to fail. It's a great way to express it,

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Speaker 1: because it's only the government that can fund that sort

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Speaker 1: of thing. When I say government, I'm referring to government everywhere,

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Speaker 1: not just the US government. And so by not providing

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Speaker 1: that basic research, not providing the capital, and by the way,

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Speaker 1: not providing sufficient encouragement for our young people to become

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Speaker 1: scientists and to really explore the facts and the data

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Speaker 1: out there in the natural world. We put ourselves at

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Speaker 1: an enormous disadvantage. My book of the year is Ken

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Speaker 1: The Curse of Cash. It is a wildly courageous book.

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Speaker 1: He's been roundly criticized for it. India, with their own

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Speaker 1: experiment and Professor Roof has been critical of how India

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Speaker 1: has tactically imposed this reduction of cash and I know

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Speaker 1: it folds into negative interests in that Abby Joseph Cole

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Speaker 1: on our future with cash? Are we going to be

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Speaker 1: a cashless society? UM, not anytime soon. What we're seeing

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Speaker 1: is a reluctance on the part of many people to

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Speaker 1: give up their cash. And one of the issues now

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Speaker 1: is not the theory behind going cash less. It is

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Speaker 1: the reality of cyber security. People's worry about loss of

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Speaker 1: their information, whether it's financial or other personal information. UM

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Speaker 1: And I think that while we have seen reduction in

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Speaker 1: the use of currency in the United States, um our currency,

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Speaker 1: our large nominations are used heavily in places like Russia.

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Speaker 1: I I look at all of this in the mixture

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Speaker 1: of international relations of finance, investment in economics, and I

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Speaker 1: guess I have to come back to one of the

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Speaker 1: clarion moments of last year. I was deeply moved standing

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Speaker 1: on the streets the morning after in the evening of

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Speaker 1: June in London. It was maybe my emotion of the

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Speaker 1: year was Brexit in the shock of London over what

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Speaker 1: has occurred. When when you look talk to your team

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Speaker 1: at Golden Sacks, so you do your own thinking what

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Speaker 1: Prime Minister may will do in two thousand and seventeen,

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Speaker 1: what is your view on how the United Kingdom will

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Speaker 1: relate to Europe and to America. Here too, we don't

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Speaker 1: quite know what will happen. The British government has not

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Speaker 1: yet made the decisions about how to move forward under

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Speaker 1: Rule fifty uh and so on. But let's talk a

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Speaker 1: little bit about what led to that Brexit vote um

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Speaker 1: and what we have seen in the UK, which is

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Speaker 1: very similar to the pattern here on November eight. Is

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Speaker 1: a very big difference by region within the country and

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Speaker 1: also rural versus urban, or in this case in in

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Speaker 1: Brexit urban successful urban versus not such successful. Kingdom absolutely

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Speaker 1: and and so places that voted very heavily to leave

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Speaker 1: the European Union tend to be those areas where there's

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Speaker 1: been a big loss of industrial jobs, even though in

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Speaker 1: those regions, uh the individuals are big beneficiaries of transfer

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Speaker 1: payments from the EU. Think of the contrast to the

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Speaker 1: United States, where many of the counties in the US

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Speaker 1: that are economically depressed, people are looking for a change,

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Speaker 1: They're looking for a different approach. Many of these areas

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Speaker 1: are also beneficiaries of notable transfer payments from our federal government.

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Speaker 1: So one question is, have people voted against their self

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Speaker 1: interest number one and number two in the UK and

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Speaker 1: the US alike? What will the new policies look like?

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Speaker 1: Will the new governments be able to provide those middle

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Speaker 1: income and lower middle income families who are feeling enormous

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Speaker 1: economic pressure? Will they be able to relieve that pressure

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Speaker 1: in a positive way? Eighteen Maybe you and I'll with

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Speaker 1: us next year as well. This has been really special, Abbey,

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Speaker 1: Joseph Colin, thank you so much. Thanks for listening to

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Speaker 1: the Bloomberg Surveillance podcast. Subscribe and listen to interviews on iTunes, SoundCloud,

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00:30:18,280 --> 00:30:22,480
Speaker 1: or whichever podcast platform you prefer. I'm out on Twitter

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00:30:22,640 --> 00:30:26,400
Speaker 1: at Tom Keene. David Gura is at David Gura Before

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00:30:26,440 --> 00:30:30,800
Speaker 1: the podcast. You can always catch us worldwide. I'm Bloomberg Radio.

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00:30:43,240 --> 00:30:45,840
Speaker 1: Who you put your trust in matters. Investors have put

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00:30:45,920 --> 00:30:50,240
Speaker 1: their trust and independent registered investment advisors to the two

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Speaker 1: and four trillion dollars. Why Learn more at find your

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Speaker 1: Independent Advisor dot com