1 00:00:00,240 --> 00:00:05,000 Speaker 1: This is Bloomberg Wall Street Week. Market shruggle, higher consumer prizes. 2 00:00:05,040 --> 00:00:07,400 Speaker 1: The economy is in the process of rebounding. Will the 3 00:00:07,400 --> 00:00:10,479 Speaker 1: futteral reserve have its own digital currency? The financial stories 4 00:00:10,520 --> 00:00:12,879 Speaker 1: that cheap hard work. Many people think the eels are 5 00:00:12,880 --> 00:00:15,080 Speaker 1: just going to keep marching up. We have more spending 6 00:00:15,120 --> 00:00:17,200 Speaker 1: coming out of Congress. One of the big questions I 7 00:00:17,200 --> 00:00:19,880 Speaker 1: think on investor's minds inflation through the eyes of the 8 00:00:19,880 --> 00:00:23,560 Speaker 1: most influential voices. Larry Summer is the former Treasury Secretary 9 00:00:23,640 --> 00:00:27,240 Speaker 1: Bryan Whan, a backup America, Will Smart CEO Charlie Sharp, 10 00:00:27,360 --> 00:00:31,560 Speaker 1: Bloomberg wool Street Week with David Weston from Bloomberg Radio, 11 00:00:34,000 --> 00:00:38,400 Speaker 1: rethinking where we are on rates, on oil, on banker's pay, 12 00:00:38,560 --> 00:00:42,400 Speaker 1: and on the Biden administration. This is Bloomberg Wall Street Week. 13 00:00:42,600 --> 00:00:46,040 Speaker 1: I'm David Weston. It was a week for taking stock 14 00:00:46,360 --> 00:00:49,600 Speaker 1: as President Biden tried to reset his agenda after a 15 00:00:49,720 --> 00:00:52,720 Speaker 1: year in the job. But I'm not going to give 16 00:00:52,840 --> 00:00:55,880 Speaker 1: up and accept things as they are now. I call 17 00:00:55,960 --> 00:01:00,280 Speaker 1: it a job not yet finished. And it did it 18 00:01:00,520 --> 00:01:02,760 Speaker 1: that he wasn't going to get all of that build 19 00:01:02,800 --> 00:01:05,720 Speaker 1: back better package, at least not all in one piece. 20 00:01:06,280 --> 00:01:09,440 Speaker 1: I think we can break the package up, get as 21 00:01:09,520 --> 00:01:11,400 Speaker 1: much as we can now and come back and fight 22 00:01:11,440 --> 00:01:13,720 Speaker 1: for the rest of lator. All markets took stock of 23 00:01:13,800 --> 00:01:16,240 Speaker 1: where they are to, sending the price of Brent crude 24 00:01:16,319 --> 00:01:18,680 Speaker 1: up over eighty nine dollars a barrel at one point, 25 00:01:18,959 --> 00:01:21,240 Speaker 1: with talk of it maybe going to one hundred dollars 26 00:01:21,280 --> 00:01:25,840 Speaker 1: of barrel. Here's amrita send from energy aspects. I think 27 00:01:25,840 --> 00:01:28,240 Speaker 1: the fact that demand is so strong and refining margins 28 00:01:28,280 --> 00:01:32,080 Speaker 1: in particular are still very, very robust despite the crewe 29 00:01:32,080 --> 00:01:35,040 Speaker 1: galley we've seen, is a very promising sign. But when 30 00:01:35,040 --> 00:01:37,920 Speaker 1: it comes to taking a fresh look, equities led the way, 31 00:01:37,959 --> 00:01:40,640 Speaker 1: suffering the worst week since the pandemic royal the market, 32 00:01:40,959 --> 00:01:43,480 Speaker 1: with tech shares leading the way down, help by uneven 33 00:01:43,480 --> 00:01:46,160 Speaker 1: earnings and the anticipation of higher rates, with the SMP 34 00:01:46,240 --> 00:01:48,200 Speaker 1: down five points six percent for the week and the 35 00:01:48,320 --> 00:01:52,320 Speaker 1: NASDAC down another seven percent, putting the index into correction territory. 36 00:01:52,680 --> 00:01:54,640 Speaker 1: For all the talk about rate hikes, the ten year 37 00:01:54,680 --> 00:01:57,440 Speaker 1: bond yield actually went down to basis points to one 38 00:01:57,480 --> 00:02:00,760 Speaker 1: point seven six while the dollar climbed nearly four tenths 39 00:02:00,800 --> 00:02:03,560 Speaker 1: of a percent. Help sort out a very vulnerable week. 40 00:02:03,680 --> 00:02:06,760 Speaker 1: We welcome now Sarah Ketder, she's CEO of Causeway Capital, 41 00:02:07,040 --> 00:02:10,639 Speaker 1: and liz Ant Sanders, she's chief investment strategist at charl Schwab. 42 00:02:10,720 --> 00:02:13,040 Speaker 1: So as a strategist, we've got to turn to you first, Lisi, 43 00:02:13,080 --> 00:02:15,640 Speaker 1: on what is going on here with the markets, is 44 00:02:15,680 --> 00:02:18,920 Speaker 1: that the rates anticipation is that the earnings isn't something else. 45 00:02:19,160 --> 00:02:21,720 Speaker 1: So there may be a little bit of a tie 46 00:02:21,800 --> 00:02:25,000 Speaker 1: into earnings just in terms of the companies that haven't 47 00:02:25,200 --> 00:02:28,040 Speaker 1: beaten expectations have gotten hit a little bit more. But 48 00:02:28,120 --> 00:02:30,200 Speaker 1: I think there are bigger picture issues here. It's the 49 00:02:30,639 --> 00:02:34,200 Speaker 1: combination of the FED having moved from very loose policy 50 00:02:34,280 --> 00:02:38,239 Speaker 1: to tighter monetary policy, whether or not that what they 51 00:02:38,360 --> 00:02:42,200 Speaker 1: will start to do with rate hikes ending tapering and 52 00:02:42,200 --> 00:02:45,640 Speaker 1: then potentially moving to QT is the elixir for what 53 00:02:45,680 --> 00:02:48,040 Speaker 1: ails us in terms of the inflation problem, which in 54 00:02:48,120 --> 00:02:51,280 Speaker 1: turn is putting downward pressure on growth. And I just 55 00:02:51,320 --> 00:02:54,080 Speaker 1: think you have a rerating going on, and certainly a 56 00:02:54,080 --> 00:02:57,360 Speaker 1: bit of a excuse the term puking of some of 57 00:02:57,400 --> 00:03:01,440 Speaker 1: the higher spec lower quality segments of the market. So, Sarah, 58 00:03:01,600 --> 00:03:04,080 Speaker 1: a puking a technical term I hadn't heard before. But 59 00:03:04,080 --> 00:03:06,440 Speaker 1: but but what are you saying as an investor, what 60 00:03:06,800 --> 00:03:08,640 Speaker 1: are you seeing there? What are the opportunities? What are 61 00:03:08,639 --> 00:03:10,560 Speaker 1: the real risks out there in the market place right now? Well, 62 00:03:10,560 --> 00:03:13,880 Speaker 1: the market is certainly rewarding certain areas such as energy 63 00:03:14,000 --> 00:03:21,560 Speaker 1: and financials, banks, insurance stocks, but it's and value indices 64 00:03:21,560 --> 00:03:24,360 Speaker 1: are outperforming growth by wide margin. And this is just 65 00:03:24,400 --> 00:03:27,639 Speaker 1: three weeks into the year. But if you look beneath 66 00:03:27,680 --> 00:03:32,519 Speaker 1: that that as lizanner, that, they're definitely pain associated with 67 00:03:32,680 --> 00:03:37,119 Speaker 1: the extremely high valuation stocks, but not all the very 68 00:03:37,200 --> 00:03:41,400 Speaker 1: low valuation stocks are doing well. Again, the market seem 69 00:03:41,480 --> 00:03:47,160 Speaker 1: to rewarding those associated with rising commodities and the financials. 70 00:03:47,400 --> 00:03:49,120 Speaker 1: Maybe the value of dias are pulling up some of 71 00:03:49,160 --> 00:03:53,480 Speaker 1: the financials. They have some I think serious headwinds, But 72 00:03:54,200 --> 00:03:56,760 Speaker 1: the area that might have the greatest amount of upside 73 00:03:56,920 --> 00:03:59,760 Speaker 1: as the market begins to discern the winners and losers 74 00:03:59,760 --> 00:04:02,800 Speaker 1: in is as we moved towards post pandemic will be 75 00:04:02,800 --> 00:04:06,160 Speaker 1: those who are most badly affected by COVID And there's 76 00:04:06,200 --> 00:04:10,520 Speaker 1: a whole range of those stocks that have outperformed thus 77 00:04:10,520 --> 00:04:14,000 Speaker 1: far should continue to do so as the year progressed. Yeah, 78 00:04:14,200 --> 00:04:16,720 Speaker 1: and David, I think what Sarah said is absolutely right 79 00:04:16,760 --> 00:04:18,560 Speaker 1: with regard to sort of the push and poll of 80 00:04:18,640 --> 00:04:21,640 Speaker 1: energy and financials, and then the relationship that that has 81 00:04:21,680 --> 00:04:24,839 Speaker 1: with the value indexes. But what's also interesting, it's a 82 00:04:24,839 --> 00:04:27,560 Speaker 1: lot of times when people talk about growth versus value 83 00:04:27,560 --> 00:04:29,719 Speaker 1: and value doing well, they're thinking about it at the 84 00:04:29,720 --> 00:04:33,840 Speaker 1: index level. But even in a sector like technology over 85 00:04:33,880 --> 00:04:38,360 Speaker 1: the past few months, those stocks within tech that screen 86 00:04:38,400 --> 00:04:43,479 Speaker 1: well on value characteristics like free cash flow yield, dividend 87 00:04:43,560 --> 00:04:46,839 Speaker 1: yield are the ones that are outperforming, whereas the stocks 88 00:04:46,880 --> 00:04:50,400 Speaker 1: within tech that have negative earnings are the ones getting hammered. 89 00:04:50,400 --> 00:04:54,160 Speaker 1: So even within call it growthier segments of the market, 90 00:04:54,480 --> 00:04:57,400 Speaker 1: of the value oriented stocks are the ones that are 91 00:04:57,400 --> 00:05:00,400 Speaker 1: doing better. Yeah, we even see this within semicon actors. 92 00:05:00,440 --> 00:05:04,800 Speaker 1: You can see an incredibly expensive semi vector stock like 93 00:05:04,839 --> 00:05:10,239 Speaker 1: an Nvidio under form of maybe a less expensive stock 94 00:05:10,880 --> 00:05:15,279 Speaker 1: in memory. So the distinction is happening right before us, 95 00:05:15,360 --> 00:05:19,080 Speaker 1: and it's a it's a reason to be grounded portfolio 96 00:05:19,200 --> 00:05:23,919 Speaker 1: wise in reasonably value, higher quality companies. Listen, as far 97 00:05:23,960 --> 00:05:25,599 Speaker 1: as there's uncertain of market right now, are we going 98 00:05:25,680 --> 00:05:27,200 Speaker 1: to get some help from the Fed? Next week? We're 99 00:05:27,240 --> 00:05:30,359 Speaker 1: gonna get another FMC ruling, So it'll be an interesting meeting. 100 00:05:30,360 --> 00:05:34,400 Speaker 1: I don't expect anything um particularly formal in terms of 101 00:05:34,440 --> 00:05:35,920 Speaker 1: what they're going to do. They're not going to start 102 00:05:35,920 --> 00:05:38,240 Speaker 1: to raise interest rates. Maybe in the statement they give 103 00:05:38,240 --> 00:05:41,360 Speaker 1: a little bit more color about tapering, but there's no 104 00:05:41,440 --> 00:05:44,479 Speaker 1: question that during the press conference, I'm sure John Powell 105 00:05:44,600 --> 00:05:48,480 Speaker 1: is going to be peppered with questions about the span 106 00:05:48,560 --> 00:05:52,320 Speaker 1: of time between papering and QT, whether or not they're 107 00:05:52,320 --> 00:05:55,240 Speaker 1: going to have to act with a faster pace, or 108 00:05:55,400 --> 00:05:57,760 Speaker 1: a lot of chatter today. Might they have to do 109 00:05:57,880 --> 00:06:01,840 Speaker 1: fifty basis points in the early stages versus only twenty five. 110 00:06:02,000 --> 00:06:04,640 Speaker 1: So I don't expect much of any of that to 111 00:06:04,680 --> 00:06:07,080 Speaker 1: be in the statement. But given that every f o 112 00:06:07,200 --> 00:06:10,320 Speaker 1: MC meeting has a press conference, those these days I 113 00:06:10,360 --> 00:06:13,120 Speaker 1: think are even more interesting than when we first here 114 00:06:13,160 --> 00:06:15,640 Speaker 1: at two o'clock Eastern. And what we can't it's so 115 00:06:15,760 --> 00:06:18,520 Speaker 1: interesting that the said, nor can the Bank of England 116 00:06:18,640 --> 00:06:21,600 Speaker 1: or the European Central Bank. They can't ignore what's right 117 00:06:21,600 --> 00:06:25,760 Speaker 1: in front of their face, which is inexorable wage increases 118 00:06:25,880 --> 00:06:28,800 Speaker 1: that every company we talked to and companies we don't 119 00:06:28,839 --> 00:06:33,480 Speaker 1: talk to, we just read transcripts, they are facing wage inflation, 120 00:06:33,560 --> 00:06:36,599 Speaker 1: and wage inflation that gets more so wage rises get 121 00:06:36,640 --> 00:06:41,000 Speaker 1: more wage rises, which is what makes inflation somewhat difficult 122 00:06:41,000 --> 00:06:44,960 Speaker 1: to eradicate. So central banks may very well be behind 123 00:06:45,320 --> 00:06:47,880 Speaker 1: the ball here. Thank you so very much to liz 124 00:06:47,880 --> 00:06:50,560 Speaker 1: An Sanders of Charles Schwab and Sarah Kettter of Causeway 125 00:06:50,600 --> 00:06:54,440 Speaker 1: Capital Management. Coming up, Bank of America Chair and CEO 126 00:06:54,600 --> 00:06:57,440 Speaker 1: on the future of digital banking. That's next on Wall 127 00:06:57,440 --> 00:07:06,120 Speaker 1: Street Week on gloom Work. This is Bloomberg Wall Street 128 00:07:06,160 --> 00:07:09,960 Speaker 1: Week with David Weston from Bloomberg Radio. The move into 129 00:07:10,000 --> 00:07:12,480 Speaker 1: digital was a big part of the earnings announcements of 130 00:07:12,520 --> 00:07:15,960 Speaker 1: the big banks this season, with projections of large investments 131 00:07:16,240 --> 00:07:19,880 Speaker 1: dampening profit expectations in the near term. Bank of America 132 00:07:20,040 --> 00:07:23,240 Speaker 1: Chair and CEO Brian moynihan has made digital priority for 133 00:07:23,480 --> 00:07:26,640 Speaker 1: years now and he's not backing off, seeing it as 134 00:07:26,680 --> 00:07:30,600 Speaker 1: a major component of the bank's future and the broadest strokes. 135 00:07:30,840 --> 00:07:33,280 Speaker 1: We are a high touch, high tech company, so digital 136 00:07:33,360 --> 00:07:35,560 Speaker 1: is part of the strategy, but it has to be 137 00:07:35,560 --> 00:07:38,239 Speaker 1: incorporated with our relationship manage of businesses think the private 138 00:07:38,280 --> 00:07:41,800 Speaker 1: bank or MARYL, or the commercial bank or UH, the 139 00:07:42,000 --> 00:07:45,160 Speaker 1: trading businesses. So and also our branches three or four 140 00:07:45,320 --> 00:07:47,120 Speaker 1: D thousand people coming to our branches, so it's a 141 00:07:47,120 --> 00:07:50,720 Speaker 1: combined strategy. But why digital is so important, it's from 142 00:07:50,720 --> 00:07:55,080 Speaker 1: the customer interface. It's from the how employees can work together, 143 00:07:55,400 --> 00:07:58,280 Speaker 1: and then how the customers can receive the uh, the 144 00:07:58,320 --> 00:08:01,120 Speaker 1: goods and services, how they by them, how they interact 145 00:08:01,160 --> 00:08:03,840 Speaker 1: with So it makes us tremendously efficient and a great 146 00:08:03,880 --> 00:08:06,400 Speaker 1: client experience, which is a pretty good thing. There's a 147 00:08:06,400 --> 00:08:08,520 Speaker 1: lot of talk right now, but particularly the big banks 148 00:08:08,560 --> 00:08:11,120 Speaker 1: investing in digital. I know you've been investing for some time. 149 00:08:11,160 --> 00:08:13,520 Speaker 1: I think your numbers around three point five billion dollars 150 00:08:13,560 --> 00:08:15,640 Speaker 1: a year is as steady as you go. Do you 151 00:08:15,640 --> 00:08:18,600 Speaker 1: expect that to continue into the future or ramp up? Well, 152 00:08:18,920 --> 00:08:20,960 Speaker 1: it's always changing as to what we spend it on. 153 00:08:21,000 --> 00:08:22,920 Speaker 1: It's a gross amount of money, which is a pretty 154 00:08:22,920 --> 00:08:25,480 Speaker 1: good sized amount of money. So when people talk about 155 00:08:25,480 --> 00:08:27,280 Speaker 1: three and a half billion for us, that means literally 156 00:08:27,280 --> 00:08:30,400 Speaker 1: incremental new products and services and new capabilities. So it's 157 00:08:30,440 --> 00:08:32,559 Speaker 1: a lot of money to run the platforms another ten 158 00:08:32,600 --> 00:08:35,080 Speaker 1: or twelve billion dollars. It just goes on every day. 159 00:08:35,160 --> 00:08:38,240 Speaker 1: But what are we investing in greater capabilities? So Erica 160 00:08:39,080 --> 00:08:42,080 Speaker 1: to our consumer clients, you know, is huge, but we 161 00:08:42,120 --> 00:08:44,680 Speaker 1: can keep increasing the functionality. So year every year, we 162 00:08:44,720 --> 00:08:47,920 Speaker 1: had a fourfold increase in the fourth quarter of twenty 163 00:08:48,559 --> 00:08:51,880 Speaker 1: one people using Erica, not because Erica it had a 164 00:08:51,880 --> 00:08:54,120 Speaker 1: growth in customers, but really came from people using it 165 00:08:54,200 --> 00:08:58,400 Speaker 1: more and more or Zel getting it more easily accessible 166 00:08:58,440 --> 00:09:00,680 Speaker 1: through a widget it's called. Those are the types of 167 00:09:00,720 --> 00:09:03,520 Speaker 1: things we're doing it in. On the institutional side, cash pro, 168 00:09:03,640 --> 00:09:07,800 Speaker 1: which is the way companies move money, more engagements by customers. 169 00:09:08,160 --> 00:09:10,400 Speaker 1: They can see everything in a in a portal type 170 00:09:10,400 --> 00:09:13,160 Speaker 1: app as opposed to a bunch of different systems. These 171 00:09:13,160 --> 00:09:16,280 Speaker 1: are just core executions we drive through the platform. I 172 00:09:16,320 --> 00:09:20,560 Speaker 1: believe you passed a road mark this actually quarter in 173 00:09:20,920 --> 00:09:24,320 Speaker 1: Zell actually having more transactions than you're checking accounts? Do 174 00:09:24,480 --> 00:09:27,040 Speaker 1: I believe? I read that? If true, give us a 175 00:09:27,080 --> 00:09:29,679 Speaker 1: sense of overall in your business. Will that continue to progress? 176 00:09:29,679 --> 00:09:32,480 Speaker 1: I mean, at some point does digital eat the entire bank? Well, 177 00:09:32,640 --> 00:09:35,400 Speaker 1: so what happened with Zell is we keep track of 178 00:09:35,520 --> 00:09:38,680 Speaker 1: the checks written by our customers. So, uh, you're sitting 179 00:09:38,679 --> 00:09:40,760 Speaker 1: down and writing a checkout and handing putting in the 180 00:09:40,840 --> 00:09:42,400 Speaker 1: mail to pay a bill or to hand it to 181 00:09:42,440 --> 00:09:45,439 Speaker 1: somebody that's down of the last couple of years, and 182 00:09:45,520 --> 00:09:48,080 Speaker 1: Zel has been growing fifty percent a year, so the 183 00:09:48,160 --> 00:09:51,600 Speaker 1: numbers of transactions by zel is actually exceed the number 184 00:09:51,679 --> 00:09:54,640 Speaker 1: checks written by our consumer customers. That was a milestone 185 00:09:54,640 --> 00:09:57,600 Speaker 1: because it shows you what's really happening is that Zel 186 00:09:57,720 --> 00:10:00,640 Speaker 1: is eating into those low balanced checks. And if you 187 00:10:00,679 --> 00:10:02,320 Speaker 1: look at a dollar amount of checks right, not the 188 00:10:02,400 --> 00:10:04,880 Speaker 1: number of transactions. Dollar amounts actually up a little bit, 189 00:10:04,920 --> 00:10:08,439 Speaker 1: so less checks of higher amounts to two thousand dollar 190 00:10:08,520 --> 00:10:10,720 Speaker 1: checks versus twy dollar checks, and those low checks are 191 00:10:10,720 --> 00:10:12,800 Speaker 1: being taken over by Zell, which is good because it's 192 00:10:12,800 --> 00:10:14,960 Speaker 1: easier for the clients to move money to each other. 193 00:10:15,000 --> 00:10:17,880 Speaker 1: It's easy instead of giving your your son or daughter 194 00:10:17,920 --> 00:10:20,720 Speaker 1: a check, David Ido, you just zelling the money. And 195 00:10:20,720 --> 00:10:23,520 Speaker 1: and in the volume of Zell now exceeds Vemo overall 196 00:10:23,559 --> 00:10:26,280 Speaker 1: in the industry, and I think we're basically equal to 197 00:10:26,360 --> 00:10:29,079 Speaker 1: Venmo in terms of transactions a quarterly basis, So we're 198 00:10:29,160 --> 00:10:31,599 Speaker 1: driving that through. It's really convenient, but that is a 199 00:10:31,640 --> 00:10:33,760 Speaker 1: big milestone to think that what you and I grew 200 00:10:33,840 --> 00:10:35,880 Speaker 1: up with, David, is the way to get money out 201 00:10:35,880 --> 00:10:38,040 Speaker 1: of the bank was to write a check and hand 202 00:10:38,080 --> 00:10:40,120 Speaker 1: it to somebody and then they could negotiate that check 203 00:10:40,400 --> 00:10:42,240 Speaker 1: has now gone to where you can just say giving 204 00:10:42,280 --> 00:10:44,160 Speaker 1: your cell phone number and you pay them. That's pretty good. 205 00:10:44,679 --> 00:10:47,680 Speaker 1: It's extraordinary development, certainly for somebody at my age. That's right, Brian. 206 00:10:48,200 --> 00:10:50,360 Speaker 1: Give me a sense as you look at the digital 207 00:10:50,400 --> 00:10:53,440 Speaker 1: strategy going forward, how much of this is basically doing 208 00:10:53,480 --> 00:10:55,520 Speaker 1: a form of the business you've been doing, for example 209 00:10:55,640 --> 00:10:58,520 Speaker 1: zel replacing checks as opposed to actually moving into new 210 00:10:58,559 --> 00:11:01,319 Speaker 1: businesses potentially with new stomers. Well, I think if you 211 00:11:01,520 --> 00:11:03,560 Speaker 1: if you look on the wealth management business, the financial 212 00:11:03,559 --> 00:11:06,360 Speaker 1: advisory team we have at MARYL and the private bankers 213 00:11:06,360 --> 00:11:09,040 Speaker 1: we have their cord of what we do for clients. 214 00:11:09,440 --> 00:11:11,760 Speaker 1: But if you think about what happened during the pandemic, 215 00:11:11,800 --> 00:11:13,520 Speaker 1: the ability for us to get information to clients and 216 00:11:13,559 --> 00:11:17,600 Speaker 1: blue our insights to clients through through Zoom and WebEx 217 00:11:17,600 --> 00:11:20,240 Speaker 1: and other types of meetings allowed us to get out 218 00:11:20,280 --> 00:11:22,880 Speaker 1: to clients in a very intimate setting, one to one, 219 00:11:22,960 --> 00:11:26,160 Speaker 1: but through the through the screen many more times. So 220 00:11:26,320 --> 00:11:29,160 Speaker 1: you enabled your reach of those teammates. But behind the scenes, 221 00:11:29,200 --> 00:11:32,280 Speaker 1: also just thinking the investment products like our our Life 222 00:11:32,280 --> 00:11:35,000 Speaker 1: Events investment product has seven million users now who are 223 00:11:35,000 --> 00:11:38,040 Speaker 1: loading in a financial plan, a life event plan for 224 00:11:38,080 --> 00:11:40,720 Speaker 1: them and It keeps them on uh you know, on 225 00:11:40,840 --> 00:11:44,440 Speaker 1: parting and moving forward on task, showing them what's happening. 226 00:11:44,480 --> 00:11:46,200 Speaker 1: If they say this much, they want to say for 227 00:11:46,240 --> 00:11:48,960 Speaker 1: this purpose, what are the priorities? You know, is that 228 00:11:49,000 --> 00:11:51,319 Speaker 1: a new product not an advisor did that for years? 229 00:11:51,360 --> 00:11:55,320 Speaker 1: But is it enablement advisor to add more value to 230 00:11:55,400 --> 00:11:57,559 Speaker 1: the insight knowledge they have as opposed to putting the 231 00:11:57,559 --> 00:12:00,160 Speaker 1: stuff in a financial planning module or doing calculations is 232 00:12:00,160 --> 00:12:03,040 Speaker 1: on spreadsheets? So you know, as you think about these, yes, 233 00:12:03,120 --> 00:12:04,880 Speaker 1: some are very new products. L is a new way 234 00:12:04,920 --> 00:12:08,680 Speaker 1: to move money. Others are digital embodiments of old products. 235 00:12:08,679 --> 00:12:11,640 Speaker 1: But light have reach and access and capabilities far different. 236 00:12:11,880 --> 00:12:14,719 Speaker 1: And that's pretty fun and interesting. Are there customers that 237 00:12:14,800 --> 00:12:16,480 Speaker 1: you will reach their digital that you would never have 238 00:12:16,520 --> 00:12:18,560 Speaker 1: reached their back of America or is it basically that 239 00:12:18,600 --> 00:12:21,800 Speaker 1: customer base that of course you're always trying to grow. Yeah, well, 240 00:12:22,280 --> 00:12:23,960 Speaker 1: you know, we have basic things. We have more to do. 241 00:12:24,120 --> 00:12:25,760 Speaker 1: We can do with every customer because we have the 242 00:12:25,760 --> 00:12:28,360 Speaker 1: best capabilities of anybody in the market. And if a 243 00:12:28,400 --> 00:12:32,240 Speaker 1: customer simply does has a product with us and does 244 00:12:32,280 --> 00:12:34,640 Speaker 1: something with somebody else, We're like, we're not serving them 245 00:12:34,640 --> 00:12:36,480 Speaker 1: well because we're the best, therefore they should do it 246 00:12:36,480 --> 00:12:39,000 Speaker 1: with us. That's our basic principle. But on the other hand, 247 00:12:39,000 --> 00:12:41,000 Speaker 1: we can gather customers. So if you think about it 248 00:12:41,400 --> 00:12:44,520 Speaker 1: in the in the consumer side, especially as we've been 249 00:12:44,520 --> 00:12:48,080 Speaker 1: going into new markets at Pittsburgh or Columbus, are Cleveland, Cincinnati, 250 00:12:48,200 --> 00:12:50,920 Speaker 1: Salt Lake, or Denver, Minneapolis that we've opened up in 251 00:12:51,240 --> 00:12:53,480 Speaker 1: with branches. When we go in there, we go in 252 00:12:53,559 --> 00:12:56,520 Speaker 1: digital first, and we'll have ten twenty thousand checking accounts 253 00:12:56,559 --> 00:12:59,760 Speaker 1: going before we ever opened the first branch. So those 254 00:13:00,000 --> 00:13:02,520 Speaker 1: stomers can do, you know, can work with this completely 255 00:13:02,559 --> 00:13:05,880 Speaker 1: digitally and it works and so but we we firmly 256 00:13:05,920 --> 00:13:08,079 Speaker 1: believe it's a high touch high tech. At some point 257 00:13:08,360 --> 00:13:11,120 Speaker 1: most customers on the consumer size come to the branch. 258 00:13:11,400 --> 00:13:14,040 Speaker 1: All the relationship managing customers the core interfaces through a person, 259 00:13:14,800 --> 00:13:19,200 Speaker 1: a financial advisor, a commercial banker, but enablement helps and 260 00:13:19,240 --> 00:13:22,520 Speaker 1: so you have to think about this as a combined 261 00:13:22,559 --> 00:13:25,120 Speaker 1: strategy of high touch high tech. So, yes, we get 262 00:13:25,160 --> 00:13:28,240 Speaker 1: customers digitally only that happens all day long. But the 263 00:13:28,320 --> 00:13:29,960 Speaker 1: end of day, what makes us special. We have the 264 00:13:29,960 --> 00:13:34,440 Speaker 1: best digital capabilities, plus we have the physical capabilities with them. Brian, 265 00:13:34,520 --> 00:13:36,440 Speaker 1: as you say, you've invested a lot of money, continue 266 00:13:36,440 --> 00:13:38,200 Speaker 1: to invest a lot. You've made a lot of progress. 267 00:13:38,480 --> 00:13:40,959 Speaker 1: At the same time, do you envision possibly a major 268 00:13:41,000 --> 00:13:43,960 Speaker 1: acquisition in this area to really take you forward, because 269 00:13:43,960 --> 00:13:46,719 Speaker 1: you said the sky is unlimited and how far you 270 00:13:46,760 --> 00:13:50,000 Speaker 1: can go with digital? So we've done major acquisition would 271 00:13:50,040 --> 00:13:52,600 Speaker 1: be off the table probably in a lot of ways 272 00:13:52,600 --> 00:13:55,800 Speaker 1: because it's just the does a business model work creature. 273 00:13:55,840 --> 00:13:59,600 Speaker 1: But we have done an acquisition like an healthcare technology space. 274 00:13:59,640 --> 00:14:02,319 Speaker 1: We did something to enable the payment side, surround payments. 275 00:14:02,559 --> 00:14:05,600 Speaker 1: We bought back our joint venture on the merchant side 276 00:14:05,600 --> 00:14:07,240 Speaker 1: a couple of years ago. That was a two billion 277 00:14:07,240 --> 00:14:09,800 Speaker 1: dollar transaction and now we've put three hundred million dollars 278 00:14:09,800 --> 00:14:12,559 Speaker 1: into the new system to drive that. So we're always 279 00:14:12,880 --> 00:14:16,480 Speaker 1: going to make acquisitions which complement our behaviors and also 280 00:14:16,520 --> 00:14:18,760 Speaker 1: partner with companies or a couple of our capabilities and 281 00:14:19,120 --> 00:14:21,920 Speaker 1: partner with companies. But the reality is, you know, we 282 00:14:21,960 --> 00:14:25,160 Speaker 1: have two point seven billion digital interactions and our consumer business. 283 00:14:25,280 --> 00:14:28,000 Speaker 1: Last quarter, we have a huge business. We have fifty 284 00:14:28,000 --> 00:14:32,000 Speaker 1: four million digital customers UH that are credited and forty 285 00:14:32,000 --> 00:14:35,040 Speaker 1: one million were active. You know, we we we we 286 00:14:35,200 --> 00:14:37,360 Speaker 1: need always be looking at what capabilities we need, and 287 00:14:37,400 --> 00:14:40,080 Speaker 1: sometimes that's partnered with providers and ideas that come in. 288 00:14:40,440 --> 00:14:44,160 Speaker 1: But the reality is acquiring more customers is not what 289 00:14:44,200 --> 00:14:46,040 Speaker 1: we're after right now. Right What we're after right now 290 00:14:46,080 --> 00:14:49,760 Speaker 1: is driving the usage in the capabilities and people understanding 291 00:14:49,760 --> 00:14:52,120 Speaker 1: what they can get from Bank of America's digital capabilities 292 00:14:52,120 --> 00:14:54,760 Speaker 1: across the whole platform. That was Brian Wynihan Chair and 293 00:14:54,840 --> 00:14:58,240 Speaker 1: CEO of Bank of America coming up. How big is 294 00:14:58,320 --> 00:15:01,680 Speaker 1: the semiconductor shortage problem? How long will it last? And 295 00:15:01,720 --> 00:15:03,960 Speaker 1: how can we fix it? We hear from the former 296 00:15:04,000 --> 00:15:07,080 Speaker 1: head of Qualcom, Paul Jacobs. That's next on Wall Street 297 00:15:07,120 --> 00:15:14,680 Speaker 1: Week on Bloomberg. This is Bloomberg Wall Street Week with 298 00:15:14,840 --> 00:15:21,000 Speaker 1: David Weston from Bloomberg Radio. Everybody's talking about it, the 299 00:15:21,120 --> 00:15:25,120 Speaker 1: shortage of microchips, whether you make cars. Like Mary Barra 300 00:15:25,280 --> 00:15:28,920 Speaker 1: of GM, we saw significant impact with the semiconductor shortage 301 00:15:29,000 --> 00:15:31,480 Speaker 1: last year. I would say every quarter it gets a 302 00:15:31,480 --> 00:15:34,240 Speaker 1: little bit better, but we're not through it yet. There 303 00:15:34,280 --> 00:15:36,240 Speaker 1: still is work to do. Or you make heating and 304 00:15:36,320 --> 00:15:40,240 Speaker 1: air conditioning equipment. Like Dave Gitland of Carrier, we actually 305 00:15:40,720 --> 00:15:43,320 Speaker 1: um don't have the kind of buying power with the 306 00:15:43,400 --> 00:15:45,960 Speaker 1: chip O e ms that maybe some of some other 307 00:15:46,000 --> 00:15:47,920 Speaker 1: folks in other industries do. But I can tell you 308 00:15:47,960 --> 00:15:51,640 Speaker 1: that we have met directly with the CEOs of major 309 00:15:51,720 --> 00:15:55,000 Speaker 1: chip manufacturers. We've done unique arrangements with them that we've 310 00:15:55,040 --> 00:15:56,840 Speaker 1: never done in the past. And it's not just the 311 00:15:56,920 --> 00:15:59,920 Speaker 1: buyers of chips feeling the pressure. The producers like Kurt 312 00:16:00,040 --> 00:16:03,880 Speaker 1: Sivers of n XP Semiconductors are feeling every bit as 313 00:16:03,960 --> 00:16:07,960 Speaker 1: much pressure. The entire semiconductor supply. Chaine is on the 314 00:16:08,120 --> 00:16:11,920 Speaker 1: pretty heavy stress these days. Even FED Chair J. Powell's 315 00:16:12,000 --> 00:16:14,760 Speaker 1: job has gotten harder because of the chip shortage, which 316 00:16:14,760 --> 00:16:17,760 Speaker 1: he says is partly what's leading to the inflation. We're 317 00:16:17,760 --> 00:16:21,120 Speaker 1: seeing people want to buy cars. Car carmakers can't make 318 00:16:21,160 --> 00:16:23,800 Speaker 1: any more cars because there are no semi conductors. So 319 00:16:23,880 --> 00:16:27,880 Speaker 1: that's that's never happening. So what's the solution. Congress is 320 00:16:27,920 --> 00:16:30,320 Speaker 1: working on a Chips Act to get more investment in 321 00:16:30,400 --> 00:16:34,480 Speaker 1: onshore production, which Congressman Hayley Stevens of Michigan says is 322 00:16:34,520 --> 00:16:38,320 Speaker 1: critical for the auto industry in her district. Here in 323 00:16:38,480 --> 00:16:42,840 Speaker 1: Automotive plan, one of the things that you cannot escape 324 00:16:43,440 --> 00:16:46,560 Speaker 1: from our is the chip shortage. We have got to 325 00:16:46,720 --> 00:16:50,560 Speaker 1: pass the Chips Act. But whatever the solution, just about 326 00:16:50,640 --> 00:16:54,040 Speaker 1: everyone agrees that it's going to take time. Whether you're 327 00:16:54,040 --> 00:16:56,400 Speaker 1: in the market to buy, we still think it's going 328 00:16:56,440 --> 00:16:58,560 Speaker 1: to linger into the first half of this year and 329 00:16:58,600 --> 00:17:00,760 Speaker 1: we should be farther out it by the end of 330 00:17:00,760 --> 00:17:03,480 Speaker 1: this year, or in the market to sell. This is 331 00:17:03,520 --> 00:17:05,879 Speaker 1: going to get better through next year, but I don't 332 00:17:05,880 --> 00:17:08,280 Speaker 1: think everything is going to be imbalanced from a supplied 333 00:17:08,320 --> 00:17:14,960 Speaker 1: amount perspective through the end of next year. And we 334 00:17:15,119 --> 00:17:18,200 Speaker 1: turned now to someone who really knows this chip industry well. 335 00:17:18,320 --> 00:17:21,080 Speaker 1: He's Paul Jacobs. He's now the chairman CEO of x 336 00:17:21,119 --> 00:17:24,000 Speaker 1: CAM and he did for many years run qual Calm. 337 00:17:24,080 --> 00:17:25,920 Speaker 1: So Paul, thanks so much for being with us. First 338 00:17:25,920 --> 00:17:27,480 Speaker 1: of all, give us a sense of how big a 339 00:17:27,560 --> 00:17:29,600 Speaker 1: problem this is. Is can you put your arms around 340 00:17:29,640 --> 00:17:32,440 Speaker 1: how big a problem the shortage of semiconductors is right now. 341 00:17:33,359 --> 00:17:37,479 Speaker 1: But as you know, everything is being digitized, and so 342 00:17:37,560 --> 00:17:40,520 Speaker 1: semi conductors are in almost every product we use, from 343 00:17:40,600 --> 00:17:44,480 Speaker 1: home appliances to cars and now even more so with 344 00:17:44,560 --> 00:17:48,720 Speaker 1: electric vehicles. They're in the cloud, they're in our smartphones, 345 00:17:48,760 --> 00:17:51,840 Speaker 1: are in just so many things in our lives. And 346 00:17:52,000 --> 00:17:56,960 Speaker 1: what's happened is that we had some shocks in the system, 347 00:17:56,960 --> 00:18:01,280 Speaker 1: which became big because we had this notion of being 348 00:18:01,359 --> 00:18:05,920 Speaker 1: very efficient just in time manufacturing, lean manufacturing, so you 349 00:18:05,960 --> 00:18:08,880 Speaker 1: didn't hold a lot of inventory on hand, and when 350 00:18:08,920 --> 00:18:12,840 Speaker 1: there were whips in the supply which happened because of COVID, 351 00:18:13,359 --> 00:18:16,160 Speaker 1: these things spiraled out of control and became very very 352 00:18:16,240 --> 00:18:20,000 Speaker 1: big issues in in the in the supply chain. And 353 00:18:20,040 --> 00:18:24,120 Speaker 1: so you're seeing for big companies, some of them are 354 00:18:24,160 --> 00:18:29,480 Speaker 1: able to get their components still, but for smaller companies, uh, 355 00:18:29,640 --> 00:18:31,960 Speaker 1: some of them are having a very hard time, long 356 00:18:32,080 --> 00:18:35,600 Speaker 1: lead times, some sometimes up as much as a year 357 00:18:35,720 --> 00:18:38,640 Speaker 1: of waiting to get a part that you need, people 358 00:18:38,640 --> 00:18:42,000 Speaker 1: who have been raising prices. So all these things are 359 00:18:42,040 --> 00:18:45,399 Speaker 1: affecting sort of that innovation economy that the world depends on. 360 00:18:46,119 --> 00:18:48,120 Speaker 1: When you talk about just in time, did we under 361 00:18:48,119 --> 00:18:52,600 Speaker 1: invest globally? Did we underinvest in the capacity to design 362 00:18:52,680 --> 00:18:57,320 Speaker 1: and manufacturer chips. I think that there's a lot of 363 00:18:57,320 --> 00:19:00,080 Speaker 1: concentration in it, and there's only a few suppliers. Is 364 00:19:00,119 --> 00:19:03,320 Speaker 1: there's not a lot of diversity in the the supply chain. 365 00:19:03,359 --> 00:19:07,000 Speaker 1: But I think maybe to explain it a little bit simpler, 366 00:19:07,040 --> 00:19:09,240 Speaker 1: if we think about it something close to home, like 367 00:19:09,359 --> 00:19:12,240 Speaker 1: toilet paper. When you think about there was supply of 368 00:19:12,560 --> 00:19:16,439 Speaker 1: toilet paper and a pretty constant demand of toilet paper, 369 00:19:16,800 --> 00:19:19,160 Speaker 1: maybe a little bit more because people were working from home. 370 00:19:19,720 --> 00:19:22,679 Speaker 1: But you didn't buy a lot of toilet paper at 371 00:19:22,720 --> 00:19:25,159 Speaker 1: your house because I figured you could go down to 372 00:19:25,160 --> 00:19:28,360 Speaker 1: the store and get it. Now what happened. People got 373 00:19:28,359 --> 00:19:30,320 Speaker 1: nervous whether they could actually go down to the store 374 00:19:30,359 --> 00:19:33,000 Speaker 1: and get it, so they started putting more at home. 375 00:19:33,040 --> 00:19:36,040 Speaker 1: They started buying more, and the system wasn't set up 376 00:19:36,080 --> 00:19:39,879 Speaker 1: for that. So there was this surgeon demand and that 377 00:19:40,040 --> 00:19:42,879 Speaker 1: meant that there were shortages. And that is part of 378 00:19:42,920 --> 00:19:46,520 Speaker 1: the problem with the chip business. The supply is there 379 00:19:46,640 --> 00:19:50,159 Speaker 1: under normal constraints. But now with these things that have 380 00:19:50,240 --> 00:19:53,800 Speaker 1: happened because of COVID, and very interesting things happened because 381 00:19:53,800 --> 00:19:57,280 Speaker 1: at first the demand dropped, everybody thought the whole economy 382 00:19:57,359 --> 00:20:00,520 Speaker 1: was slowing down to demand drop. Then the demand surge 383 00:20:00,600 --> 00:20:02,679 Speaker 1: because all of this work from home and all the 384 00:20:02,680 --> 00:20:05,879 Speaker 1: other other things. So there was this ripple in the 385 00:20:05,920 --> 00:20:09,719 Speaker 1: demand side. The supply side was basically there, but it's 386 00:20:09,760 --> 00:20:13,240 Speaker 1: kind of like this toilet paper situation. Now people who 387 00:20:13,800 --> 00:20:17,280 Speaker 1: are have the ability are trying to hold more inventory 388 00:20:17,600 --> 00:20:19,800 Speaker 1: so that they don't get hit by these ups and 389 00:20:19,840 --> 00:20:23,080 Speaker 1: downs in the process. I would say though, that it 390 00:20:23,160 --> 00:20:26,840 Speaker 1: is important to build more semiconductor uh fabs, and it's 391 00:20:26,840 --> 00:20:30,040 Speaker 1: important not just for the making of the chips, but 392 00:20:30,119 --> 00:20:33,399 Speaker 1: also the packaging of the chips, the testing of the chips, 393 00:20:33,640 --> 00:20:36,119 Speaker 1: but even beyond that, it's all the little components that 394 00:20:36,200 --> 00:20:39,040 Speaker 1: go around it aboards. I mean, we really, uh, you know, 395 00:20:39,080 --> 00:20:41,679 Speaker 1: we have an issue where there were very few suppliers. 396 00:20:41,720 --> 00:20:45,439 Speaker 1: There was a broad range of products out there that 397 00:20:45,080 --> 00:20:48,439 Speaker 1: that and components that that people needed, and all this 398 00:20:48,760 --> 00:20:52,240 Speaker 1: led to a lack of resiliency, you know, a lack 399 00:20:52,320 --> 00:20:55,840 Speaker 1: of ability to adapt to these big shocks that might 400 00:20:55,920 --> 00:20:58,280 Speaker 1: happen in the system. Paul, this has been very helpful. 401 00:20:58,320 --> 00:21:00,399 Speaker 1: Thank you so very much. As Paul Jacobs, he's the 402 00:21:00,480 --> 00:21:05,800 Speaker 1: chairman and CEO of x COOM. Coming up, we wrap 403 00:21:05,880 --> 00:21:08,920 Speaker 1: up the week with special contributor Larry Summers of Harvard. 404 00:21:10,800 --> 00:21:15,640 Speaker 1: This is Wall Street Week on Bloomberg. This is Bloomberg 405 00:21:15,720 --> 00:21:19,959 Speaker 1: Wall Street Week with David Weston from Bloomberg Radio. This 406 00:21:20,000 --> 00:21:22,520 Speaker 1: is Wall Street Week. I'm David Weston. We're gonna wrap 407 00:21:22,600 --> 00:21:24,800 Speaker 1: up the week again this week with our very special 408 00:21:24,800 --> 00:21:27,760 Speaker 1: contributer Larry Summers of Harvard. Larry, welcome back. Good to 409 00:21:27,800 --> 00:21:29,560 Speaker 1: have you here. We've talked about the Fed. We've talked 410 00:21:29,600 --> 00:21:31,480 Speaker 1: about inflation. The FED has said they're going to tighten 411 00:21:31,760 --> 00:21:33,880 Speaker 1: because the inflation you've been warning about for some time. 412 00:21:34,119 --> 00:21:36,439 Speaker 1: We actually get a decision next week. What do you 413 00:21:36,440 --> 00:21:38,480 Speaker 1: expect the FED to do? I think they're going to 414 00:21:38,560 --> 00:21:42,800 Speaker 1: be signaling the tightening in March. I hope they'll be 415 00:21:42,880 --> 00:21:49,119 Speaker 1: signaling as rapid as possible and end UH to qt UH. 416 00:21:49,320 --> 00:21:51,960 Speaker 1: We got an economy that's looking like it's above the 417 00:21:52,000 --> 00:21:55,280 Speaker 1: speed limit and it's gonna have to slow down. And 418 00:21:55,359 --> 00:21:59,440 Speaker 1: the Fed's got a very delicate operation now in UH 419 00:22:00,000 --> 00:22:04,440 Speaker 1: owing it down. The delicacy of that operation is underscored 420 00:22:04,560 --> 00:22:07,879 Speaker 1: by the turbulent and asset markets since the beginning of 421 00:22:07,920 --> 00:22:12,679 Speaker 1: the year. It's underscored by the softness in some kinds 422 00:22:12,680 --> 00:22:17,600 Speaker 1: of measures of consumer sentiment and UH consumer spending. But 423 00:22:18,080 --> 00:22:22,480 Speaker 1: if we're going to have maximum employment and maximum growth 424 00:22:23,200 --> 00:22:27,080 Speaker 1: over time, UH, we're gonna have to control the pace 425 00:22:27,720 --> 00:22:32,480 Speaker 1: of the growth of UH total incomes so that more 426 00:22:32,520 --> 00:22:36,440 Speaker 1: of it can go into more employment and more output 427 00:22:36,640 --> 00:22:39,679 Speaker 1: and less of it into inflation. Larry, as you look 428 00:22:39,720 --> 00:22:42,160 Speaker 1: at the various indicators do you can. Are you concerned 429 00:22:42,160 --> 00:22:45,400 Speaker 1: at all that maybe we're too complacent about the offensibility 430 00:22:45,440 --> 00:22:47,560 Speaker 1: to do this. The market uses they have been turbulent, 431 00:22:47,560 --> 00:22:49,440 Speaker 1: they're reacting at the same time you look at the 432 00:22:49,480 --> 00:22:51,639 Speaker 1: five year five years there's still like a two point 433 00:22:51,640 --> 00:22:55,359 Speaker 1: one two like that, And also the financial conditions have 434 00:22:55,400 --> 00:22:57,880 Speaker 1: not really tightened much. Is that because we're just so 435 00:22:57,920 --> 00:23:00,600 Speaker 1: confident that they can do this without really roiling people? 436 00:23:00,720 --> 00:23:03,480 Speaker 1: Are we underestimating the size of the problem. I think 437 00:23:03,520 --> 00:23:08,560 Speaker 1: the gravity of our situation is still understated. While the 438 00:23:08,800 --> 00:23:13,920 Speaker 1: term transitory has left the policy maker discourse, the idea 439 00:23:14,000 --> 00:23:17,760 Speaker 1: of transitory inflation is still very fixed in their minds. 440 00:23:18,240 --> 00:23:22,760 Speaker 1: There's still a belief that with very limited monetary actions 441 00:23:22,840 --> 00:23:26,720 Speaker 1: that have not taken full effect, we will see inflation 442 00:23:27,160 --> 00:23:30,439 Speaker 1: as slow to the two percent range by the end 443 00:23:30,480 --> 00:23:34,560 Speaker 1: of the year. That certainly could happen, but it wouldn't 444 00:23:34,560 --> 00:23:38,720 Speaker 1: be my bet. Given the tremendous tightness of labor markets, 445 00:23:39,119 --> 00:23:41,760 Speaker 1: given increasing signs to China is going to be a 446 00:23:41,840 --> 00:23:45,359 Speaker 1: source of bottlenecks for quite some time to come, given 447 00:23:45,400 --> 00:23:50,520 Speaker 1: increasing concerns about oil prices, given that there's a lot 448 00:23:50,600 --> 00:23:54,879 Speaker 1: of housing inflation that's still has to feed through the system, 449 00:23:54,920 --> 00:23:59,320 Speaker 1: and given how remarkably low real interest rates UH are, 450 00:24:00,080 --> 00:24:04,399 Speaker 1: I don't think that it's the best bet that inflation 451 00:24:04,560 --> 00:24:06,639 Speaker 1: is going to be coming down to the two into 452 00:24:06,680 --> 00:24:10,720 Speaker 1: the two percent range or the two's by the end 453 00:24:10,760 --> 00:24:14,760 Speaker 1: of the year. And so I think complacency is UH 454 00:24:15,000 --> 00:24:19,720 Speaker 1: not appropriate. So Larry and President Biden had a quite long, 455 00:24:19,840 --> 00:24:23,320 Speaker 1: almost two year, two hour press conference this week, and 456 00:24:23,320 --> 00:24:24,879 Speaker 1: in the course of that he basically said it is 457 00:24:24,920 --> 00:24:27,520 Speaker 1: the FEDS responsibility to do with inflation. He talked about 458 00:24:27,520 --> 00:24:29,879 Speaker 1: the economy. What did you make of what Prisident Biden 459 00:24:29,920 --> 00:24:32,360 Speaker 1: had to say about his leadership of the economy. Look, 460 00:24:32,400 --> 00:24:35,240 Speaker 1: I think President Biden is right to take pride in 461 00:24:35,960 --> 00:24:41,800 Speaker 1: the fact that more people are employed than anyone would 462 00:24:41,800 --> 00:24:47,120 Speaker 1: have expected on the day he took office, despite very 463 00:24:47,160 --> 00:24:53,959 Speaker 1: substantial uh desease threats. Frankly, I can't understand, for the 464 00:24:54,000 --> 00:24:56,760 Speaker 1: life of me why the administration is so obsessed with 465 00:24:56,800 --> 00:25:01,159 Speaker 1: meat packing. Meat Packing is a entire higherly trivial and 466 00:25:01,320 --> 00:25:08,760 Speaker 1: unimportant issue with respect to uh inflation. It is inconceivable 467 00:25:09,160 --> 00:25:13,159 Speaker 1: that tossing a billion dollars as the Agriculture Department is 468 00:25:13,640 --> 00:25:17,159 Speaker 1: in the general direction of creating an extra meeting meatpacking 469 00:25:17,280 --> 00:25:21,199 Speaker 1: plant is a good use of taxpayers money or is 470 00:25:21,240 --> 00:25:24,040 Speaker 1: going to happen. So I don't understand why the President 471 00:25:24,080 --> 00:25:28,400 Speaker 1: of the the United States keeps talking about that. I'm glad 472 00:25:28,440 --> 00:25:34,320 Speaker 1: to see him recognize and emphasize the independence of the 473 00:25:34,359 --> 00:25:38,399 Speaker 1: Central Bank. And as I said on your show last week, David, 474 00:25:38,480 --> 00:25:42,760 Speaker 1: I very much hope that his new appointees to the Fed, 475 00:25:43,359 --> 00:25:48,320 Speaker 1: when they have their confirmation hearings, will take the opportunity 476 00:25:48,359 --> 00:25:55,080 Speaker 1: to underscore their recognition that the most basic responsibility that 477 00:25:55,200 --> 00:26:00,520 Speaker 1: the Central Bank has is a stable currency and price 478 00:26:00,920 --> 00:26:07,240 Speaker 1: UH stability and the avoidance of inflation. That's not something 479 00:26:07,280 --> 00:26:11,000 Speaker 1: that's been in any of their writings UH prior to 480 00:26:11,080 --> 00:26:15,240 Speaker 1: this point. That doesn't mean they don't fully share the conviction, 481 00:26:15,680 --> 00:26:17,920 Speaker 1: but I think it will be very important for them 482 00:26:18,040 --> 00:26:23,480 Speaker 1: to articulate that and articulate how important they perceive that 483 00:26:23,640 --> 00:26:30,679 Speaker 1: to have been in the nominating process, because ultimately, credibility 484 00:26:30,800 --> 00:26:34,760 Speaker 1: is about deeds as much as it's about words, and 485 00:26:34,800 --> 00:26:39,720 Speaker 1: the most important deeds the president has with respect to 486 00:26:40,400 --> 00:26:44,159 Speaker 1: UH the Central Bank are what he are, what he 487 00:26:44,280 --> 00:26:49,320 Speaker 1: does UH in terms of staffing the Central Bank, Larry, 488 00:26:49,320 --> 00:26:51,959 Speaker 1: we're talking at me packing, I naturally think about competition 489 00:26:52,040 --> 00:26:54,960 Speaker 1: policy and a trust law. You have something of a dispute, 490 00:26:54,960 --> 00:26:57,760 Speaker 1: perhaps going with Paul Krugman, your former classmate, your friend, 491 00:26:58,119 --> 00:27:00,119 Speaker 1: over the role that a trust and we've heard from 492 00:27:00,119 --> 00:27:02,879 Speaker 1: President Biden and others that really an trust enforcement is 493 00:27:02,920 --> 00:27:05,760 Speaker 1: a key ingredient in fighting and inflation. How big a 494 00:27:05,760 --> 00:27:08,200 Speaker 1: difference do you really have on this subject. I'm not sure, 495 00:27:08,240 --> 00:27:11,399 Speaker 1: because I'm not sure what they really think. Should we 496 00:27:11,440 --> 00:27:15,760 Speaker 1: have substantially enhanced anti trust in the United States? Yes, 497 00:27:16,240 --> 00:27:22,960 Speaker 1: we absolutely should. Is it harmless and normal politics to 498 00:27:23,320 --> 00:27:29,240 Speaker 1: take advantage of concern about high prices to drive political 499 00:27:29,400 --> 00:27:35,280 Speaker 1: energy behind that competition policy? Yes. Does it make sense 500 00:27:35,400 --> 00:27:41,920 Speaker 1: to suggest that antitrust policy canning any important way reduce 501 00:27:42,440 --> 00:27:46,040 Speaker 1: uh the inflation rate over the horizon of a couple 502 00:27:46,080 --> 00:27:53,119 Speaker 1: of years. No, that is not supported by economic science. 503 00:27:53,960 --> 00:28:01,480 Speaker 1: I'm also worried about the um and type trust doctrines 504 00:28:02,000 --> 00:28:06,920 Speaker 1: that some of the Biden appointees have put forward. Lena 505 00:28:07,000 --> 00:28:12,560 Speaker 1: Kahn expressed a concern that perhaps when two firms merge 506 00:28:13,160 --> 00:28:16,960 Speaker 1: and they're able to produce more efficiently with fewer people, 507 00:28:17,640 --> 00:28:21,119 Speaker 1: that should not be counted as an efficiency. There's been 508 00:28:21,160 --> 00:28:27,320 Speaker 1: a lot of talk about introducing considerations other than lower 509 00:28:27,359 --> 00:28:34,240 Speaker 1: prices for consumers into antitrust protecting small business competitors. For example. 510 00:28:35,040 --> 00:28:41,120 Speaker 1: That kind of stuff is frankly promoting of higher prices 511 00:28:41,160 --> 00:28:45,800 Speaker 1: and works in the wrong direction with respect to inflation. 512 00:28:46,440 --> 00:28:50,720 Speaker 1: The most important things thing we can do with respect 513 00:28:50,880 --> 00:28:56,720 Speaker 1: to competition policy is accept lower priced goods from abroad, 514 00:28:57,560 --> 00:29:03,840 Speaker 1: and resistance to protection is UM active trade policy. Those 515 00:29:03,840 --> 00:29:09,880 Speaker 1: aren't things we hear about from the administration. So yes, 516 00:29:09,960 --> 00:29:13,760 Speaker 1: I am all for UH competition policy. Yes, I think 517 00:29:13,760 --> 00:29:17,040 Speaker 1: ant i trust in our country has lagged, but it 518 00:29:17,120 --> 00:29:20,840 Speaker 1: needs to be based on lower consumer prices. Larry Lewis 519 00:29:20,840 --> 00:29:22,560 Speaker 1: sneak in one more if I could hear please. A 520 00:29:22,560 --> 00:29:24,120 Speaker 1: couple of weeks ago, we had an outrage of the 521 00:29:24,120 --> 00:29:27,800 Speaker 1: week from you about the patterns of investment from our 522 00:29:27,880 --> 00:29:30,440 Speaker 1: public officials, whether at the Federal Reserve Board or up 523 00:29:30,480 --> 00:29:33,240 Speaker 1: in at on on Capitol Hill. We now have perhaps 524 00:29:33,240 --> 00:29:35,400 Speaker 1: a development where the Speak of the House, Nancy Pelosi, 525 00:29:35,560 --> 00:29:38,840 Speaker 1: apparently has backed off of her resistance to a broadband 526 00:29:38,840 --> 00:29:40,880 Speaker 1: on that. What do you think should happen? I was 527 00:29:40,920 --> 00:29:43,480 Speaker 1: glad to see it. I think we need to scale 528 00:29:43,520 --> 00:29:52,560 Speaker 1: scale any suggestion of impropriety by public officials. UM out 529 00:29:52,560 --> 00:29:56,160 Speaker 1: of our system. That means not trading in individual stocks. 530 00:29:56,880 --> 00:30:01,200 Speaker 1: That also means uh, not here in something and calling 531 00:30:01,240 --> 00:30:05,720 Speaker 1: your broker to do anything, even selling mutual funds and 532 00:30:06,240 --> 00:30:10,560 Speaker 1: the like. People should be able to adjust their financial positions, 533 00:30:10,600 --> 00:30:15,520 Speaker 1: but only well in advance, so that there's a reassurance 534 00:30:16,000 --> 00:30:20,479 Speaker 1: that insider information is not coming into it. And there 535 00:30:20,520 --> 00:30:24,960 Speaker 1: should be rigorous rules in both the executive branch, the 536 00:30:25,040 --> 00:30:29,880 Speaker 1: Federal Reserve and uh the Congress. And I think it's 537 00:30:29,920 --> 00:30:34,600 Speaker 1: an area where it's appropriate for a confidence uh to 538 00:30:34,720 --> 00:30:36,800 Speaker 1: look at things so an outrage of the week that 539 00:30:36,920 --> 00:30:39,520 Speaker 1: maybe a little bit less outrageous going forward, we hope. 540 00:30:39,520 --> 00:30:41,920 Speaker 1: Thank you so much to Larry Summers, Will Harvard, our 541 00:30:42,040 --> 00:30:45,479 Speaker 1: very special contributor on Wall Street Week. Thanks a lot. Finally, 542 00:30:45,520 --> 00:30:49,880 Speaker 1: one more thought. Lions and tigers and bears and even hamsters. 543 00:30:49,880 --> 00:30:52,760 Speaker 1: Oh my, every one of us is dealing with COVID 544 00:30:52,760 --> 00:30:55,120 Speaker 1: in one way or another, whether it's worrying about our 545 00:30:55,200 --> 00:30:58,120 Speaker 1: hospitals or whether our kids can go to school, or 546 00:30:58,240 --> 00:31:00,920 Speaker 1: figuring out when we should go back into the office. 547 00:31:01,240 --> 00:31:04,200 Speaker 1: But that's all about us. What about the other creatures 548 00:31:04,240 --> 00:31:06,840 Speaker 1: that share the planet with us? What about the tigers 549 00:31:06,880 --> 00:31:11,400 Speaker 1: and pumas, and minx, and yes, even the hamsters. Well, 550 00:31:11,440 --> 00:31:13,320 Speaker 1: it turns out that a lot of them can get 551 00:31:13,360 --> 00:31:15,880 Speaker 1: this virus too, and they don't even have the option 552 00:31:15,920 --> 00:31:19,320 Speaker 1: of getting the vaccine, much less the booster. A year ago, 553 00:31:19,400 --> 00:31:22,400 Speaker 1: it was a crisis over mink farming in Denmark which 554 00:31:22,480 --> 00:31:25,480 Speaker 1: brought the Danish Prime Minister to tears when she ordered 555 00:31:25,520 --> 00:31:29,240 Speaker 1: millions of the little furry creatures destroyed. Now we learned 556 00:31:29,240 --> 00:31:31,680 Speaker 1: that lions and pumas in a South African zoo have 557 00:31:31,680 --> 00:31:35,640 Speaker 1: contracted COVID, apparently from the people who work there. Fortunately 558 00:31:35,680 --> 00:31:38,479 Speaker 1: they were treated and they recovered, which is more than 559 00:31:38,520 --> 00:31:41,320 Speaker 1: we can say for the poor hamsters. Over in Hong Kong, 560 00:31:41,920 --> 00:31:45,560 Speaker 1: China is pursuing a vigorous, some might say ruthless policy 561 00:31:45,640 --> 00:31:48,680 Speaker 1: of zero tolerance of COVID. So when a local pet 562 00:31:48,760 --> 00:31:52,680 Speaker 1: shop worker, a customer, and eleven hamsters tested positive for 563 00:31:52,720 --> 00:31:56,360 Speaker 1: the Delta variant, the Hong Kong government ordered all hamsters 564 00:31:56,400 --> 00:32:01,040 Speaker 1: imported since December euthanized. Despite the lack of really clear 565 00:32:01,120 --> 00:32:04,680 Speaker 1: proof that humans can get COVID from hamsters, but there 566 00:32:04,720 --> 00:32:07,720 Speaker 1: may be another way. Since the eighteenth century, in a 567 00:32:07,840 --> 00:32:10,600 Speaker 1: small village west of Madrid, on the eve of San 568 00:32:10,720 --> 00:32:14,560 Speaker 1: Anton's day, they purify animals from disease. Well, how do 569 00:32:14,600 --> 00:32:16,880 Speaker 1: they do it. They take a group of horses and 570 00:32:17,000 --> 00:32:20,040 Speaker 1: ride them through bonfires, which may or may not date 571 00:32:20,120 --> 00:32:22,280 Speaker 1: back to the days of the plague. And if it 572 00:32:22,280 --> 00:32:25,920 Speaker 1: seems a bit medieval, then again doesn't a lot of 573 00:32:25,920 --> 00:32:28,720 Speaker 1: our response to this pandemic. It sure does for those 574 00:32:28,760 --> 00:32:31,920 Speaker 1: poor hamsters. That does it For this episode of Wall 575 00:32:31,920 --> 00:32:35,240 Speaker 1: Street Week, I'm David Weston. This is Bloomberg. See you 576 00:32:35,280 --> 00:32:35,760 Speaker 1: next week.