Bloomberg Businessweek Weekend - January 24th, 2025 - Bloomberg Businessweek

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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio news.

Speaker 2 (00:08):
This is Bloomberg Business Week Insight from the reporters and
editors that bring you America's most trusted business magazine, plus
global business, finance and tech news. The Bloomberg Business Week
Podcast with Carol Masser and Tim Stenoveek on Bloomberg Radio.

Speaker 1 (00:27):
Hi, everyone, Welcome to the Bloomberg Business Wee Weekend Podcast.
We began a new chapter in American politics as this
past Monday, Donald Trump was sworn in for a second time,
and this time around as the forty seventh president of
the United States. The President got right to work implementing
many of his campaign pledges on immigration, energy, the military,
the federal workforce, and more, many reversing the policies of

(00:51):
his predecessor, Joe Biden.

Speaker 3 (00:53):
Some of these signed executive orders are aimed at ending
automatic US citizenship for the children of undocumented migrants, withdrawing
the US from the Paris Agreement on Climate change, and
eliminating diversity, equity and inclusion efforts in the federal government.

Speaker 1 (01:07):
President Trump also signaled plans to impose previously threatened tariffs
of as much as twenty five percent on Mexico and
Canada and even widened his tariff threats to include China
and the European Union. So for the next two hours
we address some of President Trump's agenda and possible impacts,
everything from the outlook for a third World war and
the future of US supremacy to the Trump Trade.

Speaker 3 (01:30):
Also, as la continued to battle fires and the US
South faced the worst snowstorm at one hundred and thirty years,
extreme weather was top of mind. One former EPA administrator
weighs in on what a second Trump term may mean
for US climate policy, and with a new leader in
the White House, we take a look at leadership, those
who inspire and those who infuriate.

Speaker 1 (01:51):
And there are leaders that kind of do both, but
we'll get into that a little bit later. On all
of that to come, We begin, though, with the US
economic and geopolitical policy Donald Trump. Details are just starting
to trickle in on what sort of tariff's, immigration policies
and tax cuts the new administration will implement, and with
a Republican controlled Congress, albeit with a slim margin, it

(02:12):
is likely many a President Trump's policies will be enacted.

Speaker 3 (02:16):
Looking at the geopolitical landscape, as Ed Price, a former
British trade official, now non resident senior Fellow at NYU,
ED has advised members of the European and British parliaments
and writes regularly about politics, economic policy, and more. He
joined US along with Bloomberg's David Gura on Inauguration Day.

Speaker 4 (02:34):
Donald Trump is right when he says he could probably
avoid World War three, but the transaction in exchange for
World War three is probably something to do with the republic,
something to do with existing US soft power, So it's
not a freebie. What I mean by that is that
he has introduced this idea of an imperium, you know,
absolutely bold, absolutely simple. There it is on the table.

(02:56):
If we take Greenland and Panama, Panama SLA different.

Speaker 5 (03:00):
But if we take that, we treat those seriously.

Speaker 4 (03:02):
His team used to say take him seriously, but not literally.
I think we should take him literally and seriously. Now, honestly,
I do think that's that's something that he could do,
might do, would do. Truman thought about it during the
Second World War. Johnson, President Johnson back in the nineteenth century,
thought about it. It's a meme. But if he did that,
of course, I'm not sure that we wouldn't lose more

(03:23):
in our soft power with this, you know, China and
Russia and them turning around and saying, well, look it's
fine to do that sort of thing. Then then we
would gain I don't know what it is in Greenland
that we would gain versus that.

Speaker 6 (03:34):
Was listening to Pods Save the World and Ben Rhodes,
who hosts that, was talking a bit about presents through
history and how acquisition of territory is something that kind
of puts somebody into the history books automatically, and I
was kind of listening to this speech watching it unfold
with kind of an eye to that. Do you see
similarly a president here who is more cognizant of his
place in history than he might have been the first
time around?

Speaker 4 (03:53):
Yes, absolutely, absolutely. I think that's a good observation. Donald
Trump would like nothing more than to be added to
Mount Rushmore. I've been there their space, and he would
like nothing more than to be considered a strong leader.
I almost said strong man. Okay, So I think he
is thinking about that now. If we want to be
entirely balanced, there is some sense to expanding territory right

(04:17):
inverted commas that has been done in US history Louisiana,
purchase Mexico, California and so on. It's just as I
said before, what would be the cost now now that
we are in twenty twenty five and we have a
predominantly rules based order, at least for now, what is
it that we gain from Greenland and Panama that we
lose with Taiwan, Ukraine and wherever else? And I guess,

(04:40):
like you know, I came in and said on the
global elite, I don't think that's a good trade.

Speaker 3 (04:43):
We'll help us unpack that a little bit. Specifically with
regard to Greenland. What would we get as Greenland as
an asset to the US, and would the US be
able to do that with soft power?

Speaker 4 (04:54):
The way I would have done it is I would
have called Denmark. I would have said to them, listen,
you're tiny, we're huge. Why don't we give you the
six hundred million or whatever it is, or double it
every year. You don't have to worry. We already have bases.
We can finagle it. And I think there are many
ways that the United States does that around the world
today anyway, the United Kingdom in some ways is a garrison.
Germany is a garrison. Japan was basically conquered, right, so

(05:17):
we already do this. We don't need to say that
we're doing it now. If we did. You know, again,
this is science fiction. But if we did say, right,
turn the troops over to Greenland, it's ours now, that
would inaugurate all sorts of hell in the world. Because,
of course other people would do exactly the same thing
you'd have. Japan would have to get nuclear weapons immediately,
probably Germany as well. God knows what Aram would do,

(05:40):
and the Monroe doctri aforementioned would have to be enforced.

Speaker 1 (05:44):
Okay, so let's go to Panama and your anticipation of
what happens there.

Speaker 5 (05:50):
Does he have some points to be made here?

Speaker 4 (05:54):
Or I think the Panama Canal was designed from naval purposes, right,
so that we can move our fleet around the world.
That was the original Roosevelt's idea. I don't see that
it's necessary right now to say that we can't do that.
I think we can. He said something about China controlling
the conc I mean goodness.

Speaker 6 (06:12):
For goodness speech and the inaugural part two.

Speaker 4 (06:14):
Yes, yes, what an address that will ask to echo
through the ages. No, I don't and I sort of
I've been googling that trying to find out if that's true.
I don't think it is true, right, So no, I
don't think it's true. So there's all sorts of nonsense.
And as I understand it, the treaty does allow us
to go back anyway if we really need to. But
but I guess the point for me is that as
we look at Trump's vision of this American imperium, it

(06:36):
contradicts so many of the macroeconomic policies that he's actually
also floating. For example, keeping the dollar standard, this is one.
I mean, I know you guys think about this, but
he says, on the one hand, I want to maintain
the international dollar standard. That's critical. But on the other hand,
I'm going to start denying other countries, you know, the
dollar through these incredible new tariffs. I mean, that ultimately

(06:56):
doesn't jibe, right, So there are these huge contradictions running
through this thing. I think we should take him seriously
in everything that he says, but they don't make sense.

Speaker 6 (07:04):
We've talked a little bit about tariffs and trade policy,
and I wonder how you see that factoring into the
conversation that we're having here. So if we take your
lead here on this American imperium. What do you make
of what he's floated thus far? Do you see the
rhetoric as punitive for the point of negotiation, putitive because
he intends to show force to these allies and whatever come,

(07:26):
whatever may. How do you process sort of what he's
said so far? How much does that bombas to or
a rhetoric translate to actual policies?

Speaker 4 (07:32):
Do you think, Listen, I don't think he understands what
a tariff is, Okay, get in trouble saying this. I
think he thinks that a tariff is a great big
stick that you can permanently beat your opponent over the
head with. I don't think he understands that the supply
side over time would shift and these supply chains would change,
and that goes the same for these you know, the
currency that other countries need, they wouldn't get. Okay, So

(07:54):
it really doesn't make sense if he wants to take
his own tariff policy seriously, he needs to continue you
and expand Joe Biden's industrial policy, right, because then you
quickly develop your US supply side. You get these cars
he's talking about, You get all that going and so
I would suggest that he takes this seriously because he
doesn't understand what he's saying. All right, So that's all

(08:16):
very well and good for me to sit in your
studio and say that as a commentator, right, as a punt,
But it doesn't make sense, particularly not against what he's
saying about the dollar standard at all.

Speaker 1 (08:25):
So okay, So markets certainly are and investors are pretty
smart and they will parse through some of this. But
when you're getting conflicting messages, what do investors do in
that environment?

Speaker 5 (08:36):
Like, how do you figure out what's reality?

Speaker 4 (08:40):
I would imagine that sophisticated investors, more sophisticated than I,
are wondering about when to get out of anything. Right,
And you can follow this narrative, this Trump narrative, this
Trump curve up, and we saw that with equities. But
you're going to start seeing these contradictions appear, and at
that point, I think people will start getting out of things.
They exit. I'll give you an example. Scott Besant. Okay,

(09:03):
Treasury secretary pick, extremely smart, erudite guy. He's heads recently
that tariffs are not inflationary in the aggregate, making reference
to the Chicago School of monetarism, and you scratch your
head and think, well, my goodness, me, like, that's not
how Trump supporters or voters think, right, So there is
this sugar rush. I think there will be some excitement.
We've seen that in markets. You're right, But as these

(09:25):
contradictions start working their way through the system, as you
see this potential civil war between the sort of Trump purists,
MAGA purists, and the established sensible Republicans who are also
in the cabinet, as you see that sort of come
to a head, I think that you'll see that in markets.
And I'm not runing out of financial crisis at some
point in his term.

Speaker 3 (09:42):
Truly, what would what would what would trigger that financial
crist and what kind of crisis?

Speaker 4 (09:46):
Well, first of all, it might be that the FED
turns around and says, look, CPI is going in the
right direction. It's okay right now.

Speaker 1 (09:52):
Like three point two gave a story in the terminal
that it's not popular that the idea that the next
FED moves or possibly in the future could be higher.

Speaker 4 (09:59):
Well, this is what I'm saying. I think they could
be higher. Right if they're watching the economy, unemployment of
four percent of that lobby's against that, but I'm not
ruling this out. And then at that point of course,
japower would have to pull the rug out of anything
that's considered a bubble. So jpow not Trump's friends, and
markets nobody's friend if they decide that they're going to

(10:20):
pull the rub on you.

Speaker 6 (10:20):
Anyway, when do you look at the international order as
it stands? Who are the individuals that Donald Trump can
have a conversation with or I guess conversely, who feels
like he or she can have a frank conversation with
this new president about multilateralism international affairs more broadly than that,
who has his ear with whom does he have a

(10:42):
kind of can he have a dialogue about the international order?
More broadly?

Speaker 4 (10:47):
I was going to answer nobody. I was going to
answer nobody. I don't think that's his plan. I was
going through the list of world leaders in my head. Obviously,
he wants to sit down with Putin and talk about
ending the war in Ukraine. He probably wants to call
She or visits she and talk about Taiwan. But I
don't get the sense that this is the art of
the deal. I get the sense that this is the
art of the Act and he's just going to start

(11:09):
doing things. He's also on the clock, right, I mean
two years from now there'll be Senate elections. If he
loses four seats, that's trouble too. So it's a really
good question, but I think the answer is a bit disingenuous.
Nobody he's not intending to do that.

Speaker 1 (11:22):
So then what does it mean for something like the
Russia Ukraine War? So if he does sit down with
President Putin, how do you possibly see that scenario playing out?
Because the US, as we know, has been a big
backer in terms of financial weapons right in terms for Ukraine.
So how might that ultimately end?

Speaker 7 (11:40):
Well? Does it? Well?

Speaker 4 (11:42):
This is the question. I don't think we were a
big enough backer. I think the United States fundamentally mishandled
this question. In Ukraine. We seemed to accept Putin's nuclear framing.
He said, listen, I've got these nuclear weapons, so I'm
going in and we sort of said, all right, then
we'll give out little bits and bobs of weapons. I
think I said this before for in your show. I
just would have handed everything to the Ukraine all in all,

(12:03):
in long range go for it.

Speaker 3 (12:05):
Would you have sent American troops to.

Speaker 4 (12:07):
Absolutely I would have closed the airspace. Absolutely I would have.
And I think if you if you present weakness to dictators,
history has taught us that you get you get more
in the way of annexations, you get more in the
way of aggression. So I think so to answer your.

Speaker 5 (12:21):
Question exactly what Putt did right around.

Speaker 4 (12:24):
Exactly what he did, and we should have slapped him
in twenty fourteen over the CRIMEA to be honest with you,
so I don't know how it ends, probably at the
negotiating table, probably not in a good way for Ukraine.

Speaker 2 (12:42):
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Speaker 1 (12:57):
We've been talking with Ed Price, former British trade official,
well non resident senior fellow over at NYU and as
we mind you, he has advised members of the European
and British parliaments.

Speaker 5 (13:07):
We were talking in the break about kind of where
we wanted to go next.

Speaker 1 (13:10):
Ed, and I do think a lot about US China relations,
I mean the United States and China, the two biggest
global economies when they do different things, A lot of
other countries, a lot of companies feel it, a lot
of investors feel it. How do you anticipate that relationship
evolves during the next couple of years with Donald Trump?

Speaker 4 (13:29):
It's a great question, Carol. So you have two emperors
eyeballing each other across the ocean, both of whom think, believe,
indeed that the other should bow down to the other.
That is a way of saying, of course, that Shi
Jinpin and Trump believe themselves to be powerful individuals who
deserve respect from the other. And it's another way of
saying that both China and the US consider themselves to

(13:53):
be the conservative power. It depends on the horizon, right,
So if you look at things from a sort of
one hundred year horizon, the United States is the conservative
power in the region, trying to uphold the existing order.
If you look at things from a three hundred or
more year horizon, of course, China was their first and
who on earth are we right? We're sort of flash
in the pan. So China US relations are extremely complex.

(14:15):
I think they will get more combative, and ultimately the
pinch point will be something in the south China Sea
or Taiwan. When the Chinese come to the United States,
my interpretation is that we're having an argument. I don't
think that they would come if we weren't, And if
they weren't here, I would be more relaxed about the
forward path of our relationship.

Speaker 7 (14:34):
It's axiomatic they weren't here, Yeah, I'd be.

Speaker 4 (14:37):
Like, okay, So you know, when you really argue with someone,
you go over to their house and say we need
to talk, right And I would assume that's why they're here.
Sigin Pin was invited, by the way and didn't come,
which probably would have been a breach of protocol on
some level.

Speaker 2 (14:49):
But there is a.

Speaker 4 (14:52):
Fundamental difference between the United States current interest in the
South China Sea and in the world versus what the
Chinese are proposing. Right now, we are on a collision course.
As I said earlier, Donald Trump, President Trump, to be
fair to him, sees this, understands this. It probably takes
a con man to spot a con and I think
that's why he put his hand up earlier in history

(15:13):
in twenty sixteen, seventeen eighteen about tariffs. But to be
fair to him, he sees the world through real politique lens.
He sees the world through a power lens. He knows
what the Chinese want to do. He might avoid a
conflict with China, but it would probably mean giving them
what they want in exchange for a freer hand in
the rest of the world. I don't think that trade
works because I think we're already on top.

Speaker 6 (15:36):
I had an opportunity to have some conversations with the
outgoing Secretary of State and Treasury Secretary, and what each
of them stressed is the importance of rebuilding and reanimating
a conduit of communication, because I think that they saw
what you were alluding to, that is this collision course,
a fear that if there was no red phone to
pick up or way to contact a Chinese official or
an American official, vice versa, that could be really cataclysmic.

(15:58):
And something both of those individuals tall was they were
really trying to impress upon their successors the importance of
having that Are you at all optimistic that that view
one out that there can be this kind of pugilistic rhetoric,
but there may be in a Marco Rubio or it
as Scott Bess and an awareness of the fact that
at least, having any means by which you can talk
to your counterpart is useful from a negotiating standpoint.

Speaker 4 (16:20):
So the wonderful thing about the Bloomberg terminal is that
it is information rich, as our markets and your market
listeners have so much information at the fingertips. My limited
experience of policy and policy making is that it is
information low, information poor. And I don't see that we
have enough of a conduit with the Chinese right now
to avoid that sort of thing. I mean, Christ Jeff

(16:41):
basically sent Kennedy a facts right or two factxes, and
I don't know that we are at that level of
communication or understanding. There was an equilibrium between the United
States and the Soviet Union. Both of them were enlightenment
projects in a sense. One of them was a bit perverse,
but they were about managing a country essentially, right. The Chinese,
I think, have a different view of the world. They

(17:03):
have a civilizational view of the world. And I don't know,
and this is our fault. I don't know that we
understand them promptly that or that we truly understand them
or are always respectful. Again, I mean, there's there's one
word that you can throw out their opium and you know,
tell an entire story of how the West hasn't always
been respectful to the Chinese. That's a long winded way
of saying, I don't think that we are communicating with

(17:25):
them properly, and I don't I don't feel confident that
we can.

Speaker 5 (17:30):
You know, to be fair.

Speaker 1 (17:31):
You know, President Trump, you know, pushed back with tariffs
on China in his first term.

Speaker 5 (17:37):
They were carried over into President Biden's term.

Speaker 1 (17:39):
And if you think about China, I think that's fair
to say that both sides of the aisle agree that
there needs to be some pushback. So having said that,
are we just at this point where, you know, for
what twenty twenty five years? I feel like from the
beginning of my career in business news, it was all
about making sure that global multinationals were in China, US
big firms were in China.

Speaker 5 (17:59):
And now we're starting to rethink what needs to be
going forward.

Speaker 1 (18:03):
And I just whether it's the pushback against globalization, push
back against China specifically. I mean, is it just a
new chapter that's being created in the US China relationship
that lasts for I don't know the next it could be.

Speaker 4 (18:17):
I think it's I think it's a bit of a
conundrum because on the one hand, businesses and American capital
need as much positive exposure to the Chinese economy of
scale as they can get still still absolutely and I
think they would be both. I mean, if you look
at I don't know, JP Morgan, what have you like,
they would be loath to unilaterally pull out, particularly if
their competitors were still there. So this is economics right,

(18:40):
And ultimately JP Morgan pays a lot of tax and
that goes into the US military, So there's a there's
a conduit there. On the other hand, at some point,
either through uncertainty or through executive order or what have you,
there will be a moment that there is a strong
case to be the first out and to cut your
losses and to get a from a negative exposure to China.

(19:02):
I think that businesses are in a constant statum uncertainty
right now. They don't know how to comply. This is
very similar to the Brexit process, which I sort of
saw someone from the inside, where the commission would say
some European commission would say something, and then the British
financial services would think, should we just overcomply because we're
not sure. So I don't know that China and the

(19:22):
US have a clear glide path in either direction. I
think it's a conundrum. It's a dilemma, and there are
and it's a trade off that either way there's going
to be losses somewhere.

Speaker 3 (19:31):
And I want to step back a little bit and
talk about you know, we're talking investment, talk about the
investment environment here for Americans and for people in the
US during this next administration. During this current administration, you
wrote in a recent column for FDI Intelligence over at
the Ft that there could be this Orange gold rush
if certain Biden policies are kept in place, but also

(19:52):
certain Trump policies are enacted, but other Trump policies are
not enacted. Sort of this perfect storm of like, okay,
don't go too hard when it come to deportations and
immigration controls, but also go ahead with those tax cuts.
What's the what's the sort of best case scenario here?

Speaker 4 (20:07):
Well, I would remind you of very erudyte listeners that
the gold Rush was a disaster and not many people
got rich. I think the best case policy is that
Trump sort of redoes Reagan, that there is sensible deregulation,
that maybe we pull back on Basil three a little bit,
and all the all the rest of it, we've we've
read it. It's in my column, it's and everyone's writing
about what he could do that would make sense. And

(20:30):
if that and if he manages to say we're going
to get out of the hair of business a little bit,
we're going to calm down on tariffs, we're going to
remove criminals, but not the labor upon which this country
is foundationally built, by the way that labor is not
always American, then there is a way of sort of
reading the Trump ruins where you can say this might
be quite good. And I think that's what's happening now

(20:52):
with the markets. Back to your earlier point, Carol, the
problem is if you if you blow more dust off
this big tablet that I've now invented, and there are
further runs you can see again it doesn't add up.
There is a fundamental contradiction between cutting people's taxes and
lowering the available number of goods. I mean, that's the
money goods ratio. As everyone points out, that's inflationary. So

(21:14):
we're in a spot of bother with Trump. I think
if you scrutinize what he says. If you just feel
happy about it and have a nice can of orange soda,
you should be fine.

Speaker 6 (21:24):
I want to go back to something we heard from
Tina Fordham, that is, there's going to be this European
summit in a few weeks time, and whatever agenda might
have been in places has been scuttled now and I
wonder sort of what the consequences of that are of
all of these other global powers having to kind of
comport themselves in a different way because of the president
who's in the White House. And I think back on
when I was covering the G twenty, the US had

(21:46):
this very reduced presence there on the ground in Rio,
and you could kind of see those other countries reconfiguring
the kind of magnetism they have with other countries. So
the alliances were really shifting in real time there in
terms of who was meeting with whom. What are the
consequences sort of exclusive of the US, to having the
US take up so much oxygen and so much bandwidth
under this president.

Speaker 4 (22:08):
There are only there are only a couple of sensible
things that other countries can do now. Germany, which is
basically the EU needs to re arm, which as an
Englishman I think is an astonishing thing to say. You know,
I'll be getting some emails later, I'm sure, as does Japan.
And that's that's a way of saying that countries. It's
like this, like asymmetric risk. Right, If there's only a

(22:28):
five percent chance ten percent chance that Trump is serious
about half of this stuff, then you have to put
more than five or ten percent of your resources into
thinking about how to deal with it. I mean, imagine
if Trump sits down with Putin and says, Okay, what
parts of Ukraine do you want? That's fine with me.
I don't care, they're yours, and then Putin thinks, well, okay,
the Bultics or Poland annexed Germany has to stop making

(22:49):
cars and start making tanks, right, and I think the
same is true of Japan. So what are the consequences
for the US taking up so much oxygen? Ironically, we're
going to have to go back to world that probably
previously existed closer to nineteen ten, which is that regional
powers try and look after their own interests and have
a battle plan effectively for looking after themselves.

Speaker 1 (23:11):
So there's a lot still to be known, and you know,
we'll have another election, We'll have midterms in two years,
We'll have another election, presidential election four years. So I
just wonder. And we have a government that has so
many people in there so that things kind of move
more slowly. We have checks and balances, although we're now
questioning whether or not all those checks and balances are
in place. What's the thing that you're most concerned about

(23:32):
that will be a long, you know, lasting effect. I mean,
we haven't even talked about climate change or ai which
are some of the other big issues that are facing
our world.

Speaker 4 (23:41):
So I said this before I say it again. I
don't think Donald Trump is a threat to democracy. I
think he is a threat to the republic, which is
ever so slightly different, but is an important distinction to make.
He degrades the way we do things, codified or otherwise
that we could previously have counted on to be a
part of the checks and balance system. Right, for example,

(24:01):
firing Comy back in the day, right, firing Comy wild
and so law. But the rule of law is this
sort of ethereal thing, right, because it's a spirit and
the letter. And I think that he's not always a
threat to the letter he took the oath. Today he
is the constitutionally elected president of the United States. But
I don't think he likes the spirit. And this is

(24:22):
the thing that I would really watch carefully, which is
the extent to which his comportment, his manner, his worldview
start to seep into the American establishment, and you start
to make assumptions about, well, how would JD. Vance behave
were he president in the future.

Speaker 5 (24:37):
We don't know, right, We don't know at all.

Speaker 4 (24:39):
Of course, I can come back later and tell you
I'm completely wrong. If you like, I mean, that might be,
that might be wise.

Speaker 1 (24:44):
Is it wise for us to assume that someone's going
to pick up the mantle from him and continue.

Speaker 4 (24:49):
Something that has been let out of the box in
the American body politic? Okay? And it's it's hyper democracy.
It's the sort of democracy the founding fathers did not want,
which is that someone who is quite combative, quite crude,
and not necessarily in favor of the spirit of the
Constitution is now in power. And I blame me and
all of the other people. I mean, I'm a registered independent,

(25:11):
but all of the Democratic voters, Let's be honest, who
thought for a very long time, twenty five years that
we know best sitting around on the coasts sipping frappuccinos. Okay,
guilty is charged, and we completely took our eye off
the ball as to what matters to a lot of Americans,
and this is their response.

Speaker 3 (25:29):
We're speaking with Ed Price, former British trade official, now
non resident senior Fellow at NYU. He's advised members of
the European and British Parliament. He writes regularly about politics,
economic policy and more. As a reminder too, we're also
keep an eye on what's happening at the Capitol One
Arena in Washington, DC, where we do expect to hear
from the President in just a few minutes.

Speaker 8 (25:50):
Ed.

Speaker 3 (25:50):
What happens though, if it doesn't work? What happens if
the Americans who you spoke to and you met throughout
your road trip this summer we've had you want to
speak of that, You've written a lot about it. What
happens if the policies from this Trump administration do not
improve their lives? What's the next iteration?

Speaker 4 (26:08):
I think the next iteration could be past populism, And
then you would be appropriate if you were talking about
fascism this has happened in history time and time again.
There is a solid backbone of good, honest people in
this country who have followed the rules and really seriously
been let down in the last quarter century. And that
is a fundamental observation that Trump made. He's promised them

(26:31):
the world, He's promised them to get back on their feet.
They've believed him. You're asking exactly the right question. If
he lets them down now and we go into this
kind of like dystopia tech overlord's situation, then they are
going there's going to be hell to pay from them,
and rightly so. Now, I wish that there was some

(26:51):
third way of doing this. I wish there was a
romanticized small L liberalism, small R republicanism like the aforementioned
tr Roosevelt. We could get Americans interested in again. But
the choice between Trump and the Democratic Party isn't working.

Speaker 1 (27:07):
We are a young democracy, as you reminded us, versus
something like China or just not a demand even if
in terms of government, I mean, is this just kind
of what we need to go through to get to
a better end. I don't think to make our government evolve.

Speaker 4 (27:22):
I think that the fundamental mistake we made was twofold
one in the seventies of Fiat dollar without a better
way of controlling it. We can get into that if
you want or not. And the second one was allowing
China into the WTO and allowing it to be a
developing rather than developed country status for too long. So
these are really structural, huge structural problems. There are now
too many dollars in in existence. We've enriched a potential adversary.

(27:45):
We are in a precarious position. We imported deflation, so
we're in trouble.

Speaker 6 (27:50):
Yeah, Price, great to speak with you. Thank you very
much for an extended period time with dead Price, thinking
of NYU for a British trade official now non resident
senior fellow at n YU.

Speaker 2 (27:59):
This is the Bloomberg Business Week podcast. Listen live each
weekday starting at two pm Eastern on Apple car Play
and Android Auto with the Bloomberg Business App. You can
also listen live on Amazon Alexa from our flagship New
York station, Just Say Alexa played Bloomberg eleven thirty.

Speaker 1 (28:18):
President Donald Trump signaled plans to impose previously threatened tariffs
of as much as twenty five percent on Mexico and Canada,
possibly by February first, reiterating his contention that America's closest
neighbors and largest trading partners are letting undocumented migrants and
drugs flood into the United States.

Speaker 3 (28:36):
The President also widened his tariff threats to include China
and the European Union. For more on what this might
mean for US companies, we checked in with Gina Martin
Adams Bloomberg Intelligence as director of Equity Strategy and a
chief equity strategist.

Speaker 8 (28:49):
Right now, it's still relatively speculative, but the one thing
we can hang our hat on is the fact that
the dollar has been rallying since late September, in fits
and starts, of course, but at its peak just a
week or so ago, the dollar was up ten percent
from its low in late September.

Speaker 5 (29:04):
The dollar is a.

Speaker 8 (29:05):
Signal for portions of the US market, especially the S
and P five hundred's most multinational stocks, which tend to
experience ripple effects of currency in their earnings outlook.

Speaker 5 (29:17):
Now these happened to.

Speaker 8 (29:18):
Be also the stocks that were largely leading the S
and P five hundred earnings recovery in twenty twenty three
and twenty twenty four. They now face the most difficult
comparisons and the highest earnings expectations going into twenty twenty five.
So I would anticipate that at the very least you
have some currency concerns start to eat away a little
bit at multinational stocks earnings outlook, which could create another

(29:42):
bout of volatility or indigestion in stocks as those emerge.

Speaker 3 (29:45):
Gin we have sort of a playbook here in recent history.
We saw what happened in the first Trump administration, We
saw certain tariffs continue in the Biden administration. How were
the stocks that were affected, the sectors that were affected,
how were they hit, and how does that play unto
your analysis over at Bloomberg Intelligence.

Speaker 5 (30:05):
Yeah, I think it's a great point.

Speaker 8 (30:06):
There is a precedent, but pass is not necessarily a
perfect precedent for what.

Speaker 5 (30:10):
To expect in that.

Speaker 8 (30:11):
In twenty eighteen, the tariffs were pretty targeted at China.
This time around, it looks like the tariffs could be
considerably more widespread, wrapped up with as you mentioned at
the onset and immigration issues targeted at least in the
short run at Mexico and Canada predominantly. China seems to
be kind of put on the back burner, or at

(30:31):
least temporarily on the back burner. Let's see where that
goes over time. Nonetheless, there's one indicator that I think
is really the most important for investors to follow regarding
the potential market implications, and that is the operating margin
forecast from analysts. This is one of the single best
indicators of coming performance in the equity market. Operating margins
obviously have been expanding for the better part of the

(30:52):
last two years. In twenty eighteen, we saw operating margin
forecasts turnover very quickly, not only because of tariffs, but
also because the FED was tightening interest rates and we
had some operating issues at the largest tech companies emerge.
And so I think you want to watch this operating
margin forecast pretty carefully. If analysts start to lose face,

(31:13):
that face that companies can pass through prices onto their
ultimate consumers, that they can maintain pricing power, that is
usually pretty problematic for stocks going forward. We saw that
in twenty eighteen. We may say that again now now
on the products and areas that could experience the greatest
operating margin pressure, it could be quite different. But the
important thing to know for the markets at large is

(31:35):
that operating margins are the.

Speaker 1 (31:36):
Key also fair to say, And I was thinking about
a conversation Tim and I and David Gora had yesterday
following the inauguration, and this was with Stefan Seelig. He
was Under Secretary of Commerce for International Trade at Commerce
during the Obama administration. He was also head of the
International Trade Administration, and he said, when we talked about.

Speaker 5 (31:53):
Tarrifs, he said, they're complicated.

Speaker 1 (31:55):
They are not all one thing. And as you made
that distinction between twenty eight team and the tariffs were
very targeted at China versus maybe something here that's more
like a blanket tariff, it does become a different issue.
So we have to be smart about kind of the
devil in the details we do.

Speaker 8 (32:11):
And I think the other thing to consider is that
tariffs target at economies often impact markets through companies, and
economies and markets are not the same thing. Economies companies
are really a microcosm of economies are certainly related to
the economies, but the companies are the ones that oftentimes
pay the tariffs. A good example is, you know, these

(32:31):
tariffs targeted at Canada, how much of that is actually
going to impact US auto manufacturers who are some of
the biggest exporters of products from Canada into the US.
Is a huge question, and I think we have to
consider that companies are very multinational in nature. Many of
the US companies that are multinational will ultimately be the
payers of these tariffs. So we want to be really

(32:54):
careful and conscientious in not suggesting that tariffs that are
targeted at economy are paid by those economies exclusively. They're
generally paid by companies, and companies are often multinational in
nature and can sit on various exchanges across the world,
don't necessarily represent those economies.

Speaker 3 (33:12):
Gina, in your analysis, does any of the transformation that
the president is hoping actually happen. The idea that maybe
because of tariffs, companies based here in the US will
manufacture goods closer to home in the US, employ more Americans,
and make it work as the whole idea behind these

(33:34):
being implemented is well.

Speaker 8 (33:36):
I think there have to be a lot of other
changes that happen to get US companies to relocate into
the United States beyond simply an acceleration and cost. Companies
tend to find lowest cost labor around the world. They
will not necessarily relocate to the US. They may relocate
to other nations. They may find other ways to path

(33:56):
through costs. There are a lot of different avenues by
which companies can flexibly approach a sanctions or a tariff's environment,
such as the one that we're likely to go into.
I think you can see some relocations to the degree
that's in the best interest of profitability of the company.
But that profitability is most important for public companies to
keep an eye on, obviously, and if it's not in

(34:19):
the best interest of their shareholders, if it's not in
the most interest of seeking profits, then why would they
relocate to the United States. There has to be a
pretty compelling reason beyond tariffs. One of the biggest reasons
companies locate outside of the United States is it's just
more efficient, more effective, and better for their cost structure.

(34:39):
Will tariffs ultimately overwhelm that decision. It seems unlikely, given
that labor is such a huge portion ultimately of company costs.
But we'll see you can also see efficiencies gained in
other ways, another by relocating into other regions of the world,
particularly when we're selling into other regions of the world.
As a corporation. So I think it is very complicated.

(35:00):
I think that a blund instrument of tariffs can be
effective in certain instances, particularly protecting domestic industries, but it's
not one big broad brush that we can paint, and
I think that each company decision will be made on
a profitability perspective of that independent company.

Speaker 1 (35:17):
Hey, gin know, one thing I want to ask you,
and one of the things that we've talked about over
the last couple of years is some of the spending
plant programs that Congress passed, that Biden initiated, that Congress
ultimately passed and put investment dollars certainly into the US economy,
spending on infrastructure, green initiatives, and so on.

Speaker 5 (35:35):
Chips.

Speaker 1 (35:36):
Donald Trump is expected to announce an Open AI SoftBank
Oracle AI investment. We've been talking about this news out
of CBS reports, and I just wonder how you were
thinking about or watching the Trump administration for other things
that you think could potentially increase kind of the liquidity
and cashets out there to put to work that would
impact the markets, the equity market as well.

Speaker 8 (35:58):
Yeah, I think federal spending programs have become a really
big bogie to watch for companies. Over the course of
the last several years, the Chips Act was very consequential.
The Inflation Reduction Act was also pretty consequential to certain
industries profitability trends. So any sort of fiscal spending package
or public private partnership dedicated to elevating investment into certain

(36:21):
sectors can be very meaningful. I think we have to
watch rather than speculate as to what may happen.

Speaker 5 (36:27):
I think we want to watch for.

Speaker 8 (36:28):
The details of each of these packages to assess the
viability and certainly the market impact. But nonetheless, we are
in an era where federal spending and targeted federal spending
is having real economic and market consequences.

Speaker 1 (36:41):
I feel like I'm going to make up t shirts
watch operating margins because I feel like that's my big
message from you right now.

Speaker 8 (36:46):
Overall, it is the big message this year.

Speaker 5 (36:48):
One percent great stuff. Thank you so much.

Speaker 1 (36:50):
Bloomberg Intelligence Director of Equity Strategy. She is also the
chief equity strategist of our team there at BI.

Speaker 5 (36:56):
She's Gina Martin.

Speaker 1 (36:57):
So Tim, that's really the big picture when it comes
to tariffs and just the overall equity trade.

Speaker 2 (37:09):
You're listening to the Bloomberg Business Week Podcast. Catch us
live weekday afternoons from two to five pm Eastern. Listen
on Apple CarPlay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.

Speaker 1 (37:23):
Plenty Ahead in our second hour of the weekend edition
of Bloomberg Business Week, as President Trump kicks off his
first full week in the White House, that's this coming week,
and as we continue to report on his early initiatives
that may impact trading and the business environment, as well
as our society overall, as he looks to reign in
DEI and green initiatives.

Speaker 3 (37:43):
The leader of the free world and the world's biggest
economy is top of mind this hour, as are those
leaders he appoints to his administration and to run key
offices of the US government, which God is thinking about
what it means to be a leader.

Speaker 1 (37:55):
That's Adam Golinski's specialty. He is a social psychologist and
professor of leadership and Ethics at Columbia Business School. Adam
has spent his career building a quantifiable method of determining
who is inspiring versus who is infuriating. He joined us
to talk about his new book, Inspire, The Universal Path
for Leading yourself and others.

Speaker 9 (38:15):
So I've been studying leadership and teaching leadership since two
thousand and two. Originally I was at the calleg School
of Management, taught at Berkeley and then at Columbia, and
around two thousand and six I was actually teaching the FBI,
the Federal Bureau of Investigation. We had a program at
Kellogg for agents to come in, about sixty agents at
the time, and one of them just started talking about

(38:36):
a leader that inspired them, and I was really struck
immediately by the transformation in physical transformation.

Speaker 7 (38:44):
His eyes lit up.

Speaker 9 (38:46):
Right, he almost looked a smiled, he got expressive, his
voice spoke really quickly, with a little higher pitch, and
it was clearly that he had been fundamentally affected and
impacted by this leader. Then the next year, a different
FBI agent, ironically enough, started saying, I don't want to
talk about an inspiring person, I want to tell you

(39:06):
about all the infuriating leaders I had. And then so
I started asking hundreds and thousands, and probably tens of
thousands of people across the globe a very simple question,
tell me about a leader that inspired you, and tell
me about a leader that infuriated you, and notice both
both types of leaders transform you inside.

Speaker 7 (39:24):
Right.

Speaker 9 (39:24):
One is like a well spring, the other is, you know,
a seething cauldron. And one of the things I realized
really quickly is that they're basically mirror images of each other.
So the inspiring leader, right, has that optimistic, big, big vision.
The infuritying leader is a pessimist, pedantic, right, you know,
the inspiring leader's courageous infering leaders cowardly inspiring leader is

(39:47):
elevates people and friendly leader diminishes people. And so you
can start to understand that this happened. The second really
fascinating thing about this research is I started asking people
all over the world, so every continent that you can
think of, you know, dozens of countries, And what I
discovered was there wasn't a single inspiring or fruiting characteristic

(40:07):
that wasn't mentioned in every single country in the world.
So there's something universal in the very tapestrying fabric of
the human mind that really captures this.

Speaker 5 (40:15):
Anything between men and women differences.

Speaker 7 (40:17):
I have not found any. It's a great question, you know.

Speaker 9 (40:19):
That's that's another one, which is that you know, you know,
women find you know, courageous, big picture, you know, generous
people inspiring, you know, and so do men. And it
doesn't really vary that much by it doesn't vary by gender,
by ethnicity, by country, by culture. There's something really fundamental
about about that. I think there's some variations sometimes in

(40:42):
like you can see Democrats and Republicans right where Democrats
put a little bit more emphasis, let's say, on the
empathy side, and Republicans might put a little bit more
emphasis on the strength side of the equation.

Speaker 3 (40:53):
Well to that point, and I want to jump right
into it because I want to go we do want
to go over some leaders at a certain point, and
you know, whether they're inspiring or infuriating. But I think
to myself, here you are telling us about these different
leadership qualities or the way that people view leaders that
they've encountered in their lives. I think of somebody's top

(41:13):
of mind. President Trump to many people, to you know,
more than seventy million voters, he's an inspiring leader to
many people who didn't vote for him, and even some
people who've worked in previous administrations. In his previous administration,
he's not. He's an infuriating leader. How can one single
person be both of those things to different people.

Speaker 9 (41:33):
So I'll say three things about that. The first is
that one of the things that I think my research
has discovered is that there's these three universal factors, and
I'll sort of go through them talking about Trump in
a second. But it also tells us something fundamental. We're
not inspiring infuriating born that way, and we're not forever
that way.

Speaker 7 (41:51):
We can be inspiring.

Speaker 9 (41:52):
Today and infuriating tomorrow, and we can be inspiring on
some dimensions and infer it in other dimensions.

Speaker 7 (41:57):
So in some ways you can say all of.

Speaker 9 (41:58):
Us, every one of us both inspiring and infuritying, or
has the potential to be both at different times, right,
And so I think that's one thing. The second thing
I would say is that there's two things about Trump
that I think.

Speaker 7 (42:09):
Everyone would agree with.

Speaker 9 (42:11):
One is that he has a simple, compelling visual vision
that people everyone can understand, right, make America great again.

Speaker 7 (42:21):
It's even an acronym, right.

Speaker 9 (42:23):
And the second thing is that no one will contend
with the fact that he presents himself as a strong
and courageous protector. And two is that he comes across
as authentically passionate. And so those two are to the
fundamental of like how we are in the world, this
exemplar thing. And so he has this very clear vision
and he is very clear presents himself as this strong, courageous, passionate,

(42:47):
you know, protector. Now where he falls on the infuritying
side is I think two things. Some people find the
vision itself to be infuriating, like exclusionary it only includes
a certain category of Americans, for example, and find it
to be maybe harsh.

Speaker 7 (43:03):
And then the second thing is I.

Speaker 9 (43:04):
Don't think any person would argue with the fact that
the third fact, so the three universal factors are being visionary,
how we see the world, being an exemplar how we
are in the world, and then the final one is
mentor how we treat people in the world. And I
don't think anyone would argue with the fact that Trump
doesn't treat people very well. Right. You know, he had
more turnover in his first term than any other president

(43:26):
in terms of you know, the main leaders within his administration.
He is notorious, right for throwing people under the bus.

Speaker 7 (43:34):
Right.

Speaker 9 (43:34):
And when I ask people around the world, you know,
describe an inspiring leader, it's always someone who share success
but takes on blame and burden. But with Trump, right,
he forever steals success. It's me, me, me, me me
when things.

Speaker 7 (43:47):
Go well, and it's you you u uu when it
goes bad.

Speaker 1 (43:49):
Well and you know, And yet step back for a second,
and whether he took accountability for this or or said that,
you know, some of the policies that he implemented or
had people implement, whether it's tariff's on China, many would
say this was long and coming, Like there are certain
things he's done that actually people applaud him for, right,

(44:11):
and those terriffts with China and push back on China
carried over to the Biden administration. Now we're like getting
ready for kind of what comes next. But I'm just
saying that, is it only inspiring leaders that actually get
some stuff done? Is it infuriating leaders well also, and
you know, or leaders that maybe you know, people.

Speaker 5 (44:31):
Don't want to be around that still bring about some changes.

Speaker 7 (44:35):
Absolutely.

Speaker 9 (44:36):
I mean, I think if you look at some of
the most famous leaders in our world, you know, for example,
Steve Jobs right, even in some ways Elon Musk right,
that they fit that mold right being sort of you know,
very clear vision, you know, authentic and passionate, but not
always treating people very well, right, and so those people
might be great top of the top leaders, but they

(44:59):
wouldn't be very good for example, you know, And I
think that really makes the difference. One thing I'll say
about Trump, though, is that the things that he's concerned,
he's very good at recognizing what other people's concerns and
fears are, right, and so he's able then to package
those in a way like I think everyone would agree
we need to have a very clear immigration policy to

(45:22):
have an effective United States. Now we may disagree with
some of those elements, but he's very good at simplifying it, right,
like we need to shut our border down, you know,
to figure out what's going on, and we could maybe
then sensibly reopen it at a later point.

Speaker 7 (45:35):
And I think you see that.

Speaker 9 (45:36):
The trans issue is another one that he really expertly understood,
which is that people are concerned about fairness and athletics.
They're concerned about could someone show open a bathroom that
would make me you know, could a man schopen a
woman's bathroom, you know, using this issue as a ruse.
And so he understood people's fears around that and was
able to articulate them.

Speaker 1 (45:55):
Well, what do you think corporate leaders need to do
going forward, because often they'll have their employees they listen.

Speaker 5 (46:00):
I'm uncomfortable. I don't think of our employee base as
male or female. I think there's other choices.

Speaker 1 (46:05):
What do you think is going to how this is
going to play out in corporate America?

Speaker 9 (46:08):
I mean, that's a great question. I mean, I'll say
the first thing I'll say is, I do think that
one of the reasons why Kamala Harris lost the election
was two things that are on vision. She never articulated
the true state of the economy, which.

Speaker 1 (46:21):
Was that it was much better than the economy stupid, right, Like, yeah,
there's a reason why people say.

Speaker 9 (46:25):
That she didn't defend it. She didn't come out and say, yeah,
prices are higher than they should be. But like she
should have said every single day about drab growth. That's
what Trump would have done, right, every single day. And
the second thing is she never articulated at any point
what her vision around let's say, gender identity was, Like
I have no idea, Like I know that she generally
supports the rights, but like, are there limits to that?

(46:48):
Like what is the fabric of that? Like Trump was
very clear and when you when you look at some
of the exit polling, you see two things. People with
accurate information on the economy voted for Biden, and they
voted for Trump. If they didn't, if they're concerned about
the trans issue, they voted for Trump. And so I
think those are two things. Now, what should corporate leader?

Speaker 3 (47:05):
Well, I was just going to say, we have plenty
of time at least until we start to hear from
the president, and we are awaiting that at the White House.
I do want to ask, because your book it's not
just about leaders on the international stage and leaders in
the border. I mean, you talk about parenting and being
a leader in the home. What are some takeaways that

(47:27):
people who are not necessarily in managerial positions right now
can take from the book.

Speaker 9 (47:31):
Yeah, well, you know, I coined a phrase that I
use in the book called the leader amplification effect. And
the leader amplification effect is that when you're a leader,
you're essentially on stage.

Speaker 7 (47:41):
Eyes are on you.

Speaker 9 (47:41):
And one of the things we know from cognitive psychology,
and I know you've had a lot of cognitive psychologists
on this show, is that attention amplifies signals and then
those also intensify reactions. So when you're on stage, your signals,
whatever they could be verbal, nonverbal, good, bad, small, big,
are going to get at amplified, and then people's reactions

(48:02):
are going to be intensified. And so what is a leader, Well,
leader is someone who has power and status. Those are
two of the things I've studied the most in my
career social hierarchy for twenty years. And essentially it's someone
with some authority, right, and also people look up to
that person. That's what parents are, right. Parents are they
have authority over their kids, and their kids generally look

(48:23):
up to them, or at least look to them for information.
And so I have coined a phrase that I call
the parent amplification effect, a corollary of the leadership.

Speaker 7 (48:31):
Which is like they pick up on things.

Speaker 9 (48:33):
I'll tell you a very short story about this that
I really love about a former doctoral student at Columbia
who worked with some people you've had on, like Sondra Motz.
But when she was twelve years old, she overheard her
mom say to someone else, both girls are great at piano,
but I can't remember right now. Her sister's has a

(48:56):
real knack for it. Abby I think was their sister.
Abbey has a real knack for it, and she was
so incensed she never played piano again. She was like,
you know, basically, f you, mom. You think she's got
better thing? And you know, I saw her mom. And
this is what's great about the leader amplification effect is
that we can be totally unaware that we're we're we're
having this impact.

Speaker 7 (49:17):
And you know, you know, I told her mom the story.

Speaker 9 (49:20):
She's like, I had no idea why she quit PIATO,
Like that happened like twenty years earlier. And Barry Salzburg,
who is a he was CEO of Global Deloitte. About
six months after being CEO, he noticed there was bananas
at every meeting. He's like, huh, like, is banana is
an important symbol of Deloitte? I've been here thirty years
or someone else?

Speaker 3 (49:38):
Did he bring a banana to a media No?

Speaker 9 (49:39):
No, what happened was is his first meeting he went too.
He picked up a banana with a little bit of enthusiasm,
and his the executive assistant was like, have bananas at
every meeting. Barry's at you know, he didn't even say anything, right,
and so you know, whether it's your parent, whether it's
you know, and That's why I always say it's not
about a position of leadership. It's like whenever you matter

(50:01):
to someone else, right, it could be a spouse, it
could be in the dating relationship, when you care about
the opinion of another person, right, all of their expressions
and could you're paying attention right intentions? Really that currency
well with kids, I think about that a lot. We've
talked about this, how kids can be branded as well.

Speaker 1 (50:17):
You're a math kid or you're really not a math kid,
and they just kind of get it in their head
and and kind of go that route. We want to
ask you about a couple of different leaders. You have
mentioned Elon Musk. You know, it's interesting. We're just coming
off the inauguration. We saw these big tech CEOs, so
they're kind of top of mind for me when you
think of Elon, when you think of Jeff Bezos, Mark Zuckerberg,

(50:38):
Sundar Pichai of Alphabet. I don't know inspira inspiring leaders,
infuriating leaders.

Speaker 9 (50:43):
I mean I think there, you know, they can be
a little bit of both, right, and some of them,
you know clearly any you know, one of the things
that we are inspired by is people who do amazing
things right, right, Like, think of Steph Curry, Like, how
many people are you know, I Steph Curry is my
favorite player, right, he can just do things that no
one else can do. Josh Allen on the football field, right,

(51:04):
is the same way. And so you know, people who
create things are always going to hold, you know, a
big attention in the world. And that's true and throughout
history of the United States, you know, you go back
to you know, some of the famous people in eighteen hundreds,
you know, And and so I think that there's a
way that we really get captivated by that that vision

(51:24):
and that super competence. But also they can start veering
off into the wrong vision, right, and they can also
start not really paying attention to other people. So one
of the problems of the leader amplification effect is sometimes
we aren't aware of the impact.

Speaker 7 (51:39):
Right.

Speaker 9 (51:40):
That's exactly what happened with Erica's mother. She had no
idea this all in comment would have that impact.

Speaker 1 (51:45):
And so you know, so those employee surveys about your
bosses are really good.

Speaker 9 (51:49):
Yeah, I mean I think they're really good. I think
so I'm a huge fan of three sixty feedback, right,
and I think it's you know, I created I actually
created a thing called you know, an are you an
am I inspiring scale that people can sort of measure.
But the best way to use it is to take
it yourself and then have other people take it, and
then you can say, I might think I'm visionary, but

(52:10):
they don't see me as visionary. And that's the you know,
that's what we want, is we want accurate understanding of
how other people perceive us.

Speaker 3 (52:18):
So I'm thinking about other leaders out there who are
in our world. We talked about Lelon Musk, we talked
about some of the other tech leaders. We just celebrated
the life of Jimmy Carter, and a lot of people
in remembering Jimmy Carter talked about how he had these
qualities that you know, really inspired people around him, but

(52:41):
he was an ineffective president because he was a micromanager
and he didn't play the politics game. How do you
how do you balance where do you balance on this
continue to be effective?

Speaker 7 (52:50):
Yeah? I think that's right.

Speaker 9 (52:50):
I think, well, if we just got you know, the
last chapter of the book talks about actually the connection
between Jimmy Carter and Donald Trump.

Speaker 7 (52:58):
They both lost.

Speaker 9 (52:59):
Reelection, you know, and you know, Fortunately I was able
to get in a couple of paragraphs about Donald Trump
becoming president again, you know, after that. But you know,
they lost because I think different different parts of what
I call the VEM diagram of inspiring leadership, visionary, exemplar
and mentor Donald Trump. Sorry, Jimmy Carter was clearly he
was deficient on the visionary end, right, he never articulated

(53:23):
a clear vision first presidency. And there's an amazing quote
by I can't remember exactly what it was, but it
was about even cabinet secretaries need a vision in order
to execute within their departments, and Jimmy Carter never gave
him that vision, so they couldn't execute effectively. And the micromanagement,

(53:43):
you know, the famous story of Jimmy Carter approving the
tennis schedule everything, you know. You know, it's unclear whether
it's actually true or what role he played, but it
fit the the image of who he was, which was
someone who was lost in the weeds, a micromanager couldn't
see the thing. But all those other qualities, right, his
his courage, his calmness, his humanity, those shoone brightly outside

(54:07):
of the Oval office, and so in many ways, right,
his entire image was rehabilitated in that process. And you know,
Donald Trump, you know, really benefited from the fact that
distance left him.

Speaker 7 (54:19):
He lost because he was a poor mentor, but.

Speaker 9 (54:22):
The distance allowed people to forget how he treated people well.

Speaker 1 (54:26):
So much in this book you cover a lot of ground. Adam,
Thank you so much, Adam Galinsky. Paul Kalello, Professor of
Leadership and Ethics at the Columbia Business schal His new
book Inspire, The Universal Path for Leading yourself and others.
It is out and really gives you a lot of
things to think about in terms of leadership today.

Speaker 2 (54:44):
This is the Bloomberg Business Week Podcast. Listen live each
weekday starting at two pm Eastern on applecar Play and
Android Auto with the Bloomberg Business App. You can also
listen live on Amazon Alexa from our flagship New York
station Just Say Alexa played Bloomberg eleven.

Speaker 1 (55:02):
Safe to say leaders around the country will be answering
some questions about DEI policies following a move this past
week by President Trump. The President ramped up his assault
against diversity, equity and inclusion policies to corporate America, targeting
federal contractors and publicly traded companies for practices he labeled
quote dangerous, demeaning and immoral.

Speaker 3 (55:22):
Someone who is working to achieve racial and gender equity
across investing is Darren Dodson, managing partner at a lumin Capital.

Speaker 10 (55:29):
I think that the challenge of those that would be
fully against DEI is that they're also against what, from
what we've analyzed at illuming capital economic return, also market optimization.
They're against Nobel Prize winning economic value within corporations. Also

(55:54):
we also see there against some of the basic underlying
principles of modern portfolio theory. So I think that what
leadership looks like now is figuring out ways to embrace
some of the important ways of addressing biases towards people
who are overlooked and underestimated within corporations and unlocking that

(56:18):
to achieve prosperity. Like like Martin Luther King so poignantly
put in in a in a very similar in a
very similar way, from a similar place in Washington, d C.
That Trump is in.

Speaker 6 (56:34):
Now, darn, where are we on this spectrum of companies
adopting and embracing DEI policies. We're talking here, of course
about this in the context of of the new, the
new and past president, but more broadly, I mean there
have been so many changes of foot I think back
on that interview that Mark Zuckerber gave with Joe Rogan
in which you talked about the need for more masculine
energy in companies. It strikes me that there really has

(56:56):
been a regression, a move backward here, and I wonder
how you process that and sort of are thinking about
ways in which to again get this back on the
radar of executives and boards and make it something that's
not seen as I mean even a hot button issue
is putting it mildly here, but something that I think
a lot of companies are kind of studiously avoiding at
this point in time.

Speaker 10 (57:17):
I think one way to put it back on the
radar is to do what Wharton and Stanford Business School
have done, which has put excellent leaders at the helm,
including Dean Eric James and as of last week, Dean
Sarah soul the first woman in one hundred year history

(57:40):
of Stanford Business School, where I have the pleasure of
serving on the faculty. So every young person around the country,
whether they're women or men, or boys or girls, looking
at the future of business leadership can see themselves either

(58:02):
being managed by an extraordinary woman in leadership or also
you know, seeing that they could become, you know, dean
or CEO. I think that's why companies like Apple and
Costco are stepping forward at this moment. And what I've
always learned is that when we're in moments like this,

(58:26):
it's not that character is built in moments like this,
it's that it's revealed. And I think it's powerful to
see these companies revealing their character and not just kind
of unfolding what they've stepped forward and committed to over
the last several years.

Speaker 2 (58:43):
Darren, what are you.

Speaker 1 (58:44):
Seeing though, on the financial side of things when it
comes to racial and gender equity?

Speaker 5 (58:49):
Are you still seeing.

Speaker 1 (58:49):
Initiatives the money, you know, follow the money. Is it
going towards those efforts? Does it continue to are you
seeing a slowing down.

Speaker 10 (58:58):
We've seen a number of foundations, and you know, Apple
seems like a good company that has created a lot
of economic value over the years to be continuing along
the journey. So economic value and DEI I think for
a very long period of time, especially as we look
at the biases and heuristics that Warren Buffett and Charlie

(59:21):
Munger talk about within investment decision making and processes and
detail out in innumerable different biases. But we still think
that one of the greatest overlooking and underestimating of financial
value in economic markets is when race and gender is present.
So that's a really important aspect of continuing down the

(59:45):
process and enabling investors, some of the largest investors in
the world, to continue to find latent value in economic markets.

Speaker 3 (59:53):
Darren, I'm wondering if you think that this could end
up being a problem the market solves itself without actually
regulations or rules coming into focus. Because you've been on
with us many times over the past few years and
you've shared with us outperformance of investments that you've made
and that you haven't made as a result of who

(01:00:15):
is leading these funds or who is leading these companies.
Is this something that the market can solve because people
understand there is value there, So it really.

Speaker 10 (01:00:23):
Can't be solved without some type of intervention. And the
reason why is bias is something that's unseen. So by
naming that and working effortfully and monitoring it, as Daniel
Kaneman talked about it as Nobel Prize winning research we're
able to really ascertain what those biases are and then

(01:00:45):
build systems to address them. So one point three percent
of eighty two trillion dollars is managed by women and
people of coloring global asset management and global asset management
business right now. And part of what we see is
despite forty years of or above performance of women and
people of color, asset flows are not going to match

(01:01:07):
that out performance like we would expect in an efficient market.
So what that tells us that we have to double
click and look at those biases that asset allocators, many
of them unintentionally apply and miss economic opportunities to grow
their beneficiaries portfolios and to really unlock economic value for
their clients, et cetera.

Speaker 1 (01:01:28):
Hey, listen just ten seconds, Darren, Are you more hopeful?

Speaker 5 (01:01:31):
Are you more nervous?

Speaker 11 (01:01:33):
Well?

Speaker 10 (01:01:33):
One of the things that I think, well, on a
day like today, in celebrating Martin Luther King's birthday, a
person who was assassinated for the things that he believed in,
it's great to be working on a mission to address
these fundamental problems of bias in the global asset market

(01:01:54):
management business.

Speaker 1 (01:01:56):
Agreed, Agreed, So glad to get some time with you
on this very important day, and thank you. Darren Dotson,
maaging partner at a Lumen Capital, joining us from Oakland, California.

Speaker 2 (01:02:12):
This is the Bloomberg Business Week Podcast. Listen live each
weekday starting at two pm Eastern on Applecarplay and the
Android Auto with the Bloomberg Business App. You can also
listen live on Amazon Alexa from our flagship New York station,
Just Say Alexa played Bloomberg eleven thirty.

Speaker 1 (01:02:31):
This past week, a deep free straining power supplies across
the Eastern United States, sending demand on the country's largest
electric grid to an all time winter high. As the
US South dug out from one of the worst snowstorms
in one hundred and thirty years.

Speaker 3 (01:02:45):
We also saw New La wildfires breakout and a constant
tracking of weather conditions and wins that impact fire conditions
in the area and then out. At Davos, the Secretary
General of the World Meteorological Organization urged businesses to work
harder to provide early warnings on extreme weather and help
connect the dots with climate change. The Climate Panel at

(01:03:06):
Davos happening only days after President Trump moved to exit
the Paris Agreement and to back down from the US
International Climate Finance Plan.

Speaker 1 (01:03:14):
Tim That was all this past week, and then the
week before we actually caught up with Gena McCarthy. She's
a former EPA administrator in the United States, the first
White House National Climate Advisor. She's also managing co chair
of America Is All In Coalition, a group of leaders
from all over the United States that supports climate action
and is supported by Michael R. Bloomberg and Bloomberg Philanthropies.

(01:03:37):
Gina is also a senior advisor at Bloomberg Philanthropies, the
philanthropic arm of Bloomberg LP, the parent company of Bloomberg
Television and Bloomberg Radio.

Speaker 3 (01:03:46):
She's also operating advisor at Pegas's Capital Advisors and a
senior advisor at TPG Rise Climate Fund.

Speaker 11 (01:03:52):
My heart does go out to everybody in this area.
It's really feels.

Speaker 12 (01:03:58):
Like I'm watching climate change crisis in action when I'm
looking at what's happening in the devastation.

Speaker 11 (01:04:05):
Look.

Speaker 12 (01:04:06):
Twenty twenty four was the warmest year on record globally,
and what we saw in California was extreme heat and
a lack of rain. We saw one hundred miles per
hour winds and that just led.

Speaker 11 (01:04:22):
To a recipe for disaster, and I think we have
to be prepared.

Speaker 12 (01:04:27):
We have to understand how we can be more resilient,
how we can adapt, and look at some opportunities. We
have to really begin to tackle these issues and stop
the climate denial that keeps holding people back. You know,
these extreme weather events cost American families more than one hundred.

Speaker 11 (01:04:46):
And fifty billion dollars every year. Isn't it time for
us to really recognize this and take action?

Speaker 3 (01:04:54):
Administrator, you said we have to be prepared. Was Los
Angeles not sufficiently prepared for this latest round of wildfires?

Speaker 11 (01:05:03):
No, that wasn't what I was suggesting.

Speaker 12 (01:05:06):
I mean it was a confluence of the issues that
actually led to this challenge. But my point is that
we have to moving forward understand that with the advent
of climate change and with the challenges that we're facing,
we have to understand that a shift to clean energy
is essential.

Speaker 11 (01:05:24):
Reduction in our need.

Speaker 12 (01:05:27):
For fossil fuels is essential, because we cannot allow this
to continue to exacerbate. This is just the start of
this problem. This is not yet answered, and it's time
for us to develop a strategy in the United States
to work with other countries to really start focusing on

(01:05:48):
this clean energy zoom that we need to advance.

Speaker 1 (01:05:53):
Donald Trump, of course, has talked about more drilling in
terms of fossil fuels, and certainly seems to be a
much more simpathetic sympathetic ear in terms of the fossil
fuel industry, having said that time will tell in terms
of whatever policies we see. But any increase in reliance
on fossil fuels, that's a problem in your view, I'm

(01:06:15):
asking with a question marks.

Speaker 12 (01:06:19):
It's inconsistent with what we know we need to do
to address climate change and keep people healthy. That's the
major challenge here. And so the good news is that
we have the answers here. You know, clean energy is
literally booming. We now have federal investments.

Speaker 11 (01:06:37):
That are really changing the game here.

Speaker 12 (01:06:40):
We have the BIPOD it's an infrastructure of the Inflation
Reduction Act. All that means that we now have more
than four hundred thousand new clean energy jobs that have
already grown.

Speaker 11 (01:06:51):
Just in the past two years.

Speaker 12 (01:06:53):
We have seven hundred and fifty one new clean energy
projects out there. We're talking about and jobs and rural communities.
We're talking about the in low income communities, and this
is our opportunity. This is how we're going to prevent
the continued devastation that we're seeing and begin to realize

(01:07:15):
that clean energy is our answer and.

Speaker 11 (01:07:18):
It is cheaper for families.

Speaker 12 (01:07:20):
I mean, we are talking about great news here on
clean energy investments because it is lowering costs, but it's
also opening the.

Speaker 11 (01:07:28):
Door to a whole lot more energy choices.

Speaker 12 (01:07:31):
Like solar, which is thirty three percent cheaper than gas
power that translates into a ninety five percent reduction in
utility costs. This is a big deal and it is
an opportunity, but we still not.

Speaker 1 (01:07:46):
But you know, you know, we rely still so much
on fossil fuels at this point, right, And many would argue,
even green energy folks will say, you know, we still
kind of need a hybrid approach in terms of energy
because everything on the alt side, whether it's increasingly people
are pointing to things.

Speaker 5 (01:08:02):
Like nuclear or geothermal.

Speaker 1 (01:08:03):
But even so learned wind it can't meet the demand
that is out there today, and that we still need
to rely on fossil fuels. Unfortunately, some might say for
a few more years.

Speaker 12 (01:08:15):
Well, part of the challenge that we saw. You're absolutely right,
I am not suggesting that we reduce our energy demand
or our energy in a way that's going to impact families.
We need to address our energy challenges, but we don't.
We can do that over time by increasing clean energy

(01:08:38):
and watching fossil fuels be higher price, which they already
are now and phase out. So this is not in
all enoughing, nor is this an opportunity to threaten people's lives.
We have to keep energy.

Speaker 11 (01:08:52):
Out there and moving and strong. But we can.

Speaker 12 (01:08:55):
Do that in a way that saves families money. We
can do that in a way that lowers our air
pollution challenges. We can do it in a collaborative way
internationally so that we meet our responsibility to other countries
as well. And so I'm excited about the opportunities now.
I am not looking to shut the Spicott off of

(01:09:16):
fossil fuel tomorrow. I am looking at this as an
opportunity to ensure that clean energy can progress, because it
is the winner. It's the winner for our families, it's
the winner for our pocketbooks, and it is certainly a
winner in terms of the health and safety of our
country and how to move forward.

Speaker 7 (01:09:35):
Do you think it?

Speaker 11 (01:09:35):
So we just have to continue to be leaders on this.

Speaker 3 (01:09:38):
Do you think we can continue to be leaders on
it during the next Trump administration given the way that
the President elect has been outspoken about his disdain for
renewable energy and his support of the fossil fuel industry.

Speaker 12 (01:09:52):
You know, I think it's going to be very challenging.
It was very challenging during the Trump administration. But one
of the reasons I've been working with Bloomberg Philanthropies, as
you indicated, is that we're working on a program called
America Is All In. It's an unbelievable opportunity for governors
and mayors, local community leaders to work together to fill

(01:10:14):
in the blanks when the new administration might want to waiver. Look,
most of the money and the IRA the Inflation Reduction
Act is actually going to Republican districts. You can see it.
That's when most of the projects are being built. So
they would have to be sort of challenged to not

(01:10:37):
realize that we have to move this forward, and it's
just as important in Republican districts, if not more so,
than ENDEMA.

Speaker 5 (01:10:44):
So you know, one thing I want to ask you.

Speaker 1 (01:10:45):
You're a senior advisor at TPG Rise Climate Fund, operating
advisor at Pegasus Capital Advisors. You know, we have spent
so much time I feel like over the last decade
even talking about the intersection of you know, money from
you know financial mark, it's capital markets, the private sector,
working with the public sector. What are you hearing from

(01:11:06):
your experiences and working with those folks who manage a
ton of money and can put it to work and
make things move in the green space. We understand there
are commitments and then there are really strong initiatives that
move the needle. And especially under Trump administration, where I
think many would argue too that they don't necessarily want
to make the incoming president look at them negatively and

(01:11:30):
get negative attention. So I don't know what's your hope
for the next couple of years. And that intersection I
think of money that moves things.

Speaker 12 (01:11:39):
Yeah, I think you're going to see continued investment in
the private sector. No, they may not be standing up
and saying, you know, I'm doing this or that, but
there's no question about it that we are not seeing
private sector investment or public sector money waning. It is
actually an opportunity of our lifetime. And I think that

(01:12:00):
you know, even if President Trump doesn't want.

Speaker 11 (01:12:03):
To admit it.

Speaker 12 (01:12:05):
We are highly dependent now on clean energy.

Speaker 11 (01:12:08):
We have to be.

Speaker 12 (01:12:10):
We can not go back. We don't have that as
a choice.

Speaker 11 (01:12:15):
And the exciting thing is we don't have to, you know.

Speaker 12 (01:12:19):
So right now, we know that Republican districts are heavily
invested in this, as are the Democrats. We know we
have governors, We know we have leaders in cities and
communities that are going to keep pushing forward. So this
is all about the entire United States of America recognizing
that we're facing a world's challenge that we not only

(01:12:41):
helped to instigate, but can actually become leaders and moving forward.
And the companies that I'm working with are all in
on making that shift to clean energy and recognizing that
that's were we're going to actually make the most benefit
for our communities today and build a stronger America tomorrow.

Speaker 3 (01:13:03):
Administrator Donald Trump's pick to lead the EPA Lee Zelden.
He did tell a CENTI panel that he believes that
climate change is real. What are your thoughts on him
as the pick?

Speaker 11 (01:13:12):
Well, that was better than the answers I've seen from
other people.

Speaker 12 (01:13:16):
Look, Lee leez Elden is a bit of an unknown.

Speaker 11 (01:13:21):
I know that he has made.

Speaker 12 (01:13:22):
Some decisions in New York that seem to be very
good ones from both an environmental and climate perspective, but
I've also seen him do work that seemed very negative
around around climate change and making progress.

Speaker 11 (01:13:36):
So we'll have to wait and see.

Speaker 12 (01:13:38):
You know, it's very easy to go in front of
a committee and answer questions and now it apparently avoid
most of them.

Speaker 11 (01:13:46):
But we have to work together. We have to understand
about people, not politics.

Speaker 1 (01:13:51):
Well, we so appreciate getting time with you again. Jeana McCarthy,
former us EPA administrator, first White House National also White
Climate Advisor, should Say and she's also an advisor senior
advisor at Bloomberg Philanthropy.

Speaker 2 (01:14:05):
This is the Bloomberg Business Week podcast, available on Apple, Spotify,
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afternoons from two to five pm Eastern on Bloomberg dot Com,
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Bloomberg Businessweek Weekend - January 24th, 2025

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