June 3, 2025 • 40 mins
Watch Tom and Paul LIVE every day on YouTube: http://bit.ly/3vTiACF.
Bloomberg Surveillance hosted by Tom Keene & David GuraJune 3nd, 2025
Featuring:
1) Tina Fordham, founder at Fordham Global Foresight, on how geopolitics are never 'going back to normal'
2) Chris Harvey, Chief US Equity Strategist at Wells Fargo, on markets. Stock futures are lower after the weekend brought more tariff drama, with China and the US accusing each other of violating a trade deal concluded just a few weeks ago. There’s also bearish comments on the dollar: Morgan Stanley expects the currency to slump 9% by mid-2026.
3) Tom Porcelli, Chief US Economist at PGIM Fixed Income on how the Fed is on the sidelines, for now. But as economic activity slows this year, we expect the Fed will ease in H2.
4) Evan Osnos, author and New Yorker staff writer, on his new book "The Haves and Have-Yachts"
See omnystudio.com/listener for privacy information.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg
Surveillance Podcast. Catch us live weekdays at seven am Eastern
on Apple CarPlay or Android Auto with the Bloomberg Business app.
Listen on demand wherever you get your podcasts, or watch
(00:25):
us live on YouTube.
Speaker 2 (00:26):
Peter Ford, yourself and.
Speaker 3 (00:28):
David Gura with us as well.
Speaker 4 (00:31):
Tina, I want to focus on Ukraine and I want
to go back to nineteen eighty two, the Falklands War,
where I learned how to spell exo set. I remember
the technological shock that a missile could take out not one,
but two, but three British ships. That was stunning. Now
we have the same thing. How will your world change
(00:54):
with drones that could kill take out armament from a distance.
Speaker 5 (01:01):
Ukraine launched an incredibly bold and audacious attack eighteen months
in the making. You've talked about the idea that this
could signal a change in trend, and others have written
about China being able to do the same thing. But
when we look at the markets, guys, right, we don't
(01:22):
see a very big reaction at all. I think just
because of the amount of newsflow. So it's an example
of something that is potentially, you know, a pivotal moment
in geopolitics, certainly one that means that in the short
term there isn't going to be sanctions relief likely anytime soon,
(01:45):
or a ceasefire. But there's so much going on for
investors to digest that it's not moving the needle as.
Speaker 2 (01:54):
We sift through that news flow.
Speaker 6 (01:55):
Let me ask you about something that's complimentary. We have
this presidential election in Poland over the weekend, and the
nationalist candidate won that election, which is just going to
I think provide further headaches for Donald Tuk, the Prime
minister of that country. But we have there a president
elect who is you could say anti Europe or not
not pro Europe. We could say that, and what does
that mean just for that country's attitude toward continued involvement
(02:20):
in the war in Ukraine and in Europe's involvement more broadly.
Speaker 2 (02:22):
The outcome of that election in Poland.
Speaker 5 (02:25):
But the Polish presidential election isn't the kind of thing
that you know, we would normally be talking about in
a program like this, But because we are looking at
Europe that feels increasingly isolated following the US security and
economic reset, who is in charge in Poland has a
(02:47):
great deal to do with what kinds of decisions the
European Union can take when it comes to security and
when it comes again back to Ukraine. So even though
markets we'd like to put the Ukraine conflict behind them,
in this new global context, which we've talked about in
our new research on the geopolitics supercycle, a small, a
(03:13):
small kind of domestic vote like a Polish presidential election
can actually have a big ripple effect in a changed
security and economic environment.
Speaker 6 (03:25):
Tina, you mentioned that supercycle. So that's a circumstance in
which geopolitical risks are accelerating and accelerating quickly.
Speaker 2 (03:33):
Talk about that in.
Speaker 6 (03:34):
The context of negotiation and dialogue and diplomacy. On any
given day, I get a statement from the State Department
or from a European government indicating that talks are continuing
when it comes to Ukraine, or it comes to trade
negotiations or tariff the tariffs and the trade war. Your
sense of sort of the role that diplomacy is playing
in that supercycle.
Speaker 5 (03:55):
Well, the geopolitics supercycle is my term, and it's the
name of a new report that we've published I borrowed
from astronomy the idea of an acceleration, and what we
established in the first place before we get to the
present day is that this isn't in fact new. We've
seen a tripling of geopolitical risk events materializing over the
(04:17):
past fifteen years. We established the evidence base for that,
and in our framework we look at the drivers of
geopolitical risk against the guard rails. And whether we're talking
about diplomacy, international institutions, or even global central banks, these
are the guard rails and unless these institutions function effectively,
(04:42):
we're going to see more risk events. And I think
that this heuristic is a useful way to look at
this kind of blizzard of events.
Speaker 3 (04:53):
This is so important, folks.
Speaker 4 (04:54):
And of course the title of Tina Fortum's forum Global
Foresight there note is never going back to normal. If
we're not going back to normal, Tin of fordom, how
do we defend ourselves against not populism because there's benefits there,
but harmful populism. How do we defend ourselves from the
(05:16):
harmful populism of other eras that ended ugly.
Speaker 5 (05:23):
That's where rule of law and institutions come in. And
these are the kinds of you know, the kinds of
forces that are increasingly under attack and mistrusted. The problem
is we don't really have alternatives to them. And any
kind of revolutionary movement wants to you know, wants to
(05:45):
burn down what came before it, the idea being of course,
that you could build something newer and better in its place.
And this is where when you know, when people ask
me this question at investor events or board meetings, I
talk about, how, you know, unless we believe in predestination,
there is a you know, contributions that we make as individuals,
(06:08):
as citizens, as you know, as investors and business leaders,
and even as as parents into maintaining the guardrails that
prevent risks from turning into crises.
Speaker 4 (06:22):
Tina, one final question I want to get this. INCURTI
grouped in London yesterday was absolutely riveting on the images
of the migrants across the English Channel over the weekend.
Is the phrasing here migration is out of control in
the United Kingdom?
Speaker 3 (06:39):
How would you call her that?
Speaker 5 (06:43):
On a day like that, there were more border crossings.
And again, if we put it back in the super
cycle framework, climate change, corruption, erosion of civil rights and
civil liberties, these are all drivers of more migration, and
so as long as they proliferate, we should expect more
(07:05):
efforts for people to leave their homes and come elsewhere,
and without institutions, we're going to see that feed into
the political process, into regulation, legislation, and the kind of
low trust that we see in so many developed countries
around the world right now.
Speaker 4 (07:25):
Tina, thank you for the time. Tina Fordham, she's with
Fordham Global Foresight. Look for her report from Fordham Global Foresight.
Speaker 1 (07:38):
You're listening to the Bloomberg Surveillance podcast. Catch us Live
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Speaker 3 (07:50):
I spent weeks.
Speaker 4 (07:51):
Trying to get Christopher Harvey in here, hesus Wells Fargo
ahead of Equity Strategy and joins us this morning. I
love the tone of your optimism.
Speaker 3 (08:02):
How do you do it? Given the malstroam of newsflow
literally hour by hour? How do you do it? How
do you frame a view?
Speaker 7 (08:10):
Come on, Tom? What's not to like? You have rates
going up, you have tariffs every day, you have tweets,
you have concerned about the consumer. You have uncertainty, it's perfect, right,
But what we look at is we're looking at the
data and we're looking at six months ahead of time. Right,
we think we have seen maximum uncertainty. We think we
have seen the bottom of the market, and we think
(08:32):
that we're going to work better from here. Right, we're
expectingly have not not a ton of information on trade
and tariff, but progress on trade and tarwiff and templates
that we can work from as we go forward.
Speaker 4 (08:44):
My foundational thing, Chris Harvey, is corporations adapt. Right across
the Wills Fargo span. How are you seeing corporations adapt
so they have the optimism you have?
Speaker 7 (08:58):
Well, I think what corporations are doing is they're watching
every day. They're looking at the same thing that we're doing.
Every day. They're saying, okay, are we seeing it in
our business? And again getting back to Tony Capriano, he's saying, hey,
we're seeing pod, We're seeing the consumer spend. Right. The
US consumer, I think is really underappreciated. They we start
spending one we're five years old, and we continue to
(09:19):
spend until hopefully until ninety five.
Speaker 4 (09:22):
Right.
Speaker 7 (09:22):
We understand value intuitively, we understand utility and what we
do is we shift to where we're finding that that
utility and that's what the consumer is doing, and as
long as the consumer has a job, they will continue.
And we're just not seeing that pain or labor.
Speaker 2 (09:37):
Market that people are really worried about it.
Speaker 4 (09:39):
I just had a vision of the next Wells Fargo
equity junket to the gritty and there you go.
Speaker 2 (09:45):
Yeah, thank you.
Speaker 6 (09:46):
I was hatch here on this Tuesday. How do you
look at the soft data in complement with the hard data?
Think that's what you're getting at here. And I've noted
many members of the present's economic team have been highlighting this.
They're has been a lot of anxiety about where this
might be headed. We've seen that in consumer cent but
we've seen it in kind of the sentiment from employers
as well. The hard data hasn't met that. And did
(10:09):
you see them coming together at some point or should
we be looking at them kind of different when we
look at them together.
Speaker 7 (10:13):
So about a couple of weeks ago, we sat down
we had this conversation, what's going to happen between the
hard and soft data? Are they're going to converge or
should we actually be looking at the soft data, and
the conclusion we came to is we're not completely dismissing
the soft data, but what we realized is after the
presidential election cycle, we should be looking at the betting markets,
placing more weight on the betting markets. And the betting markets,
(10:35):
or the prediction markets, i should say, are where we're
getting our quote unquote soft data, and it's telling you
a much different story on inflation, on recession, so on and
so forth. So we discount significantly the soft data. We
watch the hard data like a hawk every day, and
when we want sentiment soft data, we're either talking to
clients or we're looking at the prediction markes.
Speaker 6 (10:57):
A bit more about that, I'm very curious of how
someone in your position approaches that world, which I think
is a novel want to renew one to a lot
of people.
Speaker 2 (11:04):
How do you make good use of the prediction markets?
Speaker 7 (11:06):
Well, well, you're talking to a guy that when was
seven years old, which reason the racing forms to his grandfathers.
So we have been involved in these types of markets
for a while, and I think there's a lot of
information in these markets, and we saw that during the
presidential election cycle. And what we do is we're just
always looking for that signal. We're always looking for information,
and there's information there. When we start to deconstruct how
(11:28):
the surveys are done, we get less confidence on the
soft data. And while people look at it and we
have to think about it and we have to react
to it, we're just not putting a whole lot of
weight on it. And at the end of the day,
we're talking to our economists, we're talking to companies, we're
going through transcripts, we're trying to break our thesis every day,
and we're just having a hard time doing that.
Speaker 4 (11:48):
How do you overlay the technology view forward and productivity
forward right onto a persistency of corporate earnings? To me,
it's underestimated.
Speaker 7 (12:01):
I think so I was around in the late nineties
and I remember what was happening there wa way.
Speaker 3 (12:08):
Faster, John help here.
Speaker 7 (12:13):
And the comparison, it's not a comparison between today and
back then. Back then you had very levered companies. I'll
throw out some goodies World com Quest, Global, Crossing level three,
tapping God bless you. But today you have the hyper
scace that aws the Microsoft, the Metas, the Googles of
(12:37):
the world. These are companies that don't need to go
to the capital markets and fund themselves.
Speaker 4 (12:41):
Right.
Speaker 7 (12:42):
Furthermore, if you look at the technology, what we were
doing is we were laying a dumb We were a
dumb technology in the ground fiber optic cable, which did
not become obsolete for a good decade decade plus. Today,
what we have is really and I'm using the phrase
that Jensen used, we have AI factories. You have then foundation,
and on top of that you have the innovation. And
(13:02):
it's a very nice symbolic. Really is symbiotic release.
Speaker 4 (13:05):
Joy Chris Harvey with us with Wells Fargo. We continue
as chief US secuity strategist here. We do this at
eight or nine year with the futures improved, how.
Speaker 3 (13:13):
Are we lifting the market?
Speaker 4 (13:14):
Futures negative eighteen on negative nine, the vics nicely under
twenty eighteen point five to.
Speaker 3 (13:20):
Two dollar churning a little bit on DXY, little bit.
Speaker 4 (13:23):
Of dollar strength fractional I call it. Over the last
two days. David Gera in for Paul Sweeney.
Speaker 6 (13:29):
David, Chris, I want to ask you about AI. We've
talked too much about in video yet you mentioned it
just a moment ago. We had this news this morning
that Meta is going to contract for nuclear power with Constellation.
Speaker 7 (13:38):
You have this kind of.
Speaker 6 (13:39):
Picks and shovels portfolio when it comes to AIS. These
are companies that are kind of ancillary maybe the big
ones that we talk a lot about.
Speaker 2 (13:46):
Where do you see growth there?
Speaker 6 (13:47):
So it's not as if we've turned the page here
from that last chapter, this one, the AI story continues.
What's interesting to you about the secretor today? Where do
you see opportunity besides the big names, the handful of
big names we talk so much about.
Speaker 7 (13:58):
I think the biggest near term issue you is the
AID Diffusion Act. The AI Diffusion Act has been mitigated.
So now what you can do is you can export
that technology. And what I think is Jensen is probably
the new Tim Cook if it looks like he has
the ear of the administration. And what they're realizing is
we do need to be that base level of AI.
(14:19):
We do need to export it. We do need us
technology all throughout the world because if we don't, somebody
else will step in. That somebody else is properly China.
And so I think the most important thing is the
mitigation of the AI difusion index, because now we can export,
we can become that base layer. But this is a
very different technology than what we saw in the late nineties,
(14:40):
and we're still, i would say, in the mid innings
for this. There's a lot more to do. The computational
power that you need, the actual power that you use
is hard to comprehend.
Speaker 4 (14:51):
In the grind of this, which ratio and the income
statement is most efficacious right now? I mean I think
back to time, Gelbot at DLJ was a price to say,
price to sales. But coming down the income statement, which
describes your optimism best.
Speaker 7 (15:06):
It's still not earnings. Right if you look at the hyperscale,
as the hyperscals are making money up.
Speaker 3 (15:10):
Thirty two percent versus this, am I right up eight percent?
Speaker 7 (15:15):
I don't know off the top of my head, but
they are. The answer is we've never seen this, right,
That's right. They are putting. They are spending capex, but
they are getting a return for their capex, and they
will continue to do that until that equation no longer works.
And as we look at it, it is working and
it will continue to work.
Speaker 4 (15:34):
So this is critical if I'm scared stiff, right, But
Chris Harvey's telling me I got to participate is my
psychological relief to take my terminal value out a little
bit farther and say, Okay, I'm nervous. I'm going to
own this stuff. But it's not a three year vision,
it's a five year vision. Is that the act?
Speaker 7 (15:54):
Well, I think what you want to do in any portfolio,
you have to have some you have to have an anchor,
You have to have some sort of low volatility or
defensive property to it. What we've been telling people, we
started the year with anchoring it with staples. Now we're
anchoring it with utilities, and so that's going to mitigate
and has mitigated the uncertainty. If you want to if
you want to get involved in lovall, SPLV or USMV,
(16:17):
that's fine, but just anchor, right, look for those really
good risk awards. Look out three five years, right, take
those good risk awards, but anchor that with something else,
because you do have to mitigate that uncertainty because of
the uncertainty. I'm not going to discount it's.
Speaker 6 (16:31):
Still quite real maximum uncertainty. You're confident in that sort
of how do you see all this playing out over
the course of the summer. So we're coming up against
some very hard deadlines here as the President continues to
make threats and ratchet up the tariffs that he's put
in place. Your sense of where we're headed.
Speaker 2 (16:47):
So these in these talks, these negotiations, you.
Speaker 7 (16:50):
Know, it's really I don't mean to be evasive, but
it is really tough. What I'm looking for is I'm
just looking for progress. I expect to hear progress out
of Asia. First. I am really surprised about the relationship
between China and the US. I did not expect them
to sit down as early as they did, and that
I think is a real positive. And that's a positive
(17:11):
I hadn't been thinking about. I thought that was frozen.
That's not happening. That's the last thing that's going to occur.
So that's actually very encouraging. But we do need to
see something either out of India or Japan or South Korea,
something to set the template. We don't see that, and
by the end of June the summer is going to
be a little bit more choppy than I think.
Speaker 4 (17:31):
What is there, I mean, you know, the advantage to
Jay Brice and what is the what is their incentive
to provide an initial template.
Speaker 3 (17:38):
I see no incentive for Japan to act well.
Speaker 7 (17:42):
If you're India, I think there's a lot there. Right.
We have a lot of things that they want ag aerospace, armament, power,
and they have many things that that we need. Right,
they can help us this intermediate China. They have the
ability to do that.
Speaker 5 (17:58):
Right.
Speaker 7 (17:58):
One of the things that we do worry about, and
we've been talking about, is what about the ports. How
do you get things from point A to point B?
And do they have enough ports? But I think India
is the key, and I think they will likely be
the first or one of the first.
Speaker 4 (18:12):
Chris Harvey with was his optimism on the equity market.
He's with Wells Fargo. I want you to up set
up the polarity we've been talking about for the last
couple of days, which is maybe three zip codes in
Manhattan versus the rest of the country. You're advantaged at
Wells Fargo by having I think, really a breadth across America.
What is the difference between the zeitgeist now almost of
(18:35):
the eastern quarters, you know a little bit of the
West coast, and what's really going on out there.
Speaker 7 (18:41):
So what I think is really going on out there
is people really do back up the administration. They really
do feel like something has to be done on trade
and tower and they think that we're making the right
steps in that direction. When for somebody like me and
somebody like you, we're looking at every single tweet, we're
looking every single thing. People in the and people on
their day to day jobs, they just don't do that.
(19:02):
And what they see is have a job. Things are good,
they're doing well. Economy seems to be fine, and we're
just going to keep moving forward. And we think the
economy and the situation is moving forward. And they look
at the technology and they say, hey, this is an
amazing technology. The world's an okay place, David.
Speaker 2 (19:20):
When it comes to.
Speaker 6 (19:23):
How about when it comes to this tax and spending bill,
and you can talking about regular folks in this country
or watching all of that unfold maybe from a distance,
how much does that standard sort of change your world,
whether or not we see that past in July or
August or later this year.
Speaker 7 (19:38):
I don't think it changes for the average person all
that much. The salt tab. We've been looking into the
salt tax, and I think that helps a lot of
people in high tax states, but on the higher income,
and that probably helps spending later over the next twelve
eighteen months, and it helps a little bit with their
bird to sentiment. I think the bigger issue is is
the deficit stabilizing. Looks like the deficit is stabilizing. I'm
(20:02):
a little bit concerned about the rhetoric and the talk
about longer end rates. But if you think about it
and you look at it, things haven't gotten worse. So
I'm not really sure why the narrative negative it is today.
It should have been much worse, much sooner. So it's
a little confounding.
Speaker 4 (20:17):
Chris, thank you generously to come in this morning. Chris
Harvey with us with Wells Fire with a real optimist
take here. All of his literature is like, get on board,
participate in America's feature.
Speaker 1 (20:30):
This is the Bloomberg Surveillance Podcast. Listen live each weekday
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Speaker 3 (20:47):
We dive into the American labor economy right now.
Speaker 4 (20:49):
There's no one better qualified than Thomas Purcelli is chief
yours economist and PGM definitive on America's wage growth or.
Speaker 3 (20:57):
Lack thereof, definitive on the bar economy. In tom I'm
going to go to tourst and slack out.
Speaker 4 (21:03):
Or the morning paragraph this morning saying look, we're at
one hundred and thirty thousand non farm payrolls on Friday.
Speaker 3 (21:09):
He doesn't buy it.
Speaker 4 (21:10):
Question mark sixty four thousand NFP coming with continuing claims
doing that little second derivative lift is a weaker job economy.
Speaker 8 (21:21):
Finally here Yeah, So so, first of all, could be
with you all. Look, I think that you know this
is not for us. This is not new new information, right.
I mean that labor backdrop has been sort of showing
these cracks for quite some time now, you know, whether
you're looking at hiring rates or quit rates or labor differentials,
and now recently this little curl up in continuing claims.
(21:42):
I think it's all the evidence is pretty clear that
that labor is slowing down. So so from our perspective,
it's you know, it's just a question of when now
do you really start to see a show up in
the payroll report. But but I would hasten to add
everyone's waiting for it to show up in the payroll report.
But once it show's up there, it tends to be
too late. I mean, it's like that's the last thing
that breaks. But you have all these other all this
(22:02):
other evidence that's already pointing in that direction.
Speaker 3 (22:05):
When it goes, it goes.
Speaker 4 (22:06):
I would suggest, folks, my reading back to World War
to thank you Olivia Blunchard for being with us yesterday
in memory of Professor Fisher Tom Percelling. When I look
at unemployment rate, it goes four point two percent. When
it goes, do you frame out a quie s in
five percent or could it be worser?
Speaker 8 (22:25):
Yeah, I think by the end of the year you
could easily you'll you'll be up close to five percent.
We don't think you necessarily break through that. I do
think that there's an interesting sort of dynamic to consider
in the context of you know, immigration flows of obviously
slow down pretty notably, and as long as you know
the economy is not going to break in a meaningful way,
I don't think the unemployment rate really has to sort
(22:45):
of do a lot of heavy lifting. So we do
expect the unemployment rate will rise, and in fact, that's
sort of one of their key criteria for for US
as relates to our view on the FED, which is
to say they will be cutting before the end of
the year. But I don't know that it to get ugly,
but it's going to happen.
Speaker 6 (23:02):
Let me ask you a bit about inflation and sort
of where you see that story going here. And we
were talking earlier about the soft data and the hard
data and the anxiety that we see among consumers and businesses.
What do you think that will start to manifest itself
more in the harder data as we see again I
call them negotiations. I guess back and forth over over
these trade deals and the prospect that they could could
(23:23):
be inflationary, it could lead to higher inflation.
Speaker 2 (23:25):
Yeah.
Speaker 8 (23:25):
Look, I think what's interesting is if you look at
some of these company transcripts right like during the quarterly
earnings calls, I mean, some companies took price in April.
I mean you didn't even have terrorists that really went
through at that point, and this was early in a.
Speaker 6 (23:39):
Less defensive or opportunistic I think it's probably a little
bit of both.
Speaker 8 (23:43):
And so you know, and think back on yesterday's IM
I mean there were some really interesting comment forget about
the indexes with an ism. I mean they're fine, but
I think the sort of you know, the responding comments
I think are always much more interesting. And responding comments
were pret clear like they're pushing price through. There's no
question that that is going to happen. So here's the
(24:05):
thing though, while we expect inflation will rise again, that's
a part of our call, has been a part of
our call. This is not the COVID lift in inflation.
And I think that's especially true when you consider incomes.
I mean real incomes right, like real incomes x transfers
is running out of slower pace than is consumption, real consumption.
(24:27):
That's not a sustainable set up, and so I think
that means that it probably breaks the spirit of the
consumer to some extent.
Speaker 3 (24:32):
An extended discussion with Tom PERCELLI.
Speaker 6 (24:34):
Pees tiught we had this warning that John Tucker mentioned
just a moment ago from the OEC this morning about
slowing growth globally US A part of that seeing slowing
growth here here as well. What is your sense of
where that's headed? Does it does it marry with or
dovetail with what the OECD said this morning?
Speaker 8 (24:50):
Yeah, I mean, look, I think the I think the
I think those forecasts are just sort of catching up
with some with some of the reality that I think
there's already been in place. You know, the sort of
the slower rejectory of economic activity in the United States
and elsewhere, I think has been pretty known at this point.
You know, it's funny we were having this conversation internally.
You know, there's I think you could break the backdrop
(25:12):
up into structural and cyclical right cyclically speaking, Uh, you know,
we see slowing economic activity, like you know, we're calling
it the muddle through with a sort of you know,
a skew to the left tail. I think over the
more medium term, right, you know, medium to long term.
You know, it's easy to see a sort of a
fatter right tail that will take time. Though in fact,
I've been saying, I think you've got to go through
the left tail before you get to the right tail.
(25:34):
But yeah, I think that that to me is it's
already baked in the cake that folds in.
Speaker 4 (25:38):
I wanted to ask you you came from a wonderful
house RBC, like haleemccroft on Hydrocarbon's your parachute in. You know,
you get off the boat, the Hinckley and your parachute
in them pagium and these guys are.
Speaker 3 (25:50):
A world class bond geeks. Yes, what do they teach you?
What does what does the Greg Peters in the rest? What?
How do they inform your economics? Now that you're surrounded
by this brain ball?
Speaker 8 (26:05):
You know, it's I I love this question. So I
always said, you know, being on the when I was
on the sale side, you know, you would you would
go into, you know, a meeting and you would just
drop these ideas and then you get the hell out
of there and you never knew really what happened with
those ideas because you'd be running off to the next meeting.
But now there, you know, my next meeting is the
sort of another internal meeting. So it's been great to
(26:27):
sort of see my ideas sort of you know, come
to life as it relates to working with guys like
Greg and Robert Tip and then of course delete saying
it's been it's been a wonderful experience.
Speaker 3 (26:39):
How do you fold in then really yield dynamics.
Speaker 4 (26:42):
Ken Rogoff was in recently with my book of the Summer,
Our Dollar Your problem and the bottom line is the
inflation had just yields the heart of the debate. Yes,
how do you lecture Greg Peters on the vector of.
Speaker 7 (26:56):
The real you?
Speaker 8 (26:58):
He does not want me to lecture him, and I
don't think I want to lecture him either, So who
I adore him?
Speaker 7 (27:05):
Actually, he's great.
Speaker 8 (27:07):
Look, I think one thing that we're really trying to do,
and I think that this is something that is sort
of the holy grail in my humble opinion, I think
the marrying you know, look, p Jim is first and
foremost to bottom up shop. That has always been true.
And so I think one thing that you know, we're
really trying to think about a lot is.
Speaker 7 (27:25):
How do we marry that right?
Speaker 8 (27:26):
How do we marry the bottom and the bottom up
and the top down. I think we've been doing a
pretty good job of making some progress on that, and
it's something I look forward to continuing with with Greg
and the rest of the team. It's actually been a
really useful project.
Speaker 6 (27:39):
I was reading in this morning and our friend Claudia
Sam has a new piece out talking abo's what the
FED is thinking through at this moment in time, and
she said, kind of the fundamental question here is will
tariff induced inflation be short lived as the level of
prices adjust to higher tariffs, or will it persist as
a series of feedback loops lead to further price increases.
Speaker 2 (27:57):
Where do you fall on that question?
Speaker 6 (27:58):
We were talking about the way that companies have been
addressing this defensively or opportunistically. As I interjected, how worried
are you about that feedback loop turning into something kind
of crippling?
Speaker 8 (28:09):
It is very hard to see this inflation dynamic persist,
and it's very hard to see. I think again, we'll
sort of have a you know, sort of short memories
for this stuff, and I think people are looking back
over this COVID window and they're saying, hey, well, this
is what happened then. Yeah, But there's so many differences, right,
I mean, people were sitting on a mountain of cash.
We shut down an otherwise pretty healthy economy, turned it
(28:31):
back on like a light switch, creating a pent up
demand scenario. People were able to dip into this mountain
of cash. We had massive supplies shortages. So I think
it was really easy to sort of build a case,
or at least it was for us when I was
at RBC, to build the case that you were going
to see much more persistent inflation than was appreciated. This
setup today is wildly different. I think what wants up
happening is these these price increases that we are undoubtedly
(28:54):
going to see will basically break break the consumer. And
I think ultimately I could give re session, which is
why we have that left tail is a little bit
on the fat side.
Speaker 4 (29:03):
Truss, there evidence that they will lower prices if and
when the tariffs are over, so see that.
Speaker 8 (29:10):
In my literal I don't think that they're talking about
that right now. I mean, in fact, if anything, companies
want to take price as much as they can. It's
been pretty clear on that, so I think it'll I
think that the what that means to me is that
the lift in inflation could actually be firmer than a
lot of people think. I think people are sort of
flirting with the idea of, hey, maybe you get to
three percent and maybe it Peter's out there. My risk
(29:32):
on that is that it can run. But I think ultimately,
if you have a slowing labor backdrop, which is what
we expect, then that'll give way.
Speaker 3 (29:40):
Here's the way the act works, folks. I'm overwhelmed.
Speaker 4 (29:43):
My email inbox is insane and young Turks show up
and they.
Speaker 3 (29:48):
Have research reports.
Speaker 4 (29:50):
And the rule is if it's seven pages, I read
the first two pages, and if it's thirty pages, I
read the first four pages. And that ages ago, this
clown showed up from our RBC Capital markets. I'm like,
who is this guy? And he's talking wage dynamics. Here
begin with the discussion on the wages. What's our real wage?
Look like you own the high ground on this.
Speaker 8 (30:12):
Yeah, well, thank you for those nice words.
Speaker 3 (30:14):
You know.
Speaker 8 (30:15):
Look, I think the way that I like to look
at the backdrop right now is I'm looking at real incomes,
and I think real incomes X transfers that running at
a slower pace than real consumption that is not sustainable.
That is simply not sustainable. So it's really easy for
us to build a case on slower economic activity.
Speaker 4 (30:35):
Forget the continuum, the media frenzy of the phrase barbelle,
I don't buy it for a minute, yep. And I'll
let you decide on a death sile or quintile basis.
Ye where does America break? To me?
Speaker 3 (30:47):
It's a way higher income and beneath that is painful.
Speaker 8 (30:50):
I agree with that. I think that that's exactly what
we're seeing right now. I mean, you know, this is
the you know, the classic K shape recovery conversation that
we've been having for for quite some time. I think
that there's almost no doubt that there's a lot more
pain happening in those other quintiles that you just mentioned.
But you know, you look at it, and again this
gets into the hard verse soft data point. Just look
(31:12):
at confidence at the upper income confidencing the upper income
is also starting to break too, And I think it
look it's easy to sort of see that happen when
you have equity markets that are also breaking them coming back.
Equity markets coming back probably will ease some of that concern,
but I think most folks get that in an environment
where you're talking about significant terrors and potentially significant price increases,
(31:37):
I think that gives everyone a moment of pause, where
do you.
Speaker 2 (31:40):
See things going from here?
Speaker 6 (31:41):
When it comes to the labor market, so there is
a lot of happy talk from the administration about how
this is going to usher in a lot of new
jobs and manufacturing in particular, we're talking about diminution of
the labor market. You have to say, we're kind of
late late to the party. Recognizing that you were there earlier,
But how do you see that ending and how much
faith or or optimism that you have that all of
(32:02):
this could lead to some sort of reimagined or or
a labor market renaissance of some sort.
Speaker 8 (32:07):
So I think over the so this gets into the
cyclic over structural right like cyclically, I think again, I
think you'll start to see the slow down in in
labor and as a result, economic activity at large. I think,
I think longer term, I think that there's I think
there's a real case to make for I you know,
I hate the term, you know, US exceptionalism. I just
(32:28):
think it's overused and there has to be a better
way of saying it. But I think the idea of
US exceptionalism over the more medium to long term, for
lack of a better phrase, I think is real. And
I think about that in the context of the pieces
are in place for productivity to kill it again, it'll
take time to get there, and I do think that
some of the things that the administration is doing could
actually help in that. Regard the corporate tax part of
(32:50):
that of the tax cuts, I think that that can
actually go a long way to sort of helping build
the base of productivity. But again that you got to
I think you're going to go through the left tail
before you go to the right.
Speaker 3 (33:00):
Tant arrested.
Speaker 4 (33:02):
They FORDA, it does thirty five knots coming back down
the East River.
Speaker 3 (33:07):
Wow, he's gonna be flying over the city.
Speaker 4 (33:09):
Tom bertz Ellie, thank you so much, with a don't thanks, guys, stranger,
please please please.
Speaker 1 (33:19):
This is the Bloomberg Surveillance Podcast. Listen live each weekday
starting at seven am Eastern on Apple, Corplay and Android
Auto with the Bloomberg Business app. You can also watch
us live every weekday on YouTube and always on the
Bloomberg Terminal.
Speaker 4 (33:34):
The new heart and soul of the New Yorker is
emin as knows out with a new book on Greenwich, Connecticut,
and it reads like McPhee. You read it, you keep
reading it, David, because it's crafted.
Speaker 6 (33:47):
Evan Aso is great to have you with a staff
writer the New Yorker is Tom alluded to there. The
new book is called The Haves and Have Yachts Dispatches
on the Ultra Rich. Congrats on the book. Congrats also
on the title, which is excellent. Let's start with the
warning that we heard from former President Biden has prepared
to leave office. He said, today an oligarchy is taking
shape in America of extreme wealth, power and influence that
(34:08):
really threatens our entire democracy, our basic rights and freedom.
He sounded the alarm as he was making his way
to the exit. What has changed when it comes to
wealth inequality in this country over the last five six months.
Speaker 9 (34:22):
Thanks guys, by the way, Tom, you made my day.
We live in a world, John McPhee made.
Speaker 2 (34:27):
I'll say that.
Speaker 9 (34:29):
What President Biden was getting at is something really important
to a lot of folks. Frankly, it sounded almost belated. Look,
the good news is this country has never been wealthier
in so many respects. We are building companies, We're on
the cusp of a new era of technology and all
the ways you talk about on the show every day,
whether it's AI and robotics. And yet at the same time,
(34:49):
as you know, there are about half of American adults
who will tell you that they don't have one thousand
dollars to spend on an emergency expense. We are at
a point now it's really similar to where we've been
at moments in our history where we have tremendous technological opportunity,
huge wealth creation, and we're also facing a fork in
the road to make sure that that is also not
(35:12):
steering our government down a path that Henry Ford used
to say that he wanted to make sure that his
own employees, his own workers, could afford the cars he
was making. And those are some of the decisions we
have to be making now.
Speaker 6 (35:24):
This is clearly a theme that has animated a lot
of your work. I look at the Osmoso for going
back to your first book, Age of Ambition, Chasing Fortune,
Truth and Faith in the New China, which I read
on my first trip to Shanghai, and you mark then
on just the abundance the amount of wealthy excitement about
wealth and up mobility in China. As you look at
this particular book, are we looking at something that's uniquely
(35:46):
American or has this rise of the ultra rich and
sort of shared globally.
Speaker 9 (35:51):
Yeah, it's a fascinating parallel in many ways, David. I
mean I first started reading in a sense about the
American guilded age when I was living in China. Hus
I was trying to understand what was happening. We were
seeing railroads built at a pace we hadn't seen since
America in the nineteenth century. It's fitting in some ways
that I used The Great Gapsbie when I lived in
Beijing to conceptualize it. Here we are it's twenty twenty
(36:13):
five hundredth anniversary of that book. There are a lot
of lessons in there about how do you take that
sense of cultural energy that we might have had at
certain moments in the Roaring twenties, but also the awareness
that without making really smart choices, we're not going to
make sure that this money gets into the hands of
people who can rise with the tide.
Speaker 4 (36:34):
Evan, you grew up in the crucible this Grantwich, Connecticut,
where I'm sure three kids down the street did have
Hinckley picnic boats.
Speaker 3 (36:40):
You didn't. Your father was acclaimed within journalism.
Speaker 4 (36:45):
But what does the crew do below the fancy people
to try to get their kids to motivate and have
a good life and even aspire to be richer. I
mean this is topic one right now between the of
AI the decline of liberal arts. What do the kids
do just below those with the super yachts.
Speaker 9 (37:08):
Yeah, you know, I face these questions myself. I'm a dad,
I've got two kids, I think about the challenges of
people coming out of school today and how hard it's
going to be to get those first jobs. But here's
the thing, you know, we have some pretty great models
to inspire us in terms of how to think about
being energetic, being creative. I think about Warren Buffett. He's
on our minds a lot, all of us these days.
Speaker 7 (37:30):
You know.
Speaker 9 (37:30):
He talks about how much he left, how much he
will leave to his kids. He likes to say, as
you know, Tommy says, I want to leave them enough
that they can do anything, but not so much that
they can do nothing. I try, as I think about
the opportunities that are coming, to say to people, Look,
it's not enough for us to just say, Elon Musk
has now crossed the four hundred billion dollar threshold. We've
(37:51):
never had somebody with that kind of prosperity. Isn't that
as sign of strength. No, we have to be saying
to people, if we don't make smart choices, it's going
to end up with too many Musks and perhaps not
enough Buffets. And I think that's an important thing to
keep in mind.
Speaker 6 (38:05):
Spare a teer for the billionaire class, but I am
interested in this element of loneliness that comes through in
your book. So if you have billionaires buying these super yachts,
they can be in isolation on the open seas. You
have another chapter or another piece that you've written about
Silicon Valley billionaires who are looking to remote New Zealand
as a place where they can go weather the storm,
if that's a nuclear disaster or something that's a natural disaster.
Speaker 2 (38:29):
What explains it?
Speaker 6 (38:29):
And just I think the contrast is so stark to
what you were talking about a moment ago, which is,
during the Gilded Age you had billionaires, you had multimillionaire
I should say, maybe not billionaires who are interested in
philanthropy and in helping the wider population, building libraries in
towns across America. It seems like there is a stark
contrast that exists now between the aspirations of a lot
of these ultra wealthy than what we saw before.
Speaker 9 (38:51):
Yeah, David, you know, for the reporting for this book,
I went to New Zealand, I went to Monaco. Hardship
pay was not forthcoming despite my insistence, and it was
a fat way of getting into the minds of people
who have succeeded. And I think what you find in
a lot of cases. And this is the surprise, is
a sense of fear, frankly, a sense of vertigo. You know,
a lot of people will say, look, you've made all
(39:11):
the money in the world, what are you afraid of?
Why do you need to stand on the stage with
a president who you may not even necessarily ideologically agree with.
And I think what that tells us is that the
higher you get, you actually can end up feeling quite vulnerable,
quite exposed. I mean, as Silicon Valley CEO said to me,
I keep a helicopter gassed up all the time, and
I have a bunker with an air filtration system. And
(39:33):
I think that is Another former hedge fund manager said
to me, Look, there are twenty five hedge fund managers
in this country who make it more money combined than
all of the kindergartener teachers. And he said, and it
doesn't feel good to be one of those twenty five.
That's the vertigo.
Speaker 4 (39:48):
Evn We got to leave it there, but don't be
a stranger. Evan Austen's congratulations from the New Yorker. The
haves and they have not have yachts. Piece it together
from a wonderful New York can't say enough about this
as a general read on these odd odd times.
Speaker 1 (40:05):
This is the Bloomberg Surveillance Podcast, available on Apple, Spotify,
and anywhere else you get your podcasts. Listen live each weekday,
seven to ten am Eastern on Bloomberg dot com, the
iHeartRadio app, tune In, and the Bloomberg Business app. You
can also watch us live every weekday on YouTube and
(40:25):
always on the Bloomberg terminal.
Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg
Surveillance Podcast. Catch us live weekdays at seven am Eastern
on Apple CarPlay or Android Auto with the Bloomberg Business app.
Listen on demand wherever you get your podcasts, or watch
(00:25):
us live on YouTube.
Speaker 2 (00:26):
Peter Ford, yourself and.
Speaker 3 (00:28):
David Gura with us as well.
Speaker 4 (00:31):
Tina, I want to focus on Ukraine and I want
to go back to nineteen eighty two, the Falklands War,
where I learned how to spell exo set. I remember
the technological shock that a missile could take out not one,
but two, but three British ships. That was stunning. Now
we have the same thing. How will your world change
(00:54):
with drones that could kill take out armament from a distance.
Speaker 5 (01:01):
Ukraine launched an incredibly bold and audacious attack eighteen months
in the making. You've talked about the idea that this
could signal a change in trend, and others have written
about China being able to do the same thing. But
when we look at the markets, guys, right, we don't
(01:22):
see a very big reaction at all. I think just
because of the amount of newsflow. So it's an example
of something that is potentially, you know, a pivotal moment
in geopolitics, certainly one that means that in the short
term there isn't going to be sanctions relief likely anytime soon,
(01:45):
or a ceasefire. But there's so much going on for
investors to digest that it's not moving the needle as.
Speaker 2 (01:54):
We sift through that news flow.
Speaker 6 (01:55):
Let me ask you about something that's complimentary. We have
this presidential election in Poland over the weekend, and the
nationalist candidate won that election, which is just going to
I think provide further headaches for Donald Tuk, the Prime
minister of that country. But we have there a president
elect who is you could say anti Europe or not
not pro Europe. We could say that, and what does
that mean just for that country's attitude toward continued involvement
(02:20):
in the war in Ukraine and in Europe's involvement more broadly.
Speaker 2 (02:22):
The outcome of that election in Poland.
Speaker 5 (02:25):
But the Polish presidential election isn't the kind of thing
that you know, we would normally be talking about in
a program like this, But because we are looking at
Europe that feels increasingly isolated following the US security and
economic reset, who is in charge in Poland has a
(02:47):
great deal to do with what kinds of decisions the
European Union can take when it comes to security and
when it comes again back to Ukraine. So even though
markets we'd like to put the Ukraine conflict behind them,
in this new global context, which we've talked about in
our new research on the geopolitics supercycle, a small, a
(03:13):
small kind of domestic vote like a Polish presidential election
can actually have a big ripple effect in a changed
security and economic environment.
Speaker 6 (03:25):
Tina, you mentioned that supercycle. So that's a circumstance in
which geopolitical risks are accelerating and accelerating quickly.
Speaker 2 (03:33):
Talk about that in.
Speaker 6 (03:34):
The context of negotiation and dialogue and diplomacy. On any
given day, I get a statement from the State Department
or from a European government indicating that talks are continuing
when it comes to Ukraine, or it comes to trade
negotiations or tariff the tariffs and the trade war. Your
sense of sort of the role that diplomacy is playing
in that supercycle.
Speaker 5 (03:55):
Well, the geopolitics supercycle is my term, and it's the
name of a new report that we've published I borrowed
from astronomy the idea of an acceleration, and what we
established in the first place before we get to the
present day is that this isn't in fact new. We've
seen a tripling of geopolitical risk events materializing over the
(04:17):
past fifteen years. We established the evidence base for that,
and in our framework we look at the drivers of
geopolitical risk against the guard rails. And whether we're talking
about diplomacy, international institutions, or even global central banks, these
are the guard rails and unless these institutions function effectively,
(04:42):
we're going to see more risk events. And I think
that this heuristic is a useful way to look at
this kind of blizzard of events.
Speaker 3 (04:53):
This is so important, folks.
Speaker 4 (04:54):
And of course the title of Tina Fortum's forum Global
Foresight there note is never going back to normal. If
we're not going back to normal, Tin of fordom, how
do we defend ourselves against not populism because there's benefits there,
but harmful populism. How do we defend ourselves from the
(05:16):
harmful populism of other eras that ended ugly.
Speaker 5 (05:23):
That's where rule of law and institutions come in. And
these are the kinds of you know, the kinds of
forces that are increasingly under attack and mistrusted. The problem
is we don't really have alternatives to them. And any
kind of revolutionary movement wants to you know, wants to
(05:45):
burn down what came before it, the idea being of course,
that you could build something newer and better in its place.
And this is where when you know, when people ask
me this question at investor events or board meetings, I
talk about, how, you know, unless we believe in predestination,
there is a you know, contributions that we make as individuals,
(06:08):
as citizens, as you know, as investors and business leaders,
and even as as parents into maintaining the guardrails that
prevent risks from turning into crises.
Speaker 4 (06:22):
Tina, one final question I want to get this. INCURTI
grouped in London yesterday was absolutely riveting on the images
of the migrants across the English Channel over the weekend.
Is the phrasing here migration is out of control in
the United Kingdom?
Speaker 3 (06:39):
How would you call her that?
Speaker 5 (06:43):
On a day like that, there were more border crossings.
And again, if we put it back in the super
cycle framework, climate change, corruption, erosion of civil rights and
civil liberties, these are all drivers of more migration, and
so as long as they proliferate, we should expect more
(07:05):
efforts for people to leave their homes and come elsewhere,
and without institutions, we're going to see that feed into
the political process, into regulation, legislation, and the kind of
low trust that we see in so many developed countries
around the world right now.
Speaker 4 (07:25):
Tina, thank you for the time. Tina Fordham, she's with
Fordham Global Foresight. Look for her report from Fordham Global Foresight.
Speaker 1 (07:38):
You're listening to the Bloomberg Surveillance podcast. Catch us Live
weekday afternoons from seven to ten am Eastern. Listen on
Applecarplay and Android Atto with the Bloomberg Business app, or
watch us live on YouTube.
Speaker 3 (07:50):
I spent weeks.
Speaker 4 (07:51):
Trying to get Christopher Harvey in here, hesus Wells Fargo
ahead of Equity Strategy and joins us this morning. I
love the tone of your optimism.
Speaker 3 (08:02):
How do you do it? Given the malstroam of newsflow
literally hour by hour? How do you do it? How
do you frame a view?
Speaker 7 (08:10):
Come on, Tom? What's not to like? You have rates
going up, you have tariffs every day, you have tweets,
you have concerned about the consumer. You have uncertainty, it's perfect, right,
But what we look at is we're looking at the
data and we're looking at six months ahead of time. Right,
we think we have seen maximum uncertainty. We think we
have seen the bottom of the market, and we think
(08:32):
that we're going to work better from here. Right, we're
expectingly have not not a ton of information on trade
and tariff, but progress on trade and tarwiff and templates
that we can work from as we go forward.
Speaker 4 (08:44):
My foundational thing, Chris Harvey, is corporations adapt. Right across
the Wills Fargo span. How are you seeing corporations adapt
so they have the optimism you have?
Speaker 7 (08:58):
Well, I think what corporations are doing is they're watching
every day. They're looking at the same thing that we're doing.
Every day. They're saying, okay, are we seeing it in
our business? And again getting back to Tony Capriano, he's saying, hey,
we're seeing pod, We're seeing the consumer spend. Right. The
US consumer, I think is really underappreciated. They we start
spending one we're five years old, and we continue to
(09:19):
spend until hopefully until ninety five.
Speaker 4 (09:22):
Right.
Speaker 7 (09:22):
We understand value intuitively, we understand utility and what we
do is we shift to where we're finding that that
utility and that's what the consumer is doing, and as
long as the consumer has a job, they will continue.
And we're just not seeing that pain or labor.
Speaker 2 (09:37):
Market that people are really worried about it.
Speaker 4 (09:39):
I just had a vision of the next Wells Fargo
equity junket to the gritty and there you go.
Speaker 2 (09:45):
Yeah, thank you.
Speaker 6 (09:46):
I was hatch here on this Tuesday. How do you
look at the soft data in complement with the hard data?
Think that's what you're getting at here. And I've noted
many members of the present's economic team have been highlighting this.
They're has been a lot of anxiety about where this
might be headed. We've seen that in consumer cent but
we've seen it in kind of the sentiment from employers
as well. The hard data hasn't met that. And did
(10:09):
you see them coming together at some point or should
we be looking at them kind of different when we
look at them together.
Speaker 7 (10:13):
So about a couple of weeks ago, we sat down
we had this conversation, what's going to happen between the
hard and soft data? Are they're going to converge or
should we actually be looking at the soft data, and
the conclusion we came to is we're not completely dismissing
the soft data, but what we realized is after the
presidential election cycle, we should be looking at the betting markets,
placing more weight on the betting markets. And the betting markets,
(10:35):
or the prediction markets, i should say, are where we're
getting our quote unquote soft data, and it's telling you
a much different story on inflation, on recession, so on and
so forth. So we discount significantly the soft data. We
watch the hard data like a hawk every day, and
when we want sentiment soft data, we're either talking to
clients or we're looking at the prediction markes.
Speaker 6 (10:57):
A bit more about that, I'm very curious of how
someone in your position approaches that world, which I think
is a novel want to renew one to a lot
of people.
Speaker 2 (11:04):
How do you make good use of the prediction markets?
Speaker 7 (11:06):
Well, well, you're talking to a guy that when was
seven years old, which reason the racing forms to his grandfathers.
So we have been involved in these types of markets
for a while, and I think there's a lot of
information in these markets, and we saw that during the
presidential election cycle. And what we do is we're just
always looking for that signal. We're always looking for information,
and there's information there. When we start to deconstruct how
(11:28):
the surveys are done, we get less confidence on the
soft data. And while people look at it and we
have to think about it and we have to react
to it, we're just not putting a whole lot of
weight on it. And at the end of the day,
we're talking to our economists, we're talking to companies, we're
going through transcripts, we're trying to break our thesis every day,
and we're just having a hard time doing that.
Speaker 4 (11:48):
How do you overlay the technology view forward and productivity
forward right onto a persistency of corporate earnings? To me,
it's underestimated.
Speaker 7 (12:01):
I think so I was around in the late nineties
and I remember what was happening there wa way.
Speaker 3 (12:08):
Faster, John help here.
Speaker 7 (12:13):
And the comparison, it's not a comparison between today and
back then. Back then you had very levered companies. I'll
throw out some goodies World com Quest, Global, Crossing level three,
tapping God bless you. But today you have the hyper
scace that aws the Microsoft, the Metas, the Googles of
(12:37):
the world. These are companies that don't need to go
to the capital markets and fund themselves.
Speaker 4 (12:41):
Right.
Speaker 7 (12:42):
Furthermore, if you look at the technology, what we were
doing is we were laying a dumb We were a
dumb technology in the ground fiber optic cable, which did
not become obsolete for a good decade decade plus. Today,
what we have is really and I'm using the phrase
that Jensen used, we have AI factories. You have then foundation,
and on top of that you have the innovation. And
(13:02):
it's a very nice symbolic. Really is symbiotic release.
Speaker 4 (13:05):
Joy Chris Harvey with us with Wells Fargo. We continue
as chief US secuity strategist here. We do this at
eight or nine year with the futures improved, how.
Speaker 3 (13:13):
Are we lifting the market?
Speaker 4 (13:14):
Futures negative eighteen on negative nine, the vics nicely under
twenty eighteen point five to.
Speaker 3 (13:20):
Two dollar churning a little bit on DXY, little bit.
Speaker 4 (13:23):
Of dollar strength fractional I call it. Over the last
two days. David Gera in for Paul Sweeney.
Speaker 6 (13:29):
David, Chris, I want to ask you about AI. We've
talked too much about in video yet you mentioned it
just a moment ago. We had this news this morning
that Meta is going to contract for nuclear power with Constellation.
Speaker 7 (13:38):
You have this kind of.
Speaker 6 (13:39):
Picks and shovels portfolio when it comes to AIS. These
are companies that are kind of ancillary maybe the big
ones that we talk a lot about.
Speaker 2 (13:46):
Where do you see growth there?
Speaker 6 (13:47):
So it's not as if we've turned the page here
from that last chapter, this one, the AI story continues.
What's interesting to you about the secretor today? Where do
you see opportunity besides the big names, the handful of
big names we talk so much about.
Speaker 7 (13:58):
I think the biggest near term issue you is the
AID Diffusion Act. The AI Diffusion Act has been mitigated.
So now what you can do is you can export
that technology. And what I think is Jensen is probably
the new Tim Cook if it looks like he has
the ear of the administration. And what they're realizing is
we do need to be that base level of AI.
(14:19):
We do need to export it. We do need us
technology all throughout the world because if we don't, somebody
else will step in. That somebody else is properly China.
And so I think the most important thing is the
mitigation of the AI difusion index, because now we can export,
we can become that base layer. But this is a
very different technology than what we saw in the late nineties,
(14:40):
and we're still, i would say, in the mid innings
for this. There's a lot more to do. The computational
power that you need, the actual power that you use
is hard to comprehend.
Speaker 4 (14:51):
In the grind of this, which ratio and the income
statement is most efficacious right now? I mean I think
back to time, Gelbot at DLJ was a price to say,
price to sales. But coming down the income statement, which
describes your optimism best.
Speaker 7 (15:06):
It's still not earnings. Right if you look at the hyperscale,
as the hyperscals are making money up.
Speaker 3 (15:10):
Thirty two percent versus this, am I right up eight percent?
Speaker 7 (15:15):
I don't know off the top of my head, but
they are. The answer is we've never seen this, right,
That's right. They are putting. They are spending capex, but
they are getting a return for their capex, and they
will continue to do that until that equation no longer works.
And as we look at it, it is working and
it will continue to work.
Speaker 4 (15:34):
So this is critical if I'm scared stiff, right, But
Chris Harvey's telling me I got to participate is my
psychological relief to take my terminal value out a little
bit farther and say, Okay, I'm nervous. I'm going to
own this stuff. But it's not a three year vision,
it's a five year vision. Is that the act?
Speaker 7 (15:54):
Well, I think what you want to do in any portfolio,
you have to have some you have to have an anchor,
You have to have some sort of low volatility or
defensive property to it. What we've been telling people, we
started the year with anchoring it with staples. Now we're
anchoring it with utilities, and so that's going to mitigate
and has mitigated the uncertainty. If you want to if
you want to get involved in lovall, SPLV or USMV,
(16:17):
that's fine, but just anchor, right, look for those really
good risk awards. Look out three five years, right, take
those good risk awards, but anchor that with something else,
because you do have to mitigate that uncertainty because of
the uncertainty. I'm not going to discount it's.
Speaker 6 (16:31):
Still quite real maximum uncertainty. You're confident in that sort
of how do you see all this playing out over
the course of the summer. So we're coming up against
some very hard deadlines here as the President continues to
make threats and ratchet up the tariffs that he's put
in place. Your sense of where we're headed.
Speaker 2 (16:47):
So these in these talks, these negotiations, you.
Speaker 7 (16:50):
Know, it's really I don't mean to be evasive, but
it is really tough. What I'm looking for is I'm
just looking for progress. I expect to hear progress out
of Asia. First. I am really surprised about the relationship
between China and the US. I did not expect them
to sit down as early as they did, and that
I think is a real positive. And that's a positive
(17:11):
I hadn't been thinking about. I thought that was frozen.
That's not happening. That's the last thing that's going to occur.
So that's actually very encouraging. But we do need to
see something either out of India or Japan or South Korea,
something to set the template. We don't see that, and
by the end of June the summer is going to
be a little bit more choppy than I think.
Speaker 4 (17:31):
What is there, I mean, you know, the advantage to
Jay Brice and what is the what is their incentive
to provide an initial template.
Speaker 3 (17:38):
I see no incentive for Japan to act well.
Speaker 7 (17:42):
If you're India, I think there's a lot there. Right.
We have a lot of things that they want ag aerospace, armament, power,
and they have many things that that we need. Right,
they can help us this intermediate China. They have the
ability to do that.
Speaker 5 (17:58):
Right.
Speaker 7 (17:58):
One of the things that we do worry about, and
we've been talking about, is what about the ports. How
do you get things from point A to point B?
And do they have enough ports? But I think India
is the key, and I think they will likely be
the first or one of the first.
Speaker 4 (18:12):
Chris Harvey with was his optimism on the equity market.
He's with Wells Fargo. I want you to up set
up the polarity we've been talking about for the last
couple of days, which is maybe three zip codes in
Manhattan versus the rest of the country. You're advantaged at
Wells Fargo by having I think, really a breadth across America.
What is the difference between the zeitgeist now almost of
(18:35):
the eastern quarters, you know a little bit of the
West coast, and what's really going on out there.
Speaker 7 (18:41):
So what I think is really going on out there
is people really do back up the administration. They really
do feel like something has to be done on trade
and tower and they think that we're making the right
steps in that direction. When for somebody like me and
somebody like you, we're looking at every single tweet, we're
looking every single thing. People in the and people on
their day to day jobs, they just don't do that.
(19:02):
And what they see is have a job. Things are good,
they're doing well. Economy seems to be fine, and we're
just going to keep moving forward. And we think the
economy and the situation is moving forward. And they look
at the technology and they say, hey, this is an
amazing technology. The world's an okay place, David.
Speaker 2 (19:20):
When it comes to.
Speaker 6 (19:23):
How about when it comes to this tax and spending bill,
and you can talking about regular folks in this country
or watching all of that unfold maybe from a distance,
how much does that standard sort of change your world,
whether or not we see that past in July or
August or later this year.
Speaker 7 (19:38):
I don't think it changes for the average person all
that much. The salt tab. We've been looking into the
salt tax, and I think that helps a lot of
people in high tax states, but on the higher income,
and that probably helps spending later over the next twelve
eighteen months, and it helps a little bit with their
bird to sentiment. I think the bigger issue is is
the deficit stabilizing. Looks like the deficit is stabilizing. I'm
(20:02):
a little bit concerned about the rhetoric and the talk
about longer end rates. But if you think about it
and you look at it, things haven't gotten worse. So
I'm not really sure why the narrative negative it is today.
It should have been much worse, much sooner. So it's
a little confounding.
Speaker 4 (20:17):
Chris, thank you generously to come in this morning. Chris
Harvey with us with Wells Fire with a real optimist
take here. All of his literature is like, get on board,
participate in America's feature.
Speaker 1 (20:30):
This is the Bloomberg Surveillance Podcast. Listen live each weekday
starting at seven am Eastern on Applecarplay 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 Play Bloomberg eleven thirty.
Speaker 3 (20:47):
We dive into the American labor economy right now.
Speaker 4 (20:49):
There's no one better qualified than Thomas Purcelli is chief
yours economist and PGM definitive on America's wage growth or.
Speaker 3 (20:57):
Lack thereof, definitive on the bar economy. In tom I'm
going to go to tourst and slack out.
Speaker 4 (21:03):
Or the morning paragraph this morning saying look, we're at
one hundred and thirty thousand non farm payrolls on Friday.
Speaker 3 (21:09):
He doesn't buy it.
Speaker 4 (21:10):
Question mark sixty four thousand NFP coming with continuing claims
doing that little second derivative lift is a weaker job economy.
Speaker 8 (21:21):
Finally here Yeah, So so, first of all, could be
with you all. Look, I think that you know this
is not for us. This is not new new information, right.
I mean that labor backdrop has been sort of showing
these cracks for quite some time now, you know, whether
you're looking at hiring rates or quit rates or labor differentials,
and now recently this little curl up in continuing claims.
(21:42):
I think it's all the evidence is pretty clear that
that labor is slowing down. So so from our perspective,
it's you know, it's just a question of when now
do you really start to see a show up in
the payroll report. But but I would hasten to add
everyone's waiting for it to show up in the payroll report.
But once it show's up there, it tends to be
too late. I mean, it's like that's the last thing
that breaks. But you have all these other all this
(22:02):
other evidence that's already pointing in that direction.
Speaker 3 (22:05):
When it goes, it goes.
Speaker 4 (22:06):
I would suggest, folks, my reading back to World War
to thank you Olivia Blunchard for being with us yesterday
in memory of Professor Fisher Tom Percelling. When I look
at unemployment rate, it goes four point two percent. When
it goes, do you frame out a quie s in
five percent or could it be worser?
Speaker 8 (22:25):
Yeah, I think by the end of the year you
could easily you'll you'll be up close to five percent.
We don't think you necessarily break through that. I do
think that there's an interesting sort of dynamic to consider
in the context of you know, immigration flows of obviously
slow down pretty notably, and as long as you know
the economy is not going to break in a meaningful way,
I don't think the unemployment rate really has to sort
(22:45):
of do a lot of heavy lifting. So we do
expect the unemployment rate will rise, and in fact, that's
sort of one of their key criteria for for US
as relates to our view on the FED, which is
to say they will be cutting before the end of
the year. But I don't know that it to get ugly,
but it's going to happen.
Speaker 6 (23:02):
Let me ask you a bit about inflation and sort
of where you see that story going here. And we
were talking earlier about the soft data and the hard
data and the anxiety that we see among consumers and businesses.
What do you think that will start to manifest itself
more in the harder data as we see again I
call them negotiations. I guess back and forth over over
these trade deals and the prospect that they could could
(23:23):
be inflationary, it could lead to higher inflation.
Speaker 2 (23:25):
Yeah.
Speaker 8 (23:25):
Look, I think what's interesting is if you look at
some of these company transcripts right like during the quarterly
earnings calls, I mean, some companies took price in April.
I mean you didn't even have terrorists that really went
through at that point, and this was early in a.
Speaker 6 (23:39):
Less defensive or opportunistic I think it's probably a little
bit of both.
Speaker 8 (23:43):
And so you know, and think back on yesterday's IM
I mean there were some really interesting comment forget about
the indexes with an ism. I mean they're fine, but
I think the sort of you know, the responding comments
I think are always much more interesting. And responding comments
were pret clear like they're pushing price through. There's no
question that that is going to happen. So here's the
(24:05):
thing though, while we expect inflation will rise again, that's
a part of our call, has been a part of
our call. This is not the COVID lift in inflation.
And I think that's especially true when you consider incomes.
I mean real incomes right, like real incomes x transfers
is running out of slower pace than is consumption, real consumption.
(24:27):
That's not a sustainable set up, and so I think
that means that it probably breaks the spirit of the
consumer to some extent.
Speaker 3 (24:32):
An extended discussion with Tom PERCELLI.
Speaker 6 (24:34):
Pees tiught we had this warning that John Tucker mentioned
just a moment ago from the OEC this morning about
slowing growth globally US A part of that seeing slowing
growth here here as well. What is your sense of
where that's headed? Does it does it marry with or
dovetail with what the OECD said this morning?
Speaker 8 (24:50):
Yeah, I mean, look, I think the I think the
I think those forecasts are just sort of catching up
with some with some of the reality that I think
there's already been in place. You know, the sort of
the slower rejectory of economic activity in the United States
and elsewhere, I think has been pretty known at this point.
You know, it's funny we were having this conversation internally.
You know, there's I think you could break the backdrop
(25:12):
up into structural and cyclical right cyclically speaking, Uh, you know,
we see slowing economic activity, like you know, we're calling
it the muddle through with a sort of you know,
a skew to the left tail. I think over the
more medium term, right, you know, medium to long term.
You know, it's easy to see a sort of a
fatter right tail that will take time. Though in fact,
I've been saying, I think you've got to go through
the left tail before you get to the right tail.
(25:34):
But yeah, I think that that to me is it's
already baked in the cake that folds in.
Speaker 4 (25:38):
I wanted to ask you you came from a wonderful
house RBC, like haleemccroft on Hydrocarbon's your parachute in. You know,
you get off the boat, the Hinckley and your parachute
in them pagium and these guys are.
Speaker 3 (25:50):
A world class bond geeks. Yes, what do they teach you?
What does what does the Greg Peters in the rest? What?
How do they inform your economics? Now that you're surrounded
by this brain ball?
Speaker 8 (26:05):
You know, it's I I love this question. So I
always said, you know, being on the when I was
on the sale side, you know, you would you would
go into, you know, a meeting and you would just
drop these ideas and then you get the hell out
of there and you never knew really what happened with
those ideas because you'd be running off to the next meeting.
But now there, you know, my next meeting is the
sort of another internal meeting. So it's been great to
(26:27):
sort of see my ideas sort of you know, come
to life as it relates to working with guys like
Greg and Robert Tip and then of course delete saying
it's been it's been a wonderful experience.
Speaker 3 (26:39):
How do you fold in then really yield dynamics.
Speaker 4 (26:42):
Ken Rogoff was in recently with my book of the Summer,
Our Dollar Your problem and the bottom line is the
inflation had just yields the heart of the debate. Yes,
how do you lecture Greg Peters on the vector of.
Speaker 7 (26:56):
The real you?
Speaker 8 (26:58):
He does not want me to lecture him, and I
don't think I want to lecture him either, So who
I adore him?
Speaker 7 (27:05):
Actually, he's great.
Speaker 8 (27:07):
Look, I think one thing that we're really trying to do,
and I think that this is something that is sort
of the holy grail in my humble opinion, I think
the marrying you know, look, p Jim is first and
foremost to bottom up shop. That has always been true.
And so I think one thing that you know, we're
really trying to think about a lot is.
Speaker 7 (27:25):
How do we marry that right?
Speaker 8 (27:26):
How do we marry the bottom and the bottom up
and the top down. I think we've been doing a
pretty good job of making some progress on that, and
it's something I look forward to continuing with with Greg
and the rest of the team. It's actually been a
really useful project.
Speaker 6 (27:39):
I was reading in this morning and our friend Claudia
Sam has a new piece out talking abo's what the
FED is thinking through at this moment in time, and
she said, kind of the fundamental question here is will
tariff induced inflation be short lived as the level of
prices adjust to higher tariffs, or will it persist as
a series of feedback loops lead to further price increases.
Speaker 2 (27:57):
Where do you fall on that question?
Speaker 6 (27:58):
We were talking about the way that companies have been
addressing this defensively or opportunistically. As I interjected, how worried
are you about that feedback loop turning into something kind
of crippling?
Speaker 8 (28:09):
It is very hard to see this inflation dynamic persist,
and it's very hard to see. I think again, we'll
sort of have a you know, sort of short memories
for this stuff, and I think people are looking back
over this COVID window and they're saying, hey, well, this
is what happened then. Yeah, But there's so many differences, right,
I mean, people were sitting on a mountain of cash.
We shut down an otherwise pretty healthy economy, turned it
(28:31):
back on like a light switch, creating a pent up
demand scenario. People were able to dip into this mountain
of cash. We had massive supplies shortages. So I think
it was really easy to sort of build a case,
or at least it was for us when I was
at RBC, to build the case that you were going
to see much more persistent inflation than was appreciated. This
setup today is wildly different. I think what wants up
happening is these these price increases that we are undoubtedly
(28:54):
going to see will basically break break the consumer. And
I think ultimately I could give re session, which is
why we have that left tail is a little bit
on the fat side.
Speaker 4 (29:03):
Truss, there evidence that they will lower prices if and
when the tariffs are over, so see that.
Speaker 8 (29:10):
In my literal I don't think that they're talking about
that right now. I mean, in fact, if anything, companies
want to take price as much as they can. It's
been pretty clear on that, so I think it'll I
think that the what that means to me is that
the lift in inflation could actually be firmer than a
lot of people think. I think people are sort of
flirting with the idea of, hey, maybe you get to
three percent and maybe it Peter's out there. My risk
(29:32):
on that is that it can run. But I think ultimately,
if you have a slowing labor backdrop, which is what
we expect, then that'll give way.
Speaker 3 (29:40):
Here's the way the act works, folks. I'm overwhelmed.
Speaker 4 (29:43):
My email inbox is insane and young Turks show up
and they.
Speaker 3 (29:48):
Have research reports.
Speaker 4 (29:50):
And the rule is if it's seven pages, I read
the first two pages, and if it's thirty pages, I
read the first four pages. And that ages ago, this
clown showed up from our RBC Capital markets. I'm like,
who is this guy? And he's talking wage dynamics. Here
begin with the discussion on the wages. What's our real wage?
Look like you own the high ground on this.
Speaker 8 (30:12):
Yeah, well, thank you for those nice words.
Speaker 3 (30:14):
You know.
Speaker 8 (30:15):
Look, I think the way that I like to look
at the backdrop right now is I'm looking at real incomes,
and I think real incomes X transfers that running at
a slower pace than real consumption that is not sustainable.
That is simply not sustainable. So it's really easy for
us to build a case on slower economic activity.
Speaker 4 (30:35):
Forget the continuum, the media frenzy of the phrase barbelle,
I don't buy it for a minute, yep. And I'll
let you decide on a death sile or quintile basis.
Ye where does America break? To me?
Speaker 3 (30:47):
It's a way higher income and beneath that is painful.
Speaker 8 (30:50):
I agree with that. I think that that's exactly what
we're seeing right now. I mean, you know, this is
the you know, the classic K shape recovery conversation that
we've been having for for quite some time. I think
that there's almost no doubt that there's a lot more
pain happening in those other quintiles that you just mentioned.
But you know, you look at it, and again this
gets into the hard verse soft data point. Just look
(31:12):
at confidence at the upper income confidencing the upper income
is also starting to break too, And I think it
look it's easy to sort of see that happen when
you have equity markets that are also breaking them coming back.
Equity markets coming back probably will ease some of that concern,
but I think most folks get that in an environment
where you're talking about significant terrors and potentially significant price increases,
(31:37):
I think that gives everyone a moment of pause, where
do you.
Speaker 2 (31:40):
See things going from here?
Speaker 6 (31:41):
When it comes to the labor market, so there is
a lot of happy talk from the administration about how
this is going to usher in a lot of new
jobs and manufacturing in particular, we're talking about diminution of
the labor market. You have to say, we're kind of
late late to the party. Recognizing that you were there earlier,
But how do you see that ending and how much
faith or or optimism that you have that all of
(32:02):
this could lead to some sort of reimagined or or
a labor market renaissance of some sort.
Speaker 8 (32:07):
So I think over the so this gets into the
cyclic over structural right like cyclically, I think again, I
think you'll start to see the slow down in in
labor and as a result, economic activity at large. I think,
I think longer term, I think that there's I think
there's a real case to make for I you know,
I hate the term, you know, US exceptionalism. I just
(32:28):
think it's overused and there has to be a better
way of saying it. But I think the idea of
US exceptionalism over the more medium to long term, for
lack of a better phrase, I think is real. And
I think about that in the context of the pieces
are in place for productivity to kill it again, it'll
take time to get there, and I do think that
some of the things that the administration is doing could
actually help in that. Regard the corporate tax part of
(32:50):
that of the tax cuts, I think that that can
actually go a long way to sort of helping build
the base of productivity. But again that you got to
I think you're going to go through the left tail
before you go to the right.
Speaker 3 (33:00):
Tant arrested.
Speaker 4 (33:02):
They FORDA, it does thirty five knots coming back down
the East River.
Speaker 3 (33:07):
Wow, he's gonna be flying over the city.
Speaker 4 (33:09):
Tom bertz Ellie, thank you so much, with a don't thanks, guys, stranger,
please please please.
Speaker 1 (33:19):
This is the Bloomberg Surveillance Podcast. Listen live each weekday
starting at seven am Eastern on Apple, Corplay and Android
Auto with the Bloomberg Business app. You can also watch
us live every weekday on YouTube and always on the
Bloomberg Terminal.
Speaker 4 (33:34):
The new heart and soul of the New Yorker is
emin as knows out with a new book on Greenwich, Connecticut,
and it reads like McPhee. You read it, you keep
reading it, David, because it's crafted.
Speaker 6 (33:47):
Evan Aso is great to have you with a staff
writer the New Yorker is Tom alluded to there. The
new book is called The Haves and Have Yachts Dispatches
on the Ultra Rich. Congrats on the book. Congrats also
on the title, which is excellent. Let's start with the
warning that we heard from former President Biden has prepared
to leave office. He said, today an oligarchy is taking
shape in America of extreme wealth, power and influence that
(34:08):
really threatens our entire democracy, our basic rights and freedom.
He sounded the alarm as he was making his way
to the exit. What has changed when it comes to
wealth inequality in this country over the last five six months.
Speaker 9 (34:22):
Thanks guys, by the way, Tom, you made my day.
We live in a world, John McPhee made.
Speaker 2 (34:27):
I'll say that.
Speaker 9 (34:29):
What President Biden was getting at is something really important
to a lot of folks. Frankly, it sounded almost belated. Look,
the good news is this country has never been wealthier
in so many respects. We are building companies, We're on
the cusp of a new era of technology and all
the ways you talk about on the show every day,
whether it's AI and robotics. And yet at the same time,
(34:49):
as you know, there are about half of American adults
who will tell you that they don't have one thousand
dollars to spend on an emergency expense. We are at
a point now it's really similar to where we've been
at moments in our history where we have tremendous technological opportunity,
huge wealth creation, and we're also facing a fork in
the road to make sure that that is also not
(35:12):
steering our government down a path that Henry Ford used
to say that he wanted to make sure that his
own employees, his own workers, could afford the cars he
was making. And those are some of the decisions we
have to be making now.
Speaker 6 (35:24):
This is clearly a theme that has animated a lot
of your work. I look at the Osmoso for going
back to your first book, Age of Ambition, Chasing Fortune,
Truth and Faith in the New China, which I read
on my first trip to Shanghai, and you mark then
on just the abundance the amount of wealthy excitement about
wealth and up mobility in China. As you look at
this particular book, are we looking at something that's uniquely
(35:46):
American or has this rise of the ultra rich and
sort of shared globally.
Speaker 9 (35:51):
Yeah, it's a fascinating parallel in many ways, David. I
mean I first started reading in a sense about the
American guilded age when I was living in China. Hus
I was trying to understand what was happening. We were
seeing railroads built at a pace we hadn't seen since
America in the nineteenth century. It's fitting in some ways
that I used The Great Gapsbie when I lived in
Beijing to conceptualize it. Here we are it's twenty twenty
(36:13):
five hundredth anniversary of that book. There are a lot
of lessons in there about how do you take that
sense of cultural energy that we might have had at
certain moments in the Roaring twenties, but also the awareness
that without making really smart choices, we're not going to
make sure that this money gets into the hands of
people who can rise with the tide.
Speaker 4 (36:34):
Evan, you grew up in the crucible this Grantwich, Connecticut,
where I'm sure three kids down the street did have
Hinckley picnic boats.
Speaker 3 (36:40):
You didn't. Your father was acclaimed within journalism.
Speaker 4 (36:45):
But what does the crew do below the fancy people
to try to get their kids to motivate and have
a good life and even aspire to be richer. I
mean this is topic one right now between the of
AI the decline of liberal arts. What do the kids
do just below those with the super yachts.
Speaker 9 (37:08):
Yeah, you know, I face these questions myself. I'm a dad,
I've got two kids, I think about the challenges of
people coming out of school today and how hard it's
going to be to get those first jobs. But here's
the thing, you know, we have some pretty great models
to inspire us in terms of how to think about
being energetic, being creative. I think about Warren Buffett. He's
on our minds a lot, all of us these days.
Speaker 7 (37:30):
You know.
Speaker 9 (37:30):
He talks about how much he left, how much he
will leave to his kids. He likes to say, as
you know, Tommy says, I want to leave them enough
that they can do anything, but not so much that
they can do nothing. I try, as I think about
the opportunities that are coming, to say to people, Look,
it's not enough for us to just say, Elon Musk
has now crossed the four hundred billion dollar threshold. We've
(37:51):
never had somebody with that kind of prosperity. Isn't that
as sign of strength. No, we have to be saying
to people, if we don't make smart choices, it's going
to end up with too many Musks and perhaps not
enough Buffets. And I think that's an important thing to
keep in mind.
Speaker 6 (38:05):
Spare a teer for the billionaire class, but I am
interested in this element of loneliness that comes through in
your book. So if you have billionaires buying these super yachts,
they can be in isolation on the open seas. You
have another chapter or another piece that you've written about
Silicon Valley billionaires who are looking to remote New Zealand
as a place where they can go weather the storm,
if that's a nuclear disaster or something that's a natural disaster.
Speaker 2 (38:29):
What explains it?
Speaker 6 (38:29):
And just I think the contrast is so stark to
what you were talking about a moment ago, which is,
during the Gilded Age you had billionaires, you had multimillionaire
I should say, maybe not billionaires who are interested in
philanthropy and in helping the wider population, building libraries in
towns across America. It seems like there is a stark
contrast that exists now between the aspirations of a lot
of these ultra wealthy than what we saw before.
Speaker 9 (38:51):
Yeah, David, you know, for the reporting for this book,
I went to New Zealand, I went to Monaco. Hardship
pay was not forthcoming despite my insistence, and it was
a fat way of getting into the minds of people
who have succeeded. And I think what you find in
a lot of cases. And this is the surprise, is
a sense of fear, frankly, a sense of vertigo. You know,
a lot of people will say, look, you've made all
(39:11):
the money in the world, what are you afraid of?
Why do you need to stand on the stage with
a president who you may not even necessarily ideologically agree with.
And I think what that tells us is that the
higher you get, you actually can end up feeling quite vulnerable,
quite exposed. I mean, as Silicon Valley CEO said to me,
I keep a helicopter gassed up all the time, and
I have a bunker with an air filtration system. And
(39:33):
I think that is Another former hedge fund manager said
to me, Look, there are twenty five hedge fund managers
in this country who make it more money combined than
all of the kindergartener teachers. And he said, and it
doesn't feel good to be one of those twenty five.
That's the vertigo.
Speaker 4 (39:48):
Evn We got to leave it there, but don't be
a stranger. Evan Austen's congratulations from the New Yorker. The
haves and they have not have yachts. Piece it together
from a wonderful New York can't say enough about this
as a general read on these odd odd times.
Speaker 1 (40:05):
This is the Bloomberg Surveillance Podcast, available on Apple, Spotify,
and anywhere else you get your podcasts. Listen live each weekday,
seven to ten am Eastern on Bloomberg dot com, the
iHeartRadio app, tune In, and the Bloomberg Business app. You
can also watch us live every weekday on YouTube and
(40:25):
always on the Bloomberg terminal.
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