Bloomberg Surveillance 05/23/2022 Davos World Economic Forum Day One

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>> THERE IS A PERVASIVE FOG OF NEGATIVE SENTIMENT OUT THERE. >> WHEN EVERY HEADLINE IS NEGATIVE, IT IS TIME TO BUY. >> I STILL THINK THE DOLLAR IS GOING TO BE KING IN THIS SORT OF ENVIRONMENT. >> THEIR EARNINGS ARE SUPERPOWERFUL AND STOCKS ARE CHEAP AT THIS POINT. >> THIS IS "BLOOMBERG SURVEILLANCE" WITH TOM KEENE, JONATHAN FERRO, AND LISA ABRAMOWICZ.

TOM: GOOD MORNING, EVERYONE. JONATHAN FERRO, LISA ABRAMOWICZ, AND TOM KEENE. THRILLED YOU ARE WITH US FROM THE WORLD A COMIC FORUM MEETINGS -- THE WORLD ECONOMIC FORUM MEETINGS IN A VERY DIFFERENT DAVOS, SWITZERLAND. A GREAT SET OF GUESTS COMING UP. WE WILL TELL YOU ABOUT THAT. BUT WE NEED TO SET THE STAGE IN MAY OF WHAT ALWAYS OCCURS IN JANUARY. I'M STUNNED HOW JARRING IT IS. I DID NOT EXPECT IT TO BE SO ODD THIS YEAR. LISA:

NOT ONLY IS IT NOT SNOWING AT IT IS NOT FREEZING, BUT DEFINITELY THE MEETINGS. TOM: SOMBER. LISA: AND I THINK THAT IS APPROPRIATE. WE ARE COMING OFF THE WORST ROUT , THE LONGEST STRETCH OF DECLINES ON THE NASDAQ AND THE S&P GOING BACK TO 2001, AND THE DOW GOING BACK TO 1973, ALTHOUGH NO ONE LOOKS AT IT, IF JON WERE HERE. TOM: JONATHAN ON ASSIGNMENT, CAPRI, WHERE THERE'S NO WIND. WE'RE GOING TO PUT UP WITH THE WIND AND ALSO LOOK AT THE WINDS OF CHANGE IN THIS ECONOMY. THE FRONT PAGE OF THE WORLD A

COMIC FORUM, BY FAR THE MOST SERIOUS, SOMEWHERE I HAVE EVER SEEN. LISA: HOW CAN THEY PROJECT OPTIMISM WHEN WE ARE FACING A DOWNTURN? THE HEAD OF THE IMF CAME OUT AND SAID SHE DOES NOT SEE A RECESSION. HOW MUCH IS THIS INEVITABLE OPTIMISM THEY HAVE TO BETRAY RATHER THAN SOMETHING THAT IS TRUE, ESPECIALLY GIVEN THE SORT OF HIDE FOOD PRICES -- THE HIGH FOOD PRICES AND INFLATION CRIPPLING THE MIDDLE-CLASS? TOM: THE CHURCH BELLS OF THE VALLEY BEHIND US ARE YOU I WOULD POINT OUT THE FIRST OBSERVATION OF THIS DAVOS IS IT IS DEFINITELY LESS CORPORATE. THERE'S LESS VISIBLE BRANDING OF THE MODERN DAVOS. IT IS MUCH MORE LIKE A 2008 OR EVEN EARLIER THAN THAT DOLLARS -- EARLIER THAN THAT DAVOS. GREEN ON THE SCREEN.

YIELDS UP ABOUT THREE BASIS POINTS. EVEN THE DOLLAR COMES IN A LITTLE BIT. LISA: WE SEE EURO STRENGTH TODAY AS CHRISTINE LAGARDE IS COMING OUT AND SEEING THE END OF NEGATIVE RATES BY THE END OF SEPTEMBER, REALLY PUSHING FOR THIS IDEA OF TRYING TO TIGHTEN INTO WHAT THEY SEE AS HUGE INFLATIONARY PRESSURES. WE WILL SPEAK TO A WHOLE HOST OF AMAZING PEOPLE TODAY, INCLUDING JASON FURMAN, A PROFESSOR AT HARVARD. WE ARE ALSO GOING TO BE SPEAKING WITH RICARDO HAUSMAN, ALSO OF HARVARD, BUT COULD HAVE BEEN PRESIDENT OF VENEZUELA. TOM: OR COULD ONE DAY BE PRESIDENT OF VENEZUELA. THE FOUNDER OF THIS PHRASE

ORIGINAL SIN, THERE'S A LOT OF TALK ABOUT IN THE ECONOMICS OF THE MOMENT. LISA: WE WILL SPEAK TO REBECCA PATTERSON, CHEESE INVESTMENT STRATEGIST -- CHIEF INVESTMENT STRATEGIST AT BRIDGEWATER, AND JOHN KERRY, U.S. SPECIAL CLIMATE ENVOY AND FORMER SECRETARY OF STATE AND A PEDAL MOMENT FOR HIM -- SECRETARY OF STATE AT A PIVOTAL MOMENT FOR HIM AND FOR THE DEMOCRATIC PARTY. TOM: HE WILL ALWAYS FOR ME BE THE SENATOR FROM JUICE IT'S DUSTY SENATOR FROM MASSACHUSETTS. I WAS -- SENATOR FROM MASSACHUSETTS. I WAS WITH HIM AT THE LAST

DAVOS. WITH NEWCASTLE COAL IN AUSTRALIA TO THE MOON, GLOBAL WARMING HAS TAKEN A BACKSEAT, CLIMATE CHANGE. LISA: SUDDENLY GETTING AS MUCH OIL AND GAS AS POSSIBLE IS WHAT IS INVOKE. TOM: WE WILL DO A LOT ON ECONOMICS ON INTERNATIONAL RELATIONS, BUT WE CANNOT IGNORE THE MARKET TURMOIL. WE START STRONG WITH THE SENIOR PORTFOLIO MANAGER OF OFFSPRING, GLOBAL INVESTMENTS WHO HAS SEEN THIS BEFORE.

THANK YOU FOR JOINING US ON SHORT NOTICE. WHAT IS DIFFERENT THIS TIME ABOUT A RECORD PULLBACK IN BONDS , PRICE DOWN, YIELD UP? >> THAT'S RIGHT. ACTUALLY THERE HAS NOT BEEN ANY PLACE AS FAR AS A SAFE HAVEN. IF YOU LOOK AT CORPORATE BONDS,

INVESTMENT GRADE, JUNK BONDS, EVEN TREASURIES, EVERYTHING IS DOWN ABOUT 10% TO 12% TOTAL RATE OF RETURN. THERE'S REALLY BEEN NO PLACE TO HIDE SO FAR. LISA: HOW DO YOU GET OPTIMISM AMID THE STOMACH TURNING VOLATILITY YOU HAVE BEEN SEEING? MARGARET: I THINK WHAT HAS HAPPENED IS THE FED, HAVING BEEN SORT OF COMATOSE WHEN RATES WERE LOW, THE DATA SIGNALS WERE STARTING, HAS NOW TALKED VERY TOUGH ABOUT AGGRESSIVELY RAISING RATES, AGGRESSIVELY SELLING DOWN THEIR PORTFOLIO. IT HAS REALLY'S AIRED THE MARKET TO DEATH. THEY ONLY MADE 75 BASIS POINTS

OF RATE INCREASES IN THE SHORT END, BUT IF YOU LOOK ALONG THE CURVE, BONDS ARE UP IN YIELD 120 TO 150 BASIS POINTS. THAT IS STARTING TO ROLL OVER INTO THE REAL STREET SAYING WE NEED HIGHER RATES AND IGNORING WHAT IS GOING ON IN THE REAL ECONOMY AS FAR AS CONSUMER INFLATION, SIGNS WE ARE SEEING EMPLOYMENT START TO ROLL OVER. THOSE ARE WORRYING SIGNS AND I THINK THE FED WILL SEE THEM. TYPICALLY THEY LAG THE REALITY OF THE MARKET, BUT HOPEFULLY THEY WILL SEE THEY ARE BEGINNING TO DO DAMAGE TO THE REAL ECONOMY, WHICH IS IN PRETTY GOOD SHAPE. THE EXCESSES HAVE REALLY BEEN IN THE ZERO INTEREST RATE PART OF THE MARKET, THE EQUITY MARKET, THE HOUSING MARKET, AND OTHER REAL ASSET MARKETS. TOM: I WANT TO TALK ABOUT COUPON RIGHT NOW. THE COUPON HAS CHANGED.

THE YIELD TO MATURITY HAS CHANGED. FOR OUR AUDIENCE, WHAT THEY ARE GAMBLING ON IS I AM GETTING A HIGHER YIELD NOW, NO QUESTION ABOUT THAT, BUT I AM WORRIED ABOUT PRICE DECLINE. HOW DO YOU BALANCE THE GREED OF GRABBING THAT HIGHER YIELD VERSUS THE FEAR OF BONDS CONTINUING SOUTH? MARGARET: I THINK WE ARE VERY NEAR THE PEAK IN INTEREST RATES BECAUSE I THINK THE ECONOMIC STATUS ARE GOING TO BEGIN TO ROLL OVER AND THE FED WILL STOP WHAT THEY ARE DOING. WHEN YOU LOOK AT HIGH-YIELD BONDS OLD INC. 6.5% TO 8.5 PERCENT, TRADING

$.90 ON THE DOLLAR, FOR A LONGER TERM INVESTOR, THAT LOOKS LIKE A PRETTY REASONABLE RISK RETURN ALTERNATIVE. FRANKLY, IT MAY DO AS WELL AS THE EQUITY MARKET, WHICH WE THINK WILL JUST BE MID SINGLE DIGITS TO LOW DOUBLE DIGITS. TOM: TO BE CLEAR, AND LET'S BE CLEAR HERE, MARK E PATEL -- MARGIE PATEL IS ACCLAIMED WORLDWIDE, DID I HEAR YOU SAY YOUR APPETITE FOR LONGER DURATION YIELD VERSUS BUYING A DIVIDEND GROWTH STORY? MARGARET: WELL, I THINK THERE'S ALWAYS GOING TO BE MORE MONEY TO BE MADE IN EQUITIES OVER THE LONG TERM. BUT OVER THE NEXT YEAR OR SO, ESPECIALLY IF YOU ARE INTERESTED IN INCOME, NET CAPITAL APPRECIATION, CORPORATE BONDS, ESPECIALLY HIGH-YIELD, ARE PRETTY ATTRACTIVE ON A RISK REWARD BASIS. LISA: WHAT DO YOU HAVE TO SEE IN ORDER TO ACTUALLY ACHIEVE THIS IN TERMS OF A DOWNTURN? A LOT OF PEOPLE BAKING IN A RECESSION TO A LOT OF VALUATIONS. YOU ARE SUGGESTING THAT IS OFF

THE TABLE AND HIGH-YIELD IS STILL THE PLACE TO HIDE. MARGARET: I'M ASSUMING THAT IS A BIG RISK THAT THE FED DOES NOT GET THE ECONOMY SIGNALS AND KEEPS MARCHING ON WITH A TIGHTENING PROGRAM, BUT I THINK THEY WILL SEE IT IS TIME TO TAKE A BIG PAUSE. I THINK AT THAT POINT WE WILL MORE OR LESS EVALUATE THE MARKET AND PERHAPS BE ABLE TO SEE A WAY THROUGH WITHOUT A RECESSION. IF THE FED KEEPS DOING WHAT THEY ARE DOING, WE MAY WELL HAVE A RECESSION AT THE END OF THIS YEAR OR 2023, PRECIPITATE BY THEIR ACTIONS, AS WELL AS GLOBAL WEAKENING THAT COULD DRAG THE U.S. MARKET DOWN. SO I HOPE THE FED WILL LOOK AROUND BEFORE THEY GET TO AGGRESSIVE. LISA: WHY HAVEN'T WE SEEN MORE SUBSTANTIAL OUTFLOWS IN PARTICULAR FROM BONDS? WE HAVE SEEN SOME, BUT WHY HAVEN'T THEY RAN A STAMPEDE FROM AN INSTRUMENT THAT SHOULD BE ROCK SOLID? MARGARET: I THINK ONE OF THE REASONS IS BECAUSE IF YOU LOOK AT THE YIELD, IT IS STILL VERY LOW, SO IT IS NOT REALLY A COMPETITIVE PLACE TO HIDE. IT IS NOT AS IF YOU COULD GET

3% OR 4% IN MONEY MARKETS AND SAY I WILL STAY THERE. YOU ARE STILL LOOKING AT SOMETHING AT BEST APPROACHING 25 BASIS POINTS, SO I THINK PEOPLE ARE SAYING WE HAVE SEEN THIS VOLATILITY BEFORE, WE WILL STAY WHERE WE ARE. OR SOME OF THOSE EQUITY NAMES THAT HAVE BLOWN UP MAY BE DON'T HAVE ANYTHING LEFT TO SELL OR DON'T KNOW WHAT TO DO IN THIS MARKET. TOM: THANK YOU SO MUCH FOR GETTING US STARTED HERE IN DAVOS . WHAT IS SO IMPORTANT HERE AND SO FAR UNSPOKEN IS ALL OF THE MUCKY MUCKS OF HAPPY VALLEY ARE LINKED INTO LONG-TERM INSTITUTIONAL MONEY, AND FRANKLY IN THE BOND SPACE, IT IS WORSE IN 2009 RIGHT NOW.

I CAN'T BELIEVE I AM SAYING THAT, BUT IT IS. LISA: THAT IS WHAT RICK RIEDER OF BLACK ROCK SAID. THERE WAS A "WALL STREET JOURNAL" ARTICLE, AND HE WAS SAYING THIS IS SOME OF THE MOST VOLATILITY HE HAS SEEN IN HIS 30 YEAR CAREER.

A LOT OF PEOPLE SAID WHAT ABOUT 2020 MARCH WHICH ABOUT 2009 AND 2008? THE REALITY IS THIS IS UNHEARD OF. THE 60/40 HAS GOTTEN DECIMATED, THE WORST YEAR EVER SO FAR FOR THIS TYPE OF PORTFOLIO. HOW DO YOU READJUST? TOM: MY SETTING IS TURNING, TOO, AFTER THE THIRD BOWL OF BARLEY SOUP. GOT TO EXPLAIN TO OUR

LISTENERS, THIS IS AN AMERICAN THING, THE AMERICAN FIXATION TWO DECADES AGO OF HEIDI ABRAMOWICZ, GIRL OF THE ALPS, WAS EXTRAORDINARY. EXPLAIN THE HEIDI OF 20, 30 YEARS AGO. LISA: I'M SO GLAD. YES, I WAS OBSESSED WITH HEIDI. IT WAS THE FIRST CHAPTER BOOK I READ.

"THE SOUND OF MUSIC," THE FLOWERS, IT IS BEAUTIFUL. YOU ARE RIGHT. AND YOU KNOW WHAT, I AM NOT DOING THIS AGAIN. TOM: HERE'S WHAT WE ARE GOING TO DO. WE ARE GOING TO KEEP THE MARKETS ABREAST. REBECCA PATTERSON WILL JOIN US LATER FROM BRIDGEWATER.

WE BEGIN TO LOOK AT THE NEW THEORY OF DAVOS AMID THE FEARS IN ECONOMICS AND PARTICULARLY, THE MARKET TURMOIL. GETTING US STARTED HERE AT THE WORLD ECONOMIC FORUM ON THE THEMES OF THE MOMENT. JASON FURMAN JOINS US FROM HARVARD. STAY WITH US FROM THE BRODA, FOR -- THE WORLD ECONOMIC FORUM. RITIKA: KEEPING YOU UP TO DATE WITH NEWS FROM AROUND THE WORLD, WITH THE FIRST WORD, I'M RICKY -- RITIKA GUPTA. THE WHITE HOUSE IS WALKING BACK PRESIDENT BIDEN'S COMMENTS ON TAIWAN AND TOKYO.

THE PRESIDENT SAID THE U.S. MILITARY WOULD INTERVENE TO DEFEND TAIWAN AND ANY ATTACK FROM CHINA. THAT APPEARED TO BREAK THE LONG-STANDING U.S. POLICY OF SO-CALLED STRATEGIC AMBIGUITY. THE WHITE HOUSE LATER SAID THE PRESIDENT SIMPLY MEANT THE U.S.

WOULD PROVIDE MILITARY EQUIPMENT TO TAIWAN, NOT SENDING TROOPS. THE BIDEN ADMINISTRATION ANNOUNCED A DOZEN END OF PACIFIC COUNTRIES WILL JOIN THE U.S. IN A SWEEPING UP AND I LIKE -- A SWEEPING ECONOMIC INITIATIVE. THE NEW FRAMEWORK DOES NOT INCLUDE ANY TARIFF REDUCTIONS AND IT IS UNCLEAR WHICH PARTS ARE BINDING. IN AUSTRALIA, THE LABOUR PARTY'S ANTHONY ALBANYES -- ANTHONY OUT MONEY -- ANTHONY ALBANESE HAS BEEN SWORN IN AS PRIME MINISTER. BRITISH PRIME MINISTER BORIS

JOHNSON IS REPAIRING FOR ANOTHER DRESSING DOWN OVER ILLEGAL PARTIES IN DOWNING STREET. CIVIL SERVANT SUE GRAY IS EXPECTED TO PUBLISH HER INTERNAL INVESTIGATION TO THE DETAILS OF THE SO-CALLED PARTY GATE SCANDAL THIS WEEKEND. IT MAY INCLUDE DIGITALLY DAMAGING PHOTOGRAPHS. JOHNSON HAS COMMITTED TO MAKING A STATEMENT IN PARLIAMENT ON THE MATTER. CHIP MAKER BROADCOM IS IN TALKS TO ACQUIRE VMWARE AND WHAT WOULD BE A MASSIVE DEAL. BE AWARE CURRENTLY HAS A MARKET

VALUATION OF ABOUT $40 BILLION. AN ACQUISITION WOULD PUT OUR, THAT'S WOULD PUT BROAD -- WOULD PUT BROADCOM INTO A HIGHLY SPECIALIZED AREA OF SOFTWARE. GLOBAL NEWS 24 HOURS A DAY, ON AIR AND ON BLOOMBERG QUICKTAKE, POWERED BY MORE THAN 2700 JOURNALISTS AND ANALYSTS IN MORE THAN 120 COUNTRIES.

BY RITIKA GUPTA. THIS IS BLOOMBERG. >> IN YOUR VIEW, IS A RECESSION IN THE UNITED STATES INEVITABLE? PRES. BIDEN: NO. >> WHY NOT? PRES. BIDEN: OUR GDP IS GOING TO GROW FASTER THAN CHINA'S FOR THE FIRST TIME IN 40 YEARS. DOES THAT MEAN WE DON'T HAVE PROBLEMS? WE DO. WE HAVE THE PROBLEMS THAT THE REST OF THE WORLD HAS COME ABOUT LESS CONSEQUENTIAL THAN THE REST OF THE WORLD HAS BECAUSE OF OUR INTERNAL GROWTH AND STRENGTH. TOM:

THE PRESIDENT OF THE UNITED STATES SAYING WE ARE NOT GOING TO HAVE A RECESSION. [LAUGHTER] LISA: HE IS SAYING IT IS NOT A HABITABLE -- NOT INEVITABLE. WHAT ELSE IS HE GOING TO SAY? TOM: THE PRESIDENT ON A SUCCESSFUL RESET IN THE PACIFIC RIM. WE THINK RUBBER DOORMATS -- ABOUT ROBERT -- WE THANKED ROBERT HORMATS OF ABOUT A WEEK AGO, WHO WAS EXCELLENT. WE WELCOME ALL OF YOU IN MAY IN DAVOS. IT IS SPECTACULAR.

I VOTE IMMEDIATELY THEY SHOULD MOVE THE MEETINGS TO JUNE. THIRD WEEK, FOURTH WEEK OF JUNE. LET'S GET STARTED RIGHT NOW AT THESE WORLD AHEAD AMONG FORUM MEETINGS WITH SOMEONE WHO CAN SYNTHESIZE THESE TOGETHER. WHAT HE DOES MORE THAN ANYONE IN THIS NATION IS STAND UP IN FRONT OF RIGHT CHERUBS AND TEACH THEM THEIR FIRST COURSE IN ECONOMICS AT HARVARD. HE'S THE ONE WHO'S FOLLOWED ON FROM MARTIN FELDSTEIN TO DELIVER WHAT IS CALLED EC 10. WHAT DID YOU SAY TO THE EAGER STUDENTS WHO HAVE NEVER SEEN A BOND MARKET LIKE THIS AND NEVER SEEN THE SECOND DERIVATIVE MOVES THAT WE ARE SEEING IN MARKETS AS IT RELATES TO OUR ECONOMY? JACOB: TO OUR STUDENTS, I TOLD THEM THAT WHEN THE PRICE GOES DOWN, THE YIELD GOES UP -- JASON: TO OUR STUDENTS, I TOLD THEM THAT WHEN THE PRICE GOES DOWN, THE YIELD GOES UP. [LAUGHTER] WHAT I AM NOT SURE YOUR VIEWERS

ARE ON TOP OF IS THAT I THINK THIS INFLATION IS GOING TO BE PRETTY PERSISTENT GOOD NOT WHERE IT IS NOW, BUT ABOVE WHERE THE FED WANTS IT TO BE. THAT MEANS THE FED IS GOING TO NEED TO STAY AT IT. A FED FUNDS RATE OF 4% OR HIGHER, COMPLETELY PLAUSIBLE, NOT PRICED INTO THE MARKET RIGHT NOW. LISA: PEOPLE BELIEVE THE FED WILL

RESCUE THE MARKETS. YOU ARE SAYING NO WAY. WHY? JASON: BECAUSE WE ARE WAY ABOVE OUR INFLATION TARGET. THAT IS THE JOB THE FED WAS ASSIGNED. YOU HAVE A CHAIR WHO TALKS ABOUT HIMSELF IN THE SORT OF WAKE OF PAUL VOLCKER, THAT HISTORICAL SHADOW. HE WANTS TO BRING THAT

INFLATION DOWN. THE MARKET IS HELPING HIM DO HIS JOB. I THINK THIS IS NOT AN ACCIDENT. THIS IS ALMOST SOMETHING THAT THEY ARE FINE WITH. LISA: WE SHOULD NOT HAVE BEEN LAUGHING COMPLETELY BECAUSE THE PROSPECT OF A RECESSION IS HORRENDOUS.

DO YOU THINK IT IS AVOIDABLE, AS JOE BIDEN SAID? OR DO YOU THINK THE FED HAS TO ESSENTIALLY ALLOW THAT TO HAPPEN TO COOL THE INFLATION AS IT IS? JASON: OVER THE NEXT YEAR, I AM NOT THAT WORRIED. I'M ALWAYS HAVE 15% FOR RECESSION, MAY BE AN -- MAYBE I AM AT 20% FOR THE NEXT YEAR, BUT CONSUMERS ARE STILL SPENDING A LOT. THERE'S PEOPLE COMING OFF THE SIDELINES FOR JOBS. THERE'S MORE INVENTORY REBUILDING TO DONE. WHEN YOU LOOK AFTER THIS YEAR, THAT IS WHEN I GET MORE WORRIED. THAT IS ONE MORE THE FED RATE HIKES START TO KICK IN AND AFFECT THE ECONOMY. TOM:

THE PUNDITRY OUT THERE I HAVE NEVER SEEN. IT IS WORSE THAN 2009. THOSE PUNDITS ARE SILENT WHEN THEY LISTEN TO YOU. WITHIN THE GEOMETRY OF WHERE WE ARE, WHEN WE GET INTEREST RATES WHERE THEY ARE, WHEN YOU GIVE US THE FEAR OF A TERMINAL RATE TO 4%, HOW DOES THAT LINK IN TO THE ACTUALLY REAL ASSUMPTION OF BONDS -- THE ACTUARIAL ASSUMPTION OF BONDS AND THE RETURN OF EQUITIES? JASON: I THINK THE LONG BONDS HAVE NOT FULLY PRICED IN THAT THEY THINK THE FED IS GOING TO STOP AT 3%.

THAT MIGHT HAPPEN. THEY MIGHT HIT A RECESSION AND WE GO BACK TO ZERO. BUT WE COULD BE WELL ABOVE 4%. I THINK THAT IS A MODAL SCENARIO. WHEN YOU LOOK AT SOMETHING LIKE THE ALONG YIELDS, THEY HAVE NOT GONE UP THE SAME WAY THEY HAVE GONE UP ON THE FRONT END OF THE CURVE. TOM: LET'S GO BACK TO THE NAPOLEONIC WARS OR THE PANIC OF 1870, THE GYRATIONS OUT OF WORLD WAR I, A FRACTURED EUROPE AND ALL. THAT IS THE FEAR THAT IS OUT THERE FOR TRULY A GENERATION OR TWO THAT HAVE NOT ENJOYED WHAT WE ARE IN RIGHT NOW. WHAT DOES IT DO TO A PORTFOLIO?

WHAT DOES IT DO TO A PENSION FUND? JASON: THAT INTEREST RATE SHOWS UP AND EVERYTHING WILL STOCK PRICE AS THE DISCOUNT FACTOR. THAT IS WHY ALMOST EVERY SINGLE STOCK PRICE IS GOING DOWN RIGHT NOW. TOM: ARE YOU IN THE TRIPLE LEVERAGED ALL-CASH FUND LIKE ME? [LAUGHTER] LISA: ARE YOU TRYING TO PITCH THAT? TOM: THEY WANT ME TO START IN EITHER ETF OR NFT. [LAUGHTER] THE FEAR HERE IS IF WE GET A FURTHER FIRST AND SECOND DERIVATIVE MOVE THAT WE HAVE ALL ENJOYED FOR FOUR MONTHS, THAT WE ARE GOING TO GET A TRUE -35% DOW , WE WILL GET BONDS LIKE WE HAVE NEVER SEEN BACK TO THE 1930'S. YOU UP SCRIBE TO THAT -- DO YOU ASCRIBE TO THAT? JASON: I THINK THAT IS A POSSIBILITY. I LOOK AT HOUSEHOLDS THAT HAVE

$2.3 TRILLION STILL SAVED UP FROM THE TRANSFERS OVER THE LAST TWO YEARS. I LOOK AT BUSINESSES STILL FACING PRETTY GOOD FINANCING IF THEY WANT TO MAKE MORE INVESTMENTS.

I LOOK AT A GLOBAL ENVIRONMENT WHERE THE DOLLAR STRENGTH IS WORRYING ME AND THE DOWNDRAFT WE ARE GETTING IN NET EXPORTS, SO I AM LOOKING AT THOSE FACTORS. OVERALL I THINK WE ARE GOING TO SEE A LOT OF JOBS THIS YEAR. LISA: THERE ARE SOME PEOPLE WHO BELIEVE THE MORE WE SEE IN MOMENTUM AND THE LACK OF RECESSION NOW, THE WORSE IT WILL BE LATER. I POINT TO PEOPLE LEVERING UP

ON THE CONSUMER SIDE ONCE AGAIN. DO YOU THINK THAT IS POSSIBLE? JASON: THE FED THINKS INFLATION IS COMING DOWN TO 2.5 PERCENT. IF THAT HAPPENS, THERE IS A 25% CHANCE OF HAPPENS, IT WOULD BE WONDERFUL IF WE COULD AVOID ALL OF THESE THINGS. INFLATION STUCK ROUGHLY AT 4% OR 5%, I DON'T KNOW WHAT SORT OF PAIN YOU WOULD NEED IF YOU WANT TO BRING IT BACK DOWN. TOM: LONG AGO AND FAR AWAY, A

COLUMBIA PROFESSOR SAW A KID AT HARVARD AND SAID THIS KID IS DIFFERENT. HE'S GOING TO WORK WITH ME. HOW DEAD ON WAS YOUR MENTOR JOE STIGLITZ ON INFLATION AND ITS DISCONTENTS? -- ON MOBILIZATION AND ITS DISCONTENTS? JASON: I SAW JOE. HE DOES NOT LIKE GLOBALIZATION, BUT HE LIKES IT HERE IN DOLLARS. [LAUGHTER] I THINK WE ARE SEEING A PAUSE IN GLOBALIZATION. I DON'T THINK WE WILL SEE BIGGER ENTRENCHMENT BECAUSE THERE'S SO MUCH EFFICIENCY GAINS. BUT I DON'T THINK THERE WILL BE

A BIG WITHDRAWAL FROM IT, AND I DON'T SHOULD BE. TOM: THE AGREEMENT WE HAVE IS THAT I GET TO CHOOSE ONE GUEST, SO WE HAVE THE OPTIMISM OF JASON FURMAN, AND YOU GET JOE STIGLITZ. LISA: THAT WILL BE COMING UP, AND HE WILL BE COUNTERING. WE WILL SAY WE HEARD YOU LIKE

GLOBALIZATION HERE AT DAVOS, THAT'S WHAT JASON FURMAN TOLD US, AND SEE WHAT HE SAYS. TOM: WHAT ARE THE MARKETS DOING? LISA: WE HAD A LITTLE BIT OF A LIFT. TOM: I THOUGHT YOUR PEOPLE TALKED TO YOU AND TOLD YOU WHAT WE ARE DOING. [LAUGHTER] LISA: THE S&P IS UP 25, SO YOU HAVE A LITTLE BIT OF A LIFT. PERHAPS PEOPLE TRYING TO TAKE A BREATH AFTER THE LONGEST STREAK OF LOSSES GOING BACK TO 2001. TOM:

10 YEAR YIELD, DUPLICATE 2%. WE GOT SO MUCH MORE COMING UP. REBECCA PATTERSON TO BE WITH US, AND ALSO, DR. WIN THIN OF BROWN BROTHERS HARRIMAN. TOM: GOOD MORNING EVERYONE. FROM THE WORLD ECONOMIC FORUM

IN DAVOS, SO DIFFERENT THIS YEAR. MUCH TALK OF THE WAR IN UKRAINE AND MUCH TALK ABOUT DEGLOBALIZATION. LISA ABRAMOWICZ IS WITH ME. JON FERRO IS ON ASSIGNMENT. LISA: ARE SEEING THE GREATEST MENTIONS OF DEGLOBALIZATION IN MORE THAN A DECADE. THEY ARE TRYING TO CHANGE WHERE THEY HAVE THEIR SUPPLY CHAIN, MAKE THEM MORE LOCAL. MY HAIRSPRAY IS NOT RESILIENT. TOM: THE SWISS WIND. LISA:

THIS IS GOING TO BE ONE OF THE KEY QUESTIONS. HOW DO YOU REARRANGE SUPPLY CHAINS IN A WORLD WHERE WE ARE SUDDENLY MORE DEPENDENT THAN EVER ON ONE ANOTHER? WHAT HAPPENS IF SUDDENLY WE CAN'T GET CHIPS FROM TAIWAN? TOM: THE CHIPS ARE FRONT AND CENTER. RIGHT NOW WE ARE GOING TO RIP UP THE SCRIPT WITH WIN THIN AT BROWN BROTHERS HARRIMAN. FROM HIS NATIVE BURMA, HE IS

SOMEONE VISCERALLY ENTWINED WITH THE PACIFIC RIM. THANK YOU SO MUCH FOR JOINING. ROBERT D KAPLAN TALKS ABOUT THE SOUTH CHINA SEA AND HE WALKS AROUND IT IN A CIRCLE CHAPTER BY CHAPTER. HE TALKS ABOUT THE CHANGE IN CHINA. WHAT DOES PRESIDENT BIDEN NEED TO DO ECONOMICALLY, POLITICALLY TO RESTORE AMERICA'S RELATIONSHIP WITH THE PACIFIC RIM? >> THANKS FOR HAVING ME. IT'S ALWAYS A PLEASURE TO BE

HERE WITH YOU TWO AND ALSO JONATHAN. I WILL SAY THIS. WE HAD A BUNCH OF COMMENTS OUT OF PRESIDENT BIDEN TODAY. MANY OF THEM CENTERED ON CHINA. THE MOST IMPORTANT THING IS THIS NEW ASIAN PARTNERSHIP THAT HE ANNOUNCED. CHINA HAS BEEN ON THE BACK BURNER SINCE MR. BIDEN CAME IN

AND RIGHTFULLY SO. CHINA SEEMS TO BE CIRCLING BACK ONTO THE FRONT BURNER. PIVOTING BACK TO THE TRANSPACIFIC PARTNERSHIP THAT WAS TORN UP BY THE PREVIOUS ADMINISTRATION.

IT'S A WAY TO REASSERT U.S. INTEREST IN THE REGION. IT'S A PRETTY BIG SIGNAL TO CHINA THAT WE ARE STILL KEEPING AN EYE ON YOU. WE ARE HOPING TO PROVIDE COUNTERWEIGHT TO YOUR INFLUENCE IN THE REGION. OBVIOUSLY THE DETAILS HAVE TO BE WORKED OUT.

I THINK THE BIG STATEMENT FROM RESIDENT BIDEN. LISA: I READ A BUNCH OF HEADLINES. PRESIDENT BIDEN SAID THE U.S. WOULD DEFEND TAIWAN. A LOT OF THIS VIEW THIS AS A COMPLETE UPHEAVAL OF HIS POSITION. IT WAS WALKED BACK

SUBSEQUENTLY. HE TALKED ABOUT HIS ADMINISTRATION REMOVING SOME OF THE TARIFFS ON CHINA. THAT SEEMS TO BE WHAT HAS BEEN DRIVING THE YUAN GAMING TODAY. -- GAINING TODAY. HOW DO YOU VIEW THE IDEA OF THE

REMOVAL OF TRUMP ERA TARIFFS? >> IT'S REALLY EYE-OPENING. IT HAS BEEN QUIETLY DISSUADED IN THE PAST. I WAS DOING THIS NEW NORMAL WEAR INFLATION IS MUCH HIGHER THAN ANYONE EXPECTED. OFFICIALS ARE LOOKING FOR WAYS TO EASE THE PAIN OF U.S. CONSUMERS. IT'S ALWAYS BEEN A NICE POINT OF LEVERAGE THAT WAS GIFTED TO PRESIDENT BIDEN. PRESIDENT TRUMP IMPOSED TARIFFS. HE TOOK A GREAT TOUGH LINE AGAINST CHINA AND SORT OF HANDED THESE TARIFFS OVER TO THE U.S.

AND IT WAS ALWAYS A GOOD POINT OF LEVERAGE FOR THE U.S. TO MAINTAIN. IF THEY ARE DISCUSSING SOME SORT OF RELIEF TARIFF, IT WOULD BE ON A TEMPORARY BASIS.

I DON'T THINK THE U.S. WILL WANT TO GIVE UP THAT POINT OF LEVERAGE. MAYBE A SIX-MONTH WINDOW OR MORE GIVEN HOW THE SUPPLY CHAINS ARE. I DON'T THINK IT'S GOING TO BE THAT ALL OF A SUDDEN EVERYONE IS BUDDY BUDDY AGAIN. IT WILL REMAIN CONTENTIOUS GOING FORWARD. I THINK A LOT OF IT IS DRIVEN BY DOLLAR WEAKNESS.

THE PENDULUM OF SENTIMENT SWINGS VERY WILDLY. IT IS SORT OF RISKS OF U.S. RECESSION ARE BEING PRICED IN. IT'S A LESS HAWKISH FED. FOR NOW THE DOLLAR IS ON THE BACK FOOT. LISA: WHEN THE PENDULUM OF DOOM HAS SHIFTED A LITTLE BIT TO THE PENDULUM OF SOMETHING A LITTLE BIT DIFFERENT FOR THE PAST COUPLE OF TRADING SESSIONS. CAN CLIENTS GET ANY CONVICTION ABOUT GOING BACK INTO CHINA AFTER MASSIVE OUTFLOWS GIVEN THIS CONTENTIOUS RELATIONSHIP OF WHICH YOU SPEAK IT? >> THE WHOLE CHINA STORY HAS BEEN COMPLICATED.

COVID ZERO HAS WREAKED HAVOC ON THE CHINESE ECONOMY. ABOUT 5% GROWTH TARGET FOR THIS YEAR. IT'S HARD TO ARGUE FOR GOING BACK INTO CHINA AT THIS POINT. POLITICALLY THEY ARE STILL CRACKING DOWN TECH COMPANIES.

TO ME THERE'S A LOT OF REASONS TO STAY OUT OF CHINA AT LEAST FOR NOW. I THINK IT'S VERY DANGEROUS RIGHT NOW. GIVEN HOW THE U.S. CHINA RELATIONSHIP IS BACK IN THE HEADLINES. TOM: I WAS TALKING WITH SIMON KENNEDY ABOUT THE LINK TO MARKETS IN THE GREAT ECONOMICAL. THE GLOBAL LITMUS PAPER IS THE DOLLAR AND THE DOLLAR SYSTEM, THE FLOATING-RATE SYSTEM THAT WE HAVE. CAN WE HAVE MARKET STABILITY

WITH A RESILIENT DOLLAR OR DOES IT DESTABILIZE SO MANY EMERGING MARKETS, DOES IT DESTABILIZE FLOW SO MUCH THAT WE ARE JUST NOT GOING TO GET TO A SOLID MARKET OUTCOME WITHOUT WEAK DOLLAR? >> THAT'S A GREAT QUESTION. THERE HAS BEEN CHATTER IN THE LAST WEEK OR TWO ABOUT SOME KIND OF ACCORD TO HELP WEAKEN THE DOLLAR. A LOT OF IT IS REALLY ABOUT THE PACE. IF THE PACE IS VERY FAST, THAT'S WHERE THE RISK OF DESTABILIZING MOVES HAPPEN. IF YOU LOOK BACK AT THE MID-80'S, WE HAD THE DOLLAR AROUND 35%, 45%. WE ARE NOWHERE NEAR CLOSE TO

THAT. I DON'T THINK IT'S SETTING OFF THE ALARM BELLS YET AT THE G7. TOM: THIS IS SO IMPORTANT IN THIS COMES UP WITH ALL SORTS OF GOOD WORK. IN 1960, THE U.S. WAS 40% OF THE GLOBAL ECONOMY AND WE HAVE COME WAY DOWN WITH A RESURGENT CHINA. DO WE OVEREMPHASIZE OUR INTERNATIONAL MARKET ANALYSIS AND AND OUR INTERNATIONAL ECONOMICS AS WE TRY TO ANALYZE AMERICA AND WHAT AMERICAN BONDS AND AMERICAN EQUITIES ARE GOING TO DO? >> THE U.S. FROM AN ECONOMIC STANDPOINT IS NOT AS DOMINANT AS IT WAS.

TO TAKE MY REASONING FORWARD, THE YUAN REPLACING THE DOLLAR, IT'S NOWHERE CLOSE TO THAT BECAUSE IT DOESN'T HAVE THE TRACK RECORD, THE DEEP MARKET SIZE. IT'S STILL HEAVILY CONTROLLED MARKETS IN CHINA. SOMETHING LIKE 2.5% OF GLOBAL RESERVES.

IT'S LIKE AN ICEBERG MELTING. IT'S FALLING BUT IT'S AT SUCH AN INCREMENTAL PACE, IT'S NOT SOMETHING FOR YOU AND I TO WORRY ABOUT. IT WILL BE SOMETHING FOR OUR KIDS OR GRANDKIDS. LISA: BEFORE WE LET YOU GO, WE ONLY HAVE A COUPLE OF MINUTES LEFT.

I WANT TO GET YOUR SENSE OF WHAT CHRISTINE LAGARDE SAID TODAY. DO YOU THINK IT MOVES THE NEEDLE BUT SHE CAME OUT AND CONFIRMED AND SAID THEY PLAN TO HAVE NO NEGATIVE RIGHT POLICIES BY THE END OF SEPTEMBER? >> IT'S THE FIRST TIME SHE'S COME OUT AND SAID THAT. IF YOU LOOK AT THE CALENDAR, A HIKE IN JULY AND IN SEPTEMBER DOES TAKE YOUR BASIS TO ZERO. ANOTHER HIKE IN OCTOBER AND DECEMBER -- IN A SENSE IT HASN'T MOVED THE NEEDLE ON THE RATES MARKET. THE MARKETS ARE STILL LOOKING FOR 0.5 BY YEAR-END. I THINK THE KNEE-JERK REACTION.

WE COULD GET CLOSE TO THE HIGH FROM A FEW MONTHS AGO. I STILL THINK THE U.S. OUTLOOK REMAINS THE BEST. WE HAVE HAD A HUGE MOVE IN THE DOLLAR THE LAST COUPLE OF MONTHS. IT'S ABOUT THE PENDULUM OF SENTIMENT. THE TRUTH IS SOMEWHERE IN BETWEEN.

TOM: TO GO FROM JASON FURMAN TO DR. THIN SHOWS THE SPAN OF THE DEBATE HERE IN DAVOS. LISA: WE TALK ABOUT OIL PRICES AND HOW THE INFLATION HITS THE MIDDLE CLASS. THIS IS ALSO A BIG DISCUSSION OF FOOD INSECURITY AND WHAT THAT DOES TO THE SOCIAL FABRIC. TOM: I AGREE. THE SOCIAL ISSUE THIS TIME AROUND IS FOOD INFLATION.

SO MUCH OF IT IS ABOUT THE CONSTRAINTS THAT THE INTERNATIONAL COMMUNITY HAS THE SHOCK OF WAR IN UKRAINE AND THE SHOCK OF WHAT WE ARE SEEING IN THE MARKETS WORLDWIDE. WE WILL GO TO THE SOURCE WITH BARRY EICHENGREEN. I CAN'T BELIEVE I'M SAYING THIS. I THINK 24 YEARS AGO.

-- CHANGED THE DIALOGUE OF ECONOMICS AND IT'S VERY EVIDENT TODAY IN THE CONSTRAINTS THAT NATIONS HAVE AMID THIS FOOD CRISIS. PLEASE STAY WITH US ON RADIO AND TELEVISION ACROSS AMERICA AND WORLDWIDE. THIS IS BLOOMBERG. GOOD MORNING. >> PRESIDENT BIDEN SAYS HE WILL REVIEW TRUMP ERA TARIFFS IMPOSED ON IMPORTS FROM CHINA.

THAT LED TO A RALLY IN THE OFFSHORE YUAN. THE BIDEN ADMINISTRATION HAS MAINTAINED MOST OF THE TARIFFS IMPOSED BY ITS PREDECESSOR. PRESIDENT BIDEN IS SEEKING TO REASSURE AMERICANS ABOUT THE CURRENT MONKEYPOX OUTBREAK. THE PRESIDENT SAID IT WAS UNLIKELY TO CAUSE A PANDEMIC ON THE SCALE OF THE CORONAVIRUS AND THE U.S. HAS ENOUGH SMALLPOX VACCINE STOCK FILES TO DEAL WITH THE OUTBREAK.

A TRAINLOAD OF MORE THAN 70,000 POUNDS OF BABY FORMULA HAS ARRIVED IN THE U.S. IT'S THE START OF AN EMERGENCY PROGRAM TO ALLEVIATE A NATIONAL SHORTAGE THAT HAS LEFT SOME PARENTS SCROUNGING TO FEED THEIR CHILDREN. POLICE ARE SEARCHING FOR A MAN WHO SHOT AND KILLED A GOLDMAN SACHS EMPLOYEE ON A SUBWAY TRAIN. GOLDMAN CALLS THE DEATH A SENSELESS TRAGEDY.

MAYOR ERIC ADAMS HAS BOOSTED THE NUMBER OF OFFICERS ON PATROL. BANK OF AMERICA IS INCREASING ITS LIMITED HOURLY -- MINIMUM HOURLY RAGE -- WAGE TO $22. GLOBAL NEWS 24 HOURS A DAY ON AIR AND ON BLOOMBERG QUICKTAKE POWERED BY MORE THAN 2700 JOURNALISTS AND ANALYSTS IN OVER 120 COUNTRIES. I'M RITIKA GUPTA. THIS IS BLOOMBERG. >> WE ARE PROJECTING A LOWER GROWTH THAN WE ANTICIPATED LAST YEAR. THREE POINT 6% VERSUS 4.9. BUT LET'S REMEMBER, 3.6% IS THE AVERAGE GROWTH. IN OTHER WORDS WE ARE STILL

PROJECTING TO POSITIVE TERRITORY. WE DO NOT ANTICIPATE A GLOBAL RECESSION. TOM: CHRISTINE LAGARDE ABOUT THE INTERNATIONAL MONETARY FUND. THEY SAID THERE WAS A FEVERISH TO GET IN THE ROOM. TO WORRY ABOUT GROWTH FRONT AND CENTER. LISA: THAT'S WHAT EVERYBODY WANTS TO DO. WHAT ARE THEY GOING TO SAY

OTHER THAN IT'S NOT INEVITABLE THAT WE ARE GOING TO GET A RECESSION. THERE IS STILL A LOT OF STRENGTH. TOM: WE ARE LEARNING SO MUCH HERE. LISA: WE TAKE A LOOK AT A WORLD THAT IS VERY MUCH IN TURMOIL. TOM: REBECCA PATTERSON TALKING ABOUT THE MARKETS. WE CONTINUE FROM JASON FURMAN. SOMEONE THAT HAS BEEN WITH US THROUGH THE MANY YEARS OF DAVOS.

THE TITLE IS PRACTICE OF ECONOMIC DEVELOPMENT PROFESSOR AT HARVARD KENNEDY SCHOOL BUT THAT BARELY DESCRIBES HIS CONTRIBUTION TO ECONOMICS ON ORIGINAL SIN. I HISTORIC DAY HERE WHEN VENEZUELA WAS BLOWING UP. PRESIDENT BIDEN IS SENDING OUT SOLICITATIONS TO SAUDI ARABIA AND YEAR VENEZUELA. SHOULD HE BE DOING THAT?

>> FOR SAUDI ARABIA DEFINITELY IT CAN BE A GAME CHANGER. THE WORLD IS NOW CONCERNED ABOUT ENERGY SECURITY AND ENERGY AFFORDABILITY. THE WORLD WANTS TO REDUCE RUSSIAN OIL PRODUCTION. IT WOULD BE GOOD TO HAVE OPEC GUARANTEE SUFFICIENT SUPPLY.

RUSSIA JOINED OPEC IN DECEMBER 2017. WE NEED TO GET OPEC AWAY FROM RUSSIA AND ONE WAY TO DO IT IS TO TELL OPEC WE ARE GOING TO RESTRICT RUSSIA'S ACCESS TO OIL TECHNOLOGY AND INTERNATIONAL FINANCIAL MARKETS. SO WE ARE GOING TO MAKE SURE THAT RUSSIA'S MARKET SHARE IN OIL SHRINKS. HELP US DO IT IN A RESPONSIBLE WAY BY YOU TAKING UP THE SLACK TO KEEP PRICES RELATIVELY STABLE. I THINK IT'S STRATEGIC. I THINK VENEZUELA IS NOT A PLAYER. VENEZUELA IS NOT PRODUCING OIL BECAUSE THEY HAVE DESTROYED THE WHOLE ECOSYSTEM TO PRODUCE OIL. A LITTLE CHANGE IS NOT GOING TO

CHANGE THE PICTURE IN VENEZUELA AND IT'S NOT GOING TO CHANGE THE PICTURE OF THE OIL MARKET. LISA: OUT OF THE FRYING PAN AND INTO THE FIRE WHEN IT COMES TO NEEDING OIL THAT MUCH MORE AND SETTING PRICES UP. IS THERE A MORE EFFECTIVE WAY FOR THE WEST? >> ABSOLUTELY. IF YOU EMBARGO RUSSIA'S OIL AND IT CANNOT COME OUT, RUSSIAN OIL PRODUCTION IS GOING TO COME DOWN. WORLD PRICES ARE GOING TO COME UP. IF OIL PRODUCERS BECOME RICHER AND GLOBAL CONSUMERS BECOME POORER, IT'S A VERY EXPENSIVE POLICY FOR EUROPE. IF YOU WANT A POLICY THAT GETS

WHAT YOU WANT REALLY IS TO GET RUSSIA'S OIL. FOR PUTIN NOT TO GET THE MONEY. THE WAY TO DO THAT IS YOU JUST TAX THE OIL. IT WILL HAVE TO BE MORE OR LESS THE SAME PRICE.

FOR RUSSIA THEY WOULD HAVE TO PUT A DISCOUNT SO LARGE. LISA: THIS IS THE ISSUE. A LOT OF PEOPLE ARE OPPOSED TO THIS.

>> THE SECRETARY CAME OUT IN FAVOR OF IT AND SAID SHE WAS GOING TO PROPOSE IT THE G7 MEETING SO IT MAKES ALL THE SENSE IN THE WORLD BECAUSE IF YOU ARE ONLY TAXING RUSSIAN OIL, YOU ARE NOT TAXING ALL OIL. SO RUSSIAN OIL WITH THE TAX WILL HAVE TO COMPETE WITH THE REST OF THE OIL. THE MONTH OF MONEY THAT PUTIN GETS IS GOING TO GO DOWN. WINNING EUROPE OUT OF OIL IS GOING TO TAKE MONTHS OR YEARS. YOU WANT TO HARM RUSSIAN NOW, NOT IN A FEW MONTHS OR YEARS.

IT'S JUST SMART THAT IN THAT WORLD, RUSSIAN OIL STILL COMES OUT SO WORLD OIL PRICES DON'T GO UP. BUT THE CASH FLOW OF RUSSIA IS HURT. TOM: YOU ON THE HIGH GROUND WITH BARRY EICHENGREEN OF THINKING HOW EMERGING MARKETS CAN RESPOND IN FINANCIAL MARKETS AND ALSO WITHIN TRADE FLOWS AND REAL ECONOMIES AS WELL. SHOULD WE BE AFRAID NOW OF EMERGING-MARKET FRAGILITY'S GIVEN A PANDEMIC, GIVEN A WAR IN UKRAINE AND MAYBE ALSO GIVEN BIG ECONOMY IRRESPONSIBILITY. HOW FRAGILE ARE THEY? >> I THINK IT'S A MIXED BAG. WE CAN TALK ABOUT INDIVIDUAL

COUNTRIES. BUT IN GENERAL AND THE EMERGING MARKETS, THERE IS A LOT OF COMMODITY EXPORTERS FOR WHICH THE CURRENT SITUATION IS A POSITIVE SHOCK. THEY ARE EITHER EXPORTING OIL OR MINERALS OR AGRICULTURAL PRODUCTS AND ALL OF THOSE HAVE GONE UP IN PRICE AND THAT'S GENERATING MORE INCOME FOR THE COUNTRY AS A WHOLE.

IN A COUNTRY LIKE SOUTH AFRICA, IN EFFECT ON THE COUNTRY IS POSITIVE, BUT IT'S SUPER POSITIVE ON THE GOVERNMENT AND NEGATIVE ON HOUSEHOLDS. SO YOU HAVE A DOMESTIC PROBLEM OF WHAT DOES THE GOVERNMENT DO WITH ITS UNEXPECTED EXTRA INCOME . ENERGY PRICES ARE UP AND FOOD PRICES ARE UP. THEY ARE PRODUCERS OF FOOD AND PRODUCERS OF ENERGY. TOM: IN THE GREATER CARIBBEAN, HOW DO WE PROMOTE DEMOCRACY? CUBA. THE CASTRO REGIME MOVES ON TO SOMETHING NEW AND DIFFERENT. THE MESS IN VENEZUELA.

HOW DO WE PROMOTE DEMOCRACY WITHIN THE GREATER MONROE DOCTRINE? >> FIRST OF ALL, IT'S ON THE SHORT FIGHT. -- IT'S NOT A SHORT FIGHT. THESE COUNTRIES ARE SUPPORTED BY THE LIKES OF PUTIN SO WINNING IN UKRAINE IS GOING TO EXTEND THAT HARMS RUSSIA, IT'S GOING TO HARM VENEZUELA, THE VENEZUELAN DICTATORSHIP AND THE CUBAN DICTATORSHIP AND THE NICARAGUAN DICTATORSHIP. I THINK IT'S A LONG HAUL UNTIL WE GET TO REESTABLISH DEMOCRACY. TOM: WITH GOT TO MAKE IT FOR THE LONG CALL. RICARDO HAUSMAN OF HARVARD, THANK YOU FOR JOINING US.

DON'T GET UP RIGHT NOW. YOU'RE GOING TO WALK IN FRONT OF CAMERA 42. LISA: HE MADE SUCH A GOOD POINT. THIS IDEA OF THE GOVERNMENT MIGHT BE GETTING THE MONEY, BUT IF IT'S NOT EFFECTIVE, IT WILL BE HURTING THE POPULATION AND THIS IS WHERE SOME OF THE SOCIAL DRAWER IS A BIG CONCERN. TOM: CONSTRUCTIVE MARKETS AFTER WHAT YOU'VE ENJOYED THE LAST COUPLE WEEKS. YIELDS MOVING.

PLEASE STAY WITH US. NEXT, REBECCA PATTERSON OF BRIDGEWATER. >> THERE IS OF PERVASIVE FOG OF NEGATIVE SENTIMENT OUT THERE. >> WHEN EVERY SINGLE HEADLINE IS NEGATIVE, IT'S TIME TO BUY. >> I STILL THINK THE DOLLAR IS GOING TO BE KING IN THIS SORT OF ENVIRONMENT. >> THE EARNINGS ARE SUPERPOWERFUL AND STOCKS ARE CHEAP AT THIS POINT.

>> THIS IS BLOOMBERG SURVEILLANCE WITH TOM KEENE, JONATHAN FERRO AND LISA ABRAMOWICZ. TOM: GOOD MORNING EVERYONE. JONATHAN FERRO, LISA ABRAMOWICZ AND TOM KEENE. FROM THE WORLD ECONOMIC FORUM

IN DAVOS, A VERY DIFFERENT DAVOS THIS YEAR IN MAY, NOT IN JANUARY. I HAVE BEEN STUNNED AT THE CHANGES. I DID NOT EXPECT THE DIFFERENCE IN ENERGY, THE BALLET OF BEAUTIFUL MAY MORNING. LISA:

IT'S VERY DIFFERENT FROM TRIPPING OVER THE ICE AND DEALING WITH SNOW AND FREEZING. IT'S A VERY DIFFERENT MOMENT IN WALL STREET. ON THE HEELS OF THE PANDEMIC, A QUIETER DAVOS ONE THAT IS ALSO MORE SERIOUS AND FOCUSED. TOM: YOU BROUGHT IT UP EARLIER. IT'S NOT A DAVOS OF CATHARSIS OUT THERE OR EMOTION.

IT'S THE SLOG IN INTEREST RATES AND THE WORRIES ABOUT RECESSION. LISA: AND A CHANGED GEOPOLITICAL LANDSCAPE TO HIGHLIGHT THE FACT THAT RUSSIA IS NOT HERE AND ALL THAT ENTAILS. WHAT DOES IT MEAN TO BE GLOBALIZED IN A WORLD WHERE PEOPLE ARE TRYING TO FIND HOW TO GET THINGS QUICKLY AND RELIABLY DESPITE SOME OF THE DISRUPTIONS? TOM: -- WAS WALKING BY THE AND HE WAS DEGLOBALIZED. WE WILL TAKE A QUICK LOOK AT MARKETS. LISA: CHRISTINE LAGARDE CAME OUT IN A NOTE AND BASICALLY WAS SAYING THAT SHE SEES GETTING TO ERODING THE NEGATIVE YIELDING POLICIES BY THE END OF SEPTEMBER AND ACTUALLY REALLY TAKING A MORE HAWKISH TONE WHICH IS GIVING A BIT OF A LIFT. TOM:

10 YEAR YIELD, 2.3% AS WELL. BRENT CRUDE RESILIENT. THAT GETS MY ATTENTION IN GLOBAL PRICE. THE FOOD CRISIS IS FRONT AND CENTER. LISA: THE FOOD CRISIS AS WELL AS HOW WE ARE DEALING WITH CLIMATE CHANGE ISSUES AT A TIME WHERE GAS AND OIL HAS NEW PROMINENCE AND PEOPLE SEEM TO BE PUTTING ASIDE THE EFT.

WE ARE GOING TO BE SPEAKING WITH JOHN KERRY. THE U.S. SPECIAL CLIMATE ONGOING AND FORMER U.S. SECRETARY OF STATE ALSO THE SENATOR FROM MASSACHUSETTS. JOSEPH STIGLITZ WILL BE TALKING ABOUT GLOBALIZED OR DEGLOBALIZE.

COLUMBIA UNIVERSITY PROFESSOR AND NOBEL LAUREATE WILL BE JOINING US IN THIS HOUR. DAVID RUBENSTEIN, CARLYLE GROUP CO-CHAIR AND CO-FOUNDER AND HOST OF PEER-TO-PEER CONVERSATIONS. RIGHT NOW THE CONVERSATION REALLY SOME UP CAN WE GET A REPRIEVE FROM THE SEVENTH STRAIGHT WEEK OF DECLINE? IS WHAT WE ARE SEEING THIS MORNING A HEAD FAKE OR THE START OF A BY THE DIP? TOM: IT'S THE MARKET COVERAGE OF EQUITIES BONDS, CURRENCIES BONDS. REBECCA PATTERSON HAS DEALT IN ALL THOSE AREAS AND CULMINATED WITH BRIDGEWATER WHERE SHE IS CHIEF INVESTMENT STRATEGIST. OUR PRINCE AND DAILY ON

SPEAKING TERMS? WHAT'S THE LATEST MEETINGS LIKE IN TERMS OF THE VOLATILITY WE ARE SEEING, THE COMPLEXITIES AND NUANCES? WHAT IS THE TONE IN YOUR MEETINGS AS YOU ASSESS. >> THERE IS SO MUCH CHANGING NOW STRUCTURALLY AS WELL AS CYCLICALLY. THERE'S A LOT OF PEOPLE SAYING WHERE WE GOING. IF WE DO DEGLOBALIZE OR REGIONALIZED, WHAT DOES THAT LOOK LIKE AS WELL AS THE SHORT-TERM WORRIES OVER CAN THE FED TIGHTENING ENOUGH TO GET INFLATION BACK DOWN TO ITS TARGET. A LOT OF UNCERTAINTY IF I HAD

TO SUM IT UP. LISA: HOW DO YOU DETERMINE WHETHER MOVES LIKE WHAT WE ARE SEEING IS A HEAD FAKE OR NOT? >> WE DON'T TRADE DAILY WIGGLES IN THE MARKET. WE TAKE A STEP BACK AND SAY WHAT'S DISCOUNTED. A LOT HAS CHANGED SINCE THE BEGINNING OF THE YEAR. THE BIGGEST CHANGE HAS BEEN DISCOUNTED TIGHTENING AND WE HAVE SEEN THAT FLOW THROUGH AND WE HAVE SEEN THE EQUITY TO -- EQUITY DECLINE. YOU HAVEN'T SEEN A MAJOR CHANGE

IN EXPECTED EARNINGS GROWTH. THAT IS THE THING WE ARE WATCHING. IF THE FED CONTINUES TO TIGHTEN TO TRY TO REDUCE DEMAND TO GET INFLATION UNDER CONTROL I WOULD EXPECT TO SEE THAT FLOW THROUGH INTO A DISCOUNTED GROWTH. LISA:

FOR YEARS PEOPLE WERE SAYING THAT MARKETS WERE IN EVEN IF THE ECONOMY WAS NOT. ARE WE HEADING INTO THE OPPOSITE WHERE WE SEE MARKETS LED THE HIND AN ECONOMY THAT CONTINUES TO BE STRONG? >> THAT HAS BEEN OUR VIEW AND CONTINUES TO BE OUR VIEW. WE ARE IN A SITUATION WHERE THE NOMINAL ECONOMY IS LIKELY TO OUTPERFORM FINANCIAL MARKETS FAIRLY SUBSTANTIALLY. THAT IS MAINLY A FUNCTION OF THE POLICY REACTION WE GOT DURING THE PANDEMIC. ALL THE FISCAL AND MONETARY STIMULUS THAT LEFT HOUSEHOLDS WEALTHIER THAN BEFORE THE PANDEMIC, CORPORATE BALANCE SHEETS STRONGER THAN BEFORE THE PANDEMIC. IT GIVES THEM A CUSHION TO WITHSTAND THE TIGHTENING SO IT IS GOING TO FEED THROUGH TO MARKETS.

THAT STARTING STRONG POINT FOR THE ECONOMY MEANS FINANCIAL ASSETS COULD UNDERPERFORM. TOM: YOU'VE GOT AT BRIDGEWATER YOUR FANCY KITCHEN. THEY HAVE THE WHOLE SUBZERO THING. >> LOOK WHO'S TALKING. BLOOMBERG, HELLO. TOM:

YOU HAVE A GREAT PRESSURE COOKER. THE ONLY REASON THEY HIRED YOU IS THE STEAM COMING OUT OF THE CATTLE IS THE CURRENCY MARKET. TO ME THE CONUNDRUM HERE AND YOU BEAUTIFULLY DESCRIBED THE FISCAL IMPULSE. WHAT RELEASES THE PRESSURE IS DOLLAR DYNAMICS. WHAT KIND OF PRESSURES WILL WE

SEE? >> THE MOST IMPORTANT THING TO UNDERSTAND ABOUT THE DOLLAR RIGHT NOW IS HOW QUICKLY OUR EXTERNAL NEED FOR FOREIGN CAPITAL IS INCREASING. IF YOU GO ON YOUR BLOOMBERG PAGE , ARE TIMELY ESTIMATE SUGGESTS THAT'S CLOSER TO FIVE OR 6% OF GDP. FOR THE DOLLAR TO STAY SUPPORTED WE NEED TO CONTINUE GETTING ENOUGH CAPITAL TO OFFSET THAT. THE DOLLAR WE THINK IS VULNERABLE ON A CYCLICAL BASIS AND A STRUCTURAL BASIS. TOM: IF WE GET A TWIN DEFICIT, DO YOU LINK THOSE TOGETHER MATHEMATICALLY OR PHILOSOPHICALLY? ARE THEY SEPARATE EVENTS? >> THEY ARE MATHEMATICALLY LINKED. AS YOU KNOW WELL.

YOU ARE BEING HUMBLE. TOM: THIS IS A PRO SURVEILLANCE TIP. DON'T ASK A QUESTION UNLESS YOU KNOW THE ANSWER. IT'S JUST LIKE JUDGE JUDY. CONTINUE.

>> THE BALANCE OF PAYMENTS IS WHAT I'M FOCUSED ON RELATIVELY MORE. THAT FINANCING NEED -- IF INTEREST RATES CONTINUE TO BE SO MUCH MORE ATTRACTIVE THAN MAYBE THE U.S. DOES CONTINUE TO HOLD UP FOR THE DOLLAR. BUT IT'S A QUESTION MARK. TOM: WHERE DOES THE MONEY GO?

>> JAPANESE EQUITIES ARE OUTPERFORMING U.S. EQUITIES. SOME EMERGING-MARKET EQUITIES ARE OUTFLOWING. IT IS LOOKING FOR OPPORTUNITIES WHERE VALUATIONS ARE A LOT LESS DEMANDING. LISA: HOW HIGH DO TREASURY YIELDS HAVE TO GO TO SUPPORT THE DOLLAR? >> WE TRY TO UNDERSTAND ALL THE DIFFERENT PLAYERS IN EVERY MARKET. WHEN WE LOOK AT U.S.

BOND MARKET TODAY, THE FED SLIPPING FROM QUANTITATIVE EASING TO QUANTITATIVE TIGHTENING IS OBVIOUSLY VERY SIGNIFICANT. THE BIG PLAYER THAT WE THINK SUGGESTS MORE UPSIDE FOR BOND YIELDS ARE BANKS. SO I YEAR AGO YOU HAD A TON OF DEPOSITS COMING IN AND BANKS ARE PUTTING THAT INTO BONDS. THE CURVE IS FLATTER. THERE IS LESS BANKS BUYING BONDS TO HOLD DOWN THE YIELD. WHEN WE LOOK AT WHO IS GOING TO BUY THOSE BONDS, WE STILL SEE A SUPPLY DEMAND AND BALANCE. I DON'T KNOW WHAT THE MAGIC

NUMBER IS, BUT WE STILL HAVE FURTHER TO GO ON THE UPSIDE. TOM: THIS IS WITHIN THE PERFECT ELECTRICAL -- IN SWITZERLAND. HOW DO YOU AFFECT AN INTEREST RATE PARITY STRATEGY, A SOPHISTICATED HEDGE IF YOU WILL EVEN RATES WE'VE NEVER SEEN BEFORE? >> WHAT'S SO INTERESTING TO ME ABOUT ALL OF THIS IS WHEN WE THINK ABOUT HOW MOST INVESTORS IN THE WORLD ARE POSITIONED FOR THE LAST ONE OR TWO DECADES, THEY HAVE BEEN BIASED TOWARDS RISING GROWTH AND FALLEN INFLATION. IT WORKED GREAT UNTIL NOW. AND THE WORLD HAS GONE UPSIDE DOWN. SO NOW WE HAVE FALLEN GROWTH

AND RISING INFLATION. WE HAVE SEEN THE PORTFOLIO HIT. THE BALANCE FOR GROWTH AND INFLATION. EVEN IF BOND YIELDS ARE GOING UP, YOU HAVE BALANCE IN OTHER PARTS OF THE PORTFOLIO.

NAMELY COMMODITIES AND OTHER INFLATION SENSITIVE ASSETS. SO THEY TEND TO HOLD A THAT ARE THROUGH THE CYCLES. TOM: IF THEY LET ME COME BACK TO NEW YORK, WILL YOU COME BACK AND FINISH THIS DISCUSSION? REBECCA PATTERSON, JUST BRILLIANT. LISA: MAYBE WE WON'T GO BACK TO NEW YORK. WE COULD WORK REMOTE. TOM: WE HAVE MUCH MORE COMING UP INCLUDING A CONVERSATION WITH FORMER SECRETARY OF STATE. JOHN KERRY, SPECIAL

PRESIDENTIAL ENVOY FOR CLIMATE FOR PRESIDENT BIDEN. ON RADIO AND TELEVISION, THIS IS BLOOMBERG. ♪ >> NEWS FROM AROUND THE WORLD. I'M READY COULD COOPED UP. THE WHITE HOUSE IS WALKING BACK PRESIDENT BIDENS COMMENTS ON TAIWAN. THAT APPEARED TO BREAK THE LONG-STANDING U.S. POLICY OF SO-CALLED STRATEGIC AMBIGUITY.

THE PRESIDENT SAID IT SIMPLY MEANT PROVIDE EQUIPMENT TO TAIWAN, NOT SEND TROOPS. A DOZEN INDO PACIFIC COUNTRIES WILL JOIN THE U.S. IN A SWEEPING ECONOMIC INITIATIVE. THE GOAL IS TO COUNTER CHINA'S

INFLUENCE IN THE REGION. THE NEW FRAMEWORK DOESN'T INCLUDE ANY TARIFF REDUCTIONS. THE LABOR PARTIES PREMISED ARE DEFEATED SCOTT MORRISON IN AN ELECTION HELD ON SATURDAY. HE'S PROMISING A REDUCTION OF CLIMATE CHANGE, GREATER GENDER EQUALITY AND IMPROVED WAGE GROWTH. PFIZER AND BIONTECH SAY THERE VACCINE WAS HIGHLY EFFECTIVE AND PROMPTED A STRONG IMMUNE RESPONSE IN CHILDREN UNDER FIVE. THAT'S LIKELY TO PAVE THE WAY FOR TODDLERS AND INFANTS TO GET IMMUNIZED.

S3 DOES REGIMEN WAS 80% EFFECTIVE IN CHILDREN AGED SIX MONTHS TO FOUR YEARS OLD. GLOBAL NEWS 24 HOURS A DAY ON AIR AND ON BLOOMBERG QUICKTAKE POWERED BY MORE THAN 2700 JOURNALISTS AND ANALYSTS IN OVER 120 COUNTRIES. I'M READY COULD THIS IS BLOOMBERG.

-- I'M RICH TO COULD GROUPED UP. >> THERE IS NO DOUBT WE FACE SERIOUS GLOBAL CHALLENGES RIGHT NOW. INFLATION FIRST AND FOREMOST AMONG THEM. BUT THERE'S ALSO NO DOUBT THAT THE UNITED STATES IS IN A BETTER POSITION THAN ANY OTHER MAJOR COUNTRY AROUND THE WORLD TO ADDRESS INFLATION WITHOUT GIVING UP ALL THE ECONOMIC GAINS THAT WE'VE HAD AND THAT'S BECAUSE OF THE STRENGTH OF OUR RECOVERY. TOM: NATIONAL ECONOMIC COUNCIL DIRECTOR ON THE THEMES OF THE MOMENT. WE WELCOME ALL OF YOU ON RADIO AND TELEVISION. LISA ABRAMOWICZ AND MYSELF.

JON FERRO IS ON ASSIGNMENT. RIGHT NOW, WE'VE GOT A LOT OF THINGS TO SPEAK OF IN A ONE HOUR CONVERSATION. JOHN KERRY, YOUR SPECIAL CLIMATE ENVOY AND FORMER U.S. SECRETARY OF STATE AND WHATEVER YOUR POLITICS, HE IS SOMEONE WHO HAS HONED OUR POLITICAL DEBATE OF THIS NATION FOR DECADES. YOU WERE UP AT ST. PAUL'S IN CONCORD, NEW HAMPSHIRE A FEW YEARS BACK.

DEBATE AND DISCUSSION WAS EATEN INTO YOU, WASN'T IT? >> WE HAD A TERRIFIC TRADITION OF BACK-AND-FORTH, SOCRATIC. TOM: IT WAS A REALLY IMPORTANT TRADITION BACK THEN. WHAT HAPPENED TO AMERICA WHERE WE WALKED AWAY FROM THE NICETIES OF DEBATE? >> THE UNITED STATES SENATE USED TO BE THE GREATEST DELIBERATIVE BODY IN THE WORLD. AND OBVIOUSLY A LOT OF PEOPLE ARE ANXIOUS ABOUT WHERE THE DELIBERATION IS TODAY. IT HAS CHANGED. IT'S REALLY CHANGED. IN THE 1990'S OUR POLITICS

CHANGE. IT BECAME FAR ANGRIER, FAR MORE INTENSE, FAR MORE PERSONAL. YOU REMEMBER THE DISCUSSIONS OF POLITICS OF PERSONAL DESTRUCTION.

NOW WE HAVE A LOT OF ANGRY PEOPLE WHO ARE APPROPRIATELY ANGRY ON EITHER SIDE OF THE AISLE. RIGHT, LEFT. AND THEY JUST DON'T FEEL THE GOVERNMENT IS DELIVERING TO THEM AND WE HAVE TO CHANGE THAT. LISA: HOW DOES THE U.S. LEAD WITH SUCH DISUNITY AT HOME? >> I THINK PRESIDENT BIDEN IS SHOWING HOW YOU LEAD RIGHT NOW. HE'S IN ASIA. HE HAS BEEN LEADING ON GLOBAL CLIMATE CHANGE AROUND THE WORLD. HE PUT AMERICA -- THE UNITED STATES BACK INTO THE PARIS AGREEMENT. HELPED MAKE GLASGOW A SUCCESS. I THINK PEOPLE UNDERSTAND THAT WE HAD FOUR DIFFICULT YEARS.

THE COUNTRY DECIDED THAT WAS AN ABERRATION AND ELECTED PRESIDENT BIDEN. NOW WE ARE IN THE BUSY BUILDING BACK PROCESS. I THINK WE HAVE MADE A LOT OF PROGRESS IN THE LAST YEAR. TOM: THE HELICOPTER FLYING OVER SAYS GOP ON THE SIDE OF IT. SENATOR KERRY, I WANT TO TALK TO YOU ABOUT CLIMATE. I WAS BLOWN AWAY A NUMBER OF YEARS AGO WITH THE BANK OF AMERICA PEOPLE. YOU ARE NOT ANOTHER FACE

TALKING CLIMATE. YOU ARE NOT ANOTHER CELEB TALKING CLIMATE. YOU HAVE ACTUALLY LEANED OVER THE DESK IN BOSTON AND SET OF GOT TO LEARN THE MATH. -- SAID I'VE GOT TO LEARN THE MATH. WHAT IS YOUR STRATEGY TO SUSTAIN OUR FOCUS ON CLIMATE CHANGE GIVEN THE TO MOLD IS MEASURED BY THE PRICE OF COAL? >> PRESIDENT BIDEN HAS DETERMINED THAT WE ARE GOING TO GET READY FOR THE NEXT MEETING BY TRYING TO RAISE AMBITION AROUND THE WORLD WE ARE VERY BUSY RIGHT NOW WORKING WITH SPECIFIC COUNTRIES. INDONESIA, VIETNAM, SOUTH AFRICA, INDIA. TO BRING THE FINANCE AND THE

TECHNOLOGY TO HELP THEM BE ABLE TO DEPLOY TO MEET THE GOALS OF THE GLASGOW PARIS AGREEMENT. BUT IN ADDITION TO THAT, WE HAVE TO WORK TO GET THE TRILLIONS OF DOLLARS DEPLOYED. THIS IS GOING TO COST LITERALLY TRILLIONS OF DOLLARS. IN ORDER TO AFFECT THE TRANSITION. IN THE WAY THAT WE CAN DO THAT IS BY BRINGING VARIOUS PLAYERS TO THE TABLE. PHILANTHROPY. SO YOU HAVE PEOPLE TAKING FIRST RISK.

PEOPLE WHO ARE DE-RISKING THE INVESTMENT. THERE ARE A LOT OF FOLKS DOING THAT. WE HAVE COMPANIES THAT ARE NOW SIGNING UP. ON WEDNESDAY WE WILL BE MAKING A MAJOR ANNOUNCEMENT WITH BILL GATES AND MARC BENIOFF OF SALESFORCE. CEOS WHO ARE DIRECTING THEIR COMPANIES TO BECOME FIRST MOVERS. THEY ARE CREATING DEMAND IN THE

MARKETPLACE. VOLVO IS GOING TO BE GREEN STEEL. CEMENT. THE LARGEST CEMENT DEALER IN THE WORLD IS PRODUCING GREEN CEMENT. THERE'S JUST A WHOLE RANGE OF THINGS IN CARBON REMOVAL. LISA: SENATOR, WE ONLY HAVE A COUPLE

MINUTES LEFT. I WANT TO GET YOUR CENTS ON GAS. YOU HAVE TALKED ABOUT CENTRAL TO A GREENER FUTURE. YOU'RE HOPING TO TRANSITION AWAY FROM THAT. HOW DO YOU DOVETAIL THE NOW INTO THE FUTURE? >> I THINK IT'S CRITICAL THAT LENDING INSTITUTIONS THAT HAVE A VAST AMOUNT OF CAPITAL INVOLVED BEGIN TO DEMAND MORE FROM THAT INDUSTRY. IT IS APPROPRIATE I THINK TO

HAVE A GAS TRANSITION FOR SOME PERIOD OF TIME WHILE YOU BRING TECHNOLOGY TO SCALE THAT IS GOING TO CHANGE ALTOGETHER WHAT WE ARE DOING. ENORMOUS AMOUNT OF RESEARCH RIGHT NOW. FRANKLY THERE'S ABOUT A TRILLION DOLLARS OF VENTURE CAPITAL ALREADY MOVING TOWARD THESE NEW TECHNOLOGIES. GREEN HYDROGEN, LONGER BATTERY STORAGE. THERE ARE THINGS THAT ARE GOING TO JUST CHANGE THE WAY AS THIS IS DUE BUSINESS AND THAT'S GOING TO BE PART OF THIS REVOLUTION.

I THINK WE ARE LOOKING AT THE LARGEST ECONOMIC OPPORTUNITY AND TRANSFORMATION SINCE THE INDUSTRIAL REVOLUTION AND THIS WILL BE BIGGER BECAUSE EVERY NATION IN THE WORLD IS GOING TO HAVE TO MOVE TO A CLEAN NEW ENERGY ECONOMY AND FUTURE. TOM: I WANT TO CENTER BACK TO THE FUTURE OF THE DEMOCRATIC PARTY. WHAT WE HAVE SEEN IS THE CENTRIST JOE BIDEN AND YOU AS A CENTRIST JOHN KERRY OVERRUN BY A RIGID PROGRESSIVE OR LIBERAL WING OF THE DEMOCRATIC PARTY. WHAT IS YOUR COUNSEL AS THEY MAY BE LOSE THE HOUSE, MAYBE LOSE THE SENATE. WHO KNOWS WITH THE WHITE HOUSE.

BUT WHAT IS THE COUNCIL YOU HAVE TO LIBERALS WHO WILL NOT BEND AS YOU HAVE SPENT A CAREER BENDING? >> I LIKE TO THINK I HAVEN'T ALWAYS BEEN. I FIND A COMPROMISE WHERE YOU CAN AND YOU NEED TO. BUT YOU HAVE TO BE REASONABLE OBVIOUSLY. THE OLD SAYING IN WASHINGTON, DON'T LET THE PERFECT BECOME THE ENEMY OF THE GOOD. YOU HAVE TO FIND THE COMPROMISE. THAT'S THE NATURE OF LEGISLATING. IF YOU DECIDE YOU WANT TO BE A LEGISLATOR, DO THAT.

BUT I'M NOT IN THE POLITICS OF THE BACK-AND-FORTH NOW. I'M TRYING TO BRING PEOPLE TOGETHER TO UNDERSTAND THAT THIS CRISIS IS EXISTENTIAL, DOESN'T HAVE A POLITICAL LABEL, IT'S UNIVERSAL. IT'S NOT A BILATERAL ISSUE BETWEEN CHINA AND THE UNITED STATES.

IT IS EXISTENTIAL FOR EVERYBODY ON THE PLANET AND WE NEED TO BE SMARTER ABOUT COMING TO SOLUTIONS. THE BEST WAY YOU GET THERE IS THROUGH EARNING AN ELECTION BUT THEN ALSO COMPROMISING TO FIND A PATH FORWARD. TOM: U.S. SPECIAL PRESIDENTIAL ENVOY FOR CLIMATE.

WE HAVE MUCH MORE COMING UP INCLUDING A CONVERSATION. STAY WITH US. TOM: FROM THE MEETINGS OF THE WORLD ECONOMIC FORUM IN DAVOS, SWITZERLAND, WE WELCOME ALL OF YOU. JUST A GLORIOUS FIRST DAY HERE. WOULD YOU HIKE 20 MILES? LISA: NOT TODAY, BUT YESTERDAY I HAD A GOOD TIME. TOM: JON FERRO ON ASSIGNMENT, AS

THEY SAY. HE'S IN CAPRI AGAIN. WE WISH HIM WELL. RIGHT NOW A QUICK THAT A CHECK OF MARKETS DOING BETTER THAN EXPECTED. THAT IN YOUR YIELD UP FIVE BASIS POINTS TO 2.83%. BRENT CRUDE WITH A $113 TRADING RANGE, BUT A MORE CONSTRUCTIVE MARKET.

FOR JON FERRO WE DO THE DOW JONES INDUSTRIAL AVERAGE. JOINING ME IS ROMAINE BOSTICK IN NEW YORK. ROMAINE: KEEP AN EYE ON THE MARKET. YOU TALK ABOUT CONSTRUCTIVE RIGHT NOW WE ARE SEEING HERE IN THE PREMARKET. WE DO HAVE A PRETTY DECENT RALLY.

VOLUME IS RELATIVELY LIGHT IN THE PREMARKET, BUT IT'S A BROAD-BASED RALLY PROVIDED SOME POTENTIAL UPSIDE. KEEP A MIND JP MORGAN HAS RELEASED A PRESENTATION ON ITS WEBSITE THAT SHOWS THE COMPANY INCREASING ITS OUTLOOK FOR NET INTEREST INCOME. THE SHARES UP ABOUT 1.5% ON THE DAY. EVEN SOME OF THE TECH COMPANIES ARE GETTING ON THE ACTION TODAY. NOT BY MUCH, BUT YOU HAVE APPLE, OR SOFT, ALL OF THAT. ELSEWHERE, KEEP AN EYE ON WHAT IS HAPPENING IN THE SOFTWARE SPACE. ACCORDING TO PEOPLE FAMILIAR

WITH THE MATTER THAT BLOOMBERG NEWS HAS SPOKEN TO, BROADCOM IS SAID TO BE MAKING A BID FOR VMWARE. THIS IS A BIG DEAL, HE CHIPMAKER BUYING A SOFTWARE COMPANY. BROADCOM HAS DABBLED IN THIS SPACE BEFORE WITH THE PURCHASE OF SYMANTEC'S ENTERPRISE BUSINESS.

BROADCOM SHARES DOWN ABOUT 5% ON THE DAY AND VMWARE UP ABOUT 22% IN THE PREMARKET. SIGA TECHNOLOGIES ALSO MOVING. THESE COMPANIES THAT MAKE ANTIVIRAL DRUGS, A LOT OF TALK RIGHT NOW. THOSE SHARES UP ABOUT 26%. TOM: THANK YOU SO MUCH. "THE CLOSE" THIS AFTERNOON AS WELL, A MORE CONSTRUCTIVE MARKET.

THIS IS AN IMPORTANT CONVERSATION. EACH AND EVERY YEAR AT DAVOS, THERE IS SOMEONE WHO OWNS THE VALLEY. USUALLY IT IS SOME ROCKSTAR THAT SHOWS UP BY HELICOPTER OR MAYBE SOME FAMOUS MODEL THAT I DON'T KNOW THEIR NAME. YOU KNOW, SOMEONE LIKE THAT.

THIS YEAR'S ROCKSTAR IS JOSEPH STIGLITZ, THE NOBEL WINNER FOR THE MYSTERIES OF INFORMATION. SOMEONE AT COLUMBIA WHO HAS TALKED AND WRITTEN ABOUT OUR DISCONTENTS. D WITH THE CHALLENGES OF GLOBALIZATION AND OTHERS, TRULY JOE STIGLITZ IS THE ATTENDEE THIS YEAR AT DAVOS.

IF YOU WROTE GLOBALIZATION AND ITS DISCONTENTS TODAY, WHAT WOULD BE DIFFERENT? JOSEPH: I THINK I WAS MOSTLY FOCUSED ON DISCONTENT IN THE SOUTH, AND NEEDS OF UPLAND COUNTRIES -- THE DEVELOPING COUNTRIES AND EMERGING MARKETS. SINCE THEN WE HAVE HAD GLOBALIZATION OF GLOBAL DISCONTENT. I THINK PART OF THE REASON IS THAT WE HAVE SEEN THAT GLOBALIZATION HAS LEFT US IN THE UNITED STATES UNPREPARED FOR COVID-19. WE WERE NOT ABLE TO PRODUCE

EVEN SIMPLE THINGS LIKE FACE MASKS, PROTECTIVE GEAR, COMPLICATED THINGS, AND NOW THIS BROADER DISCONTENT OF GLOBALIZATION THAT I TALK ABOUT WITH EMERGING MARKETS IN DEVELOPING COUNTRIES IS SHOWING UP IN A PECULIAR WAY IN THE LACK OF SUPPORT FOR THE WEST, FOR THE UNITED STATES AND EUROPE AND OTHER DEMOCRACIES IN OUR POSITION AGAINST RUSSIA'S INVASION OF UKRAINE. LISA: BEFORE WE GET TO THAT, IS THE INFLATION WE ARE SEEING NOW A SYMPTOM OF THESE CRISES, WHETHER IT IS RUSSIA AND THE WAR IN UKRAINE OR THE LOCKDOWNS IN CHINA? OR IS IT JUST EXASPERATION OF A DEGLOBALIZATION OR RE-GLOBALIZATION IN A NEW FORM THAT PEOPLE HAVE NOT FULLY UNDERSTOOD YET? JOSEPH: THE DISTURBANCES ARE TO A LARGE EXTENT THE SAME KIND OF SHORTSIGHTEDNESS, FAILURE OF MARKETS TO ATTEND TO RISK ADEQUATELY THAT WE SAW IN THE 2008 CRISIS. I WROTE MY BOOK "MAKING GLOBALIZATION WORK" THAT IT WAS EXTRAORDINARILY RISKY FOR GERMANY TO BECOME DEPENDENT ON RUSSIAN GAS. IT WAS SO CLEAR BACK THEN THAT RUSSIA WAS NOT A RELIABLE TRADE PARTNER. WHY WOULD YOU PUT ALL OF YOUR MONEY, ALL OF YOUR EGGS IN THAT BASKET? AND YET GERMANY DID, EUROPE DID, AND PART OF WHAT WE ARE SEEING NOW, BECAUSE WE DID NOT RESPOND TO CLIMATE CHANGE, SENATOR KERRY A FEW MINUTES AGO TALKING ABOUT THIS WHICH SHOULD HAVE MOVED TO RENEWABLE ENERGY, YOUR REALIZING IT WAS MORE RELIABLE THAN POLITICAL DICTATORS. LISA:

FAST-FORWARD TODAY, AND THE POLICIES WE ARE IMPLEMENTING TO CURB RUSSIA AND HAMPER THEM IN THEIR ADVANCE IN UKRAINE, OR WHETHER IT COMES TO TARIFFS IN CHINA, WHAT ARE WE GETTING WRONG? JOSEPH: I THINK WE ARE NOT GETTING ENOUGH SOLIDARITY. WE ARE ASKING A FEW COUNTRIES THAT MAY HAVE MADE MISTAKES IN THE PAST, BUT NOW WE HAVE TO HAVE SOLIDARITY. WE ARE FIGHTING A WAR RIGHT NOW. IT IS A GLOBAL WAR. IT IS A WAR TO PRESERVE THE INTERNATIONAL RULE OF LAW, AND YET WE ARE ASKING SOME OF THE POOREST COUNTRIES TO BEAR A LOT OF THE PRICE IN TERMS OF HIGHER FOOD PRICES. THEY MAY STARVE.

WE ARE NOT DOING ANYTHING ABOUT THE DEBT CRISIS. IN TERMS OF MANAGING A GLOBAL ALLIANCE, WE ARE FAILING. TOM: YOU CAME OUT OF GARY, INDIANA OR GET IT IS FLAT ON ITS BACK LIKE NO OTHER CITY IN THE COUNTRY. YOU TALK ABOUT THE INITIATIVES FORWARD WHERE THE FANCY PEOPLE MAY BE OUGHT TO PAY ATTENTION TO THE MIDDLE CLASS. HOW IN THIS NEW AMERICA DO WE GET THE ELITES TO JOIN WITH THE MIDDLE CLASS LIKE THEY DID WHEN YOU AND I GREW UP? JOSEPH: I THINK WE ALL NEED TO BE AWARE OUR DEMOCRACY IS AT RISK, AND OUR ECONOMIC SYSTEM IS AT RISK.

SO IF WE DON'T GET THAT KIND OF SOLIDARITY, WHO KNOWS WHERE THINGS WILL GO? YOU TALKED A LITTLE BIT BEFORE ABOUT INFLATION. IT IS REALLY HURTING THE PEOPLE AT THE BOTTOM AND THE MIDDLE ENORMOUSLY. THERE ARE OIL COMPANIES MAKING BILLIONS OF DOLLARS. TOM:

-- FOUGHT THIS BATTLE IN 1976. THE BOTTOM LINE IS THE ELITES HAVE FORGOTTEN THE MIDDLE CLASS ACROSS THE ENTIRE POLITICAL PERSUASION. HOW DO WE REENGAGE AND BUILD A TRUST WITH THE MIDDLE CLASS IN AMERICA GIVEN THE PRESENT SHOCKS HERE IN HAPPY VALLEY? JOSEPH: I THINK THAT WE HAVE TO REMIND THEM, AS I DID IN THE ARTICLE I WROTE 11 YEARS AGO OF THE 1% FOR THE 1% AND BY THE 1%, PART OF THE MESSAGE OF THAT ARTICLE IN "VANITY FAIR" WAS TO SAY THAT IT IS IN YOUR OWN SELF-INTEREST TO SHOW MORE SOLIDARITY BECAUSE IF YOU DON'T COME OF THIS WHOLE SYSTEM IS GOING TO FRAY APART. TOM: THIS IS IMPORTANT, REALLY IMPORTANT GIVEN THE YEARS THAT YOU AND ROGOFF WERE HERE ON STAGE. THEY HAVEN'T GOTTEN ALONG FOR YEARS. IT IS LIKE THE KARDASHIANS. HERE'S THE HEART OF THE MATTER.

WE HAVE COMPENSATION STRUCTURES IN AMERICA WHERE THE MIDDLE CLASS WAS ATTACHED TO THE ELITES, AND THEN WE CHANGE THAT TO WHERE THE ELITES ARE MAKING MORE MONEY THAN GOD AND THE MIDDLE CLASS IS LEFT BEHIND. TO ME, THAT WAS A TIPPING POINT. LISA: THIS HAS BEEN A TIPPING POINT, AND HERE WE ARE WITH A NEW TIPPING POINT OF INFLATION. DO YOU THINK IT IS MORE IMPORTANT TO GET INFLATION UNDER CONTROL AT THIS MOMENT THEN TO WORRY ABOUT OR AVOID SOME SORT OF DOWNTURN, WHICH SEEMS TO BE THE FED'S CONUNDRUM? JOSEPH: RAISING INTEREST RATES IS NOT GOING TO SOLVE THE PROBLEM OF INFLATION. IT IS NOT GOING TO CREATE MORE FOOD. IT IS GOING TO MAKE IT MORE DIFFICULT BECAUSE YOU AREN'T GOING TO BE ABLE TO MAKE THE INVESTMENT.

WHAT YOU DO IS YOU HAVE SUPPLY-SIDE INTERVENTIONS. ONE OF THE THINGS PRESIDENT BIDEN TRIED TO DO IS TO HAVE MORE CARE FOR CHILDREN, AND THAT WOULD MEAN MORE WOMEN IN THE LABOR FORCE. THAT RELEASES ONE OF THE CONSTRAINTS, LABOR SUPPLY. WE USED TO HAVE SURPLUSES OF

FOOD IN THE UNITED STATES. WE CAN GET THOSE BACK. LISA: HOW DO YOU GET THIS IN A SENSITIVE WAY? JOSEPH: I THINK WE CAN DO A LOT MORE THAN WE ARE DOING. RAISING INTEREST RATES IS NOT GOING TO BE THE SOLUTION IN ANY TIME, SO AT LEAST TRY TO DO EVERYTHING WE CAN GLOBALLY TO INCREASE THE SUPPLY. IT IS GOING TO DO MORE ON DEALING WITH THE PROBLEM. TOM: YOUR HEATED RHETORIC MELTED ALL THE SNOW IN THE VALLEY. LET'S GO SCOOP JACKSON ON YOU,

THE GIANT FROM WASHINGTON STATE. CAN YOU AS A RAGING DEMOCRAT SUPPORTING FISCAL REBUILDING OF OUR DEFENSE AND OF OUR NAVY TO PUSH AGAINST CHINA AND THE SHOCK OF PUTIN AND RUSSIA? JOSEPH: I THINK WE CAN HAVE SUPPORT DEFENSE. CLEARLY PUTIN HAS SHOWN WE NEED DEFENSE. MUCH OF WHAT WE SPEND IS WEAPONS THAT DON'T WORK AGAINST ENEMIES THAT DON'T EXIST, SO IF WE TAKE OUR CURRENT SPENDING ON DEFENSE AND RE-EXAMINE IT, WE ARE SO MUCH BACK IN THE 20TH CENTURY, THE LATTER HALF OF THE 20TH CENTURY.

WE ARE IN A WORLD OF CYBER WARFARE, OF ALL KINDS OF NEW FORMS OF WORKFARE. WE NEED TO ADAPT OUR MILITARY EXPENDITURE. I THINK IF WE DID THAT, WE DON'T HAVE TO SPEND OR ON MORE AND MORE. WE HAVE TO SPEND SMARTER AND SMARTER. TOM:

WE ARE OUT OF TIME. , PROFESSOR FROM COLUMBIA UNIVERSITY. A READING OF "GLOBALIZATION AND ITS DISCONTENT" IS A GOOD PLACE TO START ON A STUDY OF ECONOMICS. THAT IS WHERE YOU CAN GET STARTED WITH STIGLITZ 101. COMING UP, THE TELEVISION STAR DAVID RUBENSTEIN. STAY WITH US FROM THE WORLD ECONOMIC FORUM IN DAVOS.

THIS IS BLOOMBERG. RITIKA: KEEPING YOU UP TO DATE WITH NEWS FROM AROUND THE WORLD, WITH THE FIRST WORD, I'M RITIKA GUPTA. PRESIDENT BIDEN'S HAS HE WILL REVIEW TRUMP ERA TARIFFS IMPOSED ON CHINA. THAT RED TO A -- THAT LED TO A

RALLY IN THE OFFSHORE YUAN. THE PRESIDENT HAS COME UNDER PRESSURE FROM SOME LAWMAKERS AND ECONOMISTS AND THE U.S. CHAMBER OF COMMERCE TO REDUCE OR ELIMINATE THEM. PRESIDENT BIDEN IS SEEKING TO REASSURE AMERICANS ABOUT THE CURRENT MONKEYPOX OUT. AT A NEWS CONFERENCE IN TOKYO,

THE PRESIDENT SAID IT WAS UNLIKELY TO CAUSE A PANDEMIC ON THE SCALE OF THE CORONAVIRUS. HE SAID THE U.S. HAS ENOUGH SMALLPOX VACCINE STOCKPILED TO DEAL WITH THE OUTBREAK. UKRAINE'S PRESIDENT SAID RUSSIA'S ECONOMY SHOULD BE SHUT OFF FROM THE WORLD AND INVITED GLOBAL INVESTORS TO SHIFT THEIR RESOURCES INTO UKRAINE TO HELP REBUILD THE COUNTRY. IN A VIDEO ADDRESS TO THE ROTA, FORUM, DUSTY WORLD ECONOMIC FORUM, -- THE WORLD ECONOMIC FORUM. POLICE ARE SEARCHING FOR A MAN

WHO SHOT AND KILLED A GOLDMAN SACHS EMPLOYEE ON A SUBWAY TRAIN. DANIEL IN RECAST IS 48 AND -- DANIEL HENRIK AS -- DANIEL HENRIQUEZ WAS 48 AND WORKED FOR GOLDMAN SACHS. HSBC HAS REPORTEDLY SUSPENDED AN EXECUTIVE AFTER HE CRITICIZED THE FINANCE INDUSTRY FOR WORRYING TOO MUCH ABOUT CLIMATE CHANGE. THE BANK IS CONDUCTING AN INTERNAL INVESTIGATION INTO STUART KIRK'S REMARKS, THE HEAD OF RESPONSIBLE INVESTMENT FOR HSBC'S ASSET MANAGEMENT UNIT. GLOBAL NEWS 24 HOURS A DAY, ON AIR AND ON BLOOMBERG QUICKTAKE, POWERED BY MORE THAN 2700 JOURNALISTS AND ANALYSTS IN MORE THAN 120 COUNTRIES.

I'M RITIKA GUPTA. THIS IS BLOOMBERG. >> IT IS VERY CLEAR THAT PEOPLE ARE IN RISK OFF MODE, BUT OUR VIEW IS THAT THERE WILL NOT BE A RECESSION THIS YEAR, NO NEXT YEAR. THER

2022-05-26

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