Surveillance: Bloomberg Global Business Forum

of MPC. She heads up the Equity strategy division over there. Laurie, what changed for you yesterday in the last twenty four hours, if anything at all? Well, look, I think, you know, talking to investors about what happened yesterday, I think there's still a state of disbelief, you know, questions I was getting, are is this real? What will really change? I think

the street is still digesting this. But you did see a negative reaction in the market, and we've thought that the stage was set for a pullback anyway before year end. This is bringing some of the potential triggers for that into focus. Lord the regressor forward is the earnings call for October. We spoke with b MP Perry by yesterday. They've got an exceptionally cautious view on equities and it

centers back to earnings. What is your earning UH call at RBC and how does it fit into owning equities today? So we're at one six five for this year, one seventy four for next year. You know, I think that the concerns about second half Earnie's expectations have died down a little bit. I do think there's going to be some teriff adjustment that has to happen generally, though companies have been finding a way to sort of deal with these issues in the short term. I think the real issue,

frankly is next year. I think Arnie's expectations are way too high. The street is still at ten percent. I'm at five and a half percent. I have what I think are pretty reasonable assumptions on GDP growth slowing a bit, buy back slowing a bit. Those numbers are going to have to be cut at some point. My guess as

we do that before the year is up. Laurie, I know you're doing your best to look through the political know and I also know you're adding just a little bit of sicklicality pulling away just a little bit from the defensive sectors in the equity market. Give us a

little bit more detail on that. So look, I think the move in bond fields that we saw, you know, sort of late August, early September, and that vicious style rotation that we saw was a little bit of a wake up call um, and I think we do, you know, sort of we have a lot of concerns, especially on the tariffs in the short term. You know, I'm not convinced that this is necessarily a turning point, as a tipping as opposed to a tipping point in the economy.

That being said, I think we're trying to look through the day to day trading. We're trying to think about in three or five years, what will we have wished we did today, And we simply found we kept talking to investors about industrial stocks, we think they're pricing in um, pretty onerous outcomes. You're literally back at financial crisis lows if you look at a relative pe against the broad market. So we think that you should shouldn't be so worried

about what this quarter is going to look like. Take advantage of the fact that they've been derisked and we actually think you should be taking money out of consumer stocks where all the good news and resilience is baked. LORI thank you so much, flour Kelvinsina, RBC Company, Marcus here at the Bloomberg Global Business Forum. This is joy John, because this is as John tafted in his book a

number of years ago about stewardship. And what is so wonderful here with the descendants of the Mars family of Minnesota from years ago is they got together, they had the courage to make with Wrigley of Chicago, and I remember the emotion of that day. Stephen Badger joins us right now of the Mars family and driving forward the Mars Wrigley story as well. The company is not Mars Wrigley. It's Mars, right, Mars Incorporated. Yes, I mean, it's so

interesting what you've brought in. You've brought in dog food, you've brought in the chewing gunment all that. Are you the dominant confectionery player now in the world, Well, we would certainly in any given market be the leader. And we have some of the leading brands in the world with M and M's and Snickers and so forth. See how he did that he wa, I can't concentrate. I can't concentrate from what we were like growing up in a family like that with with that kind of business

around you. Well, you know, it's a normal family, it really is. Uh. You know, in normal families go through normal family issues. That being said, we were very clear that uh, as we matured that we had a responsibility with regards to the business and the associates that we have, and and really we're here today at Climate Week because

of that responsibility. We we see the science that has been out for some period of time and which which is only getting clear about the threat to the climate that uh, there's a real and significant issue that needs systemic changed and transformational action to really address the issue. And so I think one of the great things that that we grew up with and that I carry with me today is that sense of responsibility. So I told to us about the kind of things you focused on

the monment. What are you guys standing to address that? Well, we've had for many years in place what we call are sustainable and the generation plan that we are spending a billion dollars on. We've also are spending a billion dollars on what we call responsible cocoa sourcing, and we're here this week to really advocate for the fact that we need to all collectively step up the actions needed to address climate change. The issue is only ever more serious.

I would suggest you're in the cross ears here on two items. One is you make small items thing a pack of Wrigley's Experiment gum that when my father had for years, or you make the fame candy bars which got me through three years of my youth. I get that for the Mars bar, Folks is the one I always went for. You've got the little units of sustainability along with the messaging to children. You're here over the

head constantly about sugar. You know we don't need to get into that today, But how do you handle sustainability given the responsibility of kids and your small unit product show? Well, if you look at the totality of our business, whether it's gum or or chocolate, or pet food or other brands like Uncle Ben's, all of those products buying large rely upon smallholder farms around the world for their ingredients. Explain that with a pack of gum. How does that work? Well?

Mint mint is the key ingredient in one of the key ingredients and gum. It's grown by farmers in the US, but also by many farmers in India who are struggling to deal with the effects of climate change and in how they in their growing operations, and so helping them actually become more sustainable to generate a greater income and also address issues like women's empowerment. Uh IN at the local level is key to the ongoing sustainability of products

like that. You can be incredibly focused on sustainable production and then all of a sudden, imagine there's a line of banks and a line of investors knocking on the door and sounding you you can do it better, you can make more money. How do you keep slapping them away year after yet? Well, the reality is if we don't deal with climate change, of business doesn't face into the reality of climate change, there there will not be

a future as we know it. Uh So for us to have a sustainable future, we have to spend money on this issue, and that's what we're committed to doing, both through the commitments that we're making and trying to galvanize the industry, as well as through our own commitments

with our business. I gotta get to the sensitive topic as well, not just about sustainability and climate change, but as Tom mentioned, sugar, the war against sugar, thebasity epidemic in this country and in other other countries in the developed world as well. What you're role going to be in all of that, Well, obesity is a global issue

without a shadow of a doubt, uh. And we're a food business and so we have a great responsibility to ensure that we're marketing uh and selling our products responsibly. We have a marketing code that's been in place for many years and we adhere to that strictly. And it's all about how we position our products, particularly in terms of confectionery, as treats that are are to be enjoyed on occasion, as opposed to you know, daily so to speak.

And what do we do about the kids where it's not daily, it's not portion control the corporate messaging, what do we do about the X percent of any nations kids that don't have that discipline around them. Well, I think it's about trying to be clear as to what the role of a food business is, what the role of government is, and what the role of parents are. It's a collective issue and no one actor can solve it.

But what we can do is we can take responsibility for our part, be very clear about that and try to galvanize the industry to to step up agree with this. And the thing is the parents have to have a massive discipline here. So when the Snickers is developed, I get half, you get half, and the time we got left, I gotta talk. And this is wonderful that you hear Steve Badger and we celebrate Friday, folks. I am thrilled that Ken Burns will be with us with his magisterial

effort on national and country music. Everybody in the music industry goes thank you, thank you, thank you, Stephen Badger for what you did with the House of Wilson Pickett. Muscle Shoals is beloved. There's a sound, there's an authenticity there. It goes back to him and B Three's did things that no one had ever heard before. What was it like to put together your wonderful film and Muscle Shoals? Well, thank you, You're so kind of reference that it was.

It was it was incredible, I mean it was. It was an emotional journey, a spiritual journey, a lot of hard work and it was a great joy and honor to be able to engage with the folks in Muscle Shoals and the other artists who made that. Lack has his wonderful movie Catholic Records of Beyonce, and in it they've got the Stones show up in nineteen sixty whatever, like Children from England. Did you talk to Mick Jagger

or any of the Stones about Muscle Shoals. I had the great pleasure and opportunity to talk to Keith and to Mick uh and they couldn't have been more gracious and and um have a greater love for Muscle Shoals than you know I then I would have expected. And and more more recently in terms of some of the heroes and Muscle Shoals, Rick Hall, the dear Rick Hall has passed away. Jimmy Johnson just passed away. I didn't know that. So to be able to capture those guys

on film before that transparred was great. Like he's got a terrible job, isn't it still on the planet. I mean, Chuck Levols been a wonderful friend of the show up playing with the Stones keyboards. He's with us once or twice a year on himself, and he talks about the room. Sound. I mean, it's all about the room, isn't it. It's it's a concrete block, right, It's town. It's town, absolutely, Steven. A final question in it comes from home. It comes

from my mom. Oh you're the Good Morning was about many decades the Snickers Bar used to be called the Marathon Bar in the UK. But we're gonna make that change again. Can we have a special edition? I wish I could say otherwise, but no. We we moved it to Snickers because we're a global business. We operate in eighty countries and they're just are some efficiencies that come along with Yeah, there's God bless this is this is a can we tell company secrets here with Steve bar

please day carry. I come out of the meeting every morning usually was team coming out of my years and the only thing that saves me is I wander by the desk of a hundred and six mayor of New York. There's a small candy thing and it is a Mars container and Mike Bloomberg every single morning saves me with the TwixT. Well, thank you. We we need we need to make sure that he's a wealth stocked going into the future, Steven, great to catch up you, thank you,

thank you, Stephen Badger of the mass Family. Fasciniting conversation. Tell how much more coming up? This is an annual visit. We're going to crow bar him in here right now. Dr Ferguson, of course, his public service at the Federal Reserve System serving Sherman Greenspan, and particularly on September eleven, his esteemed academics, his public service to the Economic Club of New York is should point out. I get to enjoy the lunches. Roger Ferguson serves at the Economic uh

of New York as well. But I really want to devote this entire time with Vice Chairman Ferguson to his true expertise with t I A and his public leadership. And I don't know if it's a number one problem in the nation, Roger, but let's just begin by saying, retirement in America is in a terrible, terrible state. Good morning. We we talked to you a year ago. In my frustration is just do something. How close are we to

a Roger Ferguson. I mean, you're one of the most impatient guys I know in the crucible of a meeting. How close are we to ferguson immediacy in slow motion Washington? Look, I think we're a long way away from it. Frankly, on the other hand, there are some green shoots that might give us some optimism that we're returning to this really big, important, long term issue. So, um, why don't

I say we're a long way away from it? Every Congressman, every Senator must have the constituent saying, look, it was all best in engines, but actually it is not worked out for anybody of any given age. The incentivizing of younger people, the middle age, those confronting the failure of Arissa seventy four that do something is front center. Why is its slow motion in Washington? It's slow motion Washington because this is one of those really long term, slow

moving challenges. It's not an immediate crisis. Washington, I think is wired towards the immediacy of the headline. And this challenge is, you know, to use a cliche, a bit of a melting iceberg, and society, policymakers, etcetera. All turn their attention much more slowly to these slow moving challenges. The second reason why it's it's a little bit difficult.

Is the answers are all difficult. Um, you know, figuring out how to fix Social Security means for sure, maybe touching retirement age, which people are uncomfortable increasing retirement age and may mean cutting benefits for certain of people, may mean increasing taxes. All of those are tough calls. Politicians are not wired towards making the toughest calls very very quickly.

So Dr Fergus, just for our listening audience, could you scale out what you think is really again kind of the scale of the issue, the problem some just some broad numbers. Okay, So let me start with my uh friends, former colleagues were fed. They've come up with numbers of a shortfall and retirement savings of anywhere from four to seven trillion dollars. So that's a massive number. Another way to think about it is only about half of Americans

have access to retirement savings at work. So that's the second way to think about it is stunning. Third way to think about it, it's something we already know, which is that you know, more than half of Americans couldn't get hold of four hundred dollars for an emergency, and so there are lots of different ways to scale this problem. As this problem, he's gotten worse, is it? How has it evolved over the last couple of generations. Well, it's

actually gotten more. So Here's here's what's happened. For our grandparents generation. The vast majority of them had of retirement plan at work called a defined benefit plan. Now only about ten of Americans have a defined benefit plan. So the vast majority of Americas now defend on a so called defined contribution plan. And that has pushed risk from the company to the individuals at a point when we know individuals have a low level of financial literacy, so

the problem has become more challenging. If you're just joining us, the former vice Chairman of the Federal Reserve System, Roger Ferguson with us an annual visit here at the Bloomberg Global Business Forum, and we're thrilled to focus on his true expertise and leadership in America's retirement crisis. The Times of London two weeks ago Roger the business section, the big headline the annuity. You get a retirement pot, you buy a life annuity for you and your wife whatever.

The annuity at a number of four point one percent. We are nowhere near the proper actual assumption, are we That's exactly right. Uh, And that's yet another thing that makes us challenging. So in an interest a low interest rate environment, lower for longer, may be lower forever. There's no doubt that generating the returns have become more difficult. There's a solution of that, which is a broadly diversified portfolio. Right, And so people think of retirement is being driven by

fixed income and think of low interest rates. But the reality is a really good retirement will be driven by fixed income, by alternatives, by equities, thereby giving a chance to get to a much more sustainable retirement income. And so one has to think about, you know, the basic rules of investing apply for retirement as well as anything else, and diversification is one of those basic rules which will

help overcome the challenge that we're currently seeing. So as we think about, you know, thinking about some of the solution to this grand problem, which is so complex, it sounds like it might be one of those situations where it's some combination of government, of corporate, the private sector, of educating the individual. I mean, it seems like it's it can't just be the government stepping in and no, no,

And the reality is to rethink retirement involves three separate components. UH. Government for sure, because the government drives social security, and here we need to think about reforming social security. The Social Security administrators have told us that the trust fund UH will be pretty much out of out of gas, so to speak, UH, completely utilized by the twenty seventeen I'm sorry, something like that, maybe a little further out.

And so we do need government solutions in that space. UM. The government can also help by setting up rules and regulations that help create more savings in the private sector. So there's an act now in Congress called the Secure Act has been passed in the House, has passed the Senate. That would be very helpful in creating more safe and secure retirement. So we need to get government acting in that way to increase the private sector. Can I ask a dumb question of the day, I do I do

and ariska define contribution. Whatever the program is, I get immediate tax savings which can build the growth and down the road, I end up paying the taxes due to the government. Why does the government, Why are they so reticent to let anyone put more money into their account if they know they're going to get the money eventually, well, you put your finger on it, it's actually the time

value of money. And so they're concerned that broke. Look the laying trillions of dollars and taxes until all of us get to be seventy or seventy two. It's not to be taken lightly when you think about the state, the fiscal situation United States, and so you know, the tax view around retirement has always been we're willing to let you differ, but until a certain age, and then

you know, it's seventy two and a half. They required the distributions in part to make sure they get the taxes paid where they're going to get the Texas paid down the road. We've got experts at what what number of people across the broad American wage paying wtube landscape are below their actual assumption. It's a big statistic. It's a big statistic at this stage, What where is the urgency if there's no cost to the government other than as you correctly state, the time value of money. That's

that's part of the issue. And you know, the urgency is starting to come from the citizen to me. As we all get older and older, and we start to recognize the insecurity that we face around retirement, and that's going to drive what happens in more. I mean, Paul, the number of people I know older than me who are seriously looking to move abroad because they can't afford to retire here. Those are tangible numbers for people thinking.

You know, obviously it's always been Florida, but even North Carolina, low tax states, things like that. But I haven't heard they're moving to Pan Costa Rica. Thailand is very popular. Yeah, you know Italy, I mean Rogers, you know, this is very popular, right, These low income states are very very popular. What is the study that you have researched at T. I. A. Kraft about across different death stiles of the American population. If you say you can put in all you want,

do they put in more money? The answer is it depends um. And so what we see for the younger individuals is because of the student loan and students issues, they are delaying retirement and delaying putting money into retirement. Middle income folks tend to be doing better, and obviously the older individuals are staying with a frenzy, perhaps because

they started too late um. And so what this is all ending up with is another study that we did recently that shows is the degree of financial insecurity is very high. So we surveyed a bunch of folks on only about a third of them said they were feeling sick. You're about their retirements. We've got people listening worldwide. Al from New Jersey emails in and says, when you talk to about something that matters, because they Al's got his

retirement all set up. I believe Vice Chairman Ferguson I there's any number of ways to go with a beleaguer Chairman Powell, the criticism to the FED and FED independence, we've got the repo uproar of the recent days. I want to talk to you about something that you're quite good at. And this is off of your steam work at Harvard, which is the experiment of negative interest rates. This wasn't This wasn't on the chalkboard at Harvard, was it.

This was not on the chalkboard at Harvard, nor wasn't on the chalkboard at m I T on the University of Chicago. So they we are in uncharted territory. UH sixteen seventy trillion dollars a debt carrying negative interest rates never a place that we've studied, UH, and frankly, I think not a place any of us ever expected to be. Let's take the dynamics of someone who competent as Richard Clarative Columbia, who has your shingle out at the FED

right now and expert on DSG. We won't go into that because we're at the plaza where it would be unsightly to speak of something. So there was like that sculpture over there's half dress Paul here at the plot? What is this about this family Entertainment UM vice chairman first? And the glide path from negative to whatever normal is gonna be? Can we do this with stability? Can the drift function, the reaction functions be in control. I think

that's a really strong and important question, right. UH we saw a few years ago when UH then Chairman Banankee mentioned normalizing rates. There is a so called taper tantrum where markets got very excited UM about the possibility of normalizing. So I think there are some red, some yellow flags saying as we move in Europe, not in the US, but is Europe tries to move from negative to more normal rates. You know, a lot of that economy has gotten used to negative rights and the possibility of some

instability cannot be ignored, can't be discounted. What do you think that is for some of these European economies that are experiencing negative rates in half for some time, what is the path for them to get to more Look what the Europeans, I think we're working to try to do is to get two things happening that haven't happened thus far. First, get their economies, pickly their largest economies, you know, off of this borderline area where a few

of them might. One might argue Italy, maybe Germany are in or close to recession for a variety of reasons. Others may be slowing. They also are working hard to get inflation as others are back closer to their targets. Once those two things start to occur, then you will be able to start to see rates normalize. Uh, the same thing. It's also two in Switzerland. So this is

a big macroeconomic challenge. And they've been at this place and fighting this for a long period of time, and you know, we wish them best because the European economy is one of what could be one of the one of the drivers for global growth. I know when you were on the Charles River, you didn't you ignored Chicago

and microeconomics, not at all. We had a conversation with Dudley of the New York FED the other day, the micro economist from Berkeley, and it's really interesting to see the behavioral function and the microeconomic dynamics of something like the repurchase agreement. Or do you have confidence in a New York FED and John Williams and the new team there to get it done and do it right? Absolutely, I have a high, de great confidence John and the

team with the New York FED. I think what they're confronting the repo market was, you know, trying to understand the amount of reserves, the sort of technical that have to be held by the FED to get the market itself to do its business, UH, to set the repo rate the right way. And this is a new territory for for the FED, so one would expect to see every once in a while just a little bit of the rough edges as the markets and the FED get used to a new process. But they're moving in the

right direction. I have a high confidence in John and the team. Did President Bush the younger ever tweet out on Roger Ferguson, I think of the crucival you were in an early sub member of two thousand eleven two one. It wasn't funny. You didn't have to put up with presidential tweets. Right. Well, I'll be honest with you. Um, you know there has been periods on and off presidential pressure on the FED. Um, this one is highly unusual,

and that it is so public. But if you go back to the history of the FED, L B J l B J. Richard Nixon knows, you know, come over and have a quiet talk moment um and so, you know, not surprising given how powerful the FED is to have these kinds of press. You mentioned the pit bull, Roger Ferguson on the balcony, the particle there, but conversation giving it back. Yeah, but aether thing. You have to recognize that j Pal has been very clear about protecting the

independence of the FED. So we give the FED, I give the FED others. Do you know a lot of a lot of credibility right now putting up with some Yeah, tough and difficult times. Roger Ferguson, thank you so much. Particularly with T I A this conversation on retirement in America. This is a joy. And he has come to us on impeachment. Short notice. He is Professor Sunstein of Harvard University. For anybody that knows me, he was way out front on impeachment. And I made it a book of the summer.

It is readable, it is short, it is must must read on this strange word, and the joy of it is Cass Sunstein, who has been affiliated with Republicans and Democrats. Of course, his recent public service to President Obama kept the T word out of it. He does not mention President Trump in a hundred and seventy five pages of your need to understand the word impeachment. Professor Sunstein, thank you so much for joining us today. Great pleasure to

be here. Cass. Your book is so important. You begin with James Madison and Walso's through the founders, and then of the modern age. How did the comments of Speaker Pelosi yesterday link to the impeachments of Clinton and Nixon or will this be a new and discrete process. I think they linked pretty well in the sense that the general tenor of her remarks were connected with the I think legitimate inquiry into President Nixon and the questionable inquiry

into President Clinton. I think that's kind of it's best understood from the constitutional point of view. I think she got out a little in front of her skis. That is, she was a little too decisive about the breaches of the constitutional firewall. Let's call it by President Trump pending an investigation. Probably it's good to be more cautious and um inquisitive rather than categorical. And she said he violated his oath of office, which and let's just practice the

question whether that's true. That's not the constitutional standard. Uh, the on social standards, high crimes or misdemeanors, and you can, you know, not take care that the lawsby faithfully executed by making mistakes honest or even zealous, and you can't be impeached for that reason. Truman did that. Most presidents have made mistakes honest or not so honest, and that doesn't mean they're impeachable. But generally she was in the ballpark. Are we anywhere in the vicinity of the high crimes

and misdemeanors? I think of your dog snow lead out into the mud of conquered Massachusetts in the muck and there's a high crime and misdemeanor. Is President Trump anywhere near the sunsteined definition of high crimes and misdemeanors. I want to defend my dog that she, you know, uh, maybe make a number one or number two in a way that was littally illegal, but that was not a high crime in that was just uh inappropriate, let's call

it um. In terms of President Trump, I would say that we need to know more about the facts of the most recent turn, which seems to be what Speaker Pelosi is principally focused on. So if it's the case as the President says that there was an appropriate conversation in which he mentioned let's call it the B word, Biden, but he didn't put any pressure on or suggest any quick pro quo in terms of financial aid, then there's

really no basis for teaching President Trump in that conversation. Uh. If it's the case that it was explicit or implicit that he was wielding let's say the taxpayer funding uh possibility or not for Ukraine as a inducement to investigate a political opponent, Uh, then we're a very severe concern as the inquiry and possibly you know, follow up in the form of an article of impeachment with the completely legitimate.

So Professor Sunstein, there's an argument out there that is being floated that the real issue that the Democrats should focus on is the mere fact that the pres isn't it made a phone call to a foreign head of government, uh, suggesting, you know, to interfere in our elections by uh investigating a political opponent. It wasn't necessarily the quid pro quo. It was just a mere phone call asking for interference.

Is that ring true to you? Uh, it's in the ballpark, and you know, whether you're a Democrat or Republican, it just is not legitimate. Let's practical the impeachment question for the moment, and they'll get there very soon. But it's not legitimate for a president of the United States too, uh, talk to the head of a foreign country about investigation

of a political opponent. Uh, even in a context in which there's no quick pro quo, and to get to the impeachment question, it's not as clear as if there's an inducement. But if the president in the context in which withheld funds are kind of the elephant in the room, and the president saying that and UM let's just say that both Republicans and Democrats, UM uh appropriately explore the

impeachment question. And I say this with um, you know, with awareness of the severity and gravity of even the word. But but that is the president can't do that. Can't say in a context in which everyone knows that there's an economic background to this and there's a economic relationship. Can't say you investigate a political opponent. Kess Sunstein of Harvard Law, We're thrilled that he could be with us today. I really can't say enough about his wonderful book, Impeachment.

It is a sprawling walk through of American history from the Revolution to the present day. On Impeachment, We're thrilled to have with us today, Kess Sunstein, this is a joy. As we've spoken with Roger Ferguson, the former vice chairman, with Cass Sunstein of Harvard on Impeachment. One of the moments of of this September we speak to David Lipton, now, who I believe as title as of this. I'm looking at my watch and I think we've got like a

two hour ticks. Acting Managing Director David Lipton joins us. Now, certainly without question. Dr Lipton, the American representative to the UH International Monetary Fund to get an update, and it is truly a day of celebration for the International Monetary Fund. Krystallina Georgieva of Bulgaria, truly a frontline academic, will join the i m F. Is it in the matter of ours? Dr Lipton? Yeah, this week is a big week of transition for us. We have Christine Legard departed, will be

celebrating her this weekend. We expect Krystalline and Georgieva to be approved by our decision body, the Executive Board in a matter of ours, and she'll be managing director starting Monday morning. It's an extraordinary transition of geography and and tone. Is is well uh the former leader of the World Bank, of course, esteemed in international economics for years. What does the shift like within the institution? Is it just business as usual? Well, we're very good at transitions. This happens

quite a bit. The institution is used to it ready to help her take the helm. You know, you're right. She has vast experience. Not only is she from Europe, but her experience across emerging and developing economies in her work uh in in in UH the in Europe and at the World Bank. I think gives her a huge reservoir of support from our membership really very broadly emerging market countries. Correctly say this is the first managing director

from an emerging market Bulgaria. So everyone's very excited and I'm looking forward to this transition myself. Remember the first rate Bulgarian mathematics of the Koran School of New York University in the academics just extraordinary. I find it fascinating here within the tone of modern capitalism, like Angela Merkel coming out of East Germany that uh the crystallity GRGIEVA came out of the Carl Marks Higher Institute of Economics. I mean, there's this is a real shift. This is

not thesis antithesis, and now we're going to have synthesis. Paul, please David, so as a new managing director comes in, David, what do you think is the one of the key challenges facing the I m F right now? You know, we see uh UH risks to growth in the short term, and we've had a period of slowing growth in core economies for a number of years. After all, just two years ago global global growth that's closer to four percent,

and now it's closer to three percent. So in this era where there's questions about integration and interconnectedness and multilateralism, the challenges to get our members to cooperate, to ward off the risks, to try to secure continued growth UH and to promote faster growth in the future. So I think it will be a growth orientation achieved through international cooperation. One of the threats to that growth orientation is uncertainty that we have in the global economy, principally from trade

issues and uncertainty about global trade. How does that play into kind of the mandate at the I m F. Well, we do see trade tensions and uncertainty around that as as the number one risk. Yes, but but you know and and that it is important that the US and China sit down and resolve this through dialogue. And I think that will mean China having to deal with some of the shortcomings in policies that are um causing spillovers that are causing discontent in other countries around the world.

But that said, there are other uncertainties to Brexit is a huge John certainty. Um, there are geopolitical uncertainties in the in in the tensions with Iran, various others, and so if uncertainty is UH allowed to continue, this slowdown in trade, which is bringing a slowdown in investment, may

become a crippling problem for the global economy. It's not our base case, our base cases for continued growth UM and it really is important that the world work together to try to address these uncertainties and not have unforced errors. Let's get out front of the meetings that you will have here in a number of weeks or at lease the World Economic Outlook, the Green Book, the stability. I

can't remember the color of the books right now. You keep changing them, I mean, David, But the bottom line is what our audience wants to know, our global Wall Street audience wants to know, is the second derivative? Right now, I look at Korean export important numbers that German numbers the other day. I'm not asking the acting managing director to have these memorized, but you're very aware of the GAMA, the convexity accelerations that are out there right now. How

urgent is it. I think that the way to think about this is that UH, with the trade tensions we're seeing trade investment and manufacturing slowing and that's very broad. But at the same time, consumer sentiment, consumer spending, and service sector is very strong. And so the question is what will happen in the future. Will the um difficulties in the business sector eventually impair consumer sentiment and slow things down, or will the consumer strength and service sector

strength eventually help pull business up. That's possible if we're able to reduce uncertainties for the future. So I think the uh you know to me? The bottom line is growth is slowing, risks are growing, and policy makers need to get going in That rhymes and it's an easy to remember. So well. Evid Lipton with us of the International Monetary Fund, the acting managing director here as we celebrate Christallina George Eva of Bulgaria will become the new

managing director, replacing Christine Legard. Christine Legard will become the President of the European Center Bank. I'm not gonna ask you to get out front of negative interest rates in the ECB. That would be rude. But I can I ask you. I can ask you, David, the questions of our Buenos Aires office. They have a lot of questions of how the I m F will handle the original experiment, that is Argentine Uh, political economics, even social economics. What's the next step for the I m F with an

ever dynamic Argentina. You know, Argentina's situation right now is extremely complex. They've had a shock based on the political results of a of a primary and in that setting have had to take some very strong measures to try to calm things down, and I think they have calmed

markets down. So our job in this setting is to help them get through this period, give them advice, work towards an eventual uh resumption of a relationship between of some kind of financial relationship with them, which may have to wait a while. UM, but we're we're in discussion, they are. The Minister is going to be in Washington having discussions with our team shortly and we'll be continuing those discussions at the the annual meetings that you mentioned

that come up in later in October. You know, we're trying to help Argentina deal with a very difficult situation and they're working hard to do that. David, do you think the political will exists in Argentina today to move that country or rude questions Argentine's want to stabilize their country and resume growth. I think everyone shares that it's not our business to try to uh uh divine the

political path forward. We can't do that, but we're standing ready to help whichever uh side wins the presidential election and help them find the best way forward for the sake of the Argentine people. The hallmark of the modern I m F is transparency of data. What do you do in any given nation where you haven't quoted in this case Argentine and Paso in a black market set with a greater depreciation, how does the institution like you deal with the multiple markets of currency or yield day

to day. Look, there are places where data are are a big problem, like Venezuela where the data flow has stopped, but that's not the case in Argentina. We've dealt with countries that have parallel markets in many, many circumstances before. That's not a big challenge. You know, they're they've had to put on capital controls in the midst of the

market developments that they've had. And when you have capital controls, of course, some people try to um uh look for another way to move money out of the country and parallel rates arise. I think that's something that we can monitor and we can help them over time deal with UH. You know, I think the bigger the bigger issues there are how to calm the markets and stabilize the situation so that there can be UH an administration after the election that makes longer term plans and policies that can

help bring stability, lasting stability and growth to Argentina. You mentioned that it's a very complex issue obviously. Is there any sense of timing based upon your discussions with the administration of maybe how this might play now, It's too soon to be able to say that. I mean, we we were having discussions with them. Those will be continuing in Washington this week and then again during the meetings. You know, their election is coming up later in October.

It's it's just uh, not something one can foresee if you're just joining us a few more minutes with David Lipton and the International Monetary Phone. Of course out of Wesleyan and Harvards sterling economics over the years, and I always David love to go back with you to your tenure with Jeffrey Sachs on Russia. Could we go you have a visceral I would suggest you and Professor Sachs have more of a visceral understanding of the Russian economic

experiment out of n than anyone breathing. And give us an update on putin economics in the strength of Russia right now, he had a difficult Moscow election. Granted that's a one off, but give us an update on Russia. Is a frontier economy, an E M economy, or a G eight nation. The Russian economy has been managed very well from the standpoint of macroeconomic stability. They've been very careful about their maintaining a sound budget. As a result,

they have almost no uh federal debt. Uh. You know, President Putin has given strong mandates to his Central Bank governor nev you in a too, make sure that inflation is under control. That's not the issue they have as as a result of there the oil situation and the economic situation and the sanctions, they have a low growth rate. When we project their growth rate forward, we see it as lower than or roughly the same as Europe in

per capita terms. Now that what that means is we are not foreseeing Russian standards of living catching up or going in the direction of catching up to Europe. That's a problem because their their their standard living is lower than Europe, and they should be able, they should be aspiring to raise that standard of living. So I think the challenge for Russia is the broader, long term business

model question. What is their strength where they they are a country with great uh education and great technological prowess. The question is how to build a system that has a stronger private sector drive in the adoption and use of technology in ways that will bring prosperity to Russia. That's the challenge. I think they understand that, but that's

the challenge. But this is fascinating because with you and Jeff Sex at the nascent capitalism of the collapse of the Soviet Union, you go to the era I'm going to say, the oligarchs or whatever that means. How do you perceive Russian capitalism forward? Do they move beyond the

early models of the nineties and the two thousand's. Well, I don't know quite how they get from where they are to what I'm talking about, because I think it does mean uh having a system in which there's a more vibrant private economy with true competition and UH corporations that are able to UH compete with global counterparts and be modern, and it's I think it's not happening sufficiently at this point, and to me that the challenge for them is to find a way to have a more vibrant, vigorous,

dynamic private sector. David, are we seeing direct private investment in Russia today? Just give us a sense of our companies, Western companies investing in Russia. I think it's modest and more modest than before the the UH conflict in Ukraine led to sanctions and great hesitancy on the part of UH country companies from a number of Western countries uneasy about their participations. David Lipton, thank you so much. We look forward to all of us at Bloomberg to your

meetings here. He's I'm gonna say this to the acting managing director do one more time as we truly celebrate the changing of the guard APTI UH International Monetary fune Krystelina or Gava will take over as managing director of course Frontline Economics from Bulgaria. Dr Lipton, thank you so much for joining us Bloomberg Surveillance. Thanks for listening to the Bloomberg surveillance podcast. Subscribe and listen to interviews on

Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. I'm on Twitter at Tom Keene before the podcast. You can always catch us worldwide. I'm Bloomberg Radio