Surveillance: Fed Policy With Plosser

asked Dr Plosser now not to be delicate. Charles Plosser, you invented real business cycle theory. Kindling and Prescott got the Nobel Prize, but you and Long came up with the phrase and came up with the theory. There is now a raging debate in your racket over the theoretical qualifications of miss Shelton to join the FED. Is a governor? Your theory has been criticized. Ben pretty gott a Nobel prize out of it with Kindlan and Prescott. Does Judy

Shelton have a theory? Gee, Tom, I don't know. I think obviously she is very popular in some circles, uh, not so popular in others. But you know, I have to I have to say that. You know, during the course of the history, the Board of Governors has had many people of many different stripes and perspectives and on economics and macro economics. So I think that um uh, if you if you think Judy Sheldon is a great economist gonna be a great FED governor, then that's fine.

If you think that's not the case, then my guess is she we'll have gros three little impact overall on the way policies proceed. So yeah, I think debates not a bad thing. So I tend to be a little more open minded about about the willingness of the institution to ah to respond to these sorts of episodes. So I you know, she wouldn't have been my first pick, But you know, I'm not sure the consequences are terribly

serious one way or another. Dr plus are the real business cycle theory always is out a theory of exogynous shocks. You've been given your exogynous shock with a deficit. What will these trillion dollars of deficits due to our financial system? And is there a certitude that we will see inflation? Well, there's never a certain certain certain certain suit about anything in the future. But I do think that we've had a very serious shot to the system, probably due to

the shutdown and the coronavirus UH. And I think that the large ets will have their own set of consequences. We were already in a situation where UH fiscal policy UH that being conducted in this country was not was not sustainable, and this is just kind of make matters even more challenging. So I think there's a real problem.

We've got a real problem. I think that ah and and my real problem is is not is not just the fiscal policy, but how the FED response to that fiscal policy and the pressures they're going to be under to engage in UH butys policy and support supporting physical policy in ways it may be detrimental for the FED and for the account as a whole. What would be the best way for the FED to execute a lessoning of the balance sheet? Well, I think they're there a

variety of views on that. My preference was would would be to let them just continue to run this thing off, to stop increasing the balance sheet. It seems like they increase the balancing a lot. In a financial crisis. They promist we would they promised exit and it never happened, and now it's fifty present, bigger than it was after the Great Crisis, the financial crisis. So um, I'm not sure where this is going. And I think they need

to declare their independence and regained control of monetary policies. Uh. That's independent of the fiscal pressures that they're going to be under. Plus of Richard Fisher wants to punch. They just don't make them like you guys anymore on the fom C. Do you think we are suffering from groupthink at the Federal Reserve? Well, there's always a there's always a bit of that at any institution. Uh, And I

am worried that there's not enough pushback on things. I mean, we we argued back in two thousand nine, ten eleven the problems that we were going to get into que and the dangers of the large ballot sheet and the risk of it being abused by the fiscal authorities, and the difficulty we were going to face and getting out of it, and nobody wanted to listen then. And now we're back in the same boat, except it's bigger and

the risk are greater. And so I think that it would be wise upon the BED, particularly now, to be more articular about what the exit ramp books like from all this and how they're going to get out from under it. And the abuse of the BED for fiscal policy purposes is even larger now than it was then. And I'm not I'm afraid that you know, it's not looking good and I don't and I'm concerned the FED

doesn't push back enough. Charlie. I'm interested in this word abuse because the Federal Reserve, a lot of people would consider they are enabling this deliberately. This is an objective to work with the Treasury, to work with fiscal authorities, and not just the FED, but globally and many economists, Charlie, considering that the optimal way of conducting policy right now. This is what abuse, these words, these phrases. This isn't good, Charlie.

Why is it not good? Can communicate that really clearly. It's it's not good because the FED was granted independence in order to be able to conduct policy for the long run and to conduct policy independent of policy and partisan politics. And what we see now is when you lose that independence, when you become more susceptible to politicization, then the decisions will no longer necessarily be about the

best interests of the economy. But whoever happens to have political power, either in Congress or the administration, Charlie, are we already there when it comes to asset price inflation?

You've got FED officials that have been pretty sanguine about Yeah, I'm worried that we we The FED is enabling this, maybe not intentionally, but indirectly they are enabling the ability of of of this thing to go on and encouraging uh expectations from the marketplace in other parts of the economy that the FED is the restuer, not just a

last resort but a first resort. And Congress has used the beds balance sheet to fund the Transportation Bill, and in two thousands fifteen they used to do in this crisis to have the FED to lending on behalf of the treasury instead of having the Treasury do it. They have you know, they funded into the super Financed Protection Agency out of the FED budget, but with no authority by the FED. So they are examples of how the fiscal authorities are abusing the Fed's balance sheet, and the

FED has allowed this to happen without much pushback. They're operating regime of this large ballot sheet and their unwillingness to shrink it. And there the expectations they've set up with the financial markets of backing failures and polatility is all part of the play here too, as part of the actions that are supporting and encouraging um. This lack of independence I think dangerous from a philosophical perspective. People talk about the dangers of a FED or a central

bank not being politically independent. From an economic perspective, what are the negative consequences from the fact that the FED has taken the actions that it has, to your view, perhaps too much in tandem with the Treasury Department and the U S administration. One of the dangers the dangers are losing control both inflation and political independence. I mean, look what the history of of central banking and politic

is not a is not a pretty one. That those countries where central banks have become arms of the political or administrative authorities and used the substitute for sound fiscal policies and encourage money creation is the history is terrible. I mean, the empirical evidence is this waught with hyper inflations with Zimbabwe or Germany. You just go down the list Argentina. I mean, you just go down the list and see what happened when the central banks become pawns

of the political authorities. But Charles, we did not see that. Let's be clear here, they're coming out of the crisis, many look for higher inflation and it didn't occur. Did it just go over on the balance sheet side to assets. Did we just simply move the dynamics of price over to asset inflation. Well? Perhaps, But really what happened was when the FED people said, the FRED pretty money. But mostly what it did was put reserves in the banking

system that sat there. Part of the problem and the puzzle, I think, and one of the things that I think is problematic for the future is that money supply growth, money in circulation. After the Great Financial Crisis, all that stuff that FED printed sat in the banks. It didn't circulate very much, so there was no big increase in the money. I think that's an interesting puzzle. May have to do with interest on reserves and other things. That

hasn't answered this question yet. But if you look at what's happened in the last three months, unlike the Great Financial Crisis when the bed blew up its ballacy, in this episode, there's been a huge increase in money. I don't know whether it's going to lead to a different outcome or not. It depends on what the Fed does. But I think that, um, that's part of the puzzle and part of the thing that the Dead's not really hasn't really addressed in its review of what their new

strategy has been to be. I mean, they've tried, after much criticism, they tried to get inflation up to or claim they were because the zero interest rates for what seven years almost and inflation didn't rise. So now they're talking about a new strategy where they're gonna plan on overshooting inflated well, I mean they haven't even be able to get it too with zero interest rates for seven years,

So what's wrong? That's the elephant in the room here that the Fed needs to address, not some refined view of inflation averaging versus in place of targeting or whatever. I think they need a more fundamental thing about what their policies. Maybe it's like I said, the interest wrong reserves or a large balance sheet, all those things impact how the how monetary policy works for that Chairman, Pal's happy you're not on that f o MC today. As

that mating begins, childs, we've gotta leave it there. It's fantastic to catch up. This always fortunate to speak to your child's plus to that the former Philadelphia Fed president. Right now, let's jump start this discussion and do it through the prism of experience of Tobias Levkovic at City Group. It helps. He was a sell side analyst. He knows the granularity of corporations and of course the bigger view at City Group on the stock market. Tobias, have you

changed your view in the last number of days? On the last number of days, we think the market and we have thought the market was a bit ahead of itself, Um, in the sense that the expectations were powerful recovery on earnings without kind of bumps along the way back to some degree by quote unquote the power put um. I was looking to your private conversation about the bond market, Um, and the bond mark is actually something that two different messages. If you all you did was look at the U

S tenure yield, you would say it is disbelieving. If you like in the recovery. But if you were looking at the US tenure break evens, they continue to move higher. So there is an expectation for something happening, at least in the pricing side. Are you seeing that in the equity space. I mean, I'm looking at revenue shortfalls at three revenue shortfalls at McDonald's. I mean, are you just baking that into your two thousand? Yeah? We are. We

having to look. We're we're looking for earnings to this year in the one five range and then one fifty next year. Consensus for next year is one sixty four, and a survey we did in late June is over forty institutions suggested that seventy of them believe that one sixty four is too high. On the other end, people heart chasing momentum because they need to perform. So certain stalks are carrying further. They're jumping in even if they don't necessarily like it um, but they feel they have

to be. To quote in New York Claudo, you've gotta be in it to win it. It's about what do you think of the argument that, because we've got narrow breadth, this is a fragile rally. Do you agree with that, not directly. Um, Look, there are some large cap tech names that are clearly leading the market in the sense that people wanted secular growth with bulletproof balance sheets and pre cast flew generation the kind of a defensive trade.

But for example of the second quarter, A hundred twenty six names in the SMP five beat the SMP five hundred by more than ten percentage points. So it's not like only five names did well. A D twenty one did poorly, and I think that's kind of missed in the what I would call the narrative out there. Well, let's add to the narrative big tech turningsis Thursday. What's the data bias Lefkovitch guide at this point, Well, I think people are looking for the actually some disappointment because

the expectations are high. The work from home the construct has generated some particular business trends that it really accelerated trends that we're going before. So the idea of online shopping versus in store shopping has been a trend for a while, but we've probably moved it forward two years because the pandemic, telehealth, the same thing, cloud computing, all these things were ready very much moving along. All we've

really done is supercharge that that's beat to bias. In meantime, one of the big stories of the past week has been the weaker dollar, the dollar following to the weakest according versus it's a competitor currencies since two thousand eighteen. How does this factor intro equity strategy. So it's actually

quite importantly. So if I look at um a budget deficits percent of GDP, it's pretty been pretty good lead indicator for many years now for the dollar, and it was suggesting the weakness are ready prior even to the pandemic. But I think as the pandemic occurred, people went for the safety of the dollar. They rent for the safety of treasuries. UM, the beliefing, hey, this is the economy

in the world. Um, they're going to have significant support systems of the fiscal or or monetary stimulus, and there's a place to hide. As we're starting to reopen the economy. And even with these kind of awful lumps in terms of outbreaks, UM, it's unlikely we're gonna shut down the economy the same way we did March A from and me again, it's just too expensive. UM. From an economic perspective, too many job losses and not to mention some of the social ills that come out of in terms of

mental health, domestic confused, things like that. So it's unlikely you'll see that kind of stupdown. You may see sporadic ones or regionally focused ones, but not in entire countries. And in that sense, um, you're looking at environment where the dollar doesn't have to be at safe haven when

that pulls back. Historically, emerging markets of perform in the US. Historically, certain groups that are even though they have large international sales like pharma or semifectors, actually don't do as well um with a week in dollar. And then there are other ones that do particularly well, more commodity orient energy, materials, etcetera. Um, So there are you know, aspects to the dollars that

are quite important. So in other words, is this the playbook that you're going to the idea that we're going to have a week or dollar going forth it will continue to weekend given the fact that given the parameters that you just laid out, and that people should be going into merging markets and staying away from the multinationals not necessarily Again, I said multinationals like and take advantage and take a look at semi knectors, take a look

at Farmer their multinationally have large exposure to international sales that they actually do poorly when the dollar weekends. Um, and they do better when the dollar strength, which is not consistent with kind of the intuitivelopment of what it does think of an international sales with the dollar weekends will actually translate to higher remedies in the US if they don't trade that way. Um we can. Every real's entitled to their misperceptions, but um, we actually look it

happen stocks straight tobias away from Fortress Corbett. Your thoughts on the big banks, Um, Look, they're they're an area that investors have disliked for a while. Um. Initially it was the shape that yel curve concerns about credit loss provisions in in kind of a bad economy. But they're willing to trade up some other cyclicals around that. So you know, we wonder if there's something even more um disturbing an investor's mindsets. Maybe this acceleration I talked about

and trends pushes more towards fintech. But but I think the stocks themselves look very very attractively valued right now in the banks. Um the you know, again, if if the world isn't as awful as everybody thinks them, the credit lost provisions of an over provisioned um and you know, there still is business activity out there, either large corporations, the need to borrow money. The credit card businesses is you know, are generally doing well as people are buying

things online using their cards, either debit or credit. So it's kind of hard to to kind of get a sense that things are awful awful in banks. There is some concern. I believe that the elections, maybe um, if the Democrats take um, the Senate as well as the White House, and maybe there'll be some more kind of big bashing. But um, you know these are these are more speculation than anything. Kind of really at this point,

great to catch up with these Lekevich that city. Chris Krueger is a Cowen and he has a reputation for exquisite layout of the detail. He did that in June for Cowen of the many previous trillion dollars of stimulus. I'm sure you'll do it again in August. Chris Kruger joins us. Now, Chris, what is the detail you're most focused on as we staggered as some kind of agreement. Yeah, well,

good morning, thanks for having me back. I mean, I think that the big question here, the crux of this Phase four bill is going to be the expiring six hundred dollar weekly unemployment insurance payments, which which ended last which ended this this weekend. The House Democrats want to

extend that for six months at six dollars. The Republican plan from last night would take that six hundred dollars down to two hundred dollars through September and then basically kick it to the states for the states to figure out how to cap it at previous wages. I mean, I think there's there's no real surprise from the bid ask where we are. Uh The House Democrats put up over three trillion dollars over two months ago, and I think it will be one of the great political what ifs.

You know, why President Trump and the Republicans didn't sort of embrace a three trillion dollar stimulus two months ago, whereas now we're we're steering off of fiscal cliff for over twenty million Americans, and we're probably somewhere in the trillion to one and a half trillion dollar ballpark, Chris, from an economic perspective, let alone a political one, is there any argument that you believe in that you think is legitimate against having a six hundred dollar unemployment benefit continue,

the enhanced unemployment benefit continue for the next couple of months. Well, the real pushback has been from UH a number of White House advisors and Senate Republicans. If you recall, Phase three in March almost fell apart over the six hundred dollar weekly supplemental various studies have shown that, you know, as much as five five out of the six folks are getting effectively a raised from their previous salary from from January. This is really, though, the key um, the

key controversy with the bill. Republicans will get the liability shield, Democrats will get some chunk of money to go to states and municipalities. The six hundred dollar unemployment UH fiscal cliff is the real is the real question, Chris, is an interim bill at this point dead on arrival? Do you see any prospect for that down in Washington? It could happen, right sort of. The old saying is whenever Washington finds itself on the edge of a fiscal cliff,

they tend to build more land. UM, so perhaps doing an extension of the six hundred dollar weekly payments maybe through September that because you will have another cliff when the fiscal year begins on October one, Right, you'll have to pass some kind of bill to keep the government from shutting down. So maybe tying it to that. But that's gonna be that's gonna come under intense pressure from UH.

You know a number of fiscal hawks who have all of a sudden return to Washington after two years of hibernation. How does being a fiscal huwk poll in America at the moment, Chris amongst some of these constituencies, you know, I've I've, like I said earlier, I think that that you know, it's going to be one of the great political what ifs on that Heroes package over three trillion dollars from UH that the House Democrats sponsored over and

past over two months ago. I think it's it's it's quite regional, you see, but candidly, the the the Senate Republicans who are most vocal on this are not running for reelection, right, they have staggered terms, so that maybe

answers your question. This is the question, and I want to sort of double down on what John was talking about, this idea of what political benefit is they're going against some sort of big fiscal stimulus at this point, how is the idea of an ongoing enhanced unemployment benefit polling among Republicans? I haven't seen specific polling relative to Republicans.

I mean there is a real belief among Senate Republicans though, that this extension of the six hundred dollars is keeping um is keeping the economy back, meaning that people would rather stay at home and collect the six hundred dollars on top of their state payments as opposed to going back into the workforce and looking for jobs. Chris, what are you going to look for today in the next twenty four hours in Washington? The whole cable media frenzy,

the newspaper frenzy, et cetera. What is Chris Krueger most focused on? Well, I mean it is a bit of a crazed week here. I mean you you have the ongoing funeral of of of the late John Lewis, you have the big tech hearing tomorrow, You obviously have the FED as well. So I don't expect much on Phase four today. The primary negotiators, though, are pretty much the same from Phase three, with the exception of now Mark Meadows, the White House Chief of Staff is sort of a

co head along with the Treasury Secretary. But then it's you know, the the the actors we've seen before, McConnell, Pelosi, Schumer, Um. So you know, at some point I suspect we will have a meeting at the White House, which will probably predictably, you know, go sideways. I think, as you know, you you want to keep those five folks in a room.

I think injecting the president into these talks. You know, we've seen that the last couple of times, and it inevitably, you know, causes a negative tape bomb that also could be a positive, right, That's sort of how the sausage is made here, so we'll see it unfold this. I would say though, that this has a lack of urgency that the previous negotiations had, and I think some of that is because you know, we're not opening limit down every morning anymore. We need the market to do the

hard work. It's depressing. Chris, Thank you, sir, Chris Krueger. Col I'm Washingham Research, Great managing tire writ right now a serious conversation, but we must digress at the top with a Lieutenant Governor of the Empire State Counthy Hokel is a pride of Buffalo, and she knows quite well that nothing really matters except for the movie The Natural.

The Natural was filmed in Buffalo. It was a hugely important emotional vision of old baseball parks, and then Buffalo went on to build the jewel of minor league baseball, pilot Field, which is now where the Toronto Blue Jays will play. Bloomberg Surveillance is of course sent a note to Toronto saying, You've got to be kidding me. Hoco has to throw out the first pitch. Lieutenant Governor, Will you throw out the first pitch for the Toronto Blue Jays? Oh?

If asked, I will serve and I'll get out there start pricing every But I've been known for even single aid teams to stand along the New York States through a practicing if I just don't embarrass my state and my family. So I'm not good at it, but I take it very seriously. I watched videos of other first pitches, and uh, you know, I just don't want to bring any uh. Stop you're being political. You don't want to

do a fauci. Let's leave it at that. Too many you don't want to any other allan, Yeah, you don't want to do a thought. I got it. Look, there's we don't have enough time here when there's so many serious issues. You're gonna get a hundred billion dollars of school aid from the Republican stimulus? Is that enough? What a joke? I mean, seriously, you know when you see see the Republicans now have this crisis in their own states.

I mean a couple of months ago they were saying, and I'm not making this up, Mitch McConnell said, there'll be no blue state ballots. And that's when it was New York and New Jersey and Connecticut. In California, Well, today, because no one followed the playbook that Governor Cuomo handed them on how to manage a pandemic, we have a

crisis in the red states Florida, Arizona, Texas, etcetera. So to think that that's going to be enough money for the rest of the country and New York State in particular, it's paltry. It's embarrassment, and there's no way that schools can open safely if we don't get more assistance from the federal government. Don't even be talking about a trillion dollar plan. That's how much should be going to the

state local governments period for getting everything else. I mean, that's that's the baseline, just for state local in order for us to make up for fourteen billion dollars in lost revenue five billion dollars in additional expenses which continue to climb every day. So so don't you don't embarrass yourselves. Washington, get your act together, and if the center Republicans can't get their unity in their caucus, then turn it over to Chuck schumerk will get the job done, Lieutenant Governor.

A lot of economists agree with you that the states very much need a pretty big fiscal bailout or some sort of fiscal support. There is a question though, about what the states can be doing with respect to luring back businesses once the pandemic is over. Midtown is a ghost town. People are leaving the state, people are leaving the city. What economic plans do you have a are you talking about to try to bring businesses and residents

back at Leasta, you hit right on it. I mean, normally, the state of New York is very generous in terms of incentivizing businesses from Buffalo to Manhattan, and we understand that that's part of our job, is an opportunity for businesses to thrive and create jobs. That's the bottom line,

get people back to work. If we do not get that assistance from the state, from the federal government, how are we going to continue funding the economic development plans that I oversee its chair of the regur money we have to do it. I don't mean to interrupt, but as you well know, there's twelve Republicans upstate in New York who are fighting for their political life. Are Republicans and Democrats in New York State on the same page, or frankly in Arkansas? Are they on the same page

as saying? Do the elites in Washington wake up? I just don't see the calendar immediacy in Washington. Yeah. I don't know what planet they're living on, Tom, I really don't. Have they not been seeing the overcrowding and hospitals and people in other states just searching for the ppe that we had to go through that don't they understand that. What's what's the unemployment rate in Buffalo? Right now? I don't have a clue. What's the unemployment rate in your Buffalo?

I'll tell you state. Why did six percent Buffalo? It's probably closer to and for them to say that they're going to cut unemployment insurance, I'm sorry. A year ago in New York State, we had a four percent unemployment rate. Great success of the CuMo administration. People were working. They're assuming that people want to now stay home. People that are just being lazy and they don't want to get back to work because they can collect six hundred dollars

a week. They can't get back to work because the hotels are not open. There's no jobs for them. They want to get back and then okay, down the through way to the late Great Barbarabie Connabal Great. He wanted fiscal prudence around the federal government. What's the certitude for conservatives that we're gonna pay back all this debt down the road. Our economy will come back and it will come back roaring if we can get the assistance from the federal government to get us through a one hundred

year pandemic. This is not something we asked for on a regular basis, even though we do know that New York State sends about thirty billion more to Washington annually compared to what we get back. And you look at a state like Kentucky that's a taker. We're a giver. So we're not even trying to settle that score. We're just saying, can you help us out. Federal government, like other national governments around the planet, they don't leave the

individual provinces of different countries defend for themselves. Don't do that here. States. We need a federal response, we needed since the beginning, and and heaven help us if you're not figuring out a federal response to getting this this vaccine out there once it's developed. We have to make sure that they're developing that now, make sure it's going to be available for everybody in both the Defense Defense

Production Act. Don't leave it up to every individual company to try and go to the the marketing commercial life that this needs to be a federal government response or else we'll never get our economy. Back to Cathy forty five seconds, forgive me for keeping this one type. If you don't get the A G one, how quickly does the state level austerity begin in New York almost immediately. We are

counting on this. We need that money out to give to our schools so they can have the PP and the disinfecting and and rent additional space or wherever they need to do, just to get our kids back to school. And guess what if our kids don't get back to school, the economy doesn't go back because who's watching the kids when the parents go to work. And this always falls

on the shoulders of women. Senator Gillibrand and I tour the States of the last couple of days, going to cities large and small, talking about a childcare crisis that is going to hold back our recovery and settle dollars going to assist with that. Well, it's going to start hurting almost immediately, Lieutenant Governor, I appreciate your time place come back to Autenant, Governor of New York. That Kathee, it is all rage and of course of govos each and every year there is a theme that becomes so

in Paul. I don't know where E. S g B came in, but it wasn't last year. What happened last year is it reached a massive pre pandemic critical mass and was so stunning as an eighteen year Uh, Davos Watcher, maybe fifteen years excuse me, Davos Watcher, is it was a real conviction to it this time around. I give a shout at the Bank of America, who I did a panel with on E s G Environmental, social and corporate governance. Matthew Winkler is how I go to Davos.

He's the former editor in chief, editor in chief emeritus and but very much working as usual fifteen hour a day for Bloomberg, still penning an essay on E s G. And Matt you say, there's a real persistency to E s G being acknowledged by the street. Is profitable, Tom, It's always good to be with you. Um. Yes, Uh. It's a long term trend, but it's accentuated by COVID nineteen. And what we're seeing right now this year is E

s T is where the profits are. So what that means is, if you like doing the right thing, increasingly is the smartest bet. Why is that evident? Well, if you just looked at the broad market, which is I shares, exchange traded funds, if you look at the ones that are invested in E s G. They're dramatically outperforming the SMP five index. Uh no, lesser light if you will.

Then al Gore recently told a conference held but Bloomberg that, um, it is ever clearer that sustainable technologies are super and better. And so when you look at actually you know the performance of companies, which we can do on the Bloomberg my colleagues Chinpay and I. You know, there are more than three dozen companies generating at least fifty of their revenue from clean energy products or clean technology, and as a group, their sales are going to grow this year

or so. And that's a marked contrast to say the SMP five Energy and Deck, which is the benchmark for fossil fuel. And those companies are going to have residented clients of about this year, and their growth in the next two years it's going to be much less than the s G crowd. Matt, you mentioned L. L. Gore. You mentioned L. Gore. I believe he's a Democrat, something about a hanging chad. Years ago. His e s G

become a Republican theme as well. Well. If you're an investor, you don't presumably care so much about politics or ideology. What you care about is total return. So if you look at the total return, which I think Republicans and Democrats alike are interested in, the total return over five years, two years, one year, you know, pick any period really since two thousand fifteen, and the E. S G company's total return is staggeringly better than the fossil fuel crowd.

So if you want to make money, um, you know and stay rich. Uh, this has been a good trade. Um, and not just you know, this year, but uh, really over a longer term period. So why is that happening. It's because, as Gore said, the growth is in alternative energy. That's where investors increasingly are getting most excited, and that's where the innovation is, whereas in fossil fuel it's basically the same over and over again. That goes back to

the revenue line, the revenue dynamical we've been talking about. Yeah, it's interesting, Matt. I'm wondering have you noticed a difference maybe either in performance of stocks or willingness of companies to embrace E s G post you know, in the

context of this new world we're in here with the pandemic. Well, again, if you go to the Bloomberg and this is something my colleague Shouldntay does all the time, and look at their trajectory of the exchange traded funds that are invested in the s G and the exchange traded funds invested saying fossil fuel, it's dramatic. I mean, the divergence is dramatic.

So what that shows you is slow of funds consistently, robustly is slowing into e s G, whereas fossil fuel is the same old, same old, and it's relatively stable, but there's no growth there. So that's where the excitement is.

And you know, one really dramatic example of this, and you know, I don't want to belabor this point because I have before on the show, is if you look at the gap between a Ramco that's the Saudi Arabian oil company that still is the world's most valuable company went public in December more, you know, right after its I p O was worth more than two trillion dollars. Well, what's happened since then? The gap between a Ramco and Tesla, which I don't need to advertise, has has narrowed by

about five billion dollars. That's that's a really dramatic uh. You know, situation if you like. Now, what's interesting about that is that five billion dollars is a little more than the four hundred and sixty seven billion value of the world's ninth largest company. That would be Berkshire Hathaway, created by Warren Buffett, once the world's richest man. He's the avatar of value investing. He's so far shown no inclination to move towards if so far, but it's really

an indication of the sign of the time. See you see Paul, Matt brings this up. I loaded the boat double leverage on a railco. What a nightmare that's been exactly right. Hey Matt, thanks, uh thanks, thanks so much for joining us. We appreciate it. Matt Winkler, co founder of Bloomberg News and Bloomberg Editor in Chief emeritus. 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 Mean before the podcast. You can always catch us worldwide. I'm Bloomberg Radio