Surveillance: Small Business With Goldman's Solomon

at one point Goldman Sachs was a small business. Things have changed, and for David Solomon, the history of Goldman Sachs is front and center and also the future as well with Mr Solomon Urani. Thank you Tom, and thank you David for joining me today. You know, we're here outside the Capitol building and you have picketed the lawn with help wanted signs. You know you had said Goldman Sachs had said just weeks ago that more than thirty percent of small businesses didn't even know that they could

survive through this pandemic. What's at stake here, well, small businesses are First of all, thank you for having me. I'm thrilled to be here, you know, out cold with you outside the Capitol on this this gray morning but small businesses are such a vitally important part of our economy, and they're so important in terms of how they employ, take care of families, contribute to the communities that we

all live and operated. And they've been so badly hit, so badly affected by the pandemic, and they need help. And some help has come, but more help is needed. And so one of the things we're trying to do by picketing here on the hill is to let Congress know there are a number of things that small businesses still need help and support on to get to the other side. They can see the light at the end of the tunnel, but they need some help, you know,

to get through the tunnel and get to the other side. Now, a lot of this is about stimulus, and Joe Biden himself has called the current package a down payment. So what is the David Solomon plan? What would you say is needed in terms of the amount needed to save

this economy. So one of the things that we've done over the course of the last few months, given that we have over ten thousand businesses, small businesses that have been through our program over the course of the last descade, as we've gone out we've surveyed them and we've talked to them, and we've created something called ten thousand Small Businesses Voices, which is really an advocacy platform, and we've

asked them, what do you need help with? And if you look at these placards that are on the lawn, they raise a number of issues that the small businesses are saying, Hey, we need help with this, And i'd highlight three of them to you that I think are very very important. The first is they need access to capital. They need capital to bridge them through this challenging period of time, and something like the Restart Act I think

is a good way to get it. That Second, they talk about the need to support the people who work for them, particularly around healthcare, and healthcare costs are just so prohibitive. Often they're not in a position to take care of the healthcare issues that their employees have, and so they need some way to create better incentives to

provide healthcare support for their employees. And Third, because people are working harder given the challenges they face, they need more help with childcare and just basic support so they can be president at work but also make sure that their children are taken care of. You know, while they're working and trying to keep their businesses afloat. So all of this is happening as unemployment still remains very elevated, and it's even worse for Black Americans, even worse for

Hispanic Americans and Asian Americans. What do you think on day one is going to be Joe Biden's toughest task in fixing that gap. Well, the toughest task that the new administration has is continuing to march forward, to make progress on getting the vaccines distributed so we can get to the other side of the virus. There is going to be a lot of discussion about what additional stimulus

is needed. We've raised a bunch of issues here this morning where we're trying to get people focused on things that we think needs to be included in any additional stimulus that's brought forward. But I think the big focus right now is we've got to get people vaccinated. We've got to get to the other side of the virus. Well, a lot of the market had been reacting to this vaccine hope, but the role out has been so slow

so far, and it's done a lot of concerns. How is that impacting your own plans and how is that impacting the plans of your clients. Well, I think there's still a lot of uncertainty, and there's no question that the supply of vaccine is growing. In fact, I'm very encouraged by the amount of vaccine that's out there. But we have to find more flexible, nimble, more efficient ways

to get that vaccine distributed. And I'm hopeful that, in addition to the state actions that are being taken around the country, potentially will allow the private sector to help with plans to get this vaccine distributed. There's plenty of vaccine, we have to create increased speed and efficiency in getting that vaccine to people who are in need, especially vulnerable

people and frontline workers who need the support. Right now, do you think it's moving fast enough that you'll be able to bring Goldman SAX employees back and full by the end of the year. I I certainly would expect that we'll have Golden SAX employees back and full by the end of the year. We will get through this um and I'm really hopeful that over the course of

the next six months we see a real improvement. But they still work to be done, and once we deal with the vaccine and the virus and people feel safe. We're still going to have to deal with the economic consequence of the shutdowns and the impact on our economy that this pandemic has had, and that I think will be a bumpier a longer period of time before we get to the next six months. We have to get past the next three weeks and tonight with Georgia going on.

I know everyone would love your opinion here on if the Democrats were to win the seats, what kind of impact would that have on the markets. Well, I'm watching the election as anybody everybody is, and you know, we'll see over whether it's tonight or it's over the next couple of days, what the what the result is um you know, depending on the result, that obviously can have

an impact on policy policy effects markets. I think the markets think that this this election at the moment is still very uncertain, very close, too close to call, and so like you, we'll watch and we'll see the outcome, and then we'll listen to the policy responses. The policy responses will have an impact on markets at that point in time. It's a lot of the concerns simply around taxes and the taxation of corporations on well the individuals or what is really the concern? I think I think

people like people like to know the answer. The answer is uncertain at the moment. I'm sure once we know the answer will move forward. Markets will be Markets will be fine. That doesn't mean they'll go up the way they've gone up the last few months, but markets will be fine. We'll move forward. I think the big focus has to be on getting the economy back in shape, getting people employed, helping small businesses, really dealing with the consequence an impact of the pandemic, not so much the

short term gyrations of the market. And on top of the Georgia elections, we do have this issue of certifying the Biden win. And you are one of two almost two hundred executives that had signed a letter urging Congress to do so. What's at risk here amid all these uncertainties. Well, I think at this point in time, it's important for us to get focused on the tasks that are at hand. We have to get through the pandemic, we have to help those in need in the economy. We've got to

get the economy running again. And so I congratulated the president elect back in November when it was clear to me that he was the president elect and we were going to go move forward. What's going on here the next couple of days, I think is a distraction. I know what will happen on the twentie of January, and we will move forward, and that's what's important at this point. Do you have the twentieth of January, then, in the first days of Biden's and in presidency, what do you

expect from him? What do you want to see beyond the vaccine I'd like to see. I'd like to see some leadership around helping us all move forward around the pandemic, helping us move forward in terms of economically supporting those that need help because of the pandemic, particularly small businesses. I'd like to see a consistent message as to what we all need to do to come together to solve

these problems. This is a time for us to come together as a country to get past the pandemic and move forward and help people that have been really adversely affected by this this horrible twelve months that we've had. You know, I think there's a lot of been a lot of concerns for many months about why the stock market has been rallying so much while we have so many of these underlying concerns. Do you have any concerns about the fragility of the market at these current levels,

given that we still have so much wrong? Well, I think that there's no question that the monetary policy and fiscal policy actions have definitely been very, very supportive of asset prices, and so obviously equity markets benefit from that. I said a few weeks ago, and I stand by it now. It's hard to justify some of the valuations I see in the market, particularly around very very growthy companies,

around some of the I p O s that have come. Uh. We've seen other periods of ebulence and markets before they rebalance over time, and my expectation is some of the excess we've seen maybe over the course of the last few months, will rebalance in the coming months. But I'm much more focused on the medium or long term. I don't get too upset about short term market generations. I do gonna get your opinion here on something else that's going on in the market that a lot of other

people are concerned about. You know, we saw this big move by the New York Stock exchange also to potentially delist some Chinese companies and then reverse that course. You know, you're somebody who has a lot of business abroad, huge growth areya in China. I'm wondering what all these uncertainties mean for you in terms of China reopening its financial system. Well, the first the first stage of the first phase of the trade agreement called for broader access for financial firms

to markets in China, and that's being executed. You know, at the moment, we'll see if it carries through and executes all the way. But the relationship between the US and China right now, the by latter relationship is incredibly complex, and I think it's one of the big challenges that

the Biden administration has going forward. The foreign policy strategy that we've really executed on with China over the last forty years, and that allowing them to participate with all the other economies around the world, including the S and thinking they'll move in our direction in terms of how they operate. That does not seem to have worked. Uh, And we need to ensure as we go forward that

the playing field is level and fair and appropriate. And I think they're gonna be big challenges to that as we move forward, But that's something that the administration will have to take on. But there's a lot of uncertainty around that, and I think that's something that we're going to be talking about and living with and thinking about for a number of years as we move forward to the future. Right, That's what that was gonna be. My other question, how much of an overhang do you think

that uncertainty will be? I mean, Biden has all these other issues as we discussed to take care of first, how how quickly do you think the trade relationship with China will get figured out? I think this is a complicated issue that's going to take time to sort out, but certainly I know will be a big focus of the Biden administration, as it was with the Trump administration.

I think it'll be important for us to continue to focus on improving that relationship and making progress to level the plane for field and assure that that that partnership. We have to work with China as a trade partner. We have to work with China sometimes as a competitor. We have to work with China sometimes as an adversary. But we have to balance all that and do what's

right for the US to move forward. So I want to turn to your business for a second, because in the most recent quarter you had a standout quarter, right it was returns of equity of more than sevent uh You know, people look into one and I think everyone wants to know what is the biggest growth driver for you this year? Well, we um we have a number of businesses I think, as you know and you and

I have talked before. We obviously have our big corporate investment bank with our business that serves governments, institutions, corporate clients broadly, that's investment, banking, sales and trading UH and there are clients given the uncertainty in the world, have been very very active and we expect that activity to continue.

We also have a large asset management business. We're very very significant asset manager globally around the world in almost all products broadly, and we think there's a lot of opportunity for us to continue to help our clients in the asset management business and that's an area of growth

for us and something that we've been focused on. In addition, we have a consumer wealth business that we're expanding, a digital consumer business that we're trying to grow so that we can serve a broader array of clients with respect to all their financial leads digitally, and we're very focused

on the growth of that business. So those are three big platforms broadly, and we see growth opportunities and all three of them as we move forward, and we're gonna work hard to help our clients manage their financial needs because that's that's a big part of what we do on a day to day basis. You know, even after a pandemic, you still have all this excess capital. What are you gonna do with all of that. Well, we're making investments in our business, as we just discussed, and

that obviously requires capital. Um We have not been able to return capital to shareholders during the course of this year because we took that action with a number of the other large banks back in the spring because we didn't think it's appropriate. We probably are in a position to start that at some point one and so we will consider, uh, you know, we will consider both investments and return of capital as appropriate as we've forward. Also

be watching for deals. Thank you so much David for joining us in a tone best thank you so much with the leader of Goldman Sex and again extraordinary year for Goldman Sex. You wonder what two one will bring James everything, because with everything standard, he's given us wonderful perspective across assets as well. James, how have you already rewritten your two thousand twenty one outlook morning, Tom? Thankfully

I haven't had to just yet. Um, it was obviously a very strong market consensus coming into this year that we were going to see really a very happy market environment, with everything risk facing and cyclical performing extremely well, and possibly a steady but low volatility, and in no way concerning rising in treasury yields and steepening of the curve the dollar. I think everybody wants to be selling the dollar. There are inje of views as to how far that

will move. You mentioned City. I think that they're up there with one of the bigger moves that they're forecasting. But that's all part of the saint market environment of risk on. And then yesterday happened, and and already I can I can imagine that some people might be sweating a little about the one cause, but we've been cautious and defensive and circumspect about the economic how look, certainly for the first half of the year, so nothing that

happened yesterday has changed James. We just hit on Russ coster Rich of black Rock, who's taken a massive victory lap on a on A two thousand twenty where his portfolio was up plus. You know, really extraordinary when you look at everybody's returns mixed in. Mr Costrich mentioned a Barbell strategy, and I would compare that to a diversified strategy. Discuss how you're approaching that. Are we diversified in two thousand twenty one or do we make bets within an

equity Barbell strategy. Sometimes diversification seems to be seen as a dirty word. People make ex post comparisons against the best performing asset or asset class and say, well, if you didn't achieve that return, then then what you've achieved

is not not acceptable. The reality is that long term performance is achieved not by being top top percentile one year and bottom percentile the next, but by sticking around the middle of the pack um and chipping away at those returns over a long period, and diversification is a way of achieving that. Now, in the current market environment, diversification is difficult because we have very slim number of themes driving markets and a high degree of of correlation

across assets in relation to those macro themes. But that doesn't mean that there aren't diversification benefits and there aren't ways of diversifying side. Still highly recommend that, you know, the vast majority of investors should be diversifying wherever possible across assets, and that includes you know, things like precious metals, and if you're that way inclined, potentially even things like cryptocurrency that I have to say, I am skeptical on

that front. Wait, hold on a second. We're not going to let you go mentioning bitcoin just sort of on the side here as a potential alternative. Are you seriously considering this going forward if there is more stability and say bitcoin, No, not really, because I still don't see the use case as being convincing in the slightest. You know, one of the big advantages apparently of bitcoin is that it has limited supply, and that's true, but cryptocurrencies do

not have limited supply. So given that the blockchain is pretty open source, what is really to prevent an alternative to bitcoin appearing and having another twenty one million coins available? There is nothing really to prevent that, given that you can't pay your taxes in bitcoin, and it's volatility relative to the kinds of fear currency that you do pay your taxes in is incredible. It really isn't a store of value that can be used on a day to

day basis at the moment. Anyway, I think the case for Bitcoin today, and the one that seems to be driving the price in dramatic fashion, it is merely that thea currency is being played with by central banks to an extreme that we really haven't seen in the Western world. And therefore the chances of fear currency across the board losing its value, not relative to one another, but all of them, is meaningful and people are saying, well, what can I invest in that doesn't involve me being denominated

in fear currency? And so Bitcoin, you know, it does satisfy I think that requirement, but without a use case, I still struggle to believe that that is a long term investment that I believe truly has value. I've got to say, I haven't heard a lot of people talk about how you can't pay taxes in bitcoin and how this is a potential detraction for the crypto acid. I will say yesterday's sell off was sort of heralded as some as bringing risk back to the market. What did

you make of it? Yeah, it was a funny one, really, wasn't it. I Mean there are a number of again expost rationalizations as to why I guess my on a daily basis, Obviously we have no idea. Excuse me, we have no idea really what drives markets. But I would just look at the preponderance of things which are going on macro, political, technical, in financial markets and inequity markets in particular, and say that we were really at some extremes in terms of what was implicitly being discanted or

priced or expected by markets. They really were managing to see the best in everything um and that includes some you know, some well known tech companies which have got astronomical valuations, but some not very well known tech companies which have got astronomical valuations as well. And so the combination of these things I think meant that we had a market which was particularly fragile, and I still think

it is particularly fragile. I don't think it's going to take much in terms of disappointment to see some further froth coming out of equities James, the gloom crew is out in force. You're not part of that crew. Can you see a bear market coming? I mean all the fundamentally, all the conditions really have been there for a bear market for quite some time, because in spite of what we've seen, equities have managed to maintain a complete disconnect

from the real world. And all the people are doing is trying to expost justify that by saying, well, the equity market has never been the real economy. But that's not really true. Over long periods of time, there is absolutely a link between economic activity UM and company revenues.

There has to be. That's inevitable UM. So it's not a question of you know, the conditions being there today necessarily, because that's looking for triggers, and we've always said that triggers are difficult to identify until you see them in the rear view mirror. For me, it's about identifying where there are risks and fragilities, and I think there are so many of those that we don't have long enough to cover them all. Really, James Afi, thank you so much.

Just a lot of elveryn in standard investment senior investment manager. Right now, the gentleman has given us the greatest leadership during this pandemic. Peter ots of conversations of February and March at Baylor College, and of course he has received the vaccine. No shark there, Peter ote Is. To go to the directness of it, What was it like the jab in the arm? That was? It was fine? Tom, Thanks for asking. You know, it was uh that evening.

I had some arm soreness and somebody aches, maybe even a little bit of low grade fever um the next morning, a little achy by mid morning the next day. Totally fine. So no worse than any other adult vaccination, no worse than mastion gricks. Like in the cable TV business, Peter Hotez, and you've been everywhere on cable TV informing America. It's about the cable of the last mile. We're at the

last mile now on vaccines. We're trying to get vaccines worldwide to people, and we're not doing very well at it. Are you surprised? Yeah, I'm actually profoundly disappointed Tom. It we're now starting to realize the reality that there is no national strategy in the United States to vaccinate the US population. You know, everything we've heard about with operation

work speed around the logistics. What they were really talking about was the logistics of getting boxes onto the ups and FedEx trucks and FedEx planes and and ensuring that there was no violation of the freezer chain, and but that there was no plan after that to vaccinate the American people. I remember Alan Meltzer, where the freezer in the corner in the fifties, Peter Hotez, we got from Sock to Sabin, and now we've got to get out

to Hotez and your low cost vaccine. Why could we do this with other things and we can't do it with COVID nineteen. You know, this has been the story of We've come up small every time in terms of our public health response and an absence of a national strategy. We muffed on the diagnostic testing. We never did hold of virus genomic sequencing at the level that we needed

to like to have in the UK or Australia. And this is just more of the same assist insistence that the States have to be in the lead when we know they don't have the epidemiology and scientific horsepower to know how to lead this and we need the intervention of the federal government, and now we've got to vaccinate tom The estimates are we want to vaccinate two d forty million Americans, three quarters of the US population to

interrupt transmission by stay September one. That's one to one point five million Americans every day from now until September one. So far, we've vaccinated about four millions. So we need to step up. This is our last chance, really, because you know, the US government has backed us into a corner without any national containment strategy. They've now said, we've got to vaccinate our way out of this, and that's what we have to do. We have to find a way to stop coming up small and and and get

this done. Doctor, who does can we quantify some of what you're talking about in terms of when the pandemic will, for all intents and purposes be over based on the vaccination schedule that you see versus what it could have been over in the United States had there been a plan that you think would have been more adequate. Well, you know, I think right now what we need to focus on is getting the US population vaccinated by the summer.

That's the only way we're going to interrupt virus trans mission. And that's a really high bar. You know, again, three quarters of the US population. That's that's our estimate with a group of city University of New York, that's two hundred and forty million Americans. Let me give you an example of New York City. Let's say the metro area is eighteen million people. That's a roughly twelve million New Yorkers that we have to vaccinate by the summer. That's uh,

what is that's two million vaccinations every month. That's five hundred thousand per week. We're not going to get there, you know, with people calling up Dwayne Reid and write aid in Sam's Club and saying, do you have vaccination vaccine for my mom and dad? Or the hospital change. We're going to have to open up City fielding Yankee Stadium and create a high throughput mechanism for making this happen.

And it's just shocking that there seems to be this lack of situational awareness across the country that this is what we need to do. Lisa, do you see how Hotess does a math there? That's why he's Peter Hotests and we're not. He's pounded through the math down to per hour vaccinations. We talk about the math of the

dosing of some of these vaccines. Dr Hotels, There's been some discussion not only just about the distribution mechanism that you're talking about, but also about the supplies, whether we have enough to get two rounds of vaccinations to that critical mass of population, with some proposals now saying reduce the dosing and it will be just as effective. What's your take on that. My take is the evidence space

is not there to support that. The Phase three trials were done with a very deliberate dose and a very delifferent schedule. That's what the company CEOs have said. This, at least a visor ceo. This is what Dr Fauci has said. We know what works, and anytime you monkey with either dose or schedule, you're introducing an enormous amount of risk to give vaccine that won't work as well.

So all you'll do by that is take a crummy vaccination infrastructure and instead of giving delivering a good vaccine and reliable vaccine, you'll introduce one that is less than optimal. It makes no sense. So we knew that the m R and A technology is as still image or it's not really robust enough to do the whole job. That's why the whole plan for Operation Warp Speed was to bring in the Adamo virus vaccines or or their particle vaccines.

Are are vaccine and that's what we need to focus on, getting an additional vaccines, not turning a good vaccine into a mediocre one. Dr. Hote is just to put a bow on everything that you said that is so profound. How much of the slowdown and distribution of vaccines is due to a lack of a federal plan and how much is due to a supply issue of the vaccines

and how quickly we can get them online. Well, clearly there's no federal plan and you're never going to get there unless you have that roadmap, unless you have an over our arching infrastructure. So we have to fix the infrastructure. That's absolutely paramount. There are going to be supply chain issues. Look, they're gonna be lots of bumps in this road. We

also have to have a communication strategy. But right now, to me, it's less about the dosing and the supply chain than it is not having the infrastructure to vaccinate lots of people. Feuterre Hotel's amount of time, But I've got to ask about the shock of lining them up

at Yankee Stadium. You want us to get in line at Yankee Stadium will affects that at the state level of the city level, or is that at the federal level, And you have to do it safely, and you have to have medical personnel there in case there's a severe allergic reaction. It's gonna be It's doable, but it's complicated, and uh, right now, I don't know who. I don't know where the leadership comes in. Clearly we're gonna need

federal support. They're not the dollars there, I don't think at the local and state level to make that happen. So there's got to be an appropriation from Congress to help with that, and a lot of the logistics are probably going to have to come from the state. Maybe bringing the National Guard would be helpful, but we're going to have to provide some uh, you know, reinforce homeland

security a little bit. Make people feel comfortable knowing that they're taking care of you know, people are frantic now calling pharmacies and doctors saying how do I get my mom and dad vaccinated and my brother and sister and the line's busy or it's it's really it's beyond freshmanting. I gotta leave it there. Dr hote Us, thank you for showing us your vaccination. We greatly appreciate it. With

Baylor College of Medicine, this is a joy. Tina Forda is one of the clearest thinkers we have on synthesizing the moment, and I love her word here. I never can pronounce it correctly, but I'll go there. Fibrial f E b R I L E. It's almost a medical concoction around the pandemic and those horrific fevers people get with the pandemic, and yet it's our political fever of

the moment. In Tina, within your research, note what I love that you do as you focus on the Democratic Party experiment, where is the middle ground of the Democratic Party?

As we staggered these two votes in Georgia. Well, if we're talking about the policy agenda, I mean, I actually think even if Democrats pull off a miracle um in the Georgia Senate race today, UM Joe Biden is going to be a weaker president than certainly would like to be, and that his numbers suggest when it comes to the agenda, this might be a relief for investors in terms of you know, um kind of raising taxes or more progressive elements of the agenda, because even if they have that

tiny Senate majority, um, it's not going to be of the magnitude needed to do the more dramatic stuff. If it is a more conservative America over the last thirty forty fifty years, is the Democratic Party adjusted to it so they can commit policy. These are very highly charged terms in in the US context. Remember, you know, I'm an American has been living in Europe for twenty years, which I realized it makes me suspicious in some way.

I think the kinds of policies that are on the so called more progressive agenda, like healthcare, like um, you know, family leave and a stronger social contract would help the US. For example, whether the pandemic and what we're seeing played out in Georgia in a microcosm, is a lot of why we're having such a difficult time as a nation fighting this pandemic. It's low trust, its lack of legitimacy, it's polarization over the kinds of policies that, frankly, Tom

are are not in dispute in the rest of the world. Tina, how much does the certification of the election outcome of the electoral College vote tomorrow in Washington, d C. And some of the questions circulating around that, how much does the question mark around that challenge the democratic nature of this country in a way that we really haven't seen before. I think the answer is twofold. A lot of my investor clients are are are asking me this question. You know,

how important is it? Well, from the point of view of the erosion of democratic norms, it's really meaningful and um, However, it won't overturn the final result. What it adds to is the fact that forty percent of Republicans believe that Biden was not legitimately elected, even though every one of the Trump campaign's fifty legal challenges was overturned. This means that misinformation and disinformation works, um, and it does have

have an impact on policy. Can you give us a sense of how this could change something specific about policy going forward, especially given the fact that social media intervention probably is happing to go away anytime soon. Uh No,

it's not so. What it means, for example, is that vaccine rollout efforts are are clouded and compromised by this sense that they might be part of a liberal agenda, a liberal progressive agenda, right, that people don't believe that the state has the authority to do this, and we saw, you know, so what's the impact on the SMP. It's indirect, but we saw that yesterday UM equities softened on on the back of I rocketing numbers, and so there is

an interplay with a concrete impact on markets. Tina, I've got to rip up the script and it has to be about Mr mccrawl. I am absolutely fascinated by France with vaccines. If I think five hundred or six hundred vaccines, I can't remember the details, but to be Mr McCary is an incredibly key player of a tumultuous two thousand twenty one. Does he have a strategy, Well, he absolutely

does have a strategy. At the moment, he's trying to balance his own kind of lunatic fringe UM the National Front having been at a minor level anti vax for for a long time, and the French public is also strikingly one of the most of of developed world countries populations that are most vaccine hesitants. Now, ultimately, I suspect you'll see it in higher numbers also in the US. But he's got big problems. He also has uh some regional elections this year to to contend with, and we're

about to start the European election cycle. It's Germany this year, France not till till after that. But he's fighting for his political life, and he's borrowing a few pages out of the far right hand book. I mean, a bit a bit distant for America, but just absolutely extraordinary. And I've heard this consistently, the fight for political life. Tina Fordham, thank you so much. Avaner's had a global political strategy.

We continue, of course, with Eurasia's top risks to one and Thomas story that of course has captured both of our imaginations. The New York Stock Exchange reversing plans to delist three of the largest state owned Chinese telecom companies. That's backtracking on the decision just four days after it's unveiling. The measure also threatens to tescalate tensions between Washington and Beijing, falling combiance with the Trump administration executive order. The reasons

for this reversal at the moment remain unclearable. Joining his as Michael Herson. He's your AGA Group practice head for China and Northeast Asia. Michael, thank you for joining us. And before we get to the top risks and how that plays out with the U S and China, what's

exactly happening in the New York Stock Exchange? Well, I don't know the full story behind the scenes, but I think frankly, what we're seeing here is the inter agency turf fight within the Trump administration as to how this executive order is going to be implemented, and the guidance has been unclear, and so what we saw from the New York Stock Exchanges first a assumption that this is going to be sweeping and that they would be forced

to delist these companies, and then with further guidance from Treasury, which has been somewhat on the back foot in this whole process, they have drawn the conclusion that, in fact, no, they don't have to go that far. So I think that's what we're seeing is this slow guidance coming out as first the hardliners in the administration had pushed this move, and now Treasury has had the opportunity need to try

to limit the full extent of market disruption. What does that mean, Michael, For how the Biden administration will will deal with China, well, we'll have to see how the Biden team works with measures like this. I don't think that they're going to be particular fans of this executive order, partly because of how messy the processes, where you've got the Department of Defense deciding which companies should be banned from essentially US financial markets, rather than the Treasury Department.

But I don't think that this particular issue is going to be important enough for them to reverse it quickly. So I think we'll see this basically held in, you know, kind of in status quo, at least for the first several months of the Biden administration, while they wrap it into broader um, you know, broader review China strategy. Michael thom Keaton, New York, Good morning. I read an entirety the November twelfth executive Order by the President of the

United States this morning. I read the three documents by the Treasury Department as well. This is the most stunning thing I've seen in my present view of investment or my reading of the history of the New York Stock Exchange going back at least to three if not two twenty eight years is let's cut to the chase. The President did an executive order that looks like it was written, say by Navarro or someone else. I don't want to speculate on that, and they got crushed last night by

Secretary Minution. Is that accurate? I think that's fairly accurate. Tom. This executive order was rushed out. It's the type of thing that usually would have been from the get go. Yeah. But Michael, look, I don't mean to interrupt it. Come on, it's thirty paragraphs. It was not rushed out. It was it was chiseled out by President Trump and his anti China advisors. That's a fact everybody can agree on. Is this gonna end with President Biden? Or do we consider

do we continue these ad hoc procedures with President Biden? Oh? No, Tom, I mean it's going to be completely different under Biden. You this is the whole process of this executive order is unprecedented. Thank you. You know clearly this in any normal I'd say, in any typical administration, this would have come out with full guidance from Treasury. They were passive in this process. And as you said, the hardliners in the administration pushed this out with huge questions as to

how this, this novel executive order should be interpreted. And so what we've seen more recently is a bit of a return to normalcy in the sense that the agency that's actually executing this Treasury has had to worry about market disruption and fill in the details to Biden administration will be much more predictable and conventional in this. So your your raisier group top risks. Then how would you

suspect that China will respond to this? The language speaks of the Communist party they've got I don't have a language in front of me, folks, but it's basedly military industrial complex. It reads like a Dick tod out of the nineteen fifties, the November twelfth Executive Order. How would you expect Beijing to respond to such language? Do they just wait for Biden? Yes, they're going to wait for Biden,

and frankly, you know they can stomach. I think a lot of these ideological attacks so long as the practical impact for China is limited, And let's be honest, this executive order is not really going to deter Chinese military linked companies from obtaining financing They've got plenty of financing available from China's state owned banking system and from other

sources of finance. So with symbolic moves like this, you know, Beijing is willing to stomach some of this, especially, as you said, as they wait for Biden to come in and try to try to re establish some kind of stability for the relationship. Michael, what will stability look like? And it was actually a surprise to see a lot of these, you know, Chinese companies on the U S

stock exchanges in the first place. Is it going to be a deterents you know, will Chinese companies just be less present in the US de facto, I think that you know, the writing to some extent is on the wall here. Biden is not necessarily I mean, we don't think he's going to take as directly a confrontational approach with the U S and China excuse me, towards China. But the reason we included this as a top risk is that the broader underlying issues driving US China tensions

are still there. This is a very competitive relationship, it's got an increasingly ideological tinge, and none of this is going to change. So I think we will see growing tensions, increase tensions spilling into financial markets, but it's not going to be because the Biden administration is throwing out executive orders. It will be more concerns about governance issues, about investors putting pressure on companies over for example, treatment of the weakers.

It's going to be those kinds of I think deeper um concerns than it's going to be um, you know, kind of bomb throwing so to speak, coming from Biden directly. Michael Hurston, thank you so much, A hugely valuable brief on news made overnight. Is a Treasury Department really walks back that executive order of November twelve, Mr Hurston, of course, with you raise your group. 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