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