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A cooling labor market, a FED that is waiting in the wings, and David Wesson's special edition from Aspen. This is Bloomberg Wall Street Week. I'm scarlet food this week. MIT Professor Christen Forbes on what the FED has been waiting for.
There had been a leaning before the pandemic and the post pandemic inflation, to wait till you saw inflation, until you saw the weights of the eyes of inflation.
And US Ambassador to Japan Ram and Manual on China's global strategy with.
China is stealing and they bring caught.
We start with the unexpected cooling in the US labor market. The US economy added one hundred and fourteen thousand jobs in July, lower than the estimated one hundred and seventy five thousand jobs, and the unemployment rate also ticked up to four point three percent. This softness is raising questions about the Fed's decision to wait to cut rates. Bloomberg's Michael McKee joins US now. So not only did we get a miss for the July number, we also had
a downward revision to the Jude number as well. What does a breakdown look like in terms of sectors, Well, this.
Was a generally weak report across the board. The worst was information services, which is the tech world, and so that is not completely surprising. Government also hiring sloads significantly there, but there wasn't a particular area that stood out other than we like to look at temporary health services and they lost almost nine thousand jobs in that area, which is sometimes a harbinger of worse things to come as companies cut back on temporary workers before they let go of their own.
Now, speaking of worse things to come, the other thing about the rise and the unemployment rate to four point three percent is that it triggered a recession call. And this has to do with something called a Sam rule.
Claudia Sam, former FED official, designed the rule, and basically it posits that if you get a certain level of unemployment, certain change in the amount of unemployment.
When you get to that level, which is half.
A percent above the low, then it goes up much faster and you're already in recession at that point. And it's been a slow grind up as unemployment has risen. And while we didn't exactly get to the half percent move, it's close enough. And so that's why you're seeing the reaction that we have seen on Wall Street is because everybody's afraid now that this portends really bad news for the overall economy.
So that's Wall Streets reaction. But I know you speak with FED officials, you look at economists notes. What do FED officials think of this latest jobs report?
Well, the first thing they're going to tell you is that we never look at one piece of data and make a decision based on that, And this is one data report.
There'll be another Job's.
Report to CPI reports before we get to the next FED meeting on September eighteenth, and so they're going to want to look at a lot of other different things, but it does appear clear that the economy is slowing. You have to remember that that's what they wanted. They wanted the economy to slow down. The labor market was overheating. One hundred and fourteen thousand jobs isn't a bad number. It's about the replacement level that the FED would be expecting.
It's just that we got there in.
One month rather than over a slow period of time. So they're going to push back on the panic aspect of it in the markets and say we still have a strong economy. GDP has been strong, and we'll wait and see what the rest of the data tell us.
I guess they could also pushback using another data point in today's report, which is the participation rate for prime major Americans actually rose to the highest in two thousand and one, to eighty four percent. So that is a silver lining, isn't it.
It is a silver lining. It's something the FED has been wanting to see.
And really, the unemployment rate went up because a lot more people entered the labor force. People think they can get jobs and so they start looking, and because that number gets larger, the denominator gets larger.
It makes the unemployment rate a little bit bigger.
One reason that even Claudia Sam says the sum rule may not hold this time because normally it's based on the idea of your going into recessions of companies or cutting workers.
But we're not really seeing that.
So that's an interesting point, the fact that the market will bring rates lower on its own, and you could see that with bond's rallying hard after the latest jobs report. Who does it not help out to have just market rates come down, but the Fed's key rates stay where it is.
It's not going to help the con consumer borrowing as much. We know that credit card rates are very sticky, and that's what people notice the most about tight credit is that they're paying more on a monthly basis for interest.
It'll probably be slow to hit the housing market. Housing rates may come down some, but we're around seven percent and have been for a couple of years, and we don't know how low mortgage rates have to go before people feel comfortable borrowing again, but some say four to five percent, so it'll take a while to get there.
And then car sales are the other big interest rate sensitive sector, and again we don't know whether companies will go back to offering incentives, something to drive the purchases.
All right, Bloomer's Michael McKee, thank you so much, our international economics and policy correspondent.
We spent the week in Colorado at the Aspen Economic Strategy Group, where each summer, prominent economists gather with leaders from government and industry to talk about issues that affect markets and investors and ultimate all of us. One of the subjects of discussion this year was that sudden switch to Vice President Kamala Harris as the Democratic nominee for president and what that could mean for the policy alternatives
this November. One of those attending was US Ambassador to Japan Ram Emmanuel, who gave us the view from Asia.
From your friend's side, they very much interested in America selection, as is your foe. But from a different perspective. Take President Biden's leadership that created the Japan Korea Trilateral which is historic. One of China's basic principles is the three of us can never get on the same page big time, then the United States, Japan, and Korea never happened before that twilight and this kind of hub and spoke strategy
that's now becoming more like a lattice work. All of it depends on the indispensable presidence power of the United States and the permanence of that. Your foes have a strategy, which is America's a receding power and don't bet long on them. You got to bet on us. And so people want to know whether there's going to be a foreign policy that counts out. You know, you can't have
alliances without allies. Are they going to be counted? And we're making historic strides, at least in Japan, but I can say in other countries also of among friends, and so their big concern in the election is are we going to stay on this path or is it going to be a radical change to friend and foe where you not being able to tell the difference.
So tell us more about that. I think it's called trilateral minister's meeting you had for ten days. I think with South Korea, no, no.
No, no. I have patients, but not that much patience.
In fact, I have zero patience.
So this weekend was there were four first time ever events. One is the United States in what's the Secretary of State and Defense met with their counterparts and for the first time in seventy years, America is going to update their military presence and for structure in Japan, We're going to go from management to operational command and control, biggest change in seventy years, and bring parts of Indo Pacific
in Honolulu forward to theater. Second, we've been making since Camp Davids President Biden's meeting there, making a lot of progress on the political diplomatic side. For the first time ever, the defense ministers of the three countries met and planned military exercises and strategy and integration.
For the for the next four years.
Third, extended to terms, which is America's nuclear commitment to the security and safety of Japan at a ministerial level had never been so it's raised the level, especially given to China's increase in nuclear capability with what North Korea is doing. And then fourth, the first time ever in agreement with an ally about military industrial co production and code development. And when you take for those principles, the quantitative aggregate is a qualitative significant change and it is
the biggest kind of the last thirty six hours. A lot of news in America, but for the Indo Pacific strategy for what we're trying to do in the sense of building dimatic, political and military alliances. The most significant weekend in American into Pacific presence.
And how durable do you think that is? Because there are a lot of disagreements in this election between the Democracs of Roehunts. The one bipartisan points seems to be a real concern about China. I think that position ourselves.
If I can. I think there's two countries that have bipartisan agreement, one about China and about Japan, but from different perspectives, and I do think.
It's durable.
Japan today, in the last three years, has made changes to five separate seventy year old policies. They've gone from one percent to two percent on GDP. For defense, they'll become the third largest military in the world. They're adopting counter strike capability. They've changed their export capability. They've opened up and stabilized their relationship with Korea. So when you aggregate all those capacities, they're coming up as a full partner.
And then the most important thing, which we sometimes don't fully in my view, appreciate in the Indo Pacific Asian countries, Japan's the most popular country. Seventy years of development, diplomatic
work huge political benefit to the alliance. There we are going as two countries from kind of alliance management to alliance or alliance kind of protection to alliance per UH projection, and Japan can be a significant partner in the region and is a significant partner, and that accrues to America's kind of hur our diplomacy while very good. We come in with a lot of resources and assets. Japan comes in what's dubbed soft power, but it accrues to huge political benefit to the UH alliance.
Do you see a path forward to a world in which we engage with China economically? We don't just isolate them, that's unrealistic given their size, but do not enable them because it feels like the United States is going back and forth.
You know, I nobody would ever look at this and say this is a diplomat. So where deterrence ends and provocation begins, I don't know, and nobody knows. It's more art than it is science. You can have engagement. So here's just a short I thought it was the right strategy when you look at equities where China was better to have them in the tenth than out. What the
mistake was in twenty twelve. Basically, when President She comes to power, we went from they went from thinking of America in the West as strategic competitors to strategic adversaries. We held onto strategic competitors a decade too long. Now we're accelerating realizing that this is different. You can't have a system where somebody's part of it, where intellectual property theft is a norm. It's just too volatile to a system based on trust and law. They're stealing stuff from Google.
That's not a case. They're stealing stuff from ASML. And I'll take one case. ASML makes a SUITAE my conductor laser technology. Tokyo Electron is a big competitor. Nikon's a big competitor. They compete, they out innovate, They don't steal from each other. But China is stealing and they've been caught stealing. You can't have an international system, so can we have. Sure, you can trade, but you can't steal.
You can't cheat, okay, and you can't subsidize your private sector to the point that their whole strategy is to crush the opposition. That's a different economic model, to the point that it is destructive.
That was Ram Emmanuel, US Ambassador to Japan. Coming up, we get a view from the other side of the aisle with Kevin McCarthy, former Speaker of the House.
So if you ask me to run the race, it's all about Pennsylvania.
That's next on Wall Street Week on Bloomberg.
This is Bloomberg Wall Street Week with David Weston from Bloomberg Radio.
This is special edition of Wall Street Week coming from the Aspen Economic Strategy Group meetings in Colorado. Former Speaker of the House Kevin McCarthy was one of those at the meetings and we asked him about what the next president will face, whether it is Donald Trump or Kamala Harris.
We're already facing it. We are paying more an interest than we paid in defense, the proportion of GDP. What dead is We haven't seen this since World War Two, but we were fighting to save the world. Right, What are we doing now? And it's just on a spiral effect that if we don't do something now, the options will be taken away for us to save those programs that we know are so critical for this country.
In your own party, you have somebody like a Glenn Youngkin who has some experience with business he really understands the way a budget works. Do you have hopes that a Glenn Youngkind who's not going to be the vice president of nominee now a contrary to what I think you would have preferred. Is there a voice for a Glenn Youngkin right now in your party?
Yeah?
And you have to remember a vice president is just one position. You pick a team and a cabinet. I think Glenn Youngkin would be perfect a cabinet because now not only does he have business experience, he has government experience as a governor, that's a manager. I think governors make better presidents.
Right.
They can't print more money, but they have to balance a budget, they have to run agencies they didn't create, and they have to work with both sides of the aisle. And what Glenn also did was understand the importance of education and the power of what that changes individual lives. I think Glenn inside would be fabulous, And there's a lot of people out there that I think can add to the ticket to actually make it more powerful on both sides.
You've said that you think Donald Trump is a changed man after that attempt on his life. You've seen him, you've dealt with him, you believe that. Is he a changed man when it comes to economic policy.
You know, there's certain things that he believed long before he ever ran, and some of them are really we're Republican ideas in the turn of the century. You know, he believes in a strong nation. He's always said that, he believes that tariffs not let other countries have their.
Way about him.
Get mad at the way he delivered, but he was one hundred percent right when he went to NATO and said, you got to pay more. You promised all this time, and these other people would invade. He gives America greater strength. The only time Putin never invaded as he was in charge was under Trump's administration. So, I mean, there's certain things he fundamentally believes, but he does get by being
a business person. Now that may set people off differently because he'll say things that seem out of the ballpark for a politician, but it's not for a business person who's negotiating.
Well, what about the other side. I understand you're a Republican, but now have Kamala Harris. Does she have an opportunity to make some sort of a pivot on bidnamics that might make sense towards the center. Do you have any hope of that she does.
But you want to look at history what's interesting, and this race is totally different. The last six weeks of politics in America is something we probably will never see again. A top candidate being convicted, a debate that a sitting president collapses on an assassination attempt you probably haven't seen since the sixties, and the president pulling out. Now the vice president is a part of that ticket, so all
those policy things she's still rapped to. She comes from San Francisco, so she comes from being in the Senate. She was rated as the furthest to the other side. But it's a new day for Democrats when they were about to completely can collapse. But it looks a lot a lot like nineteen eighty eight. Do Caucus becomes the nominee. He's a liberal governor from Massachusetts and picks a moderate Democrat senator from Texas. He's ahead by seventeen points mid
July coming out of their convention. You got George Bush behind being the VP. He picks this young senator from the Midwest that doesn't take off very well. Right, sounds similar, But what happened you saw those policies come out across the Willie horton the week on crime when crime's a big concern to people. Then you saw the moment of Ducaucus in a tank, So the question became are they
prepared for the three am call? Then you got that moment in time in a debate or you still opposed to the death penal even if your wife was raped? And he said yes. So it was out of step where America was. So it really did come down to policies and lo and behold, George Bush had a really big election. I don't know if that happens there now. But you've got a history of Kamala starting very strong in campaigns, but as the campaign goes, she doesn't do
as well. Now this is a short campaign, so maybe advantage to her, but she has a long history of the policies that are kind of out of step when it comes to crime, inflation, and the border, and she had a responsibility for it. So she's going to have to overcome that. Now Trump has a ceiling to where he was before and the last presidential race, Biden won it by forty nine hundred eight team votes. So if you ask me to run the race. It's all about Pennsylvania.
If Trump only kept the states that he won last time when he lost, and he only picked up Pennsylvania and Georgia and won the majority of votes in Maine, that's two seventy he wins. So it's going to be interesting that Kamla It's got the ability to pick her VP candidate after knowing all the cards are held out.
It's an advantage to her.
Where does she go?
Well, that sounds like instead of picking a senator from Texas, she said, pick a governor from Pennsylvania named Shapiro. Is your advice to her?
No, I don't want to give her good advice.
I pick somebody else.
Look, I think Shapiro would be smart, just as I thought if you picked Youngkin. It's like a game of chess. You want to put more states in play. It would have put Virginia in play and it would have been a better play down. But she may look to Arizona thinking she could play out West right, Deny Trump, Arizona, Nevada reshape the debate when it comes to the border.
Mark Kelly being an astronaut, he's a very interesting Hitit go to Tim Walls, a manager I think if she's being a senator, I'd pick a governor, a manager, right and try to get away from what she's already tried to those policies. But look, you're ninety nine days out. The advice i'd give anybody, I would listen to Al Davis, just win, baby, whatever it takes, just win.
That was former House Speaker Kevin McCarthy. Wall Street Week traveled to Colorado this week for the Aspen Economic Strategy Group meetings, and the focus on the FED and where it is in an extraordinary period. This included a pandemic and a series of dramatic rate increases was very much a topic of conversation. MIT Professor of economics Kristin Forbes has studied rate cycles through history and took the opportunity in Aspen to put what we're seeing into a broader context.
There had been a leaning before the pandemic and the post pandemic inflation to wait till you saw inflation, until you saw the weights of the eyes of inflation. And mcalesson has learned need to allow center banks to be preemptive. They need to be able to start raising interest rates ahead of time when they think prices are going to pick up quickly. Related to that, I think an important lesson we've learned is that as economists central bankers, we
focus on inflation. So there's a lot of discussion now on how inflation is coming back. It's heading back to two percent. This has been a remarkably pain free recovery, but it hasn't been paid free. The price level has increased. It's more expensive for consumers to buy what they need to buy to keep their households afloat. And is the economists we forget that this price of a basket of
goods matters to people. Things are more expensive. Is the price level that matters to people, not just the rate of change of prices. So I think we've learned an important lesson that the level of prices does matter. Even if inflation comes back down, the increase in inflation and the interim can be painful.
You're an economist, of course, not a politician, But I wonder what you just said, Well, that might help explain something that I find remarkable. The economy is quite strong in the United States right now, and yet a lot of people don't feel good about it, and we keep saying we inflation is coming down we're getting our control, and it doesn't seem to be registering.
Yeah, I think that's exactly why is that as economists we see inflation coming down heading to two percent, they think everything's fine. If you look at actually where we are in this cycle, it's quite remarkable. We have had remarkable swings where unemployment increase and now it's come back down. We saw GDP growth collapse and now it's come back. So things look good in terms of the finish point.
Inflation is coming down too, but yet in the interim we sell the price level increase and everything just costs more. So even though the endpoint looks good, there's been a lot of pain to get there.
You've said that we should not wait till we see the whites of the eyes of inflation. That means they should be a little faster on the trigger. Is a correlaor that that they should be more flexible and coming back down as well. I mean there's some sense, but once we start moving in one direction, we have to keep going in that direction. We're even talking about that now with cuts. Once they start to keep going, do they have to be a little more flexible on the up and down sides?
So I think another lesson we've learned is that central banks need to be cautious about boxing themselves in ahead of time. There's always there's always surprises. You need to keep your options open to go in both directions, and you need to be able to pivot quickly. I think part of the reason why central banks were slow raising interest rates this time is they had locked themselves into so much forward guidance, locked themselves into asset purchases. It
was slow to pivot when the situation changed. And similar now as we're looking forward, there could be some major changes in economic policy, which might mean the central bank will have to change policy quickly, so they should keep options open going forward.
In law, we say hard cases make bad law. Is there an equivalence in economics?
The change in the FEDS mandate and how it responded was partly a response to the decades of very low inflation, where people were less worried about inflation picking up, and now we're seeing the oppositeere inflation can pick up quite quickly. So as central banks go back and rethink mandates that should be front and centers, we rethink mandates for all different scenarios going forward.
You've done research and analysis about the sort of rate cycles going back quite a way. Was this one different from all the others?
Yeah, great question, which fascinating when you look at this most recent rate cycle. There's some ways this is unique and unprecedented. There's other ways it's just like great cycles from the nineteen eighties and nineteen nineties. We recently wrote a long paper on this for CenTra with a couple co authors at the World Bank, and we described this rate cycle as similar to the parable of the blind men and the elephant. In some ways, it's like nothing
that's come before. In some ways it's a lot like past cycles. But let me give you a concrete example of some ways this is unique that we haven't seen before. One is just the swings in economic activity, the collapse in activity, the collapse in employment, and then also the rebound. We've never seen such a quick rebound in the labor market,
in activity, and in inflation. Another way the cycle has been unique is that central banks, on average across the advanced economies were slow to respond to the pickup in inflation and recovery, but then they responded by being unusually aggressive to make up for being slow. So it's the most synchronized period of rate high we have ever had, at least in the data I've looked at since nineteen seventy.
And it was also followed by central banks keeping rates on hold for longer on average than they ever have at their peaks, so unusually slow start, but then aggressive response hold rates at their peaks for longer. And what's remarkable, despite all those unprecedented characteristics of the cycle, we're now settling about where you settle two and a half to three years after you start hiking rates.
And giving your study of rate cycles, do you have a sense because some people think we're going to end up at a higher level than we were before you call it our star nutur rate or whatever. Other people say, no, we're going to go back down to lower rates. Do you have a view on that?
So, based on my study of historic rate cycles, what it suggests is rates may not go down as low as most people expecting, or say the FEDS dot plot
is predicting. Based on this historical comparison, looks like things are largely normalizing now where you would at this point in a rate cycle, which means rates are probably settling not far off where they're going to settle in rates now about five in a quarter, which means they would not be going all the way down to the sort of three two and a quarter three and a half that is in the FED stop plight right now, given where all the other measures of economic activity are.
That was MIT economics professor Kristin Forbes coming up some thoughts on what Vice President Harris needs to think about as she resets the presidential campaign. From the man who oversaw policy and speech writing for George Herbert Walker Bush is Bob Zelik.
She's got to step.
Out of the shadow inherit some of the benefits, but reintroduce herself to the public.
That's next on Wall Street Week on Bloomberg.
This is Bloomberg Wall Street Week with David Weston from Bloomberg Radio.
This is a special addition to Wall Street Week, coming to you from the Aspen Economic Strategy Group meetings. Kamala Harris is trying to move from Vice president to be elected as president. The last person to do that was George Herbert Walker Bush, and before his service as World Bank President and Deputy Secretary of State, Bob Zelik ran policy and speech writing for the Bush campaign. He shared with US his thoughts on the road ahead for miss Harris.
Vice president is clearly an in the shadow position. So one of the challenges for Bush in eighty eight and now for Vice President Harris is she's got to step out of the shadow inherit some of the benefits, but reintroduce herself to the public. She also has to try to figure out how she's going to define her opponent, and she's got relatively short time to do that. So Bush used his convention speech to very good effect to kind of reintroduce himself, talk about his background, his story,
kind of his mission. Critically, why do you want to be president?
Yeah?
People want to hear.
That to her.
So I think that's one thing to watch. The second is her vice presidential choice. That's always the first opportunity for candidate to take his or her own decision. And third, depending on what happens with the debate, that'll be another defining area because Biden had so much trouble and now you sort of see sort of Trump moving back and forth.
Is the one other thought that I would express on this is that in some ways she has a strength that Biden and George Herbert Walker Bush didn't have, which is that she's got a very enthusiastic base. Bush didn't have that so much on the right, and Biden had a little bit of problem with their progressives. That actually gives her a little room to edge towards the center
and seat of send some messages. It doesn't have to be on big policies, but just even in terms of language on issues that I think could could help her.
So, George Herbert Walker Bush, with whom you served, succeeded. He won the office, but like forty states, but what brought him to that? Was that policy or was that politics? The vice presidential choice of Dan Quaill was not well thought of by some people at the time, but as I recall, one of the important things is how actually he managed to position Michael Ducacis with the Willie horton issues on law and order, with the tank that he was riding around in. So how much of this for
her is going to be? Here are my positions as opposed to not allowing the Donald Trump campaign to characterize her.
I think you need a positive but also what we call a contrast as opposed to sort of a negative side, because again, remember people don't really know who she is or what she stands for. So one of the things that Bush did in September and October. People forget this is that we had sequences of two, three, four or
five days. He'd give a positive speech, he'd gave a contrast speech, the venues would send a message, we'd have the paid advertising, and would stead of hit the theme, including on weaknesses.
So you remember we went to Boston Harbor and sort of put the environmental issue on the map. And so I think part of her challenge will be to find some of those issues where she can try to do the same now. But also, you know, politics.
Is partly political culture just messaging to people.
So Bush, as.
You mentioned with Dacaca's focused on the pledge of the Allegiance because Ducaca said, veto to Bill about pleasure of allegiance, and so you know, it may seem kind of basic, but it was a message about patriotism. If I were a Kamala Harris, I would just hammer on the notion that I'll accept the result of the election, will you, And I just keep hidding that because talking to me, you don't have to go back to the twenty twenty election,
just say this election. And I think the average American understands if this is a fair play, you got to accept the result.
Bob, You've had a very distinguished career, a long career, largely in international economics and trade and international economics. That probably won't be what this elections decided on. But as you look at Donald Trump as one candidate, Kamala Harris is the other, what is important in terms of their policies when it comes to international economics, Well, the two do mix.
I mean, what we discovered is people aren't so keen on in right, and so that's been a real drag for Biden. And so if I were Kamala Harris, one of the things I would do is I'd sort of look, admit, we haven't gotten where we need to be. And by the way, when you're the new person, you can seat of say, look, this didn't work out exactly right, but inflation's coming down, interest rates will probably be coming down.
But then she can hammer Trump on saying, look, if you put on all those extra tariffs, okay, which you're going to increase sort of inflation, you know, frankly, if you try to job beyond the Fed on interest rates, if you try to deport sort of all these people you're going to have a very bad effect on inflation, and markets will react. It's a good example, David of kind of how she needs to take a positive position but then also sort of turn it, I mean, take
another one where obviously she's already set on abortion. That's a very powerful issue for her and that's a part of her base. But at the same time, what she can also do is, you know, hammer Trump on sort of well, look the reason we lostro V Wade, but then Hammerman is waffling. But also if she could sort of say, look, this is my position, but I understand people that have a different view on life. You know, the abortions are very sad issue, and you know, support adoption.
These are little ways that she can be consistent with her base, but also kind of signal look, don't put me into the box, because Trump's going to try to put her in the as you said, you know, radical San Francisco liberal box.
So you mentioned it is really tricky to both have continuity with it. Came before it was George herb at Walker Bush with Reagan. This time it's Kamala Harris with Biden. At the same time, you're saying you're somewhat different. And let me give you a specific example, the border, which they're going to necessarily tar her with because she was assigned to some immigration issues that has not gone so well.
What does she do to not just throw over everything to Joe Biden had said, but also have a break.
Another good example. You know, when you got an issue like that that matters to people, you got to face it direct. Okay, she needs to say, we haven't done everything that we need to.
You know, we're going to have to do better on this.
And then, however, she.
Has a gift because there was a bill from the Senate that Republican Center.
Lank For encouraged.
That's got a lot of good issues.
She should talk about those and say Trump's the one who torpedoed this and so and by the way, you know what did Trump's expensive border wall do? Did that sort of solve the problem? And by the way, if you deport all these people, what's that going to do? On both a humanitarian and an economic sect. So it's a good example acknowledge where you need to do better.
One of the big issues for both parties has been our dealings with China economically and otherwise. But specifically on the economic dealings with China. Does she try to distance herself or really depart from what Donald Trump is saying or are they pretty much in the same lane.
I think the way that I would try to deal with the Chinese issue for her, given her background, is to take a strong position on defense. You talked about Michael Dukakis and the tank. Every presidential candidate has to demons straight that they're up for the number one job, which is the defense of the country. And so interestingly, under both Trump and Biden, the defense modernization did really go where it needed to go.
So she should say this is.
The point she's going to stress and that she's going to focus on modernization. She's going to work with allies where Trump has had that sort of possibility. So I don't think she has to be hostile, but she needs to understand if we're going to be effective in deterrence, we need to be able to have the military. And then, frankly, this is where she should take an issue like AI and look, it's now reversed. Where Biden was the old guy, now Trump's the old guy, so she should own the future.
She should say, look, AI is an important part of our future. The Republican Convention, however, sort of dismissed any of the safety concerns. But hasn't everybody watched what just happened with CrowdStrike.
You know. CrowdStrike was the guy who was supposed to be helping dealing with cybersecurity. So whether it's biological security, whether it's sort of some of the issues.
On the cyber aarya, and so, to be honest, I think she's got an interesting hand to play. But you know, we'll watch watch the convention speech, watch the VP selection, watch the debate, and then if she could take two or three of these issues we're talking about, you know, and just sort of sort of move on them, and frankly, I think it'll drive Trump nuts, and that's the best thing she can do.
Each year we ask those attending the Aspen Economic Strategy Group meetings about what they're reading or what they've read that they recommend this year. Before giving us his recommendation, US Ambassador to Japan Ram Emmanuel told us about the library in his official residence in Tokyo and his efforts to beef it up.
So one day early on in my tenure, the person's a little late, so I actually go over and look at the books and it's tokyo on five dollars a day of kid So it's stuff that you leave, you know, behind at a hotel and it said a better breakfast.
It is a mess. And I love libraries.
I do read on a kindle now, but I love We have three at our home in Chicago. I just love them, and I Amy and I decide that's going to be our project, so I know you find it heart to believe. I raised one hundred and fifty thousand dollars. This is initiated pretty quickly. And there's two things. So we redid about four hundred and fifty to five hundred books, all on the presidential history, great American literature and poetry, great American events. Then we did a section on both
Japanese history, Japanese authors, literature, et cetera. And it's a traditional Americana beautiful library with gold at the top, and it's all walnut wood paneling, if you can kind of put that in your mind's eye. And the books are worthy of the library, and the library is worthy of the books.
Not surprisingly, Ram Emanuel is quite a reader.
One of the.
Books he recommends highly is about The Plight of Males in our Society Today. Of Boys and Men by Richard Reeves.
On kind of sociology. The two things that I do this one of boys and men. I think we have a challenge at home, specifically among boys and men. And I think I always do. One sociological book this year was I Went back Bowling Alone. You know what ye came out two thousand and When you think about where America is, you think about the opiate crisis, you think about the law of community, etc. How one professor looking at data three turns ahead, realizes where America is going?
It kind of is. Jen Dooliac of Arnold Venture spends her life researching and then writing out her results. So she pointed us in the direction of a book about the difficulties in the creative process and how to overcome roadblocks. The War of Art by Stephen Pressfield.
So one of my all time favorites is called The War of Art by Stephen Pressfield. Was a longtime researcher, which meant my job was mostly writing. Still is in many ways, and this book is basically all about how if you are engaged in any kind of creative pursuit, you have to just show up and work every day, have a routine, show up at your desk, be a professional.
Waiting for inspiration to strike is not the way any sort of any professional writer or creative is actually going to have their big ideas or get things done.
As President and COO Blackstone, John Gray spends much of his time dealing with challenging situations, but not half so difficult as those faced by the survivors of the eighteenth century shipwreck told in the book he recommends The Wager, a tale of shipwreck, mutiny and murder.
More recently, I read The Wager, which was about a failed British expedition to chase down some Spanish ships in the seventeen forties, and I'm often interested in these people who face incredible challenge and when they survive and that perseverance. Shackleton was like that as well. You know, in business and investing, oftentimes things go wrong, not as bad as those books, but you learn a little bit and you want to be smarter how to deal with crises and challenges.
That does it.
For this episode of Wall Street Week from Aspen, Colorado, I'm David Weston. This is Bloomberg. See you next week. Back in New York,