This is Bloomberg Wall Street Week. I mean may not have an overall recession, We're having a rolling recession to kind of roll looks pretty strongly it is when it comes to jobs. The financial stories that shape our world. Three major regional bank failures send shockwaves through the banking system. We're all trying to figure out what to make of generative AI through the eyes of the most influential voices.
Welcome down, Doctor Paul Krugman, Ryan moynihan, a Bank of America, Zebra Lair of the Paulson Institute, well then Hubbard of the Columbia Business School.
Bloomberg Wall Street Week with David Weston from Bloomberg Radio.
Moving forward? Or are we on wars in Ukraine and Israel, on climate, on college campuses, and on our fight with inflation? This is Bloomberg Wall Street Week. I'm David Weston this week, Rick Reader of Blackrock on where we're headed in twenty twenty four.
I really think the US economy doesn't go into recession except for pandemic financial crisis unless there's some big exage in as.
Sean former IBM had Sam Palmersano on efforts to keep tech innovation on the rails.
The issue with AI is going to be responsible use.
And Glenn August of Okill Advisors on what comes next in distressed investing.
The extraordinary thing that we're facing is a.
Trillion plus dollars of debt that's coming due over the nextly four years.
It was hard for Global Wall Street to tell this week whether we were really making progress on issues that have lingered through the years and on some of more recent vintage climate certainly has been an agenda at least to talk about for a long time. This week, the COP twenty eighth summit wrapped up in the UAE, with the man who led it declaring victory that we'll have to wait to see whether actions live up to all
those words. The war in Ukraine continues, with President Olenski bringing his message to Washington that he needs more help, though once again there was more encouraging talk than there was action from Congress. It was a very powerful leading presidents. It's being made so clear how we needs to tell. But if he gets then no, he can win this war.
We passed the two month mark in Israel's war with Amast and pressure mounted to curtail Israeli operations in Gaza, while college presidents back in the United States face the spillover on their campuses of issues triggered by the Middle East, leading to the University of Pennsylvania losing its president. There is a real justification for the penn president stepping down, and I believe the other two should come under the
exact same scrupin. The US economy kept humming along with inflation continuing to slow, but that two percent target is still evasive.
We are seeing inflation slowing and it's consistent with what the FAED it expects.
The last mile of the inflation journey is often the most difficult.
And then on Wednesday, the Federal Reserve once again stood pat on rates but made it clear it pretty much is done with rate hikes and is at least starting to talk about some cuts. My question of when will it become appropriate to.
Begin dialing back the amount of policy restraint in place that begins to come into view and is clearly a discush topic of discussion now in the world and also a discussion for US at our meeting today.
And it was that news out of the FED that drove the markets for the week, with the S and P five hundred jumping even as the FED share was speaking and adding ultimately two point five percent for the week overall to end up at forty seven nineteen. That is way above the median number for our Bloomberg ls. They projected that for the end of this year, and is more than two hundred points above where they think
we'll end up next year. The NASDAK closed on Friday at an all time high after adding two point eighty five percent, while the yield on the tenure dropped nearly thirty two basis points to end the week under four percent at three point nine to one. To take us through what we've just seen, we welcome now back Barbara reinhardtch she's Voya Investment Management CIO and multi Asset Strategy and Solutions. So Barbara, thanks for being back with this is great to ahead.
Thank you.
So what did we see? I don't know if the chi fitcher expected that kind of reaction, he sure got it. Did the markets overreact? Well?
I think you always have to put it into context. So for just about the past seven weeks, the markets have been starting to price in much better inflation data. Just remember at the end of the third quarter in September bond markets were getting very nervous. Yields were climbing close to five percent, and there was some concern that the Fed was still going to be increasing interest rates.
But I think with the.
Slowing that you've seen in the economy and the slowing that you've seen in the employment data, and the good progress on inflation, the Fed was really able to bring the message home to the markets this year. It may indeed be a bit ahead of what the Fed had wanted. You saw John Williams today from the New York Fed saying, everyone, just a moment, holds your horses. But we do think that the progress is made. Inflation is real, and we do see the economy slowing.
Well looking into next year because it's time not start thing next year. Have they steered that difficult course between recession on the one hand and continued inflation on the other Have they managed that? Do you think? We think so a voya.
We have a number of inflation probability indicators and models that we'd like to look at, and we're forecasting less than a thirty percent chance of a recession in twenty twenty four. In fact, if the data continues on this road, that it's on. We think it's probably even likely that you wouldn't see a recession much before twenty twenty five.
Wow, So what does that say to the investor going into twenty twenty four? I mean, what is different now than it was six months ago?
For example, Well, let's put some things in context, David. Over the past two years, the S and P five hundred has made very little headway. While stocks are up almost twenty percent this year, they were down almost twenty percent last year. So since December of twenty twenty one, you've basically been flat on the equity market, which is very unusual. We do see earnings able to climb about ten percent over the course of twenty twenty four, and
if bond yields continue you to fall modestly. You know, if you can get rates down to about three and a half percent, you might be able to get a little bit of multiple expansion that should give you ten to twelve percent in equities over the course of twenty twenty four. I would say it will not be smooth, and there will be bumps along the way, but there's reasons to be optimistic.
Well, that's the case for equities. If I'm trying to decide that sixty forty split between equities and bonds going into twenty twenty four, which do you think you tilt more towards the bonds, because bonds are looking more attractive than they did, certainly in recent years.
Over the very short term, I would say this, over the past seven weeks, most people have really started to pile into the equity market. Most of our sentiment indicators that we look at in terms of short term temperature of the markets are looking quite extended at this point. You're susceptible to any type of garden variety pullback at this point, just like we had in the summer there
was a ten percent peach atrough decline. But I would say the reason that bonds have really yields at this point, you're about one point seven percent on a real ten year treasure. That is great news to acid allo cators and investors alike. It means that you're getting a return on bonds in excessive inflation. It's the first time I could tell you we've had positive real yields sustainably since
the global financial crisis. So it's a great time for investors to be looking at the actual value and the material value that's in the fixed income markets right now.
Let's say we have a rising tide which are lifting most of the boats, and I think it's fair to say, as you look at twenty twenty four, where do you think some boats might get more of a lift and some less.
Well, it's interesting, David, So when you think about the Federal Reserve cutting interest rates, you immediately go to some really heavy cyclical parts of the market that should do very well. The US small capst but on a tear since the Federal Reserve started to say that they were going to be potentially not raising interest rates and even nudging them down. But there are some other parts of the market that should have been doing better but they're not.
So something like the emerging markets, you would expect them to do very well when the Fed is taking their boot off the neck of the markets. They have lagged behind significantly, in part because while they're leveraged to the global interest rates cycle, their underlying fundamentals are not particularly strong at this time. So I think you had to be careful when you're talking about the rising tides lifting all the votes. We would definitely stay allocated more towards
the US than the rest of the world. Europe is still in recession. I'm concerned that the yen may not rally as much as everyone expects this year, and I think the emerging markets are still in trouble. So for us, we're keeping our US home country bias very much alive and well for twenty twenty four.
Within that US home country bias, one of the biases we've all had is the FED. It seems like every single day all we care about is the FED. Is that going to continue in twenty five four? Are we ever going to get pass the point where all we care about is what the FED thinks it's doing or we think it's doing.
David, that's a great question, and we all have had the FED on the brain since really twenty twenty one. I think the real issue that we're going to have to face in twenty twenty four that's going to change the market's view is going to be the US presidential election.
Over the past couple of elections that we've had, say twenty twenty, twenty sixteen, two thousand and four to two thousand as well, it's kind of been this pattern that follows the market tends to make some decent gains into the beginning of the year, really the first half, and then right around the June primaries, the market starts to say, hmm, there's some things that could be uncertain about this election.
Could it be another Supreme Court decided election. Is it too difficult to determine who the winner is going to be? And the market tends to get a little bit nervous. The equity market generally has a week third quarter, and then right around October there starts to be enough information that the market starts to sniff out who the winner is going to be, and then equities generally march higher into the end of the year, and we would see that as likely replaying this year.
That June timing could be tricky because everybody, even the Fed, agrees we're going to be slowing down the economy through the first half of the year. You could have a slowing economy. I'm not necessarily going into negative, but a lot more modesty is now. At the same time, you have that market uncertainty in the middle of the year. What you're saying, I think is it could be tricky.
It could be very choppy. For sure, we think that you're going to make decent gains in twenty twenty four, in part because your starting point is relatively good. It could be a bumpy twenty twenty four for sure.
It's fascinating. Okay, any hedges, you would recommend.
None at this moment.
But thank you, Thanks so much. Gra Always great to have you with us. Barbro Reinhardt of Voyem coming up. Rick Reader of Blackrock joins us to explain his latest venture, Rick's second fixed income ETF from the leader in the field.
This is Bloomberg Wall Street Week with David Weston from Bloomberg Radio.
This is Wall Street. I'm David Weston. Exchange traded funds have grown dramatically, hitting a record ten trillion dollars in assets this year. Blackreck is the leading provider of ETFs, and we welcome back now Rick Reader. He's Blackrock Chief Investment Officer of Global Fixed Income and head of the Global Allocation Team. Rick, welcome back to Wall Street Week. Good to have you, thanks sir having me so this week you announced a second ETF. You announced one back
in May that was flexible income. As I recall, now this is total return. Why'd you do it?
So?
A couple of hanks?
As you said, I mean there's been an explosion of demand for ETF. So it's a pretty incredible how the industry is developed and how clients are looking more for things that are liquid, transparent, use them for tax strategies, build models, and the models allow you to be dynamic around putting ETFs in, and so there's a whole new cohort of investors and existing clients. It's like, gosh, the ETF rapper is a really effective one. So we are
taking a lot of our strategies. So the one we're launching now is our total return strategy, very close to what is the mutual fund, but it gives people who want to.
Use that rapper, it gives them the ability to do it.
And you know, we launch this income fund that is roughly similar to a fund we run called SiO Strategic Income Opportunities. But boy, it's gotten the receptivity to it, the rate at which it's grown. Some of it is because it's an income producing seven percent yield an environment like this with a low volatility to it. Similar people are coming in the high yield, but this is actually
lower volatile. So it's gotten a tremendous amount of attention people putting money in, and so we're launching this one, which is more of total return. Like when people do sixty forty, this would be the forty and so an AG index like, but we use a lot of strategies to generate more return than the index. So that's why
it's gotten a lot of attention. And I think you'll see a lot of people say, particularly now with rates heaven backed up, gosh, equities have had a good go, I'm gonna look for some fixed income and total return is a nice match to your equity portfolio.
If I'm putting together the portfolio and let's assume I want some ETFs in it, how do I choose your ETFs as supposed some others? I mean, how does this fit into my portfolio? What does it balance against? So?
I mean it said one thing about fixed income, and I run a lot of equity portfolios and fixed income portfolios. The one thing about fixed income is there sixty eight thousand fixed income securities versus you know the SMP five hundred, there are sixty eight thousand, and your ability to create additional return. They're using your research, your analytics, your quant fixed income market, to most investors is a pretty opaque market.
It's just hard to figure out should I buy a double a colo, a trip la commercial mortgage backed security. So the benefit of and one of the secrets to fixed income for so many years, is if you can run more income than the index, but then manage your volatility because a lot of parts of the index are inefficient, too rich, and so you cut out the bad stuff and then you build a lot of income and you can outperform. And most managers ourselves included post managers and
fixing them outperform, outperform indicies. You know what we think we're pretty good at is we use so much analytics, risk management, increasingly artificial intelligence, looking at data signals. You know, our research allows us to look at collateral under a mortgage, residential, commercial, mortgage. So you know, the ability to tap into our resources to try and create you know, real return when income is now so beneficial is something that I think, you know, why why I think people will.
Invest in it if I'm looking at various alternatives. How much of this is betting on Rick Reader and his team being able to manage that complicated world of bonds that you just describe. Yeah, so it's a great question.
I've never asked that in a couple of different So we launched the first one, which is this income fund, and that is very much and aggressive. We'll look at things like European invests, European high yield, to merging markets, and so it is very much in aggresive because they're trying to keep our income high, you know, seven percent income when an index is five ish. So that is very much tapping into because we're taking risk to get
that to get that yield. Total return is still you know, we're trying to we're trying to beat the index, but we're more tethered to the index. I mean, it should be much more sincere to the aggregate index. So people should count on it doing interest rate wise, credit wise relative to the index. When people put it in their portfolio against equities, they should look at it relative to that.
We've had a really good track record knock wood of beating the index and so, you know, but the differentiation and total return, we are going to be more index oriented. We're just going to try and create an extra hundred basis points or so over that index over time versus my income one. We're just going to try and create a lot of income for you persistently.
We had a very eventful twenty twenty three. Let's look forward to twenty twenty four, and I guess one thing setting it up is actually what Jay Powell said here just this week at the end of twenty twenty three about the possibility of rate cuts. Boy, he really embraced it. If anything, it was pretty incredible, David.
You know, it was very different than we were literally a couple of weeks ago, certainly in the last meeting, and that was you know, that was pretty aggressive. I think it is the right direction to travel. You know, you do look at inflation. I mean six month CPI core PC are all trending down aggressively. I mean, we look at numbers over six month moving averages. Service inflation is still a bit sticky, but the averages are coming
down well into the twos. Core PC we think by January is in the two So I think it was the right thing to move it. What was surprising is how fast I thought there would be a more of a transition to it. Listen to long term funds rate is two and a half percent. The Fed projections what they put in that data yesterday they had real GDP of one and a half and they have core PC
at two and a half. That's pretty normal. I mean that is, if you said, over time one and a half growth, two and a half inflation, maybe get two inflation down to two at some point, but it's not that far are We've got a funds rate that's.
Five and three ace percent.
That real rate is really high. The Fed has to get rates down, has to start to move them down. I thought they would take a bit of time because of financial conditions, managing financial conditions. I thought they'd take a bit more time. But I think the direction travel is right, and I think they are moving in a direction that is that is the right thing.
By the way, that real rate actually climbs its inflation goes down, right, So to some extent they have to come down to just keep the same level of restrictiveness.
So much your power set, And he said at the last meeting too, they asked, so you focus on nominal or real rates? And he said it again, he focus on the real rate of interest. If they focus on the real rate of interest, definitionally inflations two and a half, you know, you think about over time, the real rate of interest is closer to zero to one running three percent.
Real rates too high. He's got to at least get.
It down one hundred base points, and I think he's got to get it down two hundred basis points because growth is slowing, and he talked about you're starting to see more balance in the labor force. Virtually every cater is showing still solid, but more balanced alongside of inflation coming down. So the real rate definitionally per the way they've described, their focus has to come down. And I think they're going to get started quite frankly, you know, I think they're gonna ge started in may be.
Could they start a little bit earlier if possible? What does that tell me as an investor? I mean, bonds of had a tough time as those rates went up. The bonds really took it on the chin, so to speak. But what does that say for twenty twenty four in terms of bonds?
So I'd say one thing, I don't know. I brought a chart. I don't know if you have that chart that shows that there was we just went through the most extraordinary draw down on the bond market. So for three years you had this extraordinary draw down that was literally a twenty percent return down. I mean we were to the point where long bonds were trading. There's one of the long line trades at forty seven and a
half cents on the dollar. Nobody thinks triple A treasury should trade forty seven and a half cents on the dollar. But they were issued in twenty post COVID, and now they've they've come under this incredible pressure.
So now I did this presentation today.
Where I called it, you know, the only way to make a big splash is you need the diving board to be really high. How does the diving board get really high. It's when losses happen before it, and you just build the levels. In terms of your upside potential return, I think next year, if you believe, which I believe in the FED has pressage that we are going to start to bring their rate down, you can create a lot of income and portfolios, and I think the total
return performance is going to be really good. Can we build portfolios today there are still six and a half percent And by the way, for we're building, we're buying. We're buying assets in Europe. Now two and three year investment created European assets. As a dollar investor, you're getting at six and a quarter. They were financing at negative interest rates back in twenty twenty one negative. Now we're
at six and a quarter. Listen, I think the return I mean, I think you can clip six percent six and a half percent yield that can turn into double digit return. You could get a ten if they bring the raid down.
It could such a treat tab in Wall Street. Thank you so much. That's Rick Reader of Black Rock coming up, waiting for the the other shoe to drop. We talk with Glenn August of Oak Hill Advisors on the opportunities for distressed investing in the new year.
We think there's going to be an extraordinary opportunity to provide customized capital solutions to help these companies refinance.
That's coming up next on Wall Street Week on Bloomberg.
This is Bloomberg Wall Street Week with David Weston from Bloomberg Radio.
This is Wall Street Week. I'm David Weston. Twenty twenty three saw record rate hikes directed at curbing inflation, but inevitably putting pressure on debtors as the cost of borrowing money or refinancing what they already have borrowed goes up. To give us a read on how bad the stress could get and what opportunities may be presented to investors. Welcome now, Glenn August, He's founder and CEO of Oak Hill Advisors. Glenn, welcome to Wall Street Week. Great to
have you here, Thank you for having me. So let's start on distress because you have a new i think third fund, something over two billion dollars. Why did you decide this was a particularly good time to have some dry powder to maybe jump into the distress area.
Well, look, I've been doing distress now for over thirty five years, and distressed is an opportunistic strategy, and there are moments whe are distressed is super exciting, there's.
Moments where's less exciting.
And our view is having capital ready to sees on that opportunity always makes sense.
And as you highlighted in.
Your opening comments, rates have gone on five hundred basis points. Obviously this week, in the last couple of weeks have been pretty big weeks for the rates coming down.
But the extraordinary thing that.
We're facing is a trillion plus dollars of debt that's coming due over the next three four years, and that debt needs to get refinanced.
And as we look at the picture of that the profile of that debt.
We think that it's not going to be able to be refinanced in the syndicated markets, and so we think there's going to be an extraordinary opportunity to provide customized capital solutions to help these companies refinance. And when I look over the different distress cycles over the last few decades, it was a very different opportunity. There was a big recession, there was geopolitical events, whether it's ninety one, two thousand
and one, two thousand eight global financial crisis. This time, it feels like it's not necessarily going to be a big recession, although it's obviously still out there as a possibility that causes the stress cycle.
This time is just the reality there's so much debt coming.
Due, well, is it? In some sense it's glenn a macro event of having money essentially free for a long period of time, which is pretty extraordinary globally, not just the United States, And you come off of that and there are consequences that maybe the macro event as a work. Yeah.
Look, I think that the macro the inflation that we saw over the last couple of years post COVID, clearly put a major strain on companies, and when you raise rates five hundred basis points, that has a big dent in free cash flow. And a lot of companies issued debt a couple of years ago and rates for lower and debt comes due. We look at that profile again, A trillion one in the US over the next three
four years. It's the highest amount of debt coming to over the next three years in any point in the last twenty thirty years in the leverage finance markets. And there's another three hundred four hundred billion of debt coming due in Europe.
And so I think there's really two ways to play distressed.
I think in this upcoming cycle, one is going to be buying into those companies that you think will be able to refinance the debt and buying at discounts, and we think make double digit opportunities there. And then the second, as I said a moment ago, is providing customized capital solutions where you can layer in capital, get security because a lot of the assets are not secured, get downside protection, then have some upside opportunity.
So the rise of interest rates was a very big story for the business world twenty Another big story actually was the growth of private credit. Right every single day, we seem to see something new in private credit. You're very active in private credit, have been for a long time. Why is it growing so fast? What is the itch that's being scratched there?
So private credit is an extraordinary asset class. The itch that is being scratched, to ease your phrase is the demand by private equity sponsors and by non private equity sponsors.
To get a solution to help their capital structure.
Either to do new transactions because they're not confident in the access to the syndicated markets, to have a bespoke transaction that provides for asset sales or business improvement, to have flexibility with a partner that.
You've worked with for years.
And the reality is that the syndicated markets because of the proliferation of clos and the banks withdrawing from the market in a pretty meaningful way post GFC, but with increased capital requirements, it seems like it's be even further withdrawal. In fact, you're seeing banks do private partnerships with people like ourselves. We have a big partnership with PMO as an exis sample, but others are doing them as well.
We think that the banks aren't providing the capital. The clos are very structured.
Vehicles, and while they're great vehicles, and we have a very large COLO business ourselves, only certain types of assets
fit in there. And so when we look at the private credit market today, the opportunity to invest in the first zero to forty percent of a capital structure zero to forty five, maybe fifty percent sometimes in a multi billion dollar company in industry we like, with management team, we like, with sponsorship we like, and the opportunity to make ten to eleven percent plus unlevered, I think is really attractive.
Well, it's been great having you here on Wall Street. We thank you so much. Glenn. That is Glenn August of Oak Hill Advisors Global. Wall Street spent much of twenty twenty three focused on tech, including ways in which artificial intelligence could change our world. And so much of what tech can do depends critically on the data it uses, large amounts of it, by the way, and the quality of that data it consumes. Sam Pomesno ran ibm as
chairman and CEO. Among other things, he now co chairs that Data and Trust Alliance, which has just released proposed data standards on behalf of nineteen companies, And we welcome Sam now back to Wall Street Week, So welcome. It's good to have you back here. So first of all, why'd you start with data? There's a lot of concerns about artificial intelligence and what it might do. Why did you start with data?
It's interesting, it's a good question, Ken Schael and I'm my partner at the Coachure and this thing got together a couple of years ago and said, the issue with AI is going to be responsible use and how can you as an enterprise use it responsibly because it can be transformational.
This is before all the excitement.
GPT four and all the things that have occurred now, right, And so we formed this consortium of twenty now twenty six companies since like Walmart and Nike, Fizerman, American Express, I mean NFL, big guys at enterprise guys, right, and got together and one of the key projects that they thought we should focus on was data. The first one was a bias in data and HR practices, which was somewhat straightforward compared to let's say quality of data on
the Internet. And they came up with a whole set of procedures that they implemented, processes, etc. And the most recent one that their teams worked on was the quality of the data, and then how do you responsibly use that data so you can build trust.
There's a large enterprise.
Whether you're in consumer packaged goods or you're in finance, or whatever happens to be, you have to have a trusted relationship with the information that you're using to either attract customers or transfer funds, or fraud whatever it happens to be.
Data is an asset. It has value. So if people did adopt this and it worked, could data sets be more valuable than they might otherwise be if you didn't have the metadata attached.
Now you're getting into something that's extremely complicated because the answer is yes.
But then how do you value the asset.
We've done a lot of work on a balance sheet because a lot of these assets are data and software tangibles like a building or equipment or a tool or whatever it.
Happens to be.
So in the economic modeling of these things, it's a little more complicated. But your point is absolutely correct intellectually that it is an asset.
It's an asset of the enterprise. It's also an asset of the individual.
I mean I want to get into the consumer that is your data, that is your asset, and the fact how that data is being used, you should participate in its use, as I'd argue, if it's an economic value, you should share in the economic value.
Now that hasn't occurred.
Us to yet, but I do think some of the solutions here is make it almost a commercial relationship between the user and the service provider, so that if they are using the data correctly and you've complied, that's fine, and you get some economic value whatever that it could be, free services, whatever that happens to be.
How is this working or do you anticipate it would work across borders? Because this is a global business as a part, particularly when you get into generaive AI, it's global necessarily, is your vision that this would apply cross borders? And yes, let me say even to China.
Well, if you left China out, I'd say yes. Now we're going to get more complicated, or any any any authority and government that uses the information for we would do not as open democratic principles. Right, that's a complicated. Let's just take a more straightforward world. Let's talk about to say the West. Right, A lot of these companies, as you know, operate around the world in all these places, so they're going they will implement these approaches that they've
said they're going to adopt. Our hope is that we'll get more participation from companies outside the United States that will do the same thing.
But the where we began.
There are a couple of companies that have been involved that were non domiciled in the US, but it's not a larger portion of the twenty six.
It's a couple.
So we really think that by if these large take a Walmart adopts people around the world as well, these guys don't know what they're doing, or Nike, you know, all these companies that operate everywhere else, that we'll get up the adoption.
That's our hope. Sam. It's always good to have you on Wall Street Week. Thank you so much. That's Sam Palmisano. He is co chair of the Data and Trust Alliance. Coming up eating a slice of humble Pie with our holiday desserts this year. That's next on Wall Street Week on Bloomberg. Finally, one more thought. Winston Churchill reportedly said of his successor, Clement Attlee, he's a modest man, but
he has much to be honest about. It turns out that as we move into the final days of twenty twenty three, there are a fair number of us who have much to be honest about. As we often do. We entered the year full of confidence about all sorts of things. My confidence that the Jets would finally be a contender for the Super Bowl behind their superstar seventy five million dollar quarterback Aaron Rodgers, only to lose him to injury in the very first game.
Overall, his contract was about one hundred and twelve millions, so even if you can't play, likes.
Going to be okay. Republicans on Capitol Hill went into the new year confidence that they could finally score some points with their new majority in the House of Representatives. But then it took fifteen ballots to give Kevin McCarthy the gavel. There are obstacles in my life. I have fallen many times. There was a time I was going to be Speaker and I couldn't, and you guys all counted me out. I'm speaker. I'm the fifty fifth Speaker of the House. And he held on to it for only ten months.
The office of Speaker of the House of the United States House of Representatives is hereby declared vacant.
US automakers went into twenty twenty three confident that the demand for electric vehicles would give them momentum toward their aggressive goals for replacing internal combustion engines in the near future. But by the end of the year, Ford was said to cut its production of the F one to fifty lightning in half, and GM was redirecting some of its EV investment toward its shareholders.
We never thought that the EV adoption would necessarily be a straight line.
We've seen this in other markets. We're seeing it now in the US.
But I think the thing that everybody has to remember, if the growth is slowing, it is still growing.
On the economic front, China entered the new year by lifting its COVID lockdown, which was widely expected to give its economy a jumpstart. Is a big reopening to come in China. I don't think it's happening now.
When it does happen, I think you are going to see a very strong lifting growth.
To everyone's surprise, including Presumaly President Geez. It didn't work out that way, and China continues to struggle with getting its growth engine back on track.
I have been more optimistic about China in the past, and I will say that I have recalibrated my views.
I mean, it is definitely going through a tough period.
But when it came to economic expectations, US prognosticators also
had plenty to be modest about as economists. After economists went into the year predicting a recession that didn't come at least yet, and markets weren't much better, predicting a mere sixty six basis points and rate hikes from the Fed in twenty twenty three, and we got one hundred and fifty Over in Europe, market similarly got it wrong, predicting one hundred and forty one basis points in higher rates when it turned out to be two hundred and fifty.
So as we enter yet another new year full of expectations and predictions, it may be wise to remember Winston Churchill's suggestion that we may have much to be humble about. But as with all rules, this one is honored in the breach, and the breach in twenty twenty three must surely be miss Taylor Swift. Whatever else happened this year, whatever disappointments, the rest of US may have had, Taylor
Swift had absolutely nothing to be humble about. What she has accomplished with her tour is unprecedented.
Never before have we ever seen an artist.
Put multiple stadium shows on sale in the same city and blow them all out. She did so well that Blackstone actually imitated her for their holiday video this year.
Sixty.
That does it. For this episode of Wall Street Week, I'm David Weston. This is Bloomberg. See you next week.