This is Bloomberg Wall Street Week. We turn our attention to the markets this week. USCPI, Nembor's reinforcing concerns about inflation, the financial stories that shape our worth, a really different reaction to market. Some more indications of just how hot the US economy really is.
Through the eyes of the most influential voices.
Katherine Keating, CEO of B and Y, Moan, Ryan Winhand a Bank of America, Sam Zell Sharman and founder of Equity Group Investments.
Bloomberg Wall Street Week with David Weston from Bloomberg Radio.
Don't blame me, whether it's risking a national default or driving banks to failure, It's got to be someone else's fault. This is Bloomberg Wall Street Week. I'm David Weston. This week Econa is Gled Hubbard on the damage being done by the fight over the federal deficit that were a layer of Edelman Global Advisory. On what China stands to gain from US turmoil.
How do they build relations either with the United States to keep those markets open or can they find new markets?
And Catherine Judge of Columbia and whether we need all of those regional banks after.
All we're seeing very real questions about the regional bank business model.
This week, Global Wall Street was looking for someone to step up and take some responsibility, like for the failure of three major regional banks, and the former head of Silicon Valley Bank was there to help as he found a host of culprits other than himself, like the FED and social media.
I believe that svb's failure was brought about by a series of unprecedented events, but.
The chair of the Senate Banking Committee had a decidedly different view. We know your banks were fatally mismanaged. The next obvious question is why.
The simple answer the same answer we find to most questions about big bank failures.
Because the executives were getting rich.
And when it comes the debt ceiling, Republicans and Democrats picked up the theme of pointing fingers at everyone but themselves for the risk of the United States flirting with renigging on its debt for the first time in two hundred and thirty four years. As President Biden has put the onus on Republicans, and Speaker McCarthy continues to point his finger at President Biden.
Do we have obstacles, Yes, we have a big obstacle in the White House.
But even as the two sides blamed one another, they did find some room for optimism.
Confident that will get the agreement on the budget that America will not gault.
But despite all the disagreement and the urgency, President Biden thought things were going well enough that he could head over the G seven meetings in Horotiaa, Japan at the end of the week, though he did promise to get back by Sunday.
The nature of the presidency is addressing many of the critical matters all at once, So I'm confident we're going to continue to make progress toward avoiding default. However, I'm cutting my trip short.
Then. On Friday, Morgan Stanley ce James Gorman surprise Wall Street by announcing to shareholders that he would be stepping down at CEO within the next twelve months, raising questions about how he's yet to be named successor may change the direction of a firm Gorman led so successfully.
He's built the firm through all kinds of acquisitions. He's been a brilliant acquirer. Much of it has been through through acquisition. And so maybe now you translate an act from an acquisitive CEO to a managing CEO. Puts all these disparate pieces together.
Markets on the hold did pretty well this week, and the S and P five hundred added another one point sixty five percent, taking it to forty one ninety one, well above almost all of our Wall Street week elves who actually moved the other way in their median call for the year end, taking it down to an even four thousand. The NANZNAK did even better than the SMP, up over three percent for the week, while the yield on the ten year Treasury added twenty one basis points,
ending the week at three point six eighty six. To take us through the week, we welcome now at Leash living Bny Mellon, head of Investment Strategy and Equity Advisory Solutions, and Gerard Cassidy, RBC Capital Markets, head of US bank Equity Strategy. Welcome to both of you. Great jy, have you at leash. Let's start with you. Do we have a rally going on in the SMP. They're up now flirting with forty two hundred again.
Look, I think I think the market is expecting that forty two hundred ceiling to hold here if the s andp manages to get through it. There's a little bit of you know, blue sky out there simply because that's where all the hedges are so expectation that we're essentially fair valued here. Most of Wall Street says this is, you know, we're fairly valued here. You can't get much higher. And as you know, when all the bears say the same thing and all the strategists say the same thing,
the market tends to go in the other direction. So in part, the market rallied so hard this week on the expectation that the debt ceiling was going to be taken care of by this weekend.
By that's want to talk about it, not just this week but this year so far. Isn't the SMP up something like nine percent something along those lines? So what he is doing that is because the earnings came in better than the expectations which had been taken down. Or is it because of the Fed.
So there's a couple of things going on. The first thing is there's actually a lot of liquidity in the system because johnet Yellen at Treasury has been adding liquidity to the system to pay the US bills, which is helping stock prices and specifically NAZAG prices as well.
Gerard, let's turn to you on the question of the banks. Because that liquidity we're getting from the Fed to some extent, if I can call it, there reversal quantitative tightening because of what happened in the wake of Silicon Valley Bank and the other banks. Should we expect that to keep going out of the bank's going to keep drawing down in that liquidity.
I really it's going to be interesting. It's a great question because the deposit flight is over. We know from what we saw in the middle of March when the Silicon Valley signature and the First Republic banks failed. Now First Republic technically failed obviously not in March, but at the end of April early May. And I would say that the deposits that we saw today they came out set afternoon with the H eight data, and what you saw with the H eight data was depositor down slightly
for the larger banks. Smaller banks generally flatted down, and so there's really no need to have to pull down liquidity, even though we still have, of course discount window borrowings and the backstop borrowings with the bond portfolios from the FED. So there's plenty of liquidity, is Lesha pointed out, and I think that the banks are certainly going to benefit from that as we go forward.
The failure of three major regional banks may be in the rear view mirror, but the questions and the effects linger. As Chryston Slock of Apollo points out this week with one of his charts, this one on what it has meant for the borrowing costs of all regional banks.
What's noteworthy is what has happened to bank funding costs since Cdiconvelly Bank collapsed. Most importantly, when you look at the bank IG index for oes credit spreads, which you can split into regional banks and into diversified banks meaning large money center banks, it shows you that funding costs further out meaning five to ten years, have increased about two hundred basis points for regional banks, whereas they have
only increased about fifty basis points for diversified banks. It does signal that the market is still asking some questions about what will happen in the longer run, but the fact that funding costs further out are still permanently higher is raising some questions about how long time will it take before this banking crisis that we're going through is going to be.
Over, and to take us through what has happened to regional banks in the wake of those three failures. We welcome now Professor Catherine Judge. She's professor at the Columbia Law School, where she's also a vice dean. So professor, thank you so much for being with us. We understand we have these three major regional bank failures. We're looking sort of in the review mirror to learn what went wrong and what can we do to avoid it next time. So what's your take basically on what went wrong?
A number of things went wrong. First, we made meaningful changes in the regulatory scheme governing large regional banks with the benefit of hindsight, that was clearly in error. We've had three large regional banks fail, all in ways and imposed significant hits to the deposit Insurance Fund. So clearly the deregulation was a problem. The banks themselves were a problem.
It looks like they were taking a lot of risks without understanding those risks, without appropriately hedging those risks and managing those risks, and there were also shortcomings in supervision. It does look like some of this should have been identifiable. Some that was identified, but supervisors didn't act quickly enough and aggressive enough in escalating the concerns in ways that actually would have resolved the situations before we had such messy failures.
We've heard a lot about interest rate risk, which is a terrible thing to have. Obviously we've just seen. At the same time, given what the FED was doing, it shouldn't have come to as a surprise to the banks or to the supervisors that those were interest rate risks. I mean, we were raising interest rates like at an unprecedented pace.
We were, and the FED really did signal that. And again there was a long period of low for long and a period where ways were going up more slowly. But first of all, interest rate risk is a classic bank risk. I mean, in my very basic banking classes, I go back to the SNL debacle and I show how a changing interestrate environment affects the value of.
All assets that banks hold. So this is what banks.
Are in the business of doing. And as you just pointed out, the FED really did signal this. They said, look, we're really worried about inflation. They're concerns about inflation, and we're going to tighten as long as we need to to really get that inflation under control. So both the amount of interestrate risk the lack of hedging around that risk looks like a really inappropriate way of.
Managing those risks. Is there also a potential flaw in the business model? That is to say, you're taking deposits that by definition people can have whenever they want, so you're getting funding that is very very short term, and you are necessarily putting in longer term investments such as thirty year mortgages. But also, as we learn treasuries, it does that inherently put a lot of banks at risk. Yes and no.
So I mean the business of banking is to engage in maturity transformation.
So there is a.
Fragility that exists. On the other hand, it's been pretty well managed for a very long time, but then we have these periods of significant disruption. One of the things that's really striking right now is you look at the small community banks and they've actually been remarkably stable. Even before the March turmoil, we saw our depositors were leaving regional banks, they were leaving the largest banks because they just wanted to get a higher rate of interest than
they were getting on their deposits. But the small community banks were really holding on to those deposits and they managed to continue to provide meaningful credit. So it's not the entire bank business model. I do think we're seeing very real questions about the regional bank business model.
Professor, thank you so much for being on Wall streetetes Professor Catherine Judge of the Columbia Law School coming up with the fight over the debt ceiling is really costing us and what good may still come out of it. We'll talk with former Chair of the Council of Economic Advisors, Glenn Hubbard of Columbia. That's next on Wall Street League on Bloomberg.
This is Bloomberg Wall Street Week with David Weston from Bloomberg Radio.
China and the United States, what was an afterthought when President Nixon went to China in nineteen seventy two has now been catapulted to be the most important economic relationship in the world, as the Chinese economy has grown more than sixfold, trailing behind only the United States, and the US helped it get there, leading the move to admit China into the WTO.
Bringing China into the WTO is a win win this station.
And there's no doubt that US trade with China has grown dramatically since the end of two thousand and one when China officially joined the WTO. But now the Chinese economic juggernaut is showing signs of slowing as the COVID lockdown creates uncertainty about what comes next and demographics way on growth, not to mention continued tensions with the United States, which the wtos O kunja Awala warrants could damage global growth.
The costs of the world frad went in into two trading blocks very high. We've actually done some simulations of this at the WQ and we've seen that if we break into two tradium blocks, the world global GDP is going to decrease like five percent in the longer term.
And JP Morgan's Jamie Diamond insists we can avoid.
American shinea of a lot of common interest climate, nuclear pliferation, anti terrorism, global stability, you know, and we have differences. You know, we're capitalists, they're not, you know, and it's okay, but we could sort that out. But we need to keep the Western alliances together, not just around war and Ukraine, but the ram strategic economic relationships, including trade.
And to get an accurate and up to date picture of where China is right now. We welcome now a true expert in the area is Deborah Lair. She is both the vice chair of the Pulse Institute as well as the CEO of Edelman Global Advisory. Deborah, thank you for coming back to Wall Street. We really appreciate it. We now have the G seven meetings that are happening this week. China is not physically there, but certainly they
are an important part of the audience. What is the message of the United States and other members of the G seven want China to take away from these meetings this week?
David, You're so right.
They may not be present physically, but certainly China is one of the main topics. And it appears that the administration is going to work with its allies to try and get a united and very strong statement about being tough on China, both from a national security perspective, but also to coordinate economically.
This president, she takes a look at his economy right now, does he have any doubts do you think at all about its growth pattern? Because it was a true economic miracle in the history of the world. I don't think we've seen anything like it. At the same time, we're getting some numbers, including this week we've gotten some of our China indicating that growth is really slowing down, and some people are even saying maybe China will not after all pass the United States in the size of its economy.
It's been clear for a long time that Chi Jinping has been worried about the economy, and one of the reasons behind the whole corruption campaign that he started when he first came into office is because they couldn't govern and they were concerned about the state of the economy. And even until today, he's still sending out policy enforcement teams to ensure that mayors and governors are actually implementing
the policies that he has dictated from Beijing. They have a lot of reason to be concerned about the economy. As we've seen in reports just recently, youth unemployment is at an all time high at about twenty percent. Even though they've dealt with a lot of the systemic risk coming out of the real estate market for the small and medium size real estate companies, a number of them
are going to go bank. This has an impact then on the banking system, and while they're not concerned about the large banks, they do believe that a number of the mid sized banks who are operating in the provinces are in facing very difficult challenges.
If, as you say, Prisionji is concerned about his economy, does the West I mean to include both the United States and Europe and Japan. Does it represent a potential help to him or is it part of the problem for him.
I think this is going to depend on Si jumping himself, and if he decides that he wants to be engaged with the West, then he needs to take the kind of steps to provide market access for companies, to provide more consistency. Regulatory risk is one of the biggest challenges that we see today because we're not quite sure what policies are going to come from the new she administration. By the same token, he's very concerned about the export
markets right now. Exports are really what's driving the Chinese economy, and we see weakness in those markets. Certainly is there is concerns about a recession ahead and weakness in some of their export markets, combined with the politics of trade with the United States and trade with the European Union. I think that's a real concern that they have to have, and so part of it is how do they create the confidence at home to unlock consumer demand? And they
haven't been able to do that yet. They haven't been able to get consumers out spending their money in any significant way. And at the same token, how do they build relations either with the United States to keep those markets open or can they find new markets? And part of what we're seeing with this more active foreign policy by Si Jimping and his new team is how they build relations to compensate for some of the challenges that they're seeing in their trade with the United States.
Do you read very much into the increased pattern apparently of meetings with US representative with Jake Sullivan meeting in Vienna this counterpart we had Nick Burns, US ambassador going in to meet with the foreign minister. Do you read anything into that because there's talking, Maybe Tony Blinkinn, the Secretary of State, would go over, maybe Jennet Yellen.
Well.
I hope that this is a recognition that there's concerned about the free fall of the bilateral relationship, and both sides seem concerned about that. We run the risk of being slightly isolated, as we talked about in the G seven context. Certainly the Biden administration would like to ensure that our allies are moving and lockstep with us on China, but we haven't been seeing that necessarily.
One of the stories has gotten a lot of attension in the United States press release is set of the curtailment of operations and so of the consulting organizations over in China. The cutting off of data. Is there a risk that we're going to know even less than we did before about what's really going on in the country.
I think there's a large concern about data in many different ways. One is China definitely has been limiting access by foreigners to data, whether it's economic data, whether it's data that they're concerned about on national security purposes. We saw the whole issue when ddlisted overseas and they were forced to dlist then from the United States. That was an issue over national security concerns about the kind of
data that DD would be sharing. The other thing, obviously, one part of that is the access that American or foreign consulting firms get to data. But another part of it is also what the Chinese are planning to do with data.
Never Finally, what about capital markets? Because there is a reposers I understand executive order at the White House to limit US investment in Chine, particularly in technology areas. How big a threat would that be perceived to be by prison.
G Well, initially, I think it's very clear that the outbound some kind of outbound investment restrictions are going to be put in place by the administration. And the big question is how broad they're going to be and whether they're voluntary initially or if you have to have pre approval.
And so.
It's going to be a big test, and it's going to be much bigger than just capital markets. It's going to actually impact anyone who's looking to invest, even companies who might be looking to make acquisitions or invest in different sectors in China. Initially the administration is say it's going to be limited to just a few categories, but
subsequent administrations can broaden that. It's going to set an interesting precedent, and it, of course is of concern to the Chinese in part they've been able to benefit, certainly from capital flowing into China these days. There's actually a lot of capital in China, and one of the interesting statistics that we've seen recently is China has almost one thousand billionaires. There's a lot of money in China, and more and more money from other countries, particularly from the
Middle East, is now flowing into China. So it's yet to be seen what the impact is going to be of these outbound investment. But hopefully when the administration does put it in it's not putting it in place in a way that disadvantages American companies.
Deborah, thank you so much. It's always such a treat to have you with Wall Street Week. That's debau Lair of the Paulson Institute as well as Edelman Global Advisory coming up with the fight over the debt ceiling is really costing us and what good may still come out of it. We'll talk with former chair of the Council of Economic Advisors, Glenn Hubbard of Columbia. That's next on Wall Street Week on Bloomberg.
This is Bloomberg Wall Street Week with David Weston from Bloomberg Radio.
I've had a lot of affair in the last year, right in this book with Thomas Jefferson, who reminded us I think that he thought the Constitution should prevent us from passing debt on to our kids, because, as he said, you'd swindle futerity and the earth would belong to the dead and not the living. I think at some point, what's going to happen as our kids are going to understand what fourteen trillion dollars of unfunded liabilities mean.
That, of course, was the late Great Pete Peterson talking about the growing crisis he saw in the federal debt back in October of nineteen ninety three, and at that point the debt total to four point five trillion dollars, which was then forty eight percent of the nation's GDP. Today it stands at thirty one point five trillion dollars
and is a whopping ninety seven percent of GDP. To give us a broader perspective on the current crisis over the debt ceiling and what lies behind it, welcome Glenn Hubbard of the Columbia Business School, where he was dean after serving as chair of President George W. Bush's Council of Economic Advisors. Doctor Hubbard is the author, most recently of The Wall and the Bridge, Fear and Opportunity in Disruptions, Wake so Glenn, thank you so much for bringing back
with great to have you this. So we have a lot of talk about the default every degrees. We can't have a default be terrible. We don't spend it quite as much time talking about what lies behind this crisis, which is addressing the debt problem. There is a real debt problem, is there not?
Well, there is.
I mean Pete was right, and I think the way to think about the debt sealing crisis is to break it into two pieces.
What do we have to do right now?
And that's going to be some near term spending restraint like returning unspent COVID funds, some of the spending caps for example that Senator Manchin has talked about. But longer term, we've got to go to a different model, and we have to have either a spending limitation as I've argued in the past, or are some kind of model for example like the Swedes do of a fiscal policy commission.
It takes a.
Look at the budget.
But we need that longer term discussion. Dare I say, maybe even another commission to take.
A look at it.
But it has to be separate from the short term, which we have to do first.
But I wonder we'll come back if we could possible solutions to the immediate crisis with the default or would be default. But are the Republicans some other crises? Right, We'll never get to the second part if we don't hold hostage on the first. That's basically, as I understanding a lot of position. If we go along with you on the debt ceiling, we'll never do the second part, which is so important.
Well, that's right, But when you catch the car, you have to know what to do, and you also have to have a plan.
And since neither side.
Has what I would call a reasonable long term fiscal plan at the moment, the right thing to do would be to take a deep breath. The problem is the same problem actually when Pete talked in nineteen ninety three. It has to do with runaway social spending. This is at a time where we need to spend more on defense, we need to spend more on preparing Americans for the future. So we're going to have to make some fiscal adjustments. Some of those maybe tax increases, some maybe spending adjustments.
But we have to pivot to that world.
So let's talk about getting past the immediate crisis for the moment, you know, Washington, Well, put aside from a moment what you think is the right answer, Let's talk about what is the doable answer, because that's the important There are some red lines here, such as, for example, the publients say we cannot increase revenue full stop, can't do it? Is that right? Does a White House have to give on that point We're not going to do anything in terms of raising revenue.
Well, I think in a negotiation you have to let the other side tell you a bit about what it takes to have victory. And I think if Republicans have said there's no revenue increases in the near term, I wouldn't put that in a negotiation. I think a near term is the spending restraint, So something like returning the youn spent COVID funds and a two year spending cap. Even there's something that can be done so Republicans have
a victory. Biden, I think knows independent voters also agree with Republicans on many of these points, and he could come to the middle on that. That's where I think the solution has to be.
What about the work requirement? Because I suspect a lot of Americans do look at them and say, it's not too outrageous to day you should have to try to work. If you're really getting a lot of.
Funds, it's definitely not too outrageous.
And if you look at polls independence in the middle, about.
Two thirds support the work requirements. The only risk in the negotiation.
Is when you start adding things that aren't central to the discussion i e. Taxus spending, you make it difficult to get the resolution. So each side has to look the other in the eye and say, well, what is he or she need to win or at least think they've won and move on.
So this week we saw the hopes go up, we saw the hopes go down. I mean we heard they were making real progress, and then on Friday they stormed out of the meeting, which is not unheard of in Washington. You, Glenn Hubbard, knowing Washington the way you do, knowing the situation the way you do, how worried are you about an actual default? I'm not terribly worried.
That said, the probability isn't zero, and so the two sides have to be significantly working harder to come together. In the past, I always knew this was theater, it would simply work.
Out and we just have to endure it. This time is a little bit more uncertainty.
So I do think pressure needs to be brought to bear on both sides to come to a near term agreement and then pivot, as you say, to the longer term discussion that we've really got to have as a nation.
So let's turn to that. Let's make that pivot actually the longer term discussion. Let's get so we get past the default issue. Now we're going to address it. Suggested for example, a commission might be one. We've done that with social security, We've done that with base closings. Is there political will on the two sides, at least enough political will to actually do something about this instead of just talk about it.
There has to be The math will catch up.
We're already in fiscal year twenty twenty three for the government will have interest payments exceeding the money that we spend on children.
That's crazy.
We need to be spending more on defense. We need to be writing a number of ships in the country. We have to take a look at the composition of spending and revenue. A commission gives both sides a chance to have that discussion, and I think it's absolutely essential.
I want to come back to your book The Wall of Bridge for a moment because one of the issues is how can we grow the pie by investing and spending the money, however much it is, in a way that grows the pie. Is there an appetite for that because Republicans certainly say it's all got to be about growth.
Well, but you also have the social support and the political support for growth. If we had pro that supported work that prepared more Americans for the future that they will have as opposed to a nostalgia for the past, we could do that fairly modestly.
With new spending.
We would need to pay for that by cutting other spending or raising taxes, but it's doable. In my book, I suggested programs that together costs less than President Biden's student loan forgiveness. We know how to do this, we know how to find the money. We need to do it for something useful.
I let to come back to here and now and where we are with the economy right at the moment, and what the FED needs to do. Where we're looking at economy. Let's assume we get past the default for just a moment we hear that, in fact, maybe the neutral rate will go back down. What do you think, Where do you think we are right now with the economy, and what does the Fed need to do.
I don't think this is a time for the Fed to do what markets are suggesting is start cutting rates in the very near future. The Fed at a minimum would have to keep the funds rate where it is. I would argue if there's a change in the funds rate in the next several months, it's probably up, not down. Inflation is still very, very sticky. So despite what markets think, I think the Fed still has an awful lot of work too.
There was a report of the Bloomberg actually that in fact, if we get past the DeVault problem, there will be a tightening necessarily in liquidity. Because the Fed has been spending the treasure ram, sorry, it has been spending down what's in the coffers. They're gonna have to replenish that by issuing a lot of tea bills over the course of the summer as a pregnant. That will soak a lot of liquidy out of the system. Will that tighten
enough in itself? Some people say it's at least twenty five basis points.
I don't think so. It's a modest effect.
As you suggest, there are two ways in which those tea bills can be bought. One is through bank reserves, the other through money market funds. But I think it's a modest effect. The bigger concern, it strikes me, would be a credit crunch that's in the offing from the banking problems. If you're thinking about effective monetary tightening, there's probably another one hundred basis points of effective federal funds rate increases in that credit crunch.
That's the one to watch. When will we have a sense of fun fact whether we have that one hundred basis points, because I've heard that before, but I'm not sure if we know yet whether we have it well.
That number is a blend between effects on small and mid sized banks where it would be much larger, and then of course the very large banks where it would be very small. I think the FED in the next several months will be watching that very closely, which is an argument for the kind.
Of pause that share Powell has signaled.
So many of us are not particularly pleased with what we're seeing going on in this negotiation. Of a default. The notion that we would even think about nigga on the full faith and credit is really embarrassing. What does it do to us globally? Does it affect the value of the US currency as reserve currency? What is the rest of the world thinking right now? Will there be longer term effects?
Well, I think they think we're crazy, and of course we are in this kind of process. But the point is we need a new spending process. We have had a series of budget resolutions and budget performs over the years. I mentioned Sweden before. I think using something like the Swedish Plan and the Swedish Fiscal Policy Council. It's hard to advise conservatives to look at Sweden as an example.
But that I do, that I think is our roadmap.
Are there people Washington talking about these things right now?
There are, But I think at the moment the negotiation.
Is so mired in each side thrashing the other it's hard to get out.
What about think tanks are they helping?
I think so.
I think they're trying to get information to both sides of the aisle on the costs of what is happening and on things that might be proposed in the medium or long run as opposed to the action we have to take before June first.
So you're concerned, but hopeful always always. That's Glenn Embert, I should say, in a nutshell, that's Glen Hubbard. Many thanks Glen Hubbard of Columbia Business School. Coming up, China tries to get its economy back on track after the COVID shutdown. Devrolair of Edelman Global Advisory. It takes us through what's become of the Chinese economic miracle. This is Wall Street Week on Bloomberg.
This is Bloomberg Wall Street Week with David Weston from Bloomberg Radio Global.
Wall Street the leading light this week. When Sam Zell passed away at the age of eighty one, he went from managing student apartments in his dorm room at the University of Michigan to being a legendary investor in real estate and energy, making billions of dollars along the way. Zell was known first and foremost for his real estate investing, acquiring office space over many years in his Equity Office Properties Trust, and then selling it all to Blackstone in
two thousand and seven for thirty nine billion dollars. At just the right time, we.
Made a deal, and that deal was significantly higher than the Navy, and consequently it was an easy decision for me, even though it was my baby with something might started from scratch.
Though in later years valuations made Zell think twice before becoming a real estate buyer again for all practical purposes.
I haven't bought anything in ten years, and where the opportunity has created, I've sold a.
Lot, Zell and energy of all sorts.
I've always believed that diversification is your friend, and I've always attempted to have some kind of energy diversification and continue to do.
So, and recognize that the world needs to move away from fossil fuels, while warning that it is going to take time.
William Got to reduce their energy exposure. The transition from fossil fuels to renewables is going to be a very long process.
Zell was called the grave Dancer, taken from an article he wrote about resurrecting dead properties. But he always warned about the risks involved.
And you know, and as you're dancing around the graves, you have to we really care for your own fall, in.
Which he very nearly did in his leveraged buyout of the Tribune Company, for which he was roundly criticized and on which he lost three hundred million dollars. Sam Zel was deeply concerned about the fiscal health of the United States, alarmed about the growing debt and concern for what it could mean for the country's economic health.
We added seven trillion to our debt in three years.
This is this is you know, this is.
The Viemar Republic. And if the United States isn't careful, they're going to find themselves in the Viemar Republic.
His memoir was titled am I Being Too Subtle? The Adventures of a Business Maverick. Whatever Samzel was, he was never subtle. He was a true original as an investor and as a person, always preferring to follow his own, sometimes idiosyncratic instincts.
I was very, very successful at listening to my own song. I was very capable of ignoring the noise. Number of times people have told me you don't understand.
Is legendary.
And yet I was comfortable and had the level of self confidence that allowed me to make the right decisions at the right time.
That does it. For this episode of Wall Street Week, I'm David Weston. This is Bloomberg. See you next week,