00:00We bunched into you at the World Economic Forum in Davos, Switzerland.
00:03You were in the room, I believe, when...
00:05When Commerce Secretary Howard Lutnick delivered that speech, how controversial was it?
00:08Well, it was...
00:10Controversial, I suspect, but he didn't think it was controversial.
00:13It was a dinner...
00:14It was the...
00:15It was a welcoming dinner from the host of the...
00:17Or the chair of the World Economic Forum.
00:20Which was now co-shared for at least an interim period of time by two people.
00:25Larry Fink and Andres Hoffman from the Hoffman O'Roche family.
00:30They had about five speakers who spoke, and Howard Lutnick was the last speaker who spoke.
00:35And it was something that got people's attention, I'll put it that way.
00:39Is it curious?
00:40Is it curious that he was the one to deliver this message?
00:42The first time I ever met Howard Lutnick was...
00:45At Davos, years ago, before he was Treasury Secretary.
00:47He's talking about the global elite.
00:48Well, no offense...
00:50Mr. Commerce Secretary, but isn't he...
00:51Wasn't he part of one that now he now is saying he just owns?
00:55He is a unique figure, and I think he's gotten a lot...
01:00of leeway by the president to negotiate a lot of these deals, and I think he's very much...
01:05enjoying the job, being my impression.
01:07I co-hosted a lunch with Dina Powell.
01:10Later in the week, and he came to that lunch and spoke as well, and his message...
01:15is pretty consistent, so I think he's not getting to change, and, you know, he's pretty happy
01:19in the job, and I think the president...
01:20doesn't seem to be happy with him, so...
01:21That is a very diplomatic answer.
01:23Overall, what did you make of this year?
01:25Well, it was a transition, because Klaus Schwab, who built it...
01:30more than 50 years ago, was no longer the chair, he wasn't there, and so they had new...
01:35leadership.
01:36I think there were more CEOs than they've ever had before.
01:39They had more foreign leaders.
01:40Virtually every European leader showed up, and, clearly, when the president of the United
01:43States shows up, it tends to dominate the...
01:45news, and a lot of people stood just watching President Trump's speech for an hour or so.
01:50And everybody was waiting for the punchline, and the punchline that people were expecting
01:54didn't...
01:55show up, which was that he was going to use military force, that didn't show up, so that
01:58was the big news.
02:00And I think people were relieved about that, generally.
02:02I welcomed some of the developments in the last week.
02:04It just felt like...
02:05corporate America has shifted away from virtue signalling, and we're just focused on business
02:09now.
02:10Is that your...
02:10your sense of a shift as well?
02:11Did you witness that last week?
02:13Well, after the...
02:15the Greenland thing kind of went away a bit, people are focused on the Fed.
02:20And as you pointed out already, the Fed's decision is pretty much as well known for today.
02:25And then people are looking at earnings, and people are wondering where the deficit is going,
02:29the debt, the U.S.
02:30and also whether there's going to be a government shutdown.
02:32And I think...
02:33I think both sides in the public...
02:35Republicans, Democrats do not want to shut down.
02:37They're really trying hard to avoid a shutdown.
02:40I suspect they will avoid it in some way.
02:42We don't want to shut down.
02:43We've seen all the headlines about South America.
02:45We've seen all the headlines about South America in financial markets.
02:47But then I listened to the CEOs in America.
02:50And the global CEOs as well, who are investing in America.
02:53Do you sense a disconnect between the...
02:55the headlines and where the money's going at the moment?
02:57Well, there's no doubt that people are a little...
03:00more nervous about investing in America than maybe people would like who are trying to...
03:05get them to invest in America because there is some concern about the dollar going down.
03:09You know, if you...
03:10invest in the United States and the dollar goes down, the value of your investment obviously
03:13is not as good as you thought.
03:14But it's not...
03:15been the major cause of concern for foreign investors.
03:18They're just worried about where the U.S. government is going.
03:20You know, it's very hard to predict where the U.S. government is going for a lot of foreign
03:25investors.
03:25People want...
03:26visit people...
03:27predictability.
03:28Tell me what the rules are and I will follow them.
03:30follow the rules.
03:31And sometimes the rules are unpredictable or they change a lot.
03:34So to the extent that...
03:35there's consistency, I think more and more people will invest in the U.S.
03:38but the extent that there's inconsistency...
03:40people will pull back a bit.
03:41And particularly the dollar is an issue as well.
03:43But that's...
03:44that's true.
03:45Trump in a nutshell.
03:46Uncertainty is a feature of him.
03:48That is what he does.
03:50And...
03:50now it's an election year.
03:51So what kind of unpredictability can we see this year alone?
03:55Well, I can't predict the unpredictability of the leadership of the government...
04:00but I would say there are a lot of issues that people are worried about.
04:03And...
04:04right now I would say...
04:05the U.S. economy seems to be doing pretty well.
04:07I think growth is pretty good.
04:08Inflation is pretty much under control.
04:10Relatively speaking, it's not going to be a 2%.
04:12And unemployment is at a tolerable level.
04:14It's not a...
04:15as low as we might want.
04:16But...
04:17generally the economy is in pretty good shape.
04:19And whatever people...
04:20people might say about Jay Powell...
04:21and I'm a big supporter of his...
04:23we haven't had a recession under...
04:25Jay Powell's leadership.
04:26Normally, Fed shares often get blamed for recessions.
04:28Other people get blamed too.
04:30But he's had to increase interest rates to deal with high inflation.
04:33And he's had to lower them when...
04:34when inflation came back.
04:35And normally when you increase and you decrease...
04:37you get some kind of recession along the way.
04:39We haven't had...
04:40a recession.
04:41So in my view, he's done a pretty good job.
04:42Now having known the man...
04:43do you think he's going to any...
04:45entertain any questions today regarding...
04:47will he stay on after his chairmanship or...
04:50the more sort of stance he's taken against the White House?
04:54I don't want to...
04:55pretend to speak for him...
04:56but I would be surprised if he said anything...
04:58other than...
04:59here's what we did today.
05:00Boring!
05:01And...
05:02but it's actually interesting because when you had...
05:04previous Fed...
05:05shares...
05:06they didn't tell you what they were going to do in advance...
05:08and they didn't explain it 30 minutes later.
05:10he doesn't...
05:11in English...
05:12you can understand.
05:13So I think...
05:14to his credit...
05:15he actually explains what...
05:15what he's doing...
05:16and people can understand it.
05:17Many times the Fed never...
05:18actually had press conferences before...
05:19so I think he's done a...
05:20a pretty good job...
05:21and...
05:22I suspect in the end...
05:23he will...
05:25announce at the appropriate time...
05:27what he's going to do.
05:28He has no Greenspan.
05:29That's for sure.
05:30It's a very different...
05:30communication style...
05:31without a doubt.
05:32It's different than...
05:33Alan Greenspan...
05:34or Paul Volcker...
05:35they were more...
05:35I would say...
05:36difficult to understand.
05:37David...
05:38tons of volatility...
05:39around this institution.
05:40I've been...
05:40surprised by...
05:41how it hasn't really been...
05:42consequential at all...
05:43in financial markets.
05:44It's...
05:45I struggled...
05:46I struggled to find a read-through...
05:47from the volatility...
05:48around the institution...
05:49and how it's rippling...
05:50through financial...
05:50in fact...
05:51the treasury market...
05:52has been very resilient...
05:53in the face of...
05:54a lot of risk...
05:55as a market...
05:55participant like yourself...
05:56what's your conclusion...
05:57as you see that play out?
05:58Well I think...
05:59people...
06:00are...
06:01unclear...
06:02where the government policy...
06:03is in some areas...
06:04and therefore...
06:05they are hesitant...
06:06about making some...
06:07long-term commitments...
06:08but on the whole...
06:09the business community...
06:10is more or less supportive...
06:11of what the federal government...
06:12is doing...
06:13most of the CEOs...
06:14are more or less...
06:15in line...
06:16I mean they don't agree...
06:17with everything...
06:18the administration is doing...
06:19but they recognize...
06:20that there's less...
06:20regulation...
06:21than there was before...
06:22it's easier to get a decision...
06:23about...
06:24mergers or acquisitions...
06:25than it might have been before...
06:26so I think...
06:27some business people...
06:28are pleased with it...
06:29but some business people...
06:30are basically...
06:30doing what...
06:31they need to do...
06:32to help their company...
06:33but they may not...
06:34personally believe...
06:35in everything...
06:36that the president is doing...
06:35well...
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