00:00We don't really know. The last chapter of the book I did is, where's the post-war order headed?
00:08Because we had some certainty, and now we've kind of taken it apart.
00:14And my whole point is, I wish I was smart enough to tell you, I see it so clearly.
00:19I lay out some parameters. But the bottom line is, here's how the world's changed.
00:24The U.S. was the leader of the Western alliance in the post-war era.
00:30We've kind of given up that role. And I think what we're seeing in the Middle East today,
00:36where we thought the situation was relatively stable, and now we see that there's a reset.
00:44Nobody knows how it's going to play out, including President Trump.
00:48We all kind of grew up in the post-war era, where globalization was generally perceived, in the broadest sense,
00:55a good thing.
00:57Is that over? Is that sense of globalization, is that over?
01:01I would say yes and no. There was the backlash to globalization.
01:06And it started really in the 1990s, when people saw outsourcing by U.S. businesses.
01:13And then, of course, Ross Perot comes along and blames NAFTA and the like.
01:19Back then, we had China. So that was the backlash.
01:24And, you know, it basically got Trump elected in the first tour.
01:28So what I would say, though, that we're also learning is you can't completely do away with globalization.
01:35Nobody produces everything domestically, and it would be highly inefficient to do so.
01:41So I think we're kind of at a plateau, but yet I'm looking to see if world trade is going
01:50to slow down.
01:51It's stalled, but it hasn't turned down just yet.
01:55So I wouldn't give up on it.
01:57Tariffs, again, it's another new economic policy regime for the world, actually, now with this administration.
02:06How do you view this?
02:07It seems like if you look at the stock market, the bond market, the currency markets,
02:11they've kind of come to grips with this new world of tariffs here.
02:14Is it an economic or how much of an economic challenge is it to have a world where tariffs are
02:20higher?
02:20What I would tell you is that I started my career when the Bretton Woods fixed exchange rate system collapsed,
02:28and nobody fully understood until the decade was over what the consequences were.
02:35So my story is that I was worried about the tariffs.
02:40Thus far, not as bad as expected for a variety of reasons.
02:44But I still feel that everything has not yet played out and that there are longer-term consequences from what's
02:55happened.
02:56Nicholas Sargent, we're just thrilled that he could join us today with his decades at Wall Street.
03:00It's a more vintage perspective than so much of what we hear.
03:03He actually remembers when there was a real rate.
03:06Yeah.
03:07How cute.
03:07The book is Global Shots, second edition.
03:10The world, including Henry Kaufman, begging for the third edition as well.
03:14So here's the arch question for the young kids.
03:17Robert Gordon at Northwestern would say that that golden moment, 1950 to 1972-ish, was a one-off for America.
03:27Was the magic of our childhood, our ute, of your early professional career,
03:33was it a one-off or is that a continuum of American prosperity we can return to?
03:38I would say it certainly was the golden age in terms of high economic growth rates until 1971.
03:47Dispersed across a broad middle class.
03:49Yes.
03:50And so what I see that's different today is America.
03:54I buy into the K-shaped economy.
03:57That on one hand, some people are doing incredibly well.
04:01Those that have enough money to own a home or own stocks, what's to be unhappy with?
04:07But we've got to remember that over half the country, no one owns any stocks.
04:12They're the people that are hurting.
04:15So, you know, and again, why have we overcome these shocks?
04:20The simple answer is we're seeing the biggest capital spending boom in my lifetime with the, you know, the build
04:27-out of AI infrastructure.
04:30So, actually, that's boosting growth.
04:32Then you have the debate, but are there longer-term consequences?
04:36And the answer is yes.
04:37But on technology, I'm still a believer technology is the wave of the future.
04:44I don't want to go backwards.
04:45I mean, Paul, this weekend, heated responses on this.
04:49Are you going to create jobs or not?
04:50Torsten Slack published this morning for Apollo saying everybody calm down.
04:56Yeah.
04:56Yeah.
04:56He says net AI is going to create jobs.
05:00What's been amazing here, Nick, has just been the profitability of corporate America.
05:05The earnings we've seen have just been extraordinary despite tariffs, despite geopolitical uncertainty.
05:11Yes.
05:11Corporate America has delivered extraordinary financial results.
05:14I agree completely.
05:15And when I was expecting at some point a market sell-off, I was premature a year and a half
05:22ago.
05:22But yet, especially this past quarter, it's off the charts.
05:26But I'd like to tell you, too, we saw that in the second half of the 1990s.
05:33And then what was the difference?
05:35The difference was then there was a lot of companies reporting on a pro forma basis, and the numbers were
05:41exaggerated.
05:41I was looking at Treasury statistics that are based on tax filings.
05:47They weren't nearly as good.
05:49So today, they are.
05:51We're seeing the bigger companies.
05:52I think that the challenge is the build-out is so enormous, and you can do that for a while.
06:00But when you get to be a gargantuan company, you can't grow ultimately as fast.
06:05And that's when there will be a reset, but it's too early to say it's here.
06:10I used to go to Stanford for John Taylor and John Chauvin and their fabulous economic symposium.
06:16What a joy, ages ago, to interview a very ancient Kenneth Arrow.
06:22What was it like at Stanford for Kenneth Arrow?
06:26He's the most eclectic guy we created.
06:29Yes.
06:29I would tell you the following.
06:32I happened to meet my wife there, and she was a math undergrad at Stanford, and then they picked her
06:38to be on the economics department.
06:41She idolized Kenneth Arrow for his brilliance.
06:45I idolized him that he was brilliant, but I wasn't a great mathematician and couldn't understand it.
06:51But he clearly was revered and has had a lasting legacy.
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