Transcripts For BLOOMBERG Bloomberg Best 20240713

Answer. Its time this generation realized there is no planet b. Some of them wont succeed. All straight ahead on bloomberg next. Hello and welcome. On this vision of bloomberg best, highlights from the Bloomberg New Economy Forum. Global leaders gather in beijing. Ideas, examined opportunities, and addressed challenges facing society at a critical moment of economic transition. On the agenda, issues including trade, technology, climate, urbanization and more. Theas Vice President set tone in his keynote speech. He warned against protectionism. Pursuehould cooperatively in sustainable security and reject zerosum games and cold war mentality. Viviana some of the worlds most influential people in banking and finance share their thoughts on the Global Economy and capital markets. Lets start with Goldman Sachs ceo david solomon. Of the big issues were anything about Economic Growth in the medium and long term is the u. S. And china finding a way to coexist more productively economically. There is a good chance we will see progress from the trade discussions. Ive met with policymakers on both sides and i am encouraged. I think we can expect progress to be in stages, but i am hopeful that we will see progress and i think is important. The chinese realize it is important for them. The u. S. Realizes it is important for the u. S. And for Economic Growth around the world. Does this deal lead to a phase two . Does it mean something concrete for the World Economy . David i think we have to hope that over time, in a world where both these economies are super important to global growth, that we can find a way to make progress on all these issues. Certainly, it is a step in a positive direction. I am a glass halffull guy. I am going to assume chinas interest in the u. S. Interest and the Global Economy at bard at large, we should see progress. You were just in hong kong and you postponed a party. David we had been celebrating around the world this year the 150th anniversary of Goldman Sachs and having events in cities to celebrate that with our clients. We did postpone an event in hong kong but i spent some time in hong kong and it is a very complex situation. We are watching very closely. I was glad to spend some time with our team. We have over 2000 people on the thend and i would say that routine people experience in a city like that is disrupted, it is tense. There were not as many people on the street. You could see the impact on the economy. We are watching this closely and hoping for resolution. At your wealthy clients in asia, are they impacted by the trade war . Do they invest less . I think it has a number of impacts. Moreoduces it is difficult to make longterm investment decisions. Ledhe positive side, it has to restructuring in asia. If you look at vietnam or the philippines, a lot of clients have operations, so we can shift production from one country to another and you have seen a lot of that. You have seen the growth of intrachina trade, but we hope for resolution. Do supply chains change . If we have more than a phase one, does the supply chain come back to china . Not sure. m ivory that some change will be air reversible. Some change will be irreversible. Every time i talk to about consolidation, i talk to about negative risk. Is consolidation going to happen because of negative rates . Tidjane it can be positive. Day, what we the need is growth. Which is why we focus on emerging markets which is why focus on emerging markets is very important. Growing them ultimately is the answer. Consolidation and costcutting is necessary, because we probably have too many banks, but longterm, the future of european banks is going outside europe. Do you think there is a likelihood the two sides can come together by the end of 2019 . I think certainly phase one is to be congratulated. That is not enough. , think we need to move forward to see how these two big economies can work out their differences, and we in the bank promote a multilateral approach to development. We promote investment in infrastructure, which can include connectivity, which is essentially to promote cooperation on a regional basis. Countriesthese two will work out their differences. You still very much have your ear to the ground. What do you think as a key Sticking Point at this stage . My view is that in the present, only cooperation is the answer. By working together, sorting out their differences, looking at Common Ground they share, i think all this is important. If people look at the narrow, shortterm interest, that would be very hard to work out. Tom it looks like we are very far from that. Jin i would say initial phase is encouraging. They understand how big a stake they have in maintaining the very good economic and trade relationship and the rest of the world is watching. These negotiations, discussions. Workuld really like to with all of the countries promoting economic cooperation, regardless of membership. We have had a dip. I think that will persist. The outlook into 2020 and beyond is pretty good. It feels like we have made some adjustments related to the trade war. If things get worse on any of the fronts that we all watch, then it could be different, but we are optimistic that we can avoid the bad stuff. We are continuing to invest as if the economy will improve over the next year and a half. Talk to me about u. S. China. If we stay in this trade war without getting a phase i deal but without getting worse, what does that mean . Bill i think the world has adjusted. I think supply chains are steadily adjusting to this reality. We are seeing as recently as last night some of the Companies One was identified as a result of a visit from president trump. It is very difficult for apple to run their business. That is not a good thing for u. S. Consumers. Flexibility on both sides should allow us to get to an agreement. Francine has this trade war changed the economy forever because of supply chains and well the os supply chains go back to how they used to be . Bill supply chains are evolving anyway. China is not the low cost producer of a number of goods any longer. That change is happening. The world is changed forever. I think the confidence of supply from a Single Source for anybody in the world has reduced. Spreading their bets, hedging themselves, arranging alternative supply chains, and im afraid they will stay more and more at home. We all know that things should be done where there done best and there will be less of that. Ahead, much more from the Bloomberg New Economy Forum. Is this executives from around the world explore issues of impact in the new economy. We have had a lot of discussion consumers are doing well. Populism,p next, protectionism, and the evolving relationship between the u. S. And china. That ise at a point very similar to 1944. I think we are having a trade skirmish. I believe we are headed in precisely the wrong direction. Viviana this is bloomberg. Viviana this is bloomberg best. We are looking back at the bluebird new Economy Forum. One of the most provocative Panel Discussions was called a new capitalism, staving off class warfare. On todays luminaries, including Bridgewater Associates ray dolly. We are in the period is unique. Into letss take technology. Artificial intelligence and so on is replacing people and it is great for the whole, but it changes the nature of the environment. That is going to happen. A very important implication in the years ahead. As far as the shortterm debt cycle, we are 10 years into this expansion. Many of those stimulants that happen will be dissipating. We wont have more Interest Rate cuts. You will have more tax cuts and so on. This is true around the world. We are coming into this period that is a big sad. Not a debt crisis in that way. A lot of obligations are coming at us, particularly in mature reserve currency companies. They include healthcare obligations and the like. Large deficits which will have to be monetized. There is a reserve currency issue. Of course we have the external conflict, or the issues of the rising of a great power in the form of china, and the united having its relevant decline. Point that is very similar to 1944. Is peace,r, there because nobody wants to fight the country that has won the war, and there is a new world order. There was a new monetary system. 19 44, we establish the dollar reserve currency and the like, is i think all of that going to change the world order in dramatic ways in the next 10 years. Viviana many guests at the new Economy Forum have occupied crucial roles in finance and government. Paulson went on to establish the paulson institute. A stableo foster relationship between the u. S. And china. When he spoke about the stay of that relationship, the former treasury wreck secretary had blunt words former treasury secretary had blunt words for both sides. I believe we are headed in precisely the wrong direction. We are heading for more decoupling, not less, despite professions of constructive intent from washington and beijing. Forum, i spokeis of the barriers to the flows of goods, capital, people and technology. Some predated the current trade disputes, others are a result. Example,goods, for have been impeded by the failure of china to open big parts of its markets to foreign competition, and they have been further impeded by unilateral or retaliatory tariffs from the u. S. And china. Beyond goods, i warned about interruption in the flow of people. Been impeded have by new restrictions on visas, people to people exchanges, and interactions of students and scholars. Is what concerns me most what has happened to the flows of capital and technology over this past year. Both areas are vulnerable to significant negative headways in the forms of policy changes under consideration. China must open further. It needs to resist the temptation to protect domestic firms that would become stronger if they are subjected to best in class foreign competition. But washington needs to resist the temptation, too. Decoupling china from u. S. Markets by delisting chinese firms of u. S. Exchanges is a terrible idea. Former Goldman Sachs president gary cohn served as chief Economic Advisor to president donald trump. Conversation, he shared his insight on trade. I think we are having a trade skirmish. The two sides have some disagreements on trade, but if you look at what is going on, there is a lot of trade still going back and forth. The United States is receiving goods from china that we need to have a functioning economy and our economy is functioning well. I hope we get one deal done and i think it is in everyones best interest to get it done. Francine supply chains have moved, have they not . Gary that is a natural Business Cycle and i think it makes sense. Maybe Companies Got too concentrated in one market and maybe we are seeing more global diversification of supply chain, which is probably a good thing for companies to be more diversified about where they get products. Francine if you have this skirmish lasting 510 years, that must hurt the World Economy. Gary im not saying its a good thing. What im trying to say is everyone talks about how dramatic it is this whole trade confrontation. It has an impact, but whenever you have an impact, when countries are disagreeing in some fashion, markets make up their own mind what they need to do. Markets have quickly made up their mind and companies have made up their mind. We need to diversify our supply chain. We cannot be as dominant and dependent on one supplier as we were in the past and we have got to create more diversity, which is a good thing for the system. It is having economic consequences, but it is not the only thing in the economy. Francine you have worked for president trump. How does he view china . Is this he wants a deal and wants it fast if the chinese play by the book . Gary he is more interested in getting it right in the long term. That said, he understands how important it is to get the farmers back to work in the United States. We have a big agricultural economy in the center of the United States. Our farmers need to be exporting products and our farmers have gone through a tough cycle here. Our farmers need to get export share back by next summer. Getting a fee one deal done would allow farmers to get back into the growing cycle and allow farmers to export back to china. The chinese need to import food so the question will become, who are they going to get it from . The president understands it is a short term phase one issue, getting farmers back into the cycle. Viviana you are watching bloomberg best coverage of the bloomberg Economy Forum. Here is another Panel Discussion at the form, caught in the middle. Moderated this session, focused on countries facing unprecedented challenges as they make the transition to a new economy in an increasingly divided world. For a very long time, smaller countries have desperately refrained from making a choice between the u. S. And china. Are they getting closer to the time where they have to make the choice . The reality is, they cannot afford to make a choice. They cannot do that, because from both capital and trade, the small countries are tied to the large economic entities, the west and china. To make a choice, you give up 50 of your flows. We know africa has been impacted by the trade war. Commodities, currency are down. Scenario, has the u. S. Reputation in africa been s . Acted and has china as a continent, africa is not based on ideology. People will pick who the better partner is and who is coming up with better and more deals. China has been very active lately in africa. So has russia. In ways we africa had not experienced before, in different forms. Dont know that there is a choice, like it is either or. It is going to have to be a mix of both. Areinda opportunities increasingly in the east. What are European Companies doing, and what is dictating those choices . Orit more political values business calculation . If you look at what happened the last few years, the interlink in the euro asian dimension has grown. , would say that relationships particularly when you look at infrastructure and investments, the balance between u. S. And coming almost at the same level. I think europe cannot afford at this stage. To developcontinue sound and sustainable relationships with both sides. We are way too dependent on both for growth. I dont think it has to do with ideology. It has to do with business. Clear. Very fundamentally, i dont believe that we will ever be facing a situation in which every any country has to think outside. Nona and the u. S. Have interest to create a dramatic break of relationship. It will be extremely damaging for both, and therefore, it is more tactical. There is much more to come on bloomberg best from the new Economy Forum in beijing. A conversation with the worlds richest person, bill gates, on solving the worlds most pressing challenges. The free rider problem has never been were standard is in climate. Viviana plus, how business will shape the new economy . Top executives speak frankly about the road ahead. I think everyone has seen they need a market. Within china, you can build companies at significant scale. Viviana this is bloomberg. This is a special edition of bloomberg best we are focusing on the newburgh new Economy Forum. The Bloomberg New Economy Forum. The goal is to stimulate productive, fact driven dialogue among participants to develop Actionable Solutions on global issues. Executives from a range of industries around the world coming to beijing. Here is some of what they had to say. Markets, we are viewing our customers, where are they going with their demand, where did they see their changes . There has been a lot of discussions. Do supply chains move as trade and tariff negotiations go forward . Will . You seen customers move production . We have not seen that. We continue to see continue to serve customers in china with their plans here. 70 of our revenue is designed in the customers bill of materials or processes they use. That tends to be very long cycle demand from them. That is staying here in china. One of the most difficult markets for you was china. So what made it so difficult for you to gauge customer demand here . It was really, we saw a chinass into markets in in two markets in china. Of auto bills and china slowed down. Automobiles of in china slowed down. Electronics softened as well. Between China Electronics and automotive globally, it is 30 of our revenue without slowing. We had to make adjustments in our plans as we went through the middle and latter part of the air. What are you seeing going forward, will you see that demand especially the on a motto part especially they automotive part come back next year . We see inflections, downturns early, and we tend to lead out as well. Many economists ask us, what do you see and do you see anything changing . Of 2019 it ishalf fairly steady. We see q4 much like q3. We have not seen the inflection up yet. There is hope and optimism that things will get better, but we have not seen that yet in the marketplace. Continue hiking prices if we are in a global trade war . Are you worried that the consumer at some point well stop dragging less . Stop drinking less . Economies areour doing well, they continue to trade up. In less mature markets, and more mature markets, in all those markets there a segment of consumers looking for the next [indiscernible] and that is the taste for them. Have you had to change your supply chain . Not really. 90 of what we sources locally sourced locally and bruno locally sourced locally and tow locally and sell back the local economy. In contrast when there is a tax on aluminum, that burdens the u. S. Were most beer insulting hands. That is a tax on consumers and the industry and a disadvantage where most bears are sold in cans. Youre doing a lot of sustainability. Tell me why this is not pr speak, why this is for real. Overall it impacts water security and be are making. And beer making. Nono water, no beer. Farming, no beer. We are a community business. When you talk about water security, when you talk about consumer changes, one of the biggest changes with this new generation is that for the first time this generation realizes there iso planet b. Only planet a. Theyre worried about what they do that can impact the planet and what companies and brands, and how they can Work Together to have a positive impact in the world we live in. Our brands are all connected to a business that is good for business and good for the environment. Is all of this sentiment being dampened around the world, is this having an impact on your business . It is making everyone more conscious about inclusivity. All our businesses have to understand inclusivity, social tensions, these are issues we have to take into account in our businesses. They are sensitive issues and these explosions that are happening all around the world are happening for reason and as businesses we have to be sensitive to them. Our business is affected buys shifts in supply chains away from china . Definitely we see these taking place. Everyone is at eight china plus one policy and manufacturing. Everyone has a china plus one policy and manufacturing. We have plants in china and the philippines. We have seen an influx of people thing out of china. Beneficiary vietnam as a beneficiary, thailand is a beneficiary paired everyone has seen they need a china plus one model. And Southeast Asia is a perfect venue for manufacturing. Protests hong kong curb your appetite for china at all . No. Hong kong has had a variety of challenges over the years, play clan otherwise. Imis is a serious one sure everyone is watching very carefully. Im not going to try to predict the outcome. It is changing in nature. On the horizon a return to something doubly normalcy. We have been in hong kong since the early 1960s and in china 20 years, so it is not the first thing we weathered. When you look at the u. S. China trade war, it doesnt have an impact on have any people want your products or not at all . We are seen as a u. K. Firm. Where listed there we are listed there. That is a respected structure in this part of the world. U. K. Governance is a well proven model. And the Risk Management for those sorts of tools that we brought here, and are seeing as best practice, which is a great thing. On the u. S. Peace, it is no different than any other applicable issue, it slows down how long it takes on the u. S. Piece, it slows down how long it takes the consumer to make a decision. So the likelihood of making that second or third a fourth payment, people are riskaverse. So decisions take longer. That is true anywhere in the u. K. , and the u. S. , the Southeast Asia. We have seen that pattern emerge across might when he five years with the group across my 25 years with the group. You are watching bloomberg best, a recap of the Bloomberg New Economy Forum. Here is another Panel Discussion from the forum. Carlyle group cofounder David Rubenstein moderated a session that featured global tech leaders examining chinas strides in technology and innovation. I wanted to invest in young Artificial Intelligence companies, should i go to china, the United States, israel . Yes, all those places. We released a study a couple of weeks ago about where ai was in the global scene. There are number of Companies Leading number of countries leading. There is no question that the u. S. Is the farthest advanced. China has made a National Priority leading or collating ai is a huge priority. They are perusing many more articles, patents and computer scientists, so there is every reason to believe china will be a leader as well. Do women have as much chance to rise into Technology Companies as much chance to rise into Technology Companies in china . Or arego out of your way they going to get because they are equally talented, a crosssection anyway . We should create and work on the environment for women. A lot of them when they give birth, we create a work from home environment for them. One technology i would look ar ord to is to invest in vr, and you can totally do that. So you can replicate this atmosphere at home appeared you can have the full expense at home. This is emotional. The Bloomberg Forum is emotional. If we could replicate this at home, it empowers all the women. I think it would solve problems we talked about at this forum. I think when technologies can empower a lot of things, including women and womens careers. The china dispute with United States on trade, has it affected you in anyway or do you care if it is resolved in the near term or will it not affect you one way or the other . It is not affected us, per se, but it is actually dangerous. The way it is going. And if there is really going to or thetional sanctions two countries actually go farther apart. Guess i think if you look at technology advancement, now all we are talking about is innovation. Innovation really happens when people collaborate prayed if you look at china, the Tech Industry ifwhen people collaborate. You look at china, the Tech Industry is to the point where a lot of entrepreneurs who know about the market. At the same time, there a lot of engineers and auditors who have had expense in the states and come back. Andxpense in the states come back. And the capital. Associated with the states, bringing in experience. This type of diversity is important for innovation. Economy becomes more open, the opportunities for local entrepreneurs and Foreign Investment multiply. The countries tech sector has produced giants like tencent and alibaba. Smaller companies and new businesses are also on the hunt for capital. All this against a background of security and privacy concerns ratcheted up by global trade tensions. Bloomberg spoke with several guests at the new Economy Forum about established and emerging technologies and the investment seen. Scene. This unrest in hong kong, how is it affecting investments in chinese Tech Startups . Investments in chinese Tech Startups have been affected, but it is largely due to sentiments. Your the end of a very big cycle in china. So the Consumer Internet companies, that cycle a starting to and, the sharing economy cycle starting to end and youre rounding up to an enterprise focused cycle. Where you see the impact of uncertainty is on the fundraising. Fundraising for dollar raised funds in china is down 75 yearoveryear. And is partly sentiment, partly sensitive to the Technology Cycles we are in. Especially when you have the u. S. Coming in with blocking of alsocompanies, huawei and ai companies. What is the sentiment like, do people want to touch these companies when the u. S. When the risk is there, that the u. S. May block them from the world . Youre talking about companies on the entities last, and huawei and some are quite large. If you look at the start up ecosystem, youre talking about 1 10 of 1 . I do not think on jupiters or vcs are particularly concerned about that when we are making the initial investment i do not think vcs are entrepreneurs are particular the concern about that when we are making the initial investment. That the biggest market even if it is domestic is still big enough . Of its revenue is in china and it is a half trillion dollar company. Tencent is a 400 billion our company, so clearly you can build companies ats and cant scale. Ato that build Companies Significant scale. You will start to see companies expand overseas and be more successful overseas. I think that is a new phase of the chinese Technology Companies moving outside china. They are pretty large inside china. The Chinese Market allows them to get to crack a mass. The u. S. Market used to be the only market where you could get to critical mass. In theou are the largest u. S. Where the largest in the world and that is no longer true. Lets talk about alibaba. White list in hong kong now . Is the shot of confidence in the sector. Trading has was been in york and the stock since thats when he 14 ipo. For the information zone it is really china. Alibaba is focused on the Chinese Market. People in china know a lot better. Institutional investors might have to learn in the us. How much does these help alibaba in the eyes of beijing . Is not unhelpful. These days, the power of the states, the power of the party, one has to follow the party line, or get ahead of the party line to an extent. Has always interpreted well where things are moving in business and government. So this is a helpful move. It also makes sense for them to have around the clock trading. Also tapping into chinese mainland consumers who want to buy and. Ofas we see this bifurcation chinau. S. Trade, intact even, how is this affecting the dynamics of where we are headed in this Global Technology battle . It is a list at try for case and. What is the rest of the world doing it is almost a trifurcation. What is the rest of the world doing . In a case where the u. S. Is not offering an alternative, do Companies Hold back or two countries hold back or work in the ways that germany and the u. K. Are now wrestling with ways to work with chinese companies. We assume by now that Mainland China would be going in a different direction, in terms of opening up, and that is now happening globally paired but this question of where is china headed . Is this the china we were expecting to show up . That is a debate here. What is your view on the state of dealmaking in china now . Activity has come down a big notch this year. Mostly in terms of fundraising as well as the amount of investment paired on our measure anywhere between half to one third. , most of the deals got done. Unicorns are still able to raise a lot of capital. There is a flight to liquidity. Stage in the region happening. A lot of stuff happening in 5g, internet, Health Care Still very hot. Has the Venture Capital industry reached a bottom, or can it continue to slow further . Now i think it is not so much in terms of capital. Still sit on a lot of dry powder. People tend to be more cautious. Because of what is going on at a macrolevel, people want to take more time and see if they can negotiate a better deal. There still a lot of dry powder out there. Welcome back to bloomberg best. Lets wrap up our look back at the Bloomberg New Economy Forum in beijing. Microsoftewed cofounder and bill and litigates foundation cochair bill gates. He boko about the need to engage bill spoke about the need to engage the Global Climate crisis. There is no doubt that solar and wind including offshore wind will be a huge part of that. Because those are intermittent sources, the need either for 24 hour sources like nuclear or unbelievable miracle in terms of transmission and storage, is very high. Look at a country like japan, tokyo, 60 gigawatts, you have seven days we have no wind or sun power at all. You have to say to yourself if youre not going to have people freeze to death, what is the source of energy during that someday. . During that sevenday. Nobles be a lot of her and either a storage it will be a lot of were nobles and either ace a lot of Renewable Energy and either a storage miracle or nuclear. Over transport and industrial and heating that historically went to direct hydrocarbon usage. People Building Models of that future grid, different universities and different people picking their choices, that we the sign that, not only do we have a goal to be there by 2050, but we are debating the pathways and very concrete plans. When you see things like a 50 tax,l tax a 15 diesel the willingness to make the change in investment, you can see that. The free rider problem has never been worse than in the climate problem. The historical omissions of the person, means per that until they get up to that per person and they have admitted omitted as much emitted as much as we have. If you look at the u. S. In particular i do nothing is likely to happen. We have had tax credits on Renewable Energy, renewable portfolio standards, you can get there in a way that is less neutral. There is a variety of helpingons, and sectors. What has happened to solar and wind is very good. What is happened to the industrial sector, in terms of how do we make steel and cement, people of gotten excited about the low hanging fruit. Electric cars, that is the easy part. You still have to do the grid. The various things, including industrial, are very, very difficult. Timesr, you get a million much energy per reaction as you do burning hydrocarbons. It is advantaged if you do the design right. I cannot say for sure it would succeed but it would be good in this innovation portfolio. We have to have a lot of bets going, knowing that some of them will not succeed. Rapower, youe think youve come up with a design that would be safer and more efficient. In the computer are designed can see me like earthquakes, volcanoes, planes crashing, all sorts of things that none of the existing nuclear plants, cutie do any of that. You can show could you do any of that. You can show your cost and inherent safety are strong. We need to build a demo plant. At one point we planned to do that in china. The Us Government decided that we should not do that. So now, the backup plan now, is we will try to build that demo plant in the United States. It is not an easy endeavor. None of the paths to climate success are riskfree. A big threemonth this conference is china in america paired Henry Kissinger said we were in the foothills of the cold war. As long as i have known you you have been a passionate advocate of engagement was china. How do you view the Current Situation . Im even more passionate about the value of engagement than ever. Years, ive seen a lotta boisterous arguing against that, even arguing a lot of that,rous arguing against even arguing in some cases for decoupling. I think it is a benefit that there is interdependence paired we have tourists from japan and china. We have students from china we have companies that do research in china. Apple is the tech company that actually sells him of the only tech company that actually sells a lot of product here in china. That interdependence can lead to more dialogue, more mutual understanding. To have people arguing against that is a serious concern. That is all for bloomberg best this week. We hope you have enjoyed our review of the Bloomberg New Economy Forum. You can find many more stories on what is shaping the new Global Economy, as well as much more video from the forum at bloomberg. Com as well as all the latest Business News and analysis, to four hours a day. Take you for watching. This is bloomberg. Taylor i am taylor riggs in San Francisco and this is bloomberg technology. Coming up, teslas cyber truck debut. Demos dont go exactly as planned, but the specs are sharp. We get the opinions. Growth spurt shares. We hear from the ceo