market, that is the title. retail earnings rolling out this morning. economic data showing customers are slowing their spending. october retail sales data shows the slowest growth in about six month. joining us to break it down is michael mckee, bloomberg economic and policy correspondent. michael: we call it getting whacked upside the head here in the colonies. in april, just a 0.3% gain for the month of october, down from 1.6% in the month of october, with the pendant was at its worst in april. only five of 13 categories rose last month, compared with 11 of 13 in the prior month. october andm november seems to be getting worse. jp morgan economists report that chase card spending has fallen notably in the first part of this month. it is, as they say, really dropping off,. that suggests a weaker month ahead. who knows what will happen with black friday, if anybody cares about that anymore, but it is a clear americans are cutting back. the actual results come a much less meaningful than the third quarter numbers. it is about who is doing well and why. take a look at the chart here. walmart beats expectations pretty much across the board. earnings up 6.4%. sales fell-store 6.4% compared to walmart's gain. it is because walmart is an essential retailer. they are selling stuff like toilet paper and groceries, whereas kohl's is selling apparel. it depends on who you are and what you are selling at this point, which may be budged difficult for the coming quarter. home depot slipped in early trading. they had a good quarter in terms of sales, but they are expecting higher costs because of the pandemic. everybody being affected by what is going on with the virus. it just gets back to what we always said. the virus decides. guy: absolutely. the market getting whacked in the head by this data. you have to wonder what the november number is going to be looking like because many of the restrictions that we have seen starting to be put in place in the states are not in that data series, they will be in the november number. mike mckee, thanks very much, indeed. let's carry on the conversation about what is happening with the u.s. consumer. joining us is chuck grom, gordon analyst.esearch retail start big picture. the retail sales number today was weaker than the market , wecipated, and as they say are going to see the next set of data factoring in significantly greater restrictions as a result of covid. what is your big picture view of what is happening with u.s. retail? chuck: good morning. we expected some of the commentary this morning on walmart to be a little bit negative. our traffic data in the beginning of the month pointed to a little bit of a deceleration. you could sort of articulate for warmer temperatures throughout the country, but ironically, i just got off the calls for both walmart and home depot, and home depot said so in, the first two weeks november has accelerated from a 23% pace in the month of october. walmart outlined that the back half got better as back to school more normally and food strengthened. we will see. i know the retail sales number was softer on a year-over-year data weut the real-time are getting from walmart and hd is pretty constructive this morning. alix: let's take home depot for a moment. we did get the housing market index that beat again. forecasting depot for the first quarter as lockdowns continue? chuck: they didn't specifically give a guide, but i would say their tone on the house was about us constructive as i have ever heard them. i think that bodes well for them. the backlog on the pro business continues to grow and get bigger, which echoes commentary from a number of other home-improvement names. in the the outlook home-improvement space is very good as we move into the fourth quarter and the beginning of next year. guy: let's explore that a little bit. are these stocks you want to own when the vaccine effect kicks in? am i going to want to fix up my house, or am i going to go to a bar? am i going to be spending money at home depot or at the bar? chuck: personally i would rather go to the bar, but that's just my own thoughts. guy: exactly. chuck: i do think you need to be balanced. we outlined this in our retail playbook we published last week. we do think you want to own some names that are going to become back players. in my view, that would be the off-price retailers. to abandon some of the covid winners would be shortsighted. a lot of these businesses are going to be sick if lay better significantly better off today. a number of retailers are going to buy back more stock. i think a balanced approach next year it's really the way to play it. alix: let's end here on walmart. i am curious as to how they are looking at their inventory over the next few quarters, particularly when we got the news that amazon is launching an online pharmacy. i can't imagine that that is not worrying them in some capacity. chuck: actually asked that question on the call. they feel comfortable about where their health and wellness business is at this time. they are probably still digesting the results. on a noon tory, inventory was flat year-over-year, relative to sales up 6%. so they are in a very good position. the bright spot in moments results is really on the gross margin line. margins are really strong, and part of that is being fueled by better profitability on their digital business. i dick bremer -- i think walmart, which is flat now, should be up. that was one of the best prince in quite some time. prints in quite some time. the results were really very strong. alix: check, thank you so much. -- chuck, thank you so much. coming up, alan blinder, princeton university professor and former federal reserve vice chairman, will get his thoughts on stimulus and who is in line , asake the chair of the fed well as treasury secretary in a new biden administration. this is bloomberg. ♪ let's ritika: -- ritika: let's check in on the bloomberg. in the u.s., new infections are soaring at the fastest pace since the earliest days of the benefit. california has reimposed bands on many businesses. oregon, washington, and new jersey have tightened restrictions. former president bill clinton says it is clear that joe biden will work to strengthen ties with organizations such as nato and the world health organization. he spoke at the bloomberg new economy forum. clinton: we shouldn't accept or assume that it is all going to be bad without working to make it better. newe got to give the administration a chance to articulate an approach, and then try to achieve, in cooperation with europe and the united bodies.nd international ritika: he said the u.s. and its allies need to take a more coordinated approach with beijing. senate republicans are trying to push through the president's controversial nominee for the federal reserve board of governors. now a third republican says he opposes the nomination, lamar alexander of tennessee. approval could determine on whether all senators who approve of shelton show up for a vote this week. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm ritika gupta. this is bloomberg. alix: former fed chair janet yellen's had to be among those in consideration to be joe biden's treasury secretary. speaking yesterday, the former fed chair did not push back on those reports. >> i have to ask you, would you like to be more closely involved in that as treasury secretary for the new administration? >> i don't have anything for you on that. i'm sorry. >> you do think you'd be a good treasury secretary? i could probably ask the rest of the panel that. >> that is for other people to decide, i think. >> she would be a great treasury secretary. alix: great exchange. joining us now, alan blinder, princeton university professor of economics and former federal reserve vice chairman. it is so great to talk to you on this. do you agree? would she make a great treasury secretary? alan: i think so. i have no idea if president biden is going to choose her, but she is very well suited for the job. guy: do you think in that situation, we could see monetary policy and fiscal policy working more closely together? we are certainly seeing that here in the u.k. at the moment with the treasury and the bank of england. alan: very much so. you don't want to get too close. there is a separation, which janet yellen knows better than anybody, and necessary separation between the executive branch and the legislative branch and the central bank. but in terms of close cooperation on things that are of common interest like the fed liquidity facilities and many other things, it is hard to imagine a tighter relationship than janet yellen and jay powell . alix: fair point. the other question is what it who isor lael brainard, reportedly in the running for treasury secretary. do you think something like that is enough to do something like extend all of these programs past december, things like definitely getting some kind of stimulus done? handsstimulus is in the of the congress, but extending the liquidity facility past december, i don't see why steve hasn't let that go for one millisecond, but apparently he is. i don't think there will be any hesitation. it is borderline crazy to stop those now. guy: ok. why is that? what do you expect from the economy between now and january? we saw today with the retail sales number an indication perhaps that the covid restrictions have started to have an effect, and that is being done at a time when we don't have that stimulus that we did have earlier on in the year. how bad could those sorts of numbers get between now and the end of the year? alan: we don't know, but they could get very bad if we don't have another tactic. i don't think it is covid restrictions doing it. it is the voluntary actions of people who don't want to get sick and die. people were afraid in march, and they are afraid again now, and that kind of thing can wear on consumer spending and the economy more broadly. to your question about , the fed hasazy been amazingly successful without putting that much money at risk in backstopping the bond market and several other things, but putting their pledge on the line that we will be there if necessary. why in the world would anybody dream about taking the way pledge now? alix: you are really echoing what vice chair richard clarida said yesterday. he said the federal reserve is committed to using all of our available tools, not just the federal funds rate, but also large-scale asset purchases, to achieve our dual mandate goal. right before this changed their fed call and sees more fed bond by income december by about $80 billion -- bond buying come december by about $80 billion. what does it do? alan: i thing it is a tiny difference. the fed is grasping for straws now. i won't say it has shot its entire wad, but almost its entire wad. there's just a little more it can do. i think you have to be incredibly up to mystic -- incredibly optimistic or trying to put on a brave face. i would be doing what clarida is doing if i was vice chair of the fed now. but realistically, it would be positive for the economy, but a very small positive. guy: one of the things the fed could do now that it is no longer really supporting market function is extend the duration of the bond buying. do you think that is a logical next step? alan: absolutely. think those are the two. the two most likely things the fed will do if it feels it needs to do more, and that is tied up with whether there is a fiscal buy more andore -- buy longer. by historical standards, the fed is buying out the yield curve, but it could go further than it is. that would have a marginal positive effect on long-term interest rates. the 10 year bond rate in recent 0.7%, 0.8%,een 0.9%. how much lower could it be pushed? the answer is somewhat lower, but if you believe if i do, as the fed has said many times, it is not going for negative rates in the short end, it is not obvious that you could go very , even byr on long end concentrating more purchases. don't get me wrong, i think they should. i don't think we should have high expectations of how much. alix: today we are going to see a procedural motion in the senate to approve president trump said nominee judy shelton -- president trump's fed nominee duty shelton. if this goes through, do you think this changes how they think about monetary policy? alan: not much. if she gets on the fed, which i hope she won't, sheldon will be one vote -- shelton will be one vote. she won't take many people with her. she's the only one really that has the kind of beliefs that she has. but maybe a tiny bit in that the fed might think if we are going to do more, maybe we should do more before we have judy shelton voting. alix: that is interesting. alan: not a major effect, but if there is an effect, i would think about it in that way. guy: a broad kind of thought on this. do you think there has ever been a point, using there is a point where the fed can suffer from groupthink? as a result of which, do you think a more diverse group of should be on the look out this point? it looks that way to me when i joined the fed in the mid-1990's. i joined, and janet yellen joined right after i did. we were the first democrat to go over and 1000 years or something, and i think there was groupthink, and i thing it is good to have diversity. that is why we have staggered terms. the idea is the president gets to make some appointments. but there's a long way between that and putting somebody from the economic equivalent of the flat earth society on the board. i mean, those kinds of use are not going to be taken serious -- kinds of views are not going to be second seriously. a serious conservative or serious liberal voice on the committee might have some effect. i think in any case, it will be salutary in terms of getting away from groupthink. but somebody that is way out in left field or right field is just not going to be relevant to the debate. there may be more dissents. you could see someone like that descending all the time from the majority. the fed would rather not have that, but it is not going to really influence the debate. alix: something that also may come up under a biden administration is regulation. you were really focused on bank supervision and regulation, derivative instruments when you are at the fed. do you expect more oversight of big banks, regional, private equity, hedge funds, nonbanks? what do you think? alan: well, that was a long list. [laughter] let's start with the place i don't think it will change, which is the big banks. the big banks have been under the fed's supervisory umbrella for some time now, with not much ambiguity since dodd-frank. there is no ambiguity now. it is the fed now. it will be the fed a biden administration. then you reeled off a bunch of other institutions, going all the way to hedge funds come eight not regulated by anybody basically -- hedge funds, which are not regulated by anybody visibly. it is conceivable that the biden administration would like to extend the regulatory umbrella to some of these other institutions. depending on the details, it will likely need congressional authority to do that. as we all know, if the republican majority stays there with mitch mcconnell acting like a cement block, the prospects for doing that are pretty poor. the question will be what can you actually do with the regulatory authority that exists. and i don't mean to demean that. you can go a long way. we now have, leaving aside the fed, which takes it much more seriously, a bunch of deregulatory regulators. if you put in place people who believe the financial system needs regulation under the same laws that exist now, i think you can make a very big difference. guy: just a final quick question for me. we have just seen the nahb homebuilder index come in at a record. you think the fed can never step away from supporting the housing market? time so i is a long guess i will say yes, but it is not on the near term horizon. the way the fed supports the housing market is basically by keeping interest rates very low, and that is not going to end for quite a long time. itsndarily, by including quantitative easing, which helps market enormously, which in turn helps the mortgage market. the fed is not stepping away from that for a while. onei think the principal which a lot of people don't understand is the federal reserve act gives the fed a very limited menu of assets. the ecb's menu is much broader. the bank of japan's menu is far broader. the fed is highly restricted in terms of what, other than treasury issues, it can by. but one of those things are the mbs of fannie and freddie. as long as it needs to buy assets, it is going to want to keep buying them. guy: alan, really appreciate your time. thank you for sharing it with us. alan blinder, former fed vice chair, thank you very much. let's now go to the bloomberg new economy forum. bloomberg's erik schatzker is hosting a panel with ray dalio, the cochairman and co-ceo of bridgewater associates, and the executive chair of santander. they are talking about what investments will look like in a postcrisis world. let's listen. news of major progress on vaccine developed has looked at our hopes on vaccine development debt on that -- on vaccine development has raised our hopes. what do you see of the most lasting effect of the pandemic for years to come? anna, why don't you start us off? >> sure. we have learned a lot on a personal basis and in our professional life, and i think this is going to really result in permanent consumer behavior. how exactly that is going to happen is not easy to predict right now. i think first of all, there is a .uch faster digital adoption just to give an example, this was the case in argentina and the u.k., 80% of all our sales of financial products were online. the average for the group was 50%. i think this is clearly one of the more important acceleration trends. this is going to result in big changes across many industries, of course. very importantly, companies that have traditionally been very have really accelerated to change online. beyond that, i think it makes us all very conscious of this global trend, so climate change, like the virus, affects all of us. if we don't change together, it is not going to work. i think this is the other realization. on the other hand, very much and inward looking what happens in , what is happening to me and my health, and again, trends like climate change are important to the rest of the world. some of thee are things we are going to be seeing, and this is going to have a big impact on our communities, how we live, and we need to make a big reflection. i hope that we will do this together, the private and public sector, about how this new world needs to be governed, from taxes to regulation to competition because we are going to be deep into the digital economy, and we need to change the way we operate. --erik: ray, your thoughts on the most lasting effects of the pandemic. it appears we may have lost ray's mic. if you can hear me, perhaps turn your mic back on on the screen. i'll tell you what. while you work on that, let me turn this question to anne richards. anna just gave her sense of how this will change things over the long run. what do you think? >> i totally agree. i think there's three things that have meaningfully changed in the last nine months. the first is around the general macroenvironment. the situation we have been in with the incredibly rapid monetary policy shift we saw in march and april, the speed of the central banks, the extent to as a way ofedness navigating through the trough has risen up. that debt burden is going to be with us for a long time to come, and how we deal with that is going to absolutely drive the forces we make around that the next decade in terms of what the path of the economy is going to be. theink the second is around conversation around sustainable capitalism. anna touched on this. she talked about climate, a new kind of governance model. i it is really interesting that business is probably ahead of government and policymakers now on the issue of sustainable of aalism, perhaps because near-death experience, and perhaps because we have all suddenly realize that shocks actually really can happen like a pandemic, and maybe it has brought the reality of climate change a little closer to home will not -- closer to home on that. i think this business led approach to sustainable capitalism is a real driver, and that is not going anywhere anytime soon. the third thing, and i suspect a lot of people watching will understand what i am saying, is we have learned that the radical, the unexpected, the really innovative can be done far faster than any of us ever thought possible. when we looked at rolling out zoom across the business, we did it in 25 countries in less than two weeks. a normal project, that would have taken us eight months in the normal way you would do it. and yet, because we had to do it, we did it with remarkable rapidity and with almost no problems are consequences and the way we did it. it has shown us that when we really need to, we can do things much more quickly. i think those are the three things that have meaningfully changed as a result of everything we have seen in 2020, and the effects will be long-lasting. heard aboute have this idea that the shock of the todemic has awoken the world the need for a more sustainable version of capitalism. this is something that you touched on well before the pandemic. i want to hear your thoughts on that point, and also more broadly what kinds of long-lasting effects you think the pandemic will have. werei think that there vulnerabilities that existed under the system, and covid is a stress test, and it will go away. but there will be some things that are broken for a long time, and some things that are changed. gaps of all, the financial between entities is clear. the rich, the poor. those who have good income statements and good balance definings been a characteristic. some of those will be broken, and it has enormous political consequences. the left and the right will be i think in greater conflict. so that issue has also been connected to the changes in anne was credit that whispering to. -- was referring to. was qe, it didn't pass through to those who needed the money the most. what we now had was we are now in a new era in which there is going to be government borrowing money and directing that money more than the normal capital markets, and central banks buying money. that is going to have a profound money,on the value of probably reserve currencies and so on. related to that is it is a defining moment in terms of the strong and the weak. for example, china has come out of this very well, and it is going to change the nature of capital flows, i think. politicalve implications that will be very important and will be clarified over the next two years. you have three of touched on the macro impact of the pandemic, and i am delighted about that because i want to delve into that more deeply. before we go there, i am curious. every company has been forced to 10, 11ver the past 9, months. many ceos are pleasantly surprised by the results of that adaptation. briefly from each of you, i would like to know, what one change have you made because of the pandemic that will become a permanent part of the way that you do business? anne? : i suppose the most significant is to realize that we do not mean people to be in the office every day. we are moving to rolling out a much more fixable approach to who comes into the office, when they come into the office, what they come into the office to do. we've learned that actually, we can focus on the output rather than the input and get really good results. in some instances, we have seen operating data actually improves through this, which is not what you would expect. so i think that that is what i would highlight from us, the flex ability of where and when and why we work. bridgewater, any one thing you have done differently as a result that you think will stick? locations have the and digital part of it, but as a global and macro investor and all of the liquid markets in the world, to use this as an for differentiation and diversification of our portfolios to make sure that those kinds of surprises and those kinds of differentiations are reflected in our portfolios. alix: and anna -- and erik: --erik: and anna, one thing that santander is doing now that will become a permanent part of the business? anna: it is a very important change. in the way we manage the pandemic, we did not have somebody to manage a health crisis. we looked at health and technology customers, public policy, and organized in a different way. i have pointed a business leader to be the head of covid. he's the head of our world management division. he created a very specialized group across the whole world, and i think this is a huge lesson and something we are going to repeat and do again. way allganize the same the time, we can have a much more flexible way of getting things done, much more effective , and i am sure for many whatnies, this is maybe they do already. for us, it has been an eye-opener that we can manage the business in a different way and do it very effectively. within 15 days, we had 130,000 people from brazil to pull into the u.s. -- to poland to the u.s. communities to help with a very different organization from what is usual. so this is very important for us as a company. erik: the title of our panel posits, not unreasonably, that we have entered a new world order. anne, you already touched on it with debt burdens. ana, you spoke about the awareness of climate change and how there are similarities between that and the pandemic. ray, you talked about how ments are going to have to conduct themselves. i would like to quote tom orlik. he said, "the comic gravity is shifting from -- the economic gravity is shifting from advanced markets to emerging economies." i want to know from all three of you what you think the new order will be. are they right, or will things play out differently? ray, this is your wheelhouse. as you look out into the next five years, maybe be young that, giphy -- maybe beyond that, give me your macro framework. and i studied the rise decline of reserve currencies over the years, and this is a change in the world order very similar to that which happened prior to world war i, prior to analogousii, and period. there's large wealth gaps and income gaps and opportunity gaps that exist. there is no time that has been 1930's.ge since the at the same time, monetary policy and debt policies in which, when you have a zero interest rate, there needs to be the expansion of debt, and that monetization of debt, the last time that happened like this was 1930 to 1945. the rising power of china challenging existing power and its competitions come of the last time that existed was in the 1945. inre are struggles -- was the 1930's to 1945. there are struggles for power within countries and between countries. that confrontation, that issue about how to deal with that, whether it is in a peaceful way or a confrontational way, within countries, like our political and social divide that exists in the united states and in many countries, or between countries such as the conflicts that exist between the united states world order and the chinese rise, and which there's conflicts, there's a trade war, a technology war, i geopolitical war, and even a capital war now, and then there is military conflict, i believe we are coming into a more challenging environment because of the nature of how this happens over and over again through history in the cycles, so i believe your summary at the beginning was apt. anne, do you share ray's view of a more challenging environment? do you see things differently? that is a complete leak credible pass and credible set. it is one route we could go down. but i think it is also worth focusing on where are the points of shared interest, where are the points of commonality. china and itself has more than one billion people, with one billion different views of what their futures should look like, just like america, just like europe. everyone has their own view of what they expect to share and get asey are expected to a share of the pie. it is more constructive, and this is where i hope we will get to focus on where there are common interests and get back to a more multilateral approach to trying to solve those interests. climate change, dealing with the , dealing with the environment is one place where humanity has a shared interest, regardless of what side you are on, and we lost a little bit of that shared goal. i think the opportunity for us now is to focus on where there is a common ground, where there is common interest, but it will be easy for us to slip into the have in mind,we which is to focus on the differences. and sayant to so agree that i think this is a defining moment of how we are going to be with each other internally within countries and externally, but we are still going to have to face the problems of how do and craft money credit, and get into the hands of those who need it most. i think the summary is completely right, and i hope we follow that better direction. anna, your thoughts --erik: anna, your thoughts on this as you are looking into the future and making decisions about how to run your company. what are you anticipating? : ray and anne have said it all, and i agree with everything. how do we manage the distributional aspect of this crisis? i think that is the key. other than that, the structural trends we see are the same as prepended. they are just accelerating, and have accelerated at the next potential pace. so how do we deal with those most affected by this pandemic? because this is really going to make things worse than they were before. monetary policy obviously benefits those that already have financial assets. so i go back to we do need it. i go back to the new social contract. what is the new governance of governments around the world? is we putre fairness and social resilience at the heart because the economic terms have to be based on fair competition, fair taxation and distribution efficiency. we need to build a more inclusive and sustainable recovery. i believe we need to get public and private sectors. governments have done the best they could, but in most cases, they were not ready. they did not have a governance or leadership to actually deal with this in the same way we did. we put together things in two weeks. we had leadership where we didn't have it before. we had a plan. we executed. as we think about the new world, and it is a new world that we are already in, working together in the private and public sector is key. otherwise we are going to go down a very bumpy road, and i think there is a real risk of the happening because economy is a very different world then it was before, and we have accelerated. again, putting social resilience those are the key concepts as we have built this new world. erik: let me stay with you because i would like to understand a bit more about how you adapt to that environment that you have articulated. santander has a big geographic footprint. if my colleagues are right and there is a pivot from developed markets to emerging markets, is that something that you chase? you don't have to chase it very hard because you are already in emerging markets, but i am curious to know what kind of strategic impact or adaptation you make to adjust to this new reality. ana: am actually just back from my first trip to the united states in february. fromf our earnings come latin america, with only 13% of our growth. there's a huge potential for growth in the areas of the emerging markets that we know well. so we are going to adapt our strategy. we announced this a few months ago. we are working along three lines. we need to become much more efficient, especially in europe. we need to manage as one entity, not four or five for 10 different countries. .he second is around payment we have been doing this for four or five years, but we are bringing it all together. are going to build around a resilient company which is one of the leaders in payments. we are going to build around and do what our customers and consumers are asking. they want to do with us more online. we need to rethink how we service consumers and how we also organize ourselves, taking in the lessons we have learned during the pandemic. this is true for all companies in all sectors. anne, how about you? other companies in your industry have chosen to go down the consolidation route, and that may not be exclusively because of the pandemic. there are all kinds of other factors, let's say, or variables involved in that equation. is that how you adapt, or do you adapt differently? anne: we've made acquisitions from time to time, but our growth has largely been organic, and i doubt very much that will change. for us, the core of our investment proposition has very on abeen driven research base. we had a great year this year, which is not necessarily where we expect it to be back in march. we see there is consolidation in the industry. i think we would prefer to stay strategyn with our own and build that out organically and with patience. we are lucky in that we have a very broad international footprint. we are presented more than 25 countries around the world. they need to fill in some of the gaps is maybe less strong than others in the industry, and we are excited to continue on that route. question to you. we have seen more consolidation in banking then in some time. will it continue? participate?r ana: we are much more likely to continue buying technology for add-on acquisitions. we serve today 145 million customers worldwide, more than any bank in the western hemisphere. this has huge potential for very what weant valuation want to make sure if the structural changes we have made will help us drive sustainable growth. so we are not going to take part in any traditional bank consolidation. we don't think that is the right thing for us at the moment. ray, you --erik: talked about the need to diversify. you were speaking about the investments that bridgewater is making. can you give us a little more on that idea? how does bridgewater adapt to the new world order that you have been thinking about for a long time? anybody who is familiar with your writing, your speaking knows that. i presume some of the things you have been doing have been in the works, but nevertheless, here we 2020, and it is a different place than we were 11 months ago. ray: there's a business answer to the question, how we operate businesswise. i would like to emphasize the portfolio because i think that is probably most relevant to other people. period of great risk, so i and great ,hink there are three words diversification, liquidity, and then differentiation. we want to make sure that our investors are not just concentrated in some of the traditional markets. so diversification on how to do that well can reduce risk without reducing opportunity, and that means currency diversification, including the reserve currencies. how much exposure is to the reserve currencies. but it means currency diversification, asset class diversification, country diversification, and that should be the starting point of a portfolio. in terms of liquidity, it allows you the flexibility to change as circumstances change. the mostiation is important consideration. there are two different worlds there are worlds that will be orderly and will prosper in this kind of environment, and you can see it. when that differentiation between other worlds and markets related to that, that will be bankrupt and disorderly. that kind of differentiation is important. , wear as the business goes have the different location considerations and long relationships we are building on. you to am going to ask continue because he just said something that, at the very least, interested me. this idea of bankruptcy and disorderly mess -- and disorderliness. where do you see that? the it is reflected in income statements and balance sheets. every individual, every company, , how well they are depends on how much their income ative to their expenses . so you can see radical differences in the financial consequences of that. secondly, the proximity to those who are printing and distributing money. are you a recipient of that? for example, a lot of the third world is not a recipient of that and is not in good financial situations. and then there is order. political and also social order. you can see it differentiated in controlling the virus and performing well together. you can also see it reflected in the political and social conditions. erik: we know that markets are discounting mechanisms. i don't need to tell you that interest rates at zero, but i will remind everybody that stocks keep rising to new records not just here in the united states come but globally. pe ratios not been this high since the dot-com era. the dollar has slumped to a two and a half year low. do asset prices and valuations make sense, given the economic fundamentals, some of which we have talked about in this panel discussion? and for that matter, the policy outlook and what we can expect from a bad administration? what do you think -- a biden administration? what do you think? at: when we look interest-rate markets, we look at the earnings yield. when we look at the stocks and we look at pes, they are basically yields. to capacity of central banks print money and buy financial assets has essentially led the bond market to go to multiples that are somewhere between 100 times -- you know, you put a dollar out and you get your money back in 100 years. .t's because of the nature you have to compare stock multiples to bond multiples. so the capacity of central banks to put liquidity into the system and to have that liquidity go to produce high multiples is very real. it also changes the economics of borrowing. in other words, if you can find something that makes anything or going tozero make money, so that encourages deleveraging and the changes. the financial flows we are seeing the market behavior is reflexive of that. in my opinion, don't own bonds and cash because they are producing a lot of debt and a lot of money to fund it, so that is changing nature of capital flows. it is also changing how those flows go to china in terms of the comparison of that market, particularly as it opens. i thicket is behaving sensibly, as don't use old multiples reflections of the limitations of what is expensive. anne richards, does that make sense to you? throughout the old orcs a taxi -- the old orthodoxy? that we need to change the way with thick about values and multiples on assets? anne: of course it does. we have never been in this situation for a length of time where we had essentially free money. it has completely shifted the relative valuation of assets and how you come up to establish that as it is. this ability to use the central bank balance sheet is a massive buffer to manipulate the price of that money. that has taken us to far further reaches than you ever imagined possible, but there are consequences. the gaps that ray mentioned cap.er about the fairness it has been very easy for large companies to echo ties themselves. have been much tougher for small companies to do the same thing. a potential is problem for the recovery, which we need to address. essentially when you've got this level of indebtedness, you can grow your way out of it, you can inflate your way out of it, or you can default your way out of it. there are choices in which route you follow down at. this is the way we come all the way back to sustainable capitalism because if we want to be successful, we have to think about how we use this free money to ingest and job creation and production capacity, useful productive productivity improvement, which gets assigned positive path for the economy as a whole. this is the choice. if we waste this opportunity, if we waste the free money, if it only goes into financial asset inflation, then we will have a very large reckoning down the line. so again, i think there is a choice to be had here, and i really hope you make the right choice here -- i really hope we make the right choice here. you haves anything said, or what ray has sketched out, change under a biden administration. anne: i think you will see increased willingness to engage in a multilateral basis, which i think will be help in some of the issues we are talking about. . the likelihood of a split congress means the more radical and larger fiscal packages which were talked about are perhaps a little less likely than they were, so i think that multilateral approach will be the single biggest change that we see, and perhaps the tone of some of the communication. i think we may see some interesting conversations around large tech and just what the roles and responsible of the czar -- and responsibilities are. i think there is a sense that the concentration of power gives them great leverage, and maybe we need to think about a broader framework and a multilateral framework for them to operate within. erik: zero interest rates may have been a boon to stockmarket investors. they are not the world's greatest things for bankers. tell me how you are adapting to that reality, and maybe touch on e spokee bit of what ann to in terms of changes we might look toward in the dynamic under a biden presidency. ana: sure. the first thing is that, as far as not just a biden presidency, i think this is the case for europe and countries that actually go through this, we should not withdraw support .rematurely we need to continue with support for the small and medium-sized companies and those that have lost jobs and so on. in terms of the u.s., i think the u.s., like the world, has a complex situation, nothing when you to come together and work together to grow out of this in the right way. the main task that the ivan and public sectors have ahead of us. the banks in particular, the low interest rate environment is not a deal, but it is it -- not ideal, but is a huge opportunity to reinvent ourselves. ray mentioned how efficient you are. we continue to have 47% cost income. this is the best defense. same thing for government. we do that in a sustainable way. ray, i'd likee, to thank all three of you. great conversation, and great to see all of you. >> erik, thank you so much. next up