tv Bloomberg Markets European Open Bloomberg November 17, 2021 3:00am-4:00am EST
new economy forum in singapore. later in hour we will be speaking with goldman sachs c.e.o. david solomon. let's take a look at the futures then after a solid day on wall street. the handover to asia, though, was more menifield. you were down on the -- more mixed. you were down the on the nikkei and more mixed on mainland china and maybe ease up on property curbs. the futures as you can see are pointing just slightly lower in the session. here now you have the open just a few seconds in. the ftse 100 is currently flat in the first few seconds of the which will be looking across the financial sethor on the back of a rising yield trajectory. what that means for technology as well. you had the strongest dollar in a year state side. that continues the strength for the dollar. yields above 1.6%. down .2% on the ftse 100 down 16 points. spanish ibex lower by .1%. the german dax as well also flat. we will have a look at the cross
asset and see how things are playing out particularly in light of that inflation print out of the u.k. a near decade high. 4.2% year on year for the month of october. what that does in terms of building to the picture for the b.o.e. as they consider possibly a rate hike. that is the view, the consensus now for the month of december. this will strengthen that case. the bloomberg dollar index currently unchanged after that strength. again, one-year high. the pound has strengthened given
hawkishly could pay great dividends for the committee in the year ahead or the 18 months ahead. because it means that we would have to do less later on. and you would smooth this whole process out some. the inflation rate is quite high. the core p.c.e. inflation rate, the committee's favorite measure is about 3.6%. that's the highest it's been in 30 years. so i think it behooves the committee to tack in a more hawkish direction. but we could move faster. we kept optionality on this. that we could speed up the taper if it's appropriate. tom: ok. joining us to discuss the markets in depth is our markets editor christina aquino. thank you for joining us on set as ever. we heard from jameis bullard putting the case, there needs to be more aggressive action when it comes to the taper from a the federal reserve. the retail sales number out of the u.s. was strong of course. the markets, the equity markets reflected that as did the u.s.
dollar. does anything change in terms of how it should be -- we should be viewing the taper time line from jay powell and company? >> i think beyond the taper time line the thing to consider as well is when the fed starts to raise rates and the big question that tapering is a done deal at this stage. francine: all about the rate hike cycle? >> absolutely. the big debate is how much they will go in 2022. when the first rate hike is going to start and how much they're going to do rate hikes priced for the fed in 2020 but room to increase that. hawkish chip tear from the fed bullard and other members of the federal reserve committee and also who the next federal reserve chairman is going to be for or the next federal reserve chair a battle between brainard
and powell at the moment. and we're expecting to hear president biden's pick for that very, very soon. tom: in the next four days is what the president has said. so where watching that very closely. it seems like according to some commentary brainard is now maybe getting something of a lead on powell. so to what extent is this priced in by investors on some measures both very similar in terms of the dovishness at the start is when it comes to the regulation of the banking sethor that there's the difference? will there be a surprise do you think? will there be a sharp move lower if brainard gets the pick? >> when we first got the whispers of the possibility of brainard being a federal reserve chair, that's when we got the initial reaction to that. and so now i think-the-on the market's radar and probably won't be that much of a surprise. but yes, absolutely. i think the big questions here when it domes to brainard when it comes to regulation and longer-term approach for fed policy, again, how quickly the fed is going to go when it comes to its rate rising pace. and longer-term trajectory of
rate hikes in general. tom: ok. talking of rate hikes we had that inflation data out of the u.k.4.2% year on year for the month of october higher than the estimates at the 10-year high. it is a rate hike for the b.o.e. in december baked in? >> definitely as far as the markets are concerned. tom: they got it wrong last time. >> exactly. so that is the big question again for the b.o.e. it depends now on whether markets are -- or whether the b.o.e. is going to align with markets this time around. what they do have this time that they didn't have in november is more data on the labor market. especially after that post furlough period. i think that was one thing that was missing in their arsenal when they were trying to decide on rates in november and now they have that. they also have additional data again from the c.p.i. perspective. and a lot of that we can see is energy driven. but i think combined with the labor market data, the b.o.e. is going into december's decision with a bit more information than november. tom: and andrew bailey has stressed the importance of the labor market an interesting is
your vea by the banc of america saying 465,000 people here in the u.k. have disappeared from the workforce pointing to that tighter labor market. and crossing the terminal the u.k.10-year yield rising above 1% for the first time which points of course to your note that the markets are pricing this in in terms of the rate hike in december. thank you very much. as ever. christine aquino our markets editor. let's cross over to singapore where our co-mid atlanticor francine lacqa is at the bloomberg new economy forum. francine, we're trying to line up the connection. i know we got a line of excellent guests and executives and interviews that we have on the agenda. you're going to be conducting them for us. what is the mood in singapore and what is the -- on the agenda today? good morning, francine, good afternoon for you. francine: hi, tom. yes, well, i have to say a lot of conversation is actually on inflation. a lot of conversation is on the energy that we saw last couple of months and exactly what that means for a lot of businesses represented here.
so we'll be having a great conversation with the goldman sachs chief executive officer, that's very shortly. david solomon. i'll be asking him not only about what he's -- on glasgow and how finance can help the transition into a greener economy. but we will be talking about the markets and talking about china and we will be talking about inflation. other things coming up, we'll talk about exactly the relationship between president biden and president xi. our editor-in-chief john micklewait had a great conversation with gina raimondo they will pivot to asia or come up with new foreign policy on asia in 2022. all eyes on singapore from the bloomberg new economy forum. tom: yeah, francine. fascinating to hear of course the secretary there raimondo in singapore talking about the need to shore up supply chains and building out those relationships with singapore, japan and others in the region. and also kissinger saying this was the first good step in terms of the summit between the president and you got to see concrete action on the ground.
francine: it was one of the highlights and we're just getting started here. so it's day one and then we'll have much more on day two. tom: ok. co-anchor francine lacqa on the ground for us in singapore at the new economy forum and you can be listening in to the conversation with goldman sachs c.e.o. david solomon in just under 30 minutes' time. make sure you tune in for that. coming up u.k. inflation jumping to a 10-year high. we take a look at the factors pushing up prices and what that means for the b.o.e. next. this is bloomberg.
tom: welcome back to the open. we are 12 minutes into the european trading day. gains of .1% across the european benchmark. the stoxx europe 600. lower in the u.k. ftse 100 on the back of that inflation data down more than 1. the gains in italy, germany and some modest gains on the counterattack counterattack as well. laura wright. >> selling a stake in its electricity network assets to fund a netzero spending drive. the company expects to offload a 25% share of both its transmission and distribution grid assets confirming a
bloomberg scoop. s.s.e. has been grappling with pressure from the activist investor elliott investment management to separate into two. wal-mart shares fell the most in almost nine months despite offering an earnings beat and a positive outlook. the u.s. retail giant signaled -- it's bracing for more from your from the supply chain sweep. c.e.o. doug mcmillan said costs are rising faster than prices due to transportation and higher fuel costs. peloton shares jumped after its $1 billion stock offering drew the interest of major investors, a sign wall street is ready to look past a grim forecast earlier this month. the stock has plummeted 45% since the company set annual revenue could be $1 billion less than estimates. peloton has been grappling with the ballooning costs and weaker demand for at home fitness equipment. that's the bloomberg business. tom and francine. tom: laura, thank you very much indeed. ok. u.k. inflation as we mentioned has climbed faster than expected. to the highest in a decade.
tightening a squeeze on living standards for households. that's also putting pressure on the bank of england to raise interest rates. let's bring in bloomberg's u.k. economy reporter lizzie burden. surely the b.o.e. now is going to have to hike in december. is that the view on the back of this c.p.i. print? >> yeah. what tore does the bank of england need, tom? inflation came in above expectations. 4.2% in october year on year. the third that it's above the 2% target bank of england and highest in the u.k. in a decade and it's only expected to keep rising. already this week, the governor andrew bailey of the bank of england said that he's very uneasy about the inflation picture in the u.k. he said the reason he didn't vote for a november rate hike was because he wanted to see how the labor market was faring post furlough. we have the jobs numbers yesterday and they too strengthen the case for a december rate rise. the jobs numbers in december should just rubber stamp what's
already a strong case for a december rate rise. and the fear now will be that worries about inflation mean price growth starts fueling itself. tom: so everything seems to be come together to make the case for that rate rise by the b.o.e. in december. let's unpack what's happening with inflation here in the u.k. what is behind this surge in prices? beating estimates. what are the economists getting wrong, what are they missing? >> natural gas and electricity prices rose last month. and that's after the regulator allowed suppliers to hike tariffs to offset rising wholesale prices. they're expected to rise again in april. at the same time as a planned tax rise. so unless the bank of england steps in soon this pressure on household finances could undermine the recovery. tom: ok. bloomberg's u.k. economy reporter lizzie burden breaking down the case then and what is factoring in again for the b.o.e. and the members there as they consider the implications of all of this data, wages, c.p.i. and inflation as they look ahead to december that
important meeting. thank you very much indeed. worth noting that thics k.10-year briefly moved above 1% for the first time since november 4 and at 0.994% but you would expect that yields will grind high-for-we do indeed get that rate hike. the pound as well bumped up higher. saw some pretty significant gains for sterling yesterday. and gains again, mod he have gains, a little bit up today on the back of that c.p.i. data at a 10-year high. coming up u.s. commerce secretary gino raimondo says china needs to live up to its commitments. we'll hear more of that interview from our new economy forum next. this is bloomberg. bloomberg.
tom: welcome back to the open. we are 19 minutes into the european trading day. the benchmark stoxx 600 holding on to gains of .1%. still at record levels after a very solid close for wall street on the back of those better-than-expected retail numbers. the economic data out of the u.s. holding up it seems as concerns and amid concerns that inflationary pressures will linger. and of course we heard from james bullard suggesting that the fed should speed up its taper. the handover to asia was more mixed and lower in japan.
essentially flat over on mainland china. investors there are weighing up some changes on the regulatory front. the futures have turned positive in the u.s. gains of almost .1%. in terms of the sector breakdown in europe the gains at the top of the list industrial goods and services getting .3%. modest gains there. travel and leisure down by about .is 1%. china, we heard from kissinger at the new economy forum. and the chinese vice president wang qishan and been hearing from u.s. officials. china is not living up to its commitments from the phase one trade deal. that is according to the u.s.' gino raimondo. she was speaking at the new economy forum and is the commerce secretary. let's take a listen what she had to say particularly about supply chain issues. >> for so long, in our supply chain, the mantra has been just in time. and now we realize the vulnerabilities of just in time. we need to move to just in case. we need to have redundancies.
we need to have diversity. and so we are here, i am here in the region talking to companies that are in our supply chain and ministers here to say let's collaborate with our partners. tomorrow, i'll be in malaysia. a good part of america's supply chain is in malaysia. some of the factories went down due to covid outbreaks. which had disruptions obviously in america. some of the factories went down due to natural disaster. so we get rid of the choke points and bottlenecks. >> recumming with china in a new normal. >> we want trade.
but it needs to be china needs to play by the rules. they need to they're not living up to their commitments. we want a level playing field. and we want everyone to play by the rules. and then we do want trade. and exports. good for american business. >> the shushes has talked about using new tools to address chinese practices. what are these new tools and are you looking at deploying these new tools along with the allies? >> absolutely. so president biden is so cheer about this. first and foremost, we invest in america. we -- the president signed a trillion dollar package. biggest investment ever in american infrastructure. and then we worked with our allies. which is why i'm here in this region.
we want to develop a more resilient supply chain with our allies. here in singapore, for example, or in malaysia or japan, they are -- key partners in advancing manufacturing, in the supply chain. so we need to work with them so that -- >> what of the new tools? >> that is part of it. so i am here laying the groundwork with these countries to come up with an economic framework for how we work with countries in this region on supply chain, semiconductors, digitalization, cross-border data flows. really a decarbonization. so going beyond the limits of a traditional free trade agreement to look at other aspects, those are additional tools. tom: and that was the u.s. commerce secretary gino raimondo at the new economy forum speaking to haslinda amin. china is said to be accelerating plans to replace american and foreign technology.
it is quietly empowering a secretive government-backed organization to vet and approve local suppliers in areas from the cloud to semis. but bloomberg new economy forum chinese vice premiere wang qishan vowed that china would continue to open up to foreign investment. >> openness brings progress. whereas isolation leads to backwardness. we need to promote trade and investment liberalization and facilitation, bring down trade and knowledge barriers and stay away from discriminatory and exclusive rules and systems. and to keep the functioning of supply chains stable and smooth. tom: ok. that was wang qishan at the new economy forum and we are joined by bloomberg's bruce einhorn out of hong kong.
what do you make of the comments from wang qishan. do they square and match the reality in terms of china's position in its capital markets and on its trade front? there is an argument that china is actually looking more inward and has been more inwardly looking than it has done for years and yet here is the vice president saying that china remains open for business. >> that's a good point. what we're seeing from vice president wang qishan is they're trying to strike a balance, right? it has been a chinese priority for several years now to reduce the country's reliance on foreign countries for all sorts of vital technologies. and so that hasn't changed. at the same time, for a long time the country has also still wanted to attract foreign investment to be part of a global economy. so they're trying to strike that
balance and i think that's something that we're hearing from vice president wang. tom: what do we know about this secretive committee that bloomberg has been reporting on? in terms of technology companies that are essentially have the green light, the backing of the government to sell their products into the chinese economy and what does it mean for foreign tech? >> well, it's not -- for foreign tech, we can clearly say that. that american companies are the -- other foreign companies, with large foreign ownership, they're not going to be part of that. so that's -- that's clear, i think, that the party is really going to be on giving business to chinese companies. those are ones that are for obvious reasons easier for the chinese government to keep tabs on to control to be able to feel good about the technology.
top stories. between powell and brainard as fed chair, president rules out any other contenders. inflation looms large. st. louis president calling for more hawkish policy. u.k. inflation surges to a decade high. and we are live from the bloomberg new economy forum in singapore. later this hour, we will be speaking with the goldman sachs c.e.o., david solomon.
30 minutes into the session here, gains of more than .1%. the breakdown of the divergence is there between the ftse 100 losing .2% dragged down by s.s.e. the energy company that came out with its infrastructure and spending plans. strategy plans for the next five years and selling minority stakes in its distribution transmission business. but the -- you're seeing gains over in germany of .1% and flat on the cac. over in france. so the session in the u.s. and you do have -- morgan stanley that you want to have more exposure to european equities. credit suisse in the last few minutes upgrading japanese equities and the banc of america fund manager survey pointing to that support, the highest level exposure for u.s. equities since 2013. among fund managers. let's switch it to see what's happening on a sector by sector basis. yields in the u.s. above 1.6% and supportive for financials.
we'll talk -- take a look at how that is playing out sector by sector. 30 minutes into the trading session. we have been hearing from the fed president james bullard wants to see a speeding up of the taper. the e.c.b. grappling with inflation concerns and here in the u.k., inflation getting up to a 10-year high. more than 4%, 4.2% year over year for the month of october is a bask of england rate hike in december essentially baked in. now seeing the g.r.r., basic resources at the top of the list gaining .4%. down at the bottom, travel and leisure falling more than 1%. let's get the bloomberg first word news now with laura wright. laura. >> u.k. inflation has risen to its highest level in a decade. keeping pressure on the bank of england to hike rates, consumer prices gained 4.2% from a year ago in october. faster than all estimates in bloomberg's survey of economists. the pickup was driven by natural gas and electricity prices. after the regulator allowed
prices to rise by as much as 12% to offset rising wholesale costs. ireland introducing some covid restrictions as it struggles with rising hospitalizations. prime minister michael martin says people should work from home where possible. and cinemas and theaters will now require proof of vaccination. germany has reported another record increase in cases and the highest number of covid deaths in more than six months. meanwhile, a report says u.s. regulators could authorize pfizer boivin tech boosters for all adults by the end of the week. u.k. prime minister boris johnson is proposing members of parliament should be banned from taking paid political consultancy work as he tries to draw a line under two weeks of damaging headlines for his ruling conservative party. the plan is a dramatic reversal from johnson's position when he ordered his m.p.'s to block the suspension of a former minister. the opposition labour party says the proposal waters down its reform plan. global news 24 hours a day on
our air and bloomberg quicktake powered by more than 2,700 journalists and analysts in more than 120 countries. this is bloomberg. tom. tom: thank you. banks are poised to -- investment bankers and traders their biggest bonuses since the financial crisis. the hope is the cash will stay at the high levels of turnover sweeping wall street. it is a contrast from last year's underwhelming payouts with equity and debt underwriters appearing to be the biggest winners with a jump of as much of -- as 35%. joining us, to the headline bonus sincere bloomberg's tom metcalf. underwriters doing well and such a change from last year. >> exactly. the best, up 35%. but it's pretty widespread. we're also hearing m&a deal makers that are up a quarter. same for equity traders. so the whole industry is set for good bonuses season. tom: there has been significant trading activity. we've seen that come through in the later set of earnings for the banks.
that is behind what's propelling these higher bonuses that we expect in february. is there anything else that's behind this? >> yeah. really that. been a secular shift since the coronavirus which executives say hey, look, capital markets are bigger than ever and years of cheap money. so a lot of investors' money floating around and that's helped as well. and just a very, very good time to be a banker. tom: who is going to be looking at this with the sour puss approach? who will be missing out on the big bump bonuses within the financial sector? >> there is one group. apparently fixed income traders. a bit of a surprise given how well they did in the pandemic. they're apparently going to be down about 5%. but that is against a very strong -- in that case. so still be all right. tom: do we have a sense or a sense talking to your contacts what this will do for staff retention? been such a hot topic, hasn't it? the last 12 to 24 months. >> that's top of everyone's mind and that's the constant sort of complaint we hear from executives that we can't keep hold of our staff and people are such talent -- such demand for talent out there. so much appetite for trying to
keep up with business. that people are getting poached left, right and center. tom: thank you very much. a bump of february for many within the financial sector is what's to be expected and tom metcalf bringing us that story on bonuses. don't miss the fourth annual bloomberg new economy forum. that is happening throughout the week. this is your regular 10-minute, 15-minute reminder. and this important event for us coming up my co-anchor francine lacqa will be speaking with goldman sachs c.e.o. david solomon. and touch on the question of bonuses. we'll get that conversation shortly. this is bloomberg.
tom: we are 39 minutes into the european trading day. stocks across europe looking at gains of almost.2%. 39 minutes into the session. the top of the list on sector basic resources getting .6 -- the ftse 100 is lower. but you're seeing solid gains in italy. .3%. ok. switching focus to the corporates, alphabet c.e.o. has told bloomberg that -- mains central to its expansion plans. he spoke with emily chang at the new economy forum.
>> such a fitting time frame. you know, focus on the region the most vibrant region we see. it's our 20th year since we opened our office in tokyo. it was the first office i would say the bay -- outside the bay area. you have 2.5 billion on the internet. many years in which they're leapfrogging trends which are here. and they're embracing the future. digital payments is a great example. so many of our products originated from apack, google maps. google pay. a lot of -- our journey to bring computing to more people is playing out as -- if asia as well. i'm excited about also the work we are doing through cloud. because the companies there are rapidly transforming them. a chance to provide that is something very exciting for us. so super dynamic region. that i feel like -- first 10
years. and brought it to apac. the past few years. to build things there. >> you're facing stiff competition from chinese tech giants there. and beyond. what. tom: the c.e.o. of alphabet speaking to emily chang. let's get back to the bloomberg new economy forum where my co-anchor francine -- francine lacqa with goldman sachs c.e.o. david solomon. let's listen in. >> and i also -- we have to recognize that we're trying to drive very dramatic change. and that we -- sound government policy, solid action and activity by private sector market participants.
significant capital allocation. especially risk capital. drive technological innovation change and going to take time. i sat in the roundtable with mike bloomberg and a bunch of other participants here. we talked about a variety of ideas. and i think there's a real -- while this is an urgent thing that requires attention, we have to be realistic that we're making drastic change. on our systems of processes and etc. and this is going to take some time. >> what does it mean for -- mean for finance? is it going to be fully transitioned and some of these rules are not mandatory, and you worried they won't have enough teeth? solomon: i can't answer the question when it will be fully transitioned. remember that when we talk about this, we can talk about what's going on in the united states and we can talk about what's going on in the u.k. and but we're talking about what's going on on the planet. if you think about the developing economy and about
some of the big economies in other parts of the world we have to make progress around the world. so obviously i think about the united states, and think about china and india and think about indonesia and vietnam and brazil. and i think about the fact that when you look at these big economies and the role they're playing and less developed than we are in some ways in the united states, not all. china is coming along. the ability to solve these problems on a global basis is going to take a long time. banks and other financial players are playing a meaningful role. capital allocation is changing. one of the things that's having a big impact on markets is institutional allocators of capital are demanding different things.
we have created a framework where we said that the other -- over the next decade we will commit $760 billion to advisory financing or investing capital. to support a more sustainable planet. and by the way, we define sustainability in a very broad sense. and we talk about climate and also talk about inclusive growth. and we have nine -- subthemes that are important to making the globe more sustainable. in the first year we did $156 billion. and trapped this stuff. and my guess is over time if we continue at the pace that we're at we'll continue to expand that commitment. that's one of the big ways that we as an organization can have impact is we can direct capital and resources to help companies and institutions drive transition in their business. and i think that's our role as a financier. francine: where is that transition coming from the most? is it companies? is it governments that need
support? what part of the world? solomon: i think it's -- i think that there are a handful of things that have come up in every discussion that i have with the governance, with a corporation or an institution. and one of those things is climate. and this is a topic is front and center for all at the moment. and it's coming up in everyone's conversation. i think there are companies and institutions that have a more urgent take on it. and i think institutional capital very aggressive in europe. and moving more to the united states. so there's a different level of intensity in these discussions depending on where you are. but i think the world is coming to terms with the fact that we all have to be invested in the future and if we don't invest in the future, if we don't plan and think about how we're going to transition our businesses, that ultimately we put our businesses at great risk. and our society at great risk. francine: does this only because we're seeing the economic recovery and things are looking brighter and the markets are
going higher? or do you think there's real commitment to go through this transition no matter what? david: i think the commitment is real. this is not a function of the market environment. the commitment is real. and i can sometimes -- we get caught in a lot of high level conversations and that distracts us from the hard work on the ground, and blocking and tackling and the hard work on the ground. the investments that have to be made and the need for thoughtful process. transition is just that. you can't have a transition without a process. and so i -- i don't think this is a moment in time. i think this is real. and if we do a good job, you know, we'll make it more sustainable. we'll have a chance of accelerating it and proving that time line perspective that we currently see. francine: when you look at the economy and the markets, apart from inflation, what are you worried about? david: well, i -- i think that
we're at a complicated time. because we normally don't have an event like a pandemic that forces us to shut down economic activity so quickly. and so randomly. so we generally don't turn the light switch off and then try to turn it back on. and it's when we turned it off it was like swiet switch like flick and now a dimmer and turning the dimmer up and slowly bringing the lights back up. and it's not a straight line. obviously the impact of the pandemic and the path out of the pandemic is different, in different parts of the word and in different locations and governance in different places are taking different actions based on their own perspective. based on their own experience. and somebody said to me yesterday and i think it's very fair, if you live through sars you've had a very different point of view how to mitigate this than if you came from a place that wasn't really affected by sars. so i think that we're turning the economic environment back
on. but because of this crisis, we've had a massive amount of monetary policy over the world that's having an impact. and having an impact on asset prices and having an impact on inflation. and as you mentioned. and i think markets generally when i step back and think about my 40-year career there have been periods of time when greed has far outpaced fear. and we were in one of those periods of time. and generally speaking, my experience says that those periods are not long lived. something will rebalance in a little bit more perspective. certainly given that it feels like inflation is above trend chances are interest rates will move up and the interest rates move up that in and of itself will take some of these -- out of the markets. francine: are you expecting a taper tan tum from -- taper tantrum from the market? david: i'm not a good predictor. i never thought of myself as a good predictor but i certainly feel like the market anticipates higher rates.
at this point in time, the question is how much and how quickly? i don't think -- there's a chance that central banks can unwind this massive stimulus in a way that doesn't create some sort of a taper tantrum or some sort of a real shock to the markets. but there's also a chance it can't be done that way. and i do think that people -- it's been a long time until we operated in an environment where the general trend on interest rates has been higher. and the general trend on inflation has been above trend. i got out of school in the early 1980's and generally we've had the opposite for that 35 plus years. and so i do think people don't remember when paul volcker raised interest rates by 300 basis points on an afternoon. so a lot of factors that will go into how this process plays out. and it's unclear but i certainly think that also market participants are thinking about it and my conversation with big
institutions are thinking about it and trying to balance they need to participate and have relative performance based on participation. and what happens as we unwind some of this and we rebalance a little bit. francine: are you telling me that you're worried that markets are too cool about it because they've made money for -- david: i do think that generally speaking, everyone feels quite smart right now. because most of the things that you invest in are going up. that's not the way it normally works. so again, i'm not -- i'm not a great predictor. but my experience tells me this is a moment in time that's probably not a sustainable moment in time. francine: and be an economic shock away from a inflation and monetary policy -- >> it could be a change in the perspective of the course of economic activity. it could be some sort of a geo political shock. it could be that something goes wrong with respect to our emergence from the pandemic and we have a different set of events that change -- but all this is based on -- out of
confidence and a forward view. and i would say at the moment the forward view is quite optimistic. if it stays optimistic, and central bankers handle the withdrawal in an appropriate way with the right communication there's a chance we can do it in a balanced way. and something to go on. has to be prepared for both. francine: how do you prepare actually for growth? >> you prepare by thinking about it if the world looks differently how will it affect different assets and how would you feel if things were worth less, not worthless. and so in that context, we do a lot of -- talk to our clients a lot about different scenarios. and we think a lot about our own balance sheet. and appetite for revving as we try to navigate this. francine: talking about china, and you're optimistic longer term in china. do you ever get any pressure from washington to grow less fast in china?
david: we are -- we're very committed to building our business in china. but in the context of the fact that goldman sachs operates globally all over the world and we've served governments and institutions and corporations all over the world. and given the importance to china, the important position that china plays economically in the world, you really can't do -- goldman sachs without participating in that. and i wouldn't say there's a direct question. and to change our long-term plans to grow our business in china, is it possible that at some point in time something goes on geo politically between the u.s. and china and u.s. companies, either pressure or directed to do certain things differently? sure, there's a possibility. but we think about this with a 10, 20, 30-year perspective, not with next couple of year perspective. and so we're long-term committed. and continuing to serve our clients by vehicle the resources and capabilities of china that allow our clients globally to
participate in markets. francine: you worried about your license could be revoked? >> we worked for 17 years to get it and only had it for a few weeks. so i would like -- i would like to think we'll hold on to it for more than a few weeks before it will be revoked. but i think that china after holding institutions like ours in terms of taking control of our entities, in china, i think china wants to grow its capital markets and want more listing activities in hong kong onshore. and i think the participation of global institutions and the capital markets strengthens their capital markets. so my guess is they continue to support that. but the world can change. francine: the world can change. quite fast. and you look at some of the shocks and we mentioned some of the shocks as well, when you look at the prospects of china, hoch do you want to grow in chinnia and how difficult is it to access talent in hong kong
and to retaken talent in hong kong because of the quarantine? david: i think it's important to put it in perspective that while we haven't -- have a business in china and a good sized business and it's growing, it's actually a very small business and the overall scope of goldman sachs. so given the economic activity there, and the size of the economy, over the next 10 or 20 years, it could obviously be a bigger percentage of the business. and so we'll continue to serve our clients and try to allow it to grow. and an important part of our business and something we're very -- eve always been focused on and think that we're a relatively attractive place for people to come to work, to grow, to learn, and the network, etc. and a lot of young people into our organization and one of the things i don't think people realize about our organization is that 50% of the people working in our organization, are in their 20's. so a very, very young organization. and one of the reasons for that
is people feel that they can learn a lot and they can build a great network and they can get a great set of experience and that's an important part of our ecosystem. i wouldn't say that it's -- i would say that it's -- we're going through one of those periods where it's more competitive with talent than it is in other periods. francine: globally? david: globally. i do think that -- china, hong kong, have a certain approach right now to covid and therefore the -- relatively closed and this is my first trip to asia since february of 202020. which would be very unusual. i've been in asia four or five times a year normally. and i haven't been to hong kong or china. and don't expect that i'll be able to go for quite some time. and so in the context of that we have a lot of people that work and operate there. many of them are, you know, are local chinese.
but many of them, from other parts of the world. and certainly being restricted in terms of leaving or coming back, family pressures, etc., that's -- that's not a great dynamic for talent. but at a time when we have to navigate that and that's certainly a headwind for global talent and -- in that part of the world right at this moment. francine: could you think -- do you think it will loosen up? david: i think ultimately it should and it will have to. it's -- i don't think it's going to loosen up quickly. meaning in the next couple of months. but i think economically, just one person's view from the outside, when you restrict travel in and out and restrict the ability for people to come and visit and engage for people to -- engage around the world, a time that hasn't impacted economic activity. so i'm sure that the leaders in china are thinking about that balance and -- based on how they are protecting their population
from covid and executing on their plan. but at some point i would assume that we'll get to a different place. i just think on a different path and a different trajectory based on the facts and circumstances. francine: what are you most excited about at this juncture in time? david: i continue to be excited about the amount of innovation that exists in the world and all the great ideas and all the change that technology and innovation is driving. and i'm excited about technology and innovation, driving change around climate where we started the conversation. and i'm a big believer that we got to find a -- path for more risk capital and drive technological change. that can help us improve a bunch of the technology that exists to make our world greener. and take the cost differential out and make progress. and we will do better over time. francine: do we see enough
partnerships on green technology between the u.s. and china? david: well, we -- i think that there are -- a variety of places. and broadly one of the opportunities for china and the west to cooperate is the climate technology broadly. and governors have to find ways to accelerate and make more investable certain unknown technologies. and wipe hopeful that that is something that we will continue to progress. but i just think the pace of innovation in the world is only accelerating. what those vaccines and the technology behind those vaccines can do for other health issues. and how we can continue to
francine: can that be a market disruption coming? david: life expectancy is a positive for economic growth. the more we can improve health and well-being and participate -- also extending life. and that drives economic growth and economic activity. so over time there's lots of opportunity for growth in the world and we continue to make technological progress and continue to advance and i'm -- i'm just always having a glass half full guy and worry as a manager of our organization i worry about what but i do not wake up every day worrying about what could go wrong. and then try to mitigate the things that along the way. francine: i know they've had record bonuses.
>> we haven't paid any bonuses yet because we pay them after the year is over based on performance. if that performance is good, compensation will increase this year because we are pay-for-performance based business. our employees are focused on what most employees are focused on. the health and safety and well-being. i think one of the things that's been challenging about covid is the isolation of society. people want to be out and be with other people. i hear from employees. we are doing depending on where you are. people want to be working hard, they want their families safe, they want their own safety, security and health.