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00:00From the world of politics to the world of business this is balance of power with David Westin. For Bloomberg World Headquarters in New York two hour television and radio audiences worldwide welcomed the balance of power. As we all wait for Jackson home particularly Chair Jay Paul's remarks on this Friday we got some economic data today and it was not altogether encouraging that P.M. ISE composed of the United States were down to something like 45. In the meantime Europe PMI ISE were also under 50 about forty nine point two and new housing sales were the lowest in six years for the United States to give us a sense of where we are in the economy as we head toward Jackson Hole. Welcome now. Thorsten Slack he's chief economist for Apollo Management. Thorsten great to have you back with us. Always is. Good to see you. So where is the economy. Is it slowing down as much as some indicators suggest. Yeah the data today as you mentioned David was a bit worse than expected. And what was particularly surprising is that the services sector which has been holding up not only the U.S. economy but also the European economy was showing a little bit more sign of weakness and combining that also with the housing data being a little bit weaker. It is clear that there are some signs at least now in the services sector that things are slowing. Housing has been slowing for a while but it looks like Fed rate hikes combined of course with the situation in Europe on the energy front are beginning to have at least somewhat of a moderating impact on growth. So that was going to be my question. Is it too soon to know whether in fact the Fed is starting to have the effect that it seeks or just slowing down the economy in particular to get at inflation. Yeah. That's really important because I mean obviously with the U.S. and Europe inflation is essentially 8 percent with the target for the ECB and the Fed is 2 percent. It is very clear that both these are being the fans are trying to get that very high number 8 percent down to 2. And that does require tighter financial conditions that that can either come through higher short term interest rates a higher long term interest rates. But it could also come through what credit spreads on lower stock prices. The challenge for the Fed more recently is that stock prices have been going up in the last four or five weeks. The same thing yields have seen for credit spreads have also been rallying. So in that sense and more may be needed to be done in short rates. But the good news if you will from a Fed perspective is that there are some signs now that the economy is at least on some fronts beginning to slow down. That's exactly the goals that they're trying to achieve. Of course one question we all have is how much is it slowing down. Can we in fact get inflation down. As you suggest. It's got a long way to cover this point without having reception. We heard from John Taylor that famous economist who whose rule is named at the rule. We heard from him actually and he suggested maybe it is possible to avoid a recession. This is part of what he said. I don't think it needs to be part of the cure. What we've experienced if we let inflation build up over time like it in the 70s it was seven years of higher inflation. If we nip it in the bud which I don't think we can then you don't have to have these negative effects that people are worried about. So Thorsten what is the chance of a so-called soft landing as John Taylor suggesting. Yeah. This is a very important question because this is at the heart of the debate about how much does the Fed need to raise rates how much demand do they need to destroy the economy. Well the answer to that question depends very importantly on why did invasion go up and inflation go up because there was more demand or did inflation go up because there were some problems with supply and supply chains or labor supply. And a Fed working paper in the month or so ago basically quantified the question and found that a third of the rise in inflation was because of demand. And if we therefore are waiting for two thirds of the problems on the supply side to get results maybe the answer to John Taylor's question here is that we could actually have a soft landing if it is the case that a lot of the problems that we have on the supply side are going to resolve themselves. If supply chain issues are getting better which they certainly are at the moment transportation costs are coming down everywhere. So both are true cost by airplane by truck by container by rail. If that's the case we could actually have a soft landing. If it is the case that these inflation problems solved themselves on their own. If that's the case what we need is time to resolve those issues on the supply side. And then maybe the demand destruction that's required is not as significant as it was in the 1970s. So it's a very important debate which all surrounds this around this question. NAMIE Well how are the drivers of inflation. How are they quantified in terms of what's it demand once it's supply. And if it was really mainly supply which there's some at least that 20 paper suggesting maybe we could have that soft landing that the FOMC would keep on saying is that go. All of which takes us to Jay Powell the chairman of the Federal Reserve. What he has to say on Friday because it strikes me it's complicated enough. And what you just said to us and I interpreted as saying two thirds of the problem is outside his control and yet everybody is waiting for him to solve the problem. That's exactly right. And that's exactly why it's so striking and that Fed paper that was written namely that maybe if it really is just the fact that we're waiting for supply chain problems to get resolved well then all that's needed for the Fed is time. And if that's the case well then in some sense it doesn't really matter that much how much the Fed funds rate goes up. All we need is that we use again semiconductors out in cars. We need to get containers from the rest of the world into the US and into Europe. We need to get the supply chains back up and running to the pre pandemic levels. And if that's all we're waiting for then maybe the Fed funds rate doesn't need to go up as much as at least some observers are saying at least those who would seem to put a lot of weight on saying oh inflation is only driven by demand. So that's why this debate I know it's a complex overall in quantifying this and that's why this is such a challenge for markets at the moment. But the bottom line is that day on Friday I still think the Fed will focus on saying we don't really completely meaning the market. Anyone really doesn't understand at this point how quickly inflation will come down. But we do know that inflation at more than 8 percent is a problem. So if that's the case they need to continue to be hawkish to signal that inflation needs to come down. If the economy needs time the markets are not known for their patients in general. And as you've pointed out actually the next FOMC meeting is not until September twenty first which is almost an error. And even from now as a practical matter how does that work out. Because there's a lot of data that will come in between now and September 21st. Can the markets wait. Absolutely. That's why it's also tricky for the Fed on Friday. I mean what do you communicate when you still have four weeks until the next meeting and you don't know what the next inflation report will say. You don't know what the next CPI inflation print will say. The latest employment report of course at more than 500000 jobs traded in the month of July. That was very strong. So that's of course all setting them up for hawkish tone and combining that with the other side of the dual mandate beat inflation. Again being significantly above the 2 percent where they would like it. It is relatively straightforward for them to continue to be hawkish about there exactly as you're pointing out. David we have a lot of important data ahead of us and that's why markets and that's why the debate continues. Something with markets have the strong view that rates are going to come down very quickly very soon. Other people are saying no no this is more like the 1970s that this is going to take a longer time. That's why there's such a wide dispersion of views on a more technical way of saying is that the implied vol embrace is very elevated because there is such a wide range of views and wide range of bets being made in markets at the moment about what this scenario is and what road we're going down. Thorsten just put this in a global context if you would because we have a Chinese economy that's not growing as fast as they thought it was going to grow. A European economy that certainly is challenged at this point may well be headed to a recession depending what happens with energy over there U.K. economy that admits it's heading to a recession. Does that actually in an ironic way potentially help the Federal Reserve. Yes. So of course the backdrop fine. Just think about the latest employment report at more than 500000 jobs created. The backdrop of slowing global growth and obviously China is slowing for a number of different reasons of course have to do with the property sector but also has to do with zero Covid policy. So once the Sierra Club policy is lifted or at least that's of the restrictions are lifted we should expect some rebound in the Chinese economy. The situation in Europe is much more serious because now of course you have Covid so well the energy crisis continues to weigh on the outlook and that could be a risk of a recession sooner rather than later. So the broader backdrop of slowing growth globally to your question is certainly helpful for slowing down the U.S. economy. So we'll see what the next day in Paul Allen report shows. We'll see where the next inflation print shows. And that will then be helping the Fed making that decision fall whether it needs to grow 50 or 75 at the meeting on the 21st of September. Thorsten very much appreciate you joining us. That's Torsten Slack of Apollo. Coming up a second congressional delegation has now returned from Taiwan. We're going to talk with one of those on that trip Democratic Congressman Don Buyer of Virginia. This is balance of power on Bloomberg television and on radio. This balance of power on Bloomberg television or radio ISE David Westin we have some sad news to report now. Julian Robertson the founder of Tiger Management has passed away at the age of 90. He was a legendary investor and of course was when the real pioneers in hedge funds and spun off something like 50 different tiger cubs as they were called in specific funds of people who had worked with him. To bring us more now. We welcome Chanel IBEX. So Chanel I knew him pretty well. I'm sure you knew him. He was a wonderful man. But give us a sense of how important he was for the investment community. He was certainly a titan of Wall Street. David you are talking about somebody according to Elsie H. Investments who had two hundred or so investment firms linked back to Tiger in some way. He was also a philanthropist helping low income New Yorkers from very early on in his tenure as a hedge fund manager and also signing the giving pledge. But again he was known for training generations of fund managers including Chase Coleman of Tiger Global. Lee Ames really a maverick. Andre ISE Halvorson of Viking. Stephen Mandel of Lone Pine. The Lead Look font of CO 2. The list goes on and on. And he remained very close to them. So this is a man who is very close to many people on Wall Street up until now. He died at his home in Manhattan from cardiac complications according to a longtime spokesman for him as reported by Bloomberg News and Bloomberg. Kathy Burton who reported on him for a very long time. This was a man who is very near and dear to many people on Wall Street from his time at Kidder Peabody to his start of tiger management in 1980 after everyone remembers his sabbatical where he tried to write a book and instead came up with the idea for Tiger management then going on to train many generations of investors. And as you say a major philanthropist a lot of us in New York City we walk past things that he donated for the city but talk about his role as an early hedge fund person maybe not the first but boy he was really toward the first of creating hedge funds had enormous success took his investment and turned it many many times over and then stumbled a bit. Yeah a really really incredible run he had as a hedge fund manager himself before seeding as you say dozens of funds at Tiger between 2000 and 2000. In 1980 when he started the fund the average annual ally's returns net of fees were 25 percent. And remember he was striking gains north of 30 percent at the peak until around nineteen ninety eight. He really missed a lot of the issues that a lot of people had gotten into in the height of the tech bubble here. He had even made some really incredible macro trades at that time before stumbling a bit on some of the macro bets that he had made. So to your point here his focus here on value investing stock picking risk management remember he wouldn't make any bet. Too big of a part of his portfolio was really what he was known for along with the conviction that he had on the trades that he made. Exactly. As I recall Jihye Lee correct me if I'm wrong. He's one of the people who saw the tech bubble coming. Yes that's exactly one of the things he known for. And it was a painful time too as it was coming up. It was something that he lagged from but it was something he was ultimately very right about and therefore had the last word on. And remember a lot of the investors that are now taken away from tiger management and now are tiger cubs. They also are known as some of the most historic tech investors in the world. You know in reading a little bit about the process of being even an analyst at Tiger Management they had to answer 450 questions just to get the job and take a Rorschach test. So he had this laser sharp way of training his staff as well as forming his own wagers here. And again to your point here really understanding technology and avoiding a lot of the pitfalls that a lot of investors got burned from in that era talked about. So his full answer is all the things he did. I know for example he has a plaza at Lincoln Center named for his late wife who passed away sadly and he was devoted to. Yeah. I mean his philanthropy is also what he was very well-known for. And he was known also. I want to talk about the Tiger Foundation because that was excepted in 1989. So again within nine years of forming tiger management here and to your point here this was something that had millions hundreds of millions of dollars in grants to schools low income New Yorkers training programs childhood education is something that he focused on very very strongly here. So again this is definitely some of one of the most legendary investors but also on Wall Street one of the most legendary philanthropists as well. Yes. Fascinating. Thank you so much for joining us to reminisce about Julian Robertson. That's Sonali Basak. And once again Julian Robertson legendary investor is dead at the age of 90. In the meantime we want to turn back to Washington if we could. I'm sorry we're going to go to break. OK so let's go to break now. This is Bloomberg. This is balance power on Bloomberg television or radio. I'm David Westin. Well Taiwan has been very much in the news pretty much all summer long with the speaker of the House Nancy Pelosi going to visit there causing some controversy. And then a second congressional delegation went over more recently. We welcome now one of the people who is on that second delegation. He's Democratic congressman from Virginia Don Byer. He's also chair of the Joint Economic Committee. So Carmen thank you so much. And thanks for your patience as we broke that sad news about Julian Robertson. So give us a sense of your trip and I guess as important he has. Why did you go. And we had set the trip up before Nancy Pelosi's trip was announced and certainly before she had gone. But we felt it is really important to reinforce the message that despite America's or maybe because America's One China policy that we've nevertheless wanted to maintain the status quo in Taiwan and deter if possible any kind of forceful intervention that the PRC would have with Taiwan. And so what did you do while you're over there. With whom did you speak of. Would you accomplish do you think looking back on it. Well we met with the president President Sy for a half an hour or so. Good conversation. We had a fascinating meeting with ten or eleven members of the Taiwanese parliament. And I think they must represent his six or seven different parties including the party just out of power the party in power. And so there is a range of opinions on strategic ambiguity versus strategic clarity and the like. But the biggest impression I got was their gratitude that the American people and the American political leadership was behind their resistance to being simply absorbed into the PRC. You know they they said I know this sounds subtle but they wanted to differentiate between the one China principle of the PRC and the one China policy of the United States which is recognizing that in historical terms it is one China but two very different governments two different systems one democracy one autocracy one freedom of assembly and speech and capitalism. The other very repressive. We were there to support the good parts of. So to talk about specifically what that might look like. Let's talk about the negotiations the discussions I guess formal discussions now ongoing about a trade arrangement sort of I guess along the lines of the Indo-Pacific economic framework although not part of that specific proposal for the United States. Where do we stand with that and what will that accomplish if it is completed. Well David I'm still in the category that thinks that our withdrawal from the Trans-Pacific Partnership was a serious strategic mistake. You know when the Obama administration was pushing TPP their idea was that we needed to write the rules of the road for trade in the generation to come. We not just United States but democracy throughout the world rather than letting China the People's Republic of China right in force. And I think that's what President Biden is trying to do with the Indo-Pacific trade framework. And because we can't formally include the people of Taiwan the island of Taiwan these as part of that into the Pacific. The specific conversations between U.S. trade rep Catherine Tai and Taiwan on our trade stop. I think it's really important to make them feel part of it. And hey there are eighth largest trading partner and our largest supplier of chips. We need them. There are eighth largest trading partner. But but we don't necessarily recognize them as a separate country. Right. That is the one China two systems rule. So how does that work. The integer trade agreement with a part of China. Well we we try to be very careful about how we refer to the people of Taiwan. The Taiwanese island. And I think we'll have that same level of care. That's not government to government but the United States to the people of Taiwan in this kind of trade arrangement. Clearly we work on an economic basis with all the flows back and forth. By the way we like to brag that Taiwan is our eighth largest trading partner but their largest trading partner by far is the PRC. And so they have to build on that relationship too which is just across the Taiwan Strait. Bring us a little closer to home at least your homeless talk about cars because semiconductors are terribly important to manufacture cars. You've had a passing acquaintance with cars in your prior life as a successful businessman having built it up. Where are we right now with semiconductors coming out of Taiwan. It's getting better. The inventories are starting to build but we're still in a relative shortage. Depending on the vehicle. You can still wait two three four months. And David I think one of the most fascinating statistics came from Kelley Blue Book that last year something like 82 percent of the new cars sold were sold at sticker price or more. I can tell you after 46 years in the business that was pretty rare for his 45 years. And you know the lots are still largely empty. I'm fast and driving by. You see handful of cars. I suppose the things you're spilling over onto the curb in the grass. So expand this out to the economy or generally as I say you're chair of the Joint Economic Committee. We now have as you know the symposium going on in Jackson Hole with Chair Jay Powell about to speak on Friday. Where are we from your point of view on the economy and what do we need out of the Fed right now. Well David as you know most of Congress now it's this very strange economy that we're in right now. You know very strong labor market vibrant 20000 new jobs but housing is plummeting. And it's good news on the gas prices which are down. I think what 30 some days are right now. But and the other good news as it turns out that people the money they're saving on gasoline they're spending as consumers. I'm optimistic about a very strong third quarter. I saw a projection as high as 5 percent last night even though Bloomberg is still saying 1 and 2 1/2 percent for the third quarter. I don't know what the Fed will do. My hope is that they'll be more like. Points rather than 75. But they seem very determined to get the inflation down to their 2 percent goal. That may mean 75 points in Jackson Hole. Are you more worried right now about a slowdown economically or about inflation. Much more about a slowdown and not because of the United States but as one of your previous guest said. What's happening in China. You know this first time since 1964 that we are growing faster than they are back when they were growing nine and a half 10 11 percent a year. Now I heard their second quarter is four tenths of one percent. That does affect the rest of the world and of course the energy crisis in Europe which is not yet overcome. You know we are part of a global economy and we have to live with that. Scarlet Fu finally let's talk a bit about politics. You say that you think there'll be a resurgence in the third quarter. Is that going to be soon enough for the midterm elections. Yeah I hope so. I'm not just the resurgence. But you know the price of gas falling inflation falling over all that new numbers come out this week. I think we'll be pleased that we saw the peak already at least. I'm afraid so. But then the biggest thing David is we passed the Chips and Science Act. We just passed the Inflation Reduction Act which is the largest climate change bill in our history. I think we're showing that we can govern in a constructive way. And that's going to be good for Joe Biden and good for Democrats in November. Well you certainly got a lot of legislation through that measure. Everyone expected that given the narrow majority in the House. Thank you so much. It's always a treat to have you back. And welcome back from Taiwan by the way. That's Democratic congressman from Virginia. He's Mr. Dan Buyer. Coming up oil and gas are buffeted by GOP concerns once again. We talk with energy expert Sarah Luxury of SVP Strategies about exactly what's going on what we should expect next for oil and for gas. Somewhat different questions. This is balance of power. I'm Bloomberg Television and on radio. This is balance of power on Bloomberg television and radio. I'm David Westin will I keep you up to date with news from all around the world. For that we turn to Mark Crumpton here with the first word. David thank you. Western leaders today warned Russia against annexing other parts of Ukrainian territory after Crimea amid rumors that Russia is planning to do so in various occupied areas. The leaders sent video addresses to the Crimea Platform Conference in Kiev which was attended in person by Ukrainian President Vladimir Zelinsky. Russia stole a part of life even from those in Crimea. I was lucky enough not to become a victim of repression. It was impossible to imagine that the occupation turned to Crimea. And I was in paradise for all of us. It turned this paradise into the depressed and dependent region. U.S. officials are warning that Russia is preparing to launch intensified strikes against Ukrainian government facilities in coming days. The U.S. says that a nuclear deal with Iran is getting closer but the gaps still remain. A State Department spokesman says Iran has appeared to drop some of its quote non-starter demands. The Biden administration continues to review the EU's latest proposal to revive the agreement that curbs Iran's nuclear program. Life expectancy in New York plummeted by three years in 2020. The CDC says that was the biggest decline among all states in the first year of the Covid-19 pandemic. Residents of New York are expected to live to just under 78. The 15th highest life expectancy in the country. Overall U.S. life expectancy plunged by one point eight years in 2020. The biggest drop since World War Two. The University of Texas is endowment is positioned to overtake Harvard's as the richest in the U.S. higher education. But that has nothing to do with investing or fundraising. Every day the Texas college system makes about six million dollars off a chunk of land it manages in the largest oilfield in the country. The land is leased to drillers such as Conoco Phillips and Continental Resources. As we have mentioned Julian Robertson has died at the age of 90. The billionaire tiger management founder became one of his generation's most successful hedge fund managers. He was a mentor to a wave of investors known as Tiger Cubs. Global news 24 hours a day on air and on Bloomberg Quicktake powered by more than 27 100 journalists and analysts in over 120 countries. I'm Mark Crumpton. This is Bloomberg. David thank you so much Mark. Well energy whether it's oil or natural gas has been in the headlines today as it's been pretty much every day this entire summer to bring us up to speed on where we are on oil and on natural gas. We welcome now Sarah IBEX. She is founder and president of SVP Strategies. So thank you so much for being with us to start with oil. A report of the Bloomberg today that the kingdom of Saudi Arabia's energy minister now says maybe OPEC plus may have to do something to curtail some supplies because there's too much volatility. What do you make of that. That's a good way to start the discussion. The volatility in the market is very rapid and very huge. So what Prince Abdulaziz discussed yesterday in media is that there has been a disconnect between the futures market and the current present market. Basically the paper and the physical market there are going to a very different routes. There is the man the paper market is so much impacted by different sentiments in the market because we have so many uncertainty in the market. When would OPEC plus move if it did in fact move. Well on the supply side when we are talking about oil well the uncertainties on the supply side obviously now we are dealing with Iran. The nuclear deal and the market doesn't know when and how much of Iranian oil is coming to the market. So if there is a deal tomorrow are we going to have those 70 200 million barrels of Iranian liquids on the water immediately being a market their exports could add another million barrels at least in the market. A million barrels per day. So there is a lot of uncertainty of how and when and how much. And when you run it oil will come to the market. Definitely. If that causes a price reduction further then what it is now the OPEC will react and cut back more production on the demand side. However we also have uncertainty. No one is really sure when Chinese economy is going to recover to really pre Covid if next year we're going to have economic slowdown at a global scale. So there are uncertainties on also demand recovery where the demand is going and all of this is really making the market to react in the way it's doing today. So you took us exactly to a question I had about Iran. I mean today oil is up. I'm looking at Bloomberg right now. And I think that's probably because of what we heard from Saudi Arabia. But yesterday it was down because of thoughts that maybe we're getting closer to a deal with Iran if in fact there were a deal. How long would it be before that oil actually hit the marketplace. So if there is a deal obviously we have to see the details of that. It seems that the market expects that if there is a deal there is going to be a gradual increase of Iranian oil. But something that we have to consider is that Iran has already about what is been estimated between 75 70 75 200 million barrels of liquid not all of its crude oil that is condensate. But that's basically ready on floating storage is to be released or being exported to different destinations. Also the question is that if there is going to be waivers given by U.S. government would that be only for European markets. European importers of oil is going to benefit from this deal or again China and India could import that oil because now under this situation they are importing you a lot of U.S. oil which is a very long distance to go there. Let's turn to natural gas now if we could. It's not just Iran. It's not just Saudi Arabia. It's also Russia has something to say about energy these days. And we heard actually from all of Schultz the chancellor of Germany just overnight talking about the investments that they're trying to make in Europe. This is part of what he had to say. We are working hard to become independent of discussed supply and we are doing a lot of investments to make it happen. And we are doing it as fast as ever possible never such an infrastructure that has been built in Germany in a short time. So sir they're working very very hard no question about investing a lot of money. Will it be enough to avoid perhaps a recession in Germany if in fact Russia cuts out the National Guard and gas. All the investment. It's going to take time at least a few years. Yes Germany has reached out to different alternative source says they have even had discussions with Canadian. Which is interesting because now we are dealing in the past few years of the North America U.S. Canada energy trade ties have been weakening. So now we see that Canada and Germany are looking in further energy trade ties. But all of this is not going to be ready for this winter. So this winter is going to be unfortunately dark and cold because if Russia decides to reduce its gas exports or there is additional sanctions or retaliations from Russian side there is not a quick fix for natural gas. Yes most of the natural gas power plants are switching to oil and liquids but that means that we need a lot more oil. So and also coal available. But there isn't all of these investments are not going to be ready in time for this winter in the next couple of months. And if the economy starts slowing down for the next early next year this I mean this is something that could happen eventually unless European countries could convince countries like Norway to give discounts. But that's again these are just at the political level. It's very hard to when it comes to the logistics and implementation phase. And what does that mean for natural gas prices back here in the United States. Because they seem to be spiking. Is that because the demand from Europe as they try to build up their stockpiles. Yes. And also we are hitting the cold season so we have like maybe a month and a half a warmer season and obviously the demand for natural gas for heating also electricity increases and U.S. is exporting a lot. Still the prices in U.S. is way lower than prices in Europe and Asia. Because we are a major natural gas producer. But yes obviously we have a seasonal demand and seasonal demand will cause additional increase of the process. But especially at the time that now we have in regions like Europe or Asia that there is a huge need for natural gas. But also something that we have to consider is that natural gas is also feedstock for petrochemicals and fertilizers. So it's not just into electricity and heating but also its impact on the food. Food prices. So this has been very helpful. Really appreciate you're spending time with us today. That's Sarah actuary of SBB International. Coming up the labor market remains tight and inflation high. What does that mean for wages. We ask Alexander Covid. He's dean of Cornell's School of Industrial and Labor Relations. This is balance of power on Bloomberg television and on radio. This is balance of power on Bloomberg television or radio. I'm David Westin. Well despite all the contradictory information about the economy it appears least the labor market remains pretty robust at least according the last jobs report. At the same time wages are going up although perhaps not as fast as inflation is going up. All of which really puts some pressure on workers and also on the whole labor management relationship in negotiating wages. To take us through that we welcome now. Alexander COLVIN. He's dean of Cornell's School of Industrial and Labor Relations. So Dean thank you so much for being with us. As I say we all know about inflation. We all know about real wages was a nominal rate of wages. But tell us what you're seeing the dynamics in the workplace. I think the dynamics are really coming from a couple of things. One is that we have this genuinely tight labor market. We've got low unemployment. We have lots of jobs out there for people who want jobs. People have alternatives so they feel they have some power. But the other side is a push. They see the high inflation coming from these high commodity prices and they feel the need to push the wages up to keep up essentially. So we've got really a perfect combination of factors where we're going to expect to see a real push for higher wages. And I wonder in what form that might take. We're seeing strikes over the United Kingdom a very major port. A lot of places are going on strike. I'm not sure we've seen that much of that here. But are we seeing more union organizing. We are seeing we are seeing that strike pressure in Britain. There's some Hanson in the United States too. Discussions around the rail rail unions and the possibility of a strike. So we certainly are seeing that what's happened the U.K. could could spread to our labor market. I do think it spreads beyond that though as well that we see non-EU workers as well pushing for higher wages. So it's I think these are interconnected things going on with the economy right now. So it's all understandable the way you lay it out. At the same time the one thing I think every economist tells us we want to avoid is the so-called wage price spiral which we did have back in the 70s you referred to. How do we accommodate the workers give them what they need and deserve and at the same time avoid a wage price spiral. Yeah I think that is something to really think about what was different in the 1970s. There were a lot of what we call the COLA clauses the cost of living adjustment clauses that automatically adjusted to inflation and those were really built into a lot of collective agreements. We just don't see that today. If you look at collective agreements that you don't see a whole lot of cola clauses. If we have the one time wage increases that keep the workers up with inflation I don't think we should fear that the same way we would a built in COLA clause type push of wages. So yeah we're seeing pressure from workers but I don't think it's the same as happened back in the 70s. As you suggest those cost of living adjustments as I recall came out of collective bargaining agreements. The percentage of workers who were represented by a union backed particular particularly the private sector was significantly higher than it was today. Is that not right. Is that turning around. Yeah that's absolutely right. That percentage was much higher. We had over 20 percent of workers represented in America by unions. Today it's it's below 7 percent and down to around 6 percent of the private sector. So it is a much weaker. We have seen an uptick in organizing about just the last year or so. Starbucks is one of the most prominent examples of that where you've seen a number of stores across the country unionizing Amazon. We saw that facility in New York City unionize. So there there does seem to be a new energy of organizing going on this year. At the same time we have a president in Joe Biden who has been unabashed in support for organized labor. Has that made a difference yet. I think it makes a difference symbolically. I do think people look to the president ask the national leader to set a tone and Biden has clearly set that tone. He's got a sector of labor as a former union leader and I think he's been clear that he is supportive of organized labor. So I think that does change the mood. We're seeing a lot more support for unions amongst younger workers. I think they're picking up on that shifted the political vibe and more positive attitude towards unions. So what's the best path forward from your point of view. Because you see this from both sides and you deal with actual labor disputes. What's the best path forward. As I say to sort of accommodate the workers who have very reasonable demands because they're seeing the price at the pump price. The support go up all the time. They need more money to cover it. Seem to want don't want this to get out of control. Yeah I think our traditional tool of collective bargaining is something that can deal with this negotiation sitting down at the table management labor across from each other and having reasonable discussions about what the wages the hours the terms and employment are. It's an old solution but I think it's one that works. It can adjust to the current economic situations to the need of the business and the needs of the workers to a decent wage. So sit down at the negotiating table and hammer out an agreement. That's the best way to do it. At the same time the nature of work has changed for an awful lot of Americans. I mean gig economy is what a lot of you call it but we don't have the situation where you go to work for a company an employer and you're there for 30 or 40 years which was I think more consistent with collective bargaining was it not. It was but I think there's ways of doing it that can actually work more effectively in this kind of new economy. It seems like some of the models we see in industries like entertainment where people go from one movie to another or one TV show to another those kind of models could be adapted to some of our new economy gig economy type settings. There's tools we have that could be used effectively in the new setting as well. So I don't think we want to throw out that basic idea of bringing out a structure where people can sit down and negotiate and come to reasonable deals that fit the circumstances of this new economy. OK. Thank you so much for your time. This was very helpful. That's Dean Alexander COLVIN of Cornell. Coming up we take a look at today's New York primaries with our New York bureau chief Shelly Banjo. This is balance of power on Bloomberg television and on radio. This is balance of power on Bloomberg Television Radio. I'm David Westin what is getting toward the end of August. Lot of you were at the beach on vacation somewhere else. But what is New York doing. It's holding primary elections. To take us through that we welcome now Bloomberg New York bureau chief Shelly Banjo. So before we get to the races is ever going to vote. Well that's the question. How many people are still around the city or how many people are going to vote absentee. We had pretty meager totals in early voting. There was only about 70000 people that showed up which was about 60 percent less than who showed up for early voting during the mayor's race last year. So if you look around the state all these congressional primaries which is the most important do you think. I think the most consequential one is the race between Carolyn Maloney and Jerrold Nadler because they've both been serving for 30 years. They're both longtime on members of the House on important committees. And so one of them is going to go or both of them could go. But we know that by the end of this week you know one of them will no longer hold that seat. So a lot of seniority going up in smoke as it were is effectively. What's most interesting one. So what is the most interesting ones I think is this New York 10 district which is lower Manhattan and the you know what affectionately is called Brownstone Brooklyn. It is one of the most diverse districts in New York progressive of probably one of the most progressive corners in America. And there's about a dozen people running. You know the limited polling that has been conducted shows that Dan Goldman who is one of the heirs to the Levi Strauss jeans empire is leading the race. But there's so many people in that race that it really will probably come down to hundreds of votes. But there's one fewer right. Is this one where former Mayor Bill de Blasio. Right. Hat in the ring for a minute or two. That's right. De Blasio tried to run and said you know what this is too crowded and I'm polling too low and I'm not raising enough money. So I'm going to get my skedaddle out of here. So what do we know about Dan Golden other the fact that he was involved in the impeachment of Donald Trump. That's what you see from all the ads we see all the time on TV here in New York. That's right. So he has been in New York for a long time. He worked in FDNY. He was a lawyer. He went up to be a lawyer on the first Trump impeachment hearing. And he's really traded on that. And on that during his campaign he's talked a lot about democracy and you know upholding democracy. But he's also paid for his whole run. He you know he did raise money but then about a million dollars of it. He said you know I'm I'm sick of fundraising. I was going to use my own money to buy this race which has created you know criticism that he's trying to buy the race. It also explains why I see so many ads on TV when I watch the local news. Right. And who were the other significant players in that race do you think. So one interesting one is you lay knew who's Taiwanese American who's represented you know lower Manhattan Chinatown for the state Senate. Carolina Rivera she is a city council member there. And then Monday Jones who moved from Rockland County after being booted there to avoid kind of an inner party race with Sean Patrick Maloney over to the 10th Congressional District. And so it's a credit race with a lot of people that people know. And so that's kind of the question is all these people kind of have their own little bases of support. So how many of them are going to actually get those people to turn out in the middle of August and go vote. We have a viewer actually writing an excellent question I should have thought to ask which is OK if nobody gets 50 percent is there a run off. Would you. Is it just plurality for the primaries itself. It's just a plurality. So we had we had this you know ranked voting during the mayor's race last year which was extremely confusing. But it ended you know delaying a lot of the results. We don't have that in this in the scenario. One last one just because it gets so much attention. Paladino Mr. Paladino up toward Buffalo. Right. And so this is you know what the one of the most Republican if not the most Republican corners of New York Buffalo businessman Carl Paladino. He has you know it's been described as you know Trump versus Trump here between the two people. He's running against the state chairman of the Republican Party. NIKKEI worthy. And you know a lot of folks are you know somewhat worried by a lot of the racist comments that Paladino has has made. But he has been endorsed by Elise Stefanik. Trump has not actually endorsed either of them but they both have close ties to Hamas. Thank you so much. Really great to have you here. That's Bloomberg New York bureau chief Shelly Banjo. Check out the Balance of Power newsletter on the terminal and also online. And this is balance of power on Bloomberg television and on radio.

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Balance of Power Full Show (08/23/2022)

On Bloomberg’s ‘Balance of Power’ with David Westin: Torsten Slok, Apollo Management chief economist, on US economy beginning to slow down; Rep. Don Beyer (D) Virginia, on rising tensions between the US and China over Taiwan; Sara Vakhshouri, SVB International president, discusses oil volatility and uncertainty; Alexander Colvin, Cornell University Industrial and Labor Relations School Dean, on a tightening US labor market. (Source: Bloomberg)