SUSAN, GREAT SEEING YOU AGAIN.
THAT IS SUSAN LI.
ALSO SOME OF THE DEVELOPMENTS
WE’RE FOLLOWING IS THIS YIELD
CURVE INVERSION.
I KNOW A LOT OF PEOPLE, THEY
HEAR THIS AND THEIR EYES JUST
SORT OF GLAZE OVER HERE BUT IT
DOES BEAR REPEATING THAT WHEN
YOU HAVE A TWO-YEAR OR NETTING
YOU MORE THAN A 10-YEAR IT
DOESN’T ALWAYS MEAN THAT IT
LEADS TO A RECESSION.
BUT WE CAN SAY EVERY RECESSION
HAS BEEN PRECEDED BY A
SHORT-TERM MATURITY YIELDING
MORE THAN A LONGER-TERM
MATURITY.
IT BEARS WATCHING.
I WONDER IF ART LAFFER IS
WATCHING THIS RIGHT NOW, FORMER
REAGAN SVENGALI, MUCH MORE WITH
US.
ART, WHAT DO YOU MAKE OF THE
WHOLE YIELD CURVE FIXATION WE
HAVE?
DO YOU FOLLOW IT?
SAY THIS IS ANOTHER BIT OF NOISE
I SHOULD KEEP AN EYE ON OR WHAT?
>> I HAVE FOLLOWED IT OVER THE
YEARS A LOT, NEIL, AND IT HAS
BEEN A VERY VALUABLE THING
BECAUSE WHEN THE LONG YIELDS ARE
LOWER THAN THE CURRENT YIELDS
MEANS THERE IS EXPECTED DECLINE
OF REAL RATE OF RETURN ON
CAPITAL, WHICH IS CLEAR SIGN OF
FORECAST FOR THE MARKET OF A
RECESSION.
I DON’T THINK THAT IS THE CASE
TODAY BECAUSE THE FEDERAL
GOVERNMENT IS INTERVENING SO
MUCH IN THESE MARKETS THAT THESE
RATES DO NOT REFLECT EXPECTED
RETURNS OVER THE NEXT TWO YEARS,
10 YEARS, 20 YEARS, THEY JUST
DON’T, SO THEREFORE I DON’T PUT
MUCH CREDENCE IN THE MEASURE AT
ALL.
I PUT A LOT OF CREDENCE INTO
ELON MUSK.
I’M NEVER BEEN SO EXCITED AS I
AM BY HIM TAKING A POSITION IN
TWITTER.
IT IS REALLY WONDERFUL.
NEIL: WHY IS IT WONDERFUL?
>> BECAUSE I THINK HE WILL BE
ABLE TO CHANGE THE CULTURE OF
TWITTER AND MAKE IT MUCH MORE
OPEN FOR EVERYONE AND NOT HAVE
IT CANCELED ALL THE TIME.
ONCE YOU GET OPEN NETWORKING
THERE, YOU KNOW, YOU’RE REALLY
CAN GET A SHARING OF VIEWS.
IT’S A MUCH MORE DEMOCRATIC WAY
OF DEALING WITH THE WORLD.
I THINK JUST LIKE BEZOS TAKING
OVER "THE WASHINGTON POST," I
THINK ELON MUSK TAKING OVER THIS
WILL BE A CLEAR IMPROVEMENT IN
DEMOCRACY IN THIS COUNTRY.
VERY EXCITED BY IT.
NEIL: YOU THINK ABOUT THE
"WASHINGTON POST" HAS BEEN TOUGH
ITER ON HIM SINCE HE TOOK OVER
THE POST THAN IT HAS PRIOR.
I AM CURIOUS THOUGH, WHAT YOU
MAKE OF A LOT OF THESE
BILLIONAIRES RIGHT NOW BEING
CLOSELY SCRUTINIZED BY THE BIDEN
WHITE HOUSE, ELIZABETH WARRENS,
ALL THESE OTHERS WHO ARE NOW
SAYING YOU HAVE BEEN DODGING THE
TAXMAN ON A PERCENTAGE BASIS.
YOU DON’T PAY NEARLY WHAT YOUR
SECRETARIES ARE PAID OR
ASSISTANTS ARE PAID AND THAT IT
IS GAINING STEAM.
DO YOU THINK IT IS GAINING
STEAM?
>> I THINK IT IS A LOSER ALL THE
WAY, NEIL.
I DON’T THINK THESE PEOPLE HAVE
A LICK OF SENSE IN THEIR HEADS
AS TO WHAT THEY’RE TALKING
ABOUT.
WHAT WE NEED IS A LOW RATE,
BROAD-BASED, FLAT TAX THE ONE I
DID WITH JERRY BROWN, TO GET IT
THERE.
RICH PEOPLE ARE NOT THE PROBLEM.
THEY ARE OUR SOLUTION.
LOOK WHAT ELON MUSK HAS DONE
WITH REGARD TO BATTERIES AND
TECHNOLOGY AND THESE COMPANIES?
LOOK WHAT BEZOS HAS DONE WITH
AMAZON.
THESE GUYS ARE THE PEOPLE WE
NEED TO CULTIVATE AND THINK.
THAT IS WHAT MAKES AMERICA SO
PHENOMENAL IS THAT WE HAVE THESE
GREAT ENTREPRENEURS THAT GREETED
ALL THIS GROWTH AND PROSPERITY
IN THIS COUNTRY.
THEY ARE NOT THE ONES ARE THE
ENEMIES OR THE PROBLEM.
ELIZABETH WARREN, JOE BIDEN THEY
ARE THE PROBLEMS.
THEY ARE THE ONES TRYING TO
STIFLE AMERICA’S LEADERSHIP IN
THIS WORLD.
IT REALLY BOTHERS ME THEY’RE
TRYING TO GO AFTER THESE PEOPLE
AS OPPOSED TO SENDING THEM
FLOWERS AND THANKING THEM FOR
ALL THE TAXES THEY DO PAY.
YOU KNOW WHEN YOU GOT A CLIENT
OF YOURS PAYING YOU MONEY YOU
SHOULD NOT TRY TO FLIP THEM OFF.
YOU SHOULD TRY BE NICE TO THEM.
THAT IS NOT WHAT THESE
TAXPAYERS, TAX SPENDER PEOPLE
DO.
THEY DO JUST THE EXACT OPPOSITE
AND IT’S WRONG.
NEIL: LET ME GET YOUR TAKE ON
WHAT’S HAPPENING RIGHT NOW IN
OUR MARKETS, IN THE ECONOMY.
WE, YOU KNOW LAST TIME YOU AND I
WERE CHATTING I SAID WE WERE
STILL WAITING FOR THE
STAGFLATION PART OF THE
INFLATION.
IN OTHER WORDS IN THE 1970S WE
GOT BOTH ALMOST SIMULTANEOUSLY.
THE UNDERLYING ECONOMY HAS BEEN
VERY, VERY STRONG.
I THINK WE HAD 11 STRAIGHT
MONTHS OF BETTER THAN 400,000
JOBS GAINED EACH MONTH BUT WE
DID START SEEING HINTS OF MAYBE
A CONSUMER SORT OF A PULLBACK IN
THE LATEST SPENDING FIGURES.
I THINK THEY WERE UP .2 OF A IN
FEBRUARY, A 10th OF THE RATE
THEY WERE IN JANUARY.
DO YOU THINK WE’RE STARTING TO
SEE A SLOWDOWN NOW AND IS IT
GOING TO BE LIKE THE ’70sS?
HOW DO YOU SEE IT?
>> WHAT WE TALKED ABOUT LAST
TIME, I THINK WHAT I SAID WE HAD
THE ARTIFICIAL DIP DOWN BECAUSE
OF THE PANDEMIC AND RECOVERY
COMING THERE, A BOUNCE-BACK FROM
THE PANDEMIC, PEOPLE TOOK JOBS,
WEREN’T BACK TO WORK ALL THAT,
BUT WE STILL HAVE NOT GOTTEN TO
THE EMPLOYMENT LEVELS OF THE
PRE-PANDEMIC.
OUR GROWTH RATES ARE NOT WHERE
WE SHOULD BE BY ANY MEANS.
I THINK WE’RE NOT HAVING
STAGFLATION IN THE SENSE OF THE
’70s.
I THINK WE’RE HAVING SECULAR
DECLINE IN PRODUCTION IN THE
U.S., MUCH LIKE JAPAN, MUCH LIKE
GERMANY, JUST VERY SLOW GROWTH
BECAUSE OF THE HUGE IMPOSITION
OF GOVERNMENT ON THE ECONOMY BUT
IT IS NOT HIGH UNEMPLOYMENT.
IT IS REALLY VERY LOW WILL TO
WORK, LOW PRODUCTIVITY AND THAT
LONG RUN I THINK IS OUR REAL
PROBLEM.
THAT IS MUCH MORE DIFFICULT TO
DEAL WITH THAN A RECESSION.
THIS IS NOT A RECESSION.
THIS IS A SECULAR DECLINE IN THE
U.S. AND WE HAVEN’T RECOVERED
FROM WHERE WE WERE.
I DON’T SEE MUCH PROSPECTS WITH
THESE POLICIES OF RECOVERING.
NEIL: ALL RIGHT.
WE’LL WATCH IT CLOSELY.
ART, GREAT SEE BEING YOU AGAIN
GREAT TO SEE YOU RONALD REAGAN