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GS Picked Solomon To Tap Modern Market, Young Blood: Schatzker · Bloomberg Intelligence

• 0:05
  Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm pim Fox.
• 0:08
  Speaker 1: Along with my co host Lisa Bramowitz. Each day we
• 0:11
  Speaker 1: bring you the most important, noteworthy, and useful interviews for
• 0:15
  Speaker 1: you and your money, whether you're at the grocery store
• 0:17
  Speaker 1: or the trading floor. Find the Bloomberg p m L
• 0:20
  Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot Com. The
• 0:33
  Speaker 1: boardroom drama continues. Golden Sachs said that David Solomon will
• 0:38
  Speaker 1: become the sole president of the bank, elevating him over
• 0:41
  Speaker 1: Harvey Schwartz as the eventual successor to Chief Executive Officer
• 0:46
  Speaker 1: Lloyd blank Find. Of course, as follows at reports on
• 0:49
  Speaker 1: Friday by The Wall Street Journal that Lloyd blank Find
• 0:52
  Speaker 1: was planning to step down as CEO as early as
• 0:55
  Speaker 1: this year. Later in the year, Eric Shasker joins us
• 0:58
  Speaker 1: now he's editor at lar for Bloomberg. Eric, I want
• 1:02
  Speaker 1: to start with denials by Lloyd blank Find that this
• 1:06
  Speaker 1: news came from him over the weekend and he was
• 1:08
  Speaker 1: sort of saying, it's sort of like Huckleberry Finn watching
• 1:11
  Speaker 1: his eulogy. Why the pushback If Goldman Sachs is just
• 1:15
  Speaker 1: going to fan the flames with this announcement today. Well,
• 1:20
  Speaker 1: let's be careful. What Lloyd said was that, as you
• 1:25
  Speaker 1: as you phrase it, that the news did not come
• 1:28
  Speaker 1: from him, which is to say he wasn't the source
• 1:30
  Speaker 1: of the Wall Street Journal report on Friday. But that's all.
• 1:34
  Speaker 1: I'm not sure that I would call that a denial. Um.
• 1:37
  Speaker 1: What it does tell us is that this did not
• 1:39
  Speaker 1: go according to script, and that Goldman Sachs to a
• 1:44
  Speaker 1: certain degree clearly wasn't in charge of the cadence of events.
• 1:51
  Speaker 1: They might not have proceeded exactly according to Goldman's plan,
• 1:54
  Speaker 1: but nevertheless, here we are. Goldman Weather by hook or
• 1:57
  Speaker 1: by Crook was forced to say that David Solomon is
• 1:59
  Speaker 1: the soul sole president excuse me, and the likely successor
• 2:04
  Speaker 1: to Lloyd blank find a CEO if and when that happens.
• 2:07
  Speaker 1: But they decided this a while ago. It wasn't like
• 2:08
  Speaker 1: this happened over the weekend a short while, but it
• 2:11
  Speaker 1: was not on Friday. My understanding, having recently spoken when
• 2:16
  Speaker 1: I say recently in the last few minutes to a
• 2:18
  Speaker 1: person UH with direct knowledge of the situation, is that
• 2:22
  Speaker 1: Lloyd Blank find met with the rest of the board
• 2:24
  Speaker 1: on February twenty one, regularly scheduled board meeting, at which
• 2:26
  Speaker 1: point he recommended that David Solomon be the sole president
• 2:30
  Speaker 1: of the firm and be his chosen successor, and the
• 2:35
  Speaker 1: board endorsed that recommendation. So shortly thereafter we can presume
• 2:40
  Speaker 1: Harvey Schwartz was informed of this decision, and then it
• 2:43
  Speaker 1: was up to Harvey to decide what his next move
• 2:46
  Speaker 1: was going to be. Most people under those circumstances on
• 2:50
  Speaker 1: Wall Street choose to leave the firm. There's not much
• 2:52
  Speaker 1: point hanging around the hoop, right if you're not going
• 2:54
  Speaker 1: to be the centerman. And uh, the problem here is
• 2:59
  Speaker 1: that February when he first is what almost three weeks ago.
• 3:03
  Speaker 1: Goldman could have done this more elegantly by doing it
• 3:06
  Speaker 1: a little faster. In the end, someone presumably in the boardroom,
• 3:10
  Speaker 1: although we may never know, decided to have a conversation
• 3:13
  Speaker 1: with a Wall Street journal and speed things along. At
• 3:16
  Speaker 1: the very least, that's what that conversation resulted in a
• 3:21
  Speaker 1: pace that Goldman itself perhaps had not signed onto and
• 3:26
  Speaker 1: was not entirely in control of. Eric shares A Goldman sacks.
• 3:29
  Speaker 1: They're up about one and a half percent right now.
• 3:32
  Speaker 1: Market seems pleased at least by this news, however, it
• 3:35
  Speaker 1: has been disseminated. What can you tell us about Mr
• 3:38
  Speaker 1: Solomon in terms of what the future of the bank
• 3:41
  Speaker 1: or indeed the financial I should just say it's not
• 3:44
  Speaker 1: just a bank, because while it has an investment bank,
• 3:47
  Speaker 1: they also had now the online lending platform Marcus. They've
• 3:50
  Speaker 1: invested in uh kind of online blockchain cryptocurrency Bitcoin. Those
• 3:56
  Speaker 1: are those are still very very small parts of Sacks. Right.
• 3:59
  Speaker 1: It's still principally an advisory firm, right that does principally
• 4:04
  Speaker 1: M and A work, but also equity capital markets and
• 4:06
  Speaker 1: debt capital markets, and it does sales and trading. What
• 4:10
  Speaker 1: can I tell you about David Solomon? He is a
• 4:13
  Speaker 1: leverage finance banker. That's how he started his career at Drexel.
• 4:16
  Speaker 1: He went on to do it at bear Stearns. He
• 4:18
  Speaker 1: came into Goldman Sacks as a partner, hired as a
• 4:21
  Speaker 1: partner from the outside, very rare, and went on to
• 4:24
  Speaker 1: build Goldman's debt capital markets business. The firm was almost
• 4:28
  Speaker 1: nowhere in d c M until David Solomon showed up
• 4:31
  Speaker 1: on the scene, and that's why he was hired. He
• 4:33
  Speaker 1: did so so successfully that he became the president at
• 4:36
  Speaker 1: least the head of investment banking at Goldman Sachs. He's
• 4:39
  Speaker 1: not in that sense an m and a guy like
• 4:42
  Speaker 1: Hank Paulson was. He's more of a financier. He belongs,
• 4:46
  Speaker 1: if you will, more in the modern financial market, perhaps
• 4:51
  Speaker 1: than the kind of M and a guy who grew
• 4:54
  Speaker 1: up as Paulson did under Gus Levy and perhaps under
• 4:57
  Speaker 1: Steve Friedman and Bob Ruben back in then, so what
• 5:00
  Speaker 1: can we infer from the fact that Harvey Schwartz was
• 5:04
  Speaker 1: kind of pushed aside? I mean, he was head of
• 5:06
  Speaker 1: the trading death. We know we can do more than
• 5:08
  Speaker 1: infer because the same person who told me about the
• 5:11
  Speaker 1: February twenty one meeting also shared with me some of
• 5:14
  Speaker 1: the reasons why David Solomon was chosen over Harvey Schwartz.
• 5:19
  Speaker 1: He's a better client guy. Even though Harvey Schwartz was
• 5:22
  Speaker 1: the CFO prior to becoming co president and spent tons
• 5:26
  Speaker 1: of time to be with you might say that he
• 5:29
  Speaker 1: gets He's Look, I've spent lots of time with David Solomon.
• 5:32
  Speaker 1: When I say lots enough time with David Solomon to
• 5:35
  Speaker 1: know what kind of a person he is. He is
• 5:38
  Speaker 1: a fun guy to be with. He's gregarious, He is
• 5:40
  Speaker 1: an infectious personality. He's good at making conversation. Harvey is
• 5:45
  Speaker 1: a little more buttoned up and buttoned down, if you will.
• 5:48
  Speaker 1: He isn't as emotive as David is. These are my
• 5:52
  Speaker 1: own personal observations. Furthermore, David worked very hard to get
• 5:59
  Speaker 1: in front of Master's Over that fifteen month period when
• 6:02
  Speaker 1: he and Harvey were co presidents, he had some one
• 6:05
  Speaker 1: on one meetings with major investors um They like the
• 6:09
  Speaker 1: fact that he has been pushing for diversity at the
• 6:12
  Speaker 1: firm and also spending a lot of time getting to
• 6:15
  Speaker 1: know the younger cohort at Goldman Sacks, which of course
• 6:19
  Speaker 1: is the firm's future, as it is at any firm.
• 6:23
  Speaker 1: They like the fact that Goldman is at a point
• 6:25
  Speaker 1: in its trajectory where it's going to have to start
• 6:28
  Speaker 1: building again. If it wants to grow, Goldman is going
• 6:31
  Speaker 1: to have to find new things to do. To go
• 6:33
  Speaker 1: back to your point, him, Goldman is going to have
• 6:36
  Speaker 1: to light a fire into this consumer finance platform Marcus
• 6:40
  Speaker 1: that they have online. They're going to have to make
• 6:42
  Speaker 1: a choice is to have big his business they want
• 6:44
  Speaker 1: to build in crypto. They're going to have to rebuild
• 6:47
  Speaker 1: to a degree to fixed income, currency and commodities business,
• 6:50
  Speaker 1: not because it's broken, but it isn't performing as well
• 6:54
  Speaker 1: on a relative basis as Morgan Stanley's, a JP Morgan's,
• 6:57
  Speaker 1: or City Groups or even Bank of America's. These are
• 7:00
  Speaker 1: some of the things that Goldman is going to have
• 7:02
  Speaker 1: to do, and the board appears to have decided that
• 7:05
  Speaker 1: David is a better guy to get that done than
• 7:07
  Speaker 1: Harvey Schwartz or together, so David's the sole president in
• 7:12
  Speaker 1: line to succeed Lloyd Blank find We still don't know
• 7:15
  Speaker 1: when that's going to happen, and if we do, you're
• 7:18
  Speaker 1: going to be the person I'll be here You're going
• 7:19
  Speaker 1: to tell us. Thanks very much. Eric Shatzker, editor at
• 7:22
  Speaker 1: large for Bloomberg News giving us all the details about
• 7:26
  Speaker 1: Goldman sacks what we want to visit now with Stephen DISSANCTUS.
• 7:43
  Speaker 1: He is managing director for small cap and mid cap
• 7:46
  Speaker 1: stocks at Jeffreys. He's managing director there, and I want
• 7:49
  Speaker 1: to thank you very much for being here in our
• 7:50
  Speaker 1: eleven three oh studios God mornings, for being here. Go ahead,
• 7:54
  Speaker 1: make the case for UH small and mid cap stocks,
• 7:58
  Speaker 1: particularly in this kind of rate environment and in where
• 8:02
  Speaker 1: we are in the business cycle. Great, So you know
• 8:04
  Speaker 1: what I think? The first thing is that UM we
• 8:06
  Speaker 1: actually got more positive on small cap stocks in UM
• 8:10
  Speaker 1: in February after the big sell off. I think a
• 8:12
  Speaker 1: lot of the run in January was big inflows into
• 8:16
  Speaker 1: large cap ETFs into passive try to get exposure. So
• 8:21
  Speaker 1: is that trade unwinds itself. I think that's gonna be
• 8:23
  Speaker 1: beneficial for for small amid. And then relative valuations have
• 8:28
  Speaker 1: really come in pretty dramatically. Really small cap stocks of
• 8:32
  Speaker 1: underperformed since of course I had a big run in
• 8:36
  Speaker 1: in sixteen, but relative to large caps, the valuations got better.
• 8:40
  Speaker 1: Earnings growth in this kind of environment, when you're gonna
• 8:43
  Speaker 1: get three percent GDP, you're gonna see better earnings growth
• 8:47
  Speaker 1: down the market cap. And then the interesting thing on
• 8:50
  Speaker 1: on the rate side, Yeah, higher rates will lead to
• 8:53
  Speaker 1: lower overall returns. But if rates are going up for
• 8:56
  Speaker 1: the right reasons, better economic growth, that's generally better for
• 9:00
  Speaker 1: small MidCap companies. So how much do you expect, for example,
• 9:05
  Speaker 1: the Russell two thousand to perform this year. So we've
• 9:08
  Speaker 1: got a target of sixteen sixty four, so so about
• 9:12
  Speaker 1: eight percent on the upside there. I think you've got
• 9:16
  Speaker 1: a little more room to go since really we made
• 9:18
  Speaker 1: our call small as outperform large by a little over
• 9:22
  Speaker 1: two percent, and I could see that kind of continuing
• 9:25
  Speaker 1: to widen. One of the things that we pointed out
• 9:27
  Speaker 1: for this year was that, you know, last year was
• 9:30
  Speaker 1: such a calm market that volatility is going to pick up,
• 9:33
  Speaker 1: and so with that you get more opportunities to play
• 9:37
  Speaker 1: small MidCap versus large cap style, more second rotation, A
• 9:42
  Speaker 1: whole host of things are going to happen this year
• 9:45
  Speaker 1: that probably didn't happen last year. Let's talk about some
• 9:48
  Speaker 1: specific industry groups. In order to narrow down the areas,
• 9:52
  Speaker 1: people should focus on discretionary technology industrials uh more, materials yea.
• 10:00
  Speaker 1: So the so what we're looking at is trying to
• 10:02
  Speaker 1: base it on our sort of themes. So one theme
• 10:05
  Speaker 1: would be growth stocks over value stocks, just real general there.
• 10:10
  Speaker 1: And the argument here is that growth is still a
• 10:12
  Speaker 1: lot cheaper than value. And now everybody says tech has
• 10:15
  Speaker 1: had great performance in seventeen, it's continuing eighteen. People tend
• 10:20
  Speaker 1: to forget that in sixteen tech was a week performer,
• 10:24
  Speaker 1: and so you're kind of getting back what you lost
• 10:27
  Speaker 1: in sixteen and then the earrings growth has been really good,
• 10:30
  Speaker 1: So we like tech to sort of represent our more
• 10:33
  Speaker 1: growth oriented kind of biased. Materials and energy are two
• 10:38
  Speaker 1: groups that we like as well. That kind of gives
• 10:41
  Speaker 1: us a cyclical bias. So global growth gets better, you
• 10:45
  Speaker 1: should see commodity prices rise, including oil that gives you
• 10:49
  Speaker 1: the bad on energy to play higher interest rates. I
• 10:53
  Speaker 1: think the way we would look at this would be financials,
• 10:55
  Speaker 1: and the smaller banks generally do a lot better with
• 10:59
  Speaker 1: rates going higher from a profitability standpoint. I think it
• 11:03
  Speaker 1: comes also more down to deregulation. Deregulation where are o's
• 11:08
  Speaker 1: have been suppressed? Now they can rise, and then maybe
• 11:11
  Speaker 1: we get a little M and A. And then for
• 11:13
  Speaker 1: consumative discretionary I just think the earnings numbers have gotten
• 11:17
  Speaker 1: pretty low, and so the bar is is really low.
• 11:21
  Speaker 1: So the companies are beating numbers by a pretty wide margin.
• 11:24
  Speaker 1: We're starting as he sent them in turnaround, and quite frankly,
• 11:28
  Speaker 1: it's the only area that's really a value. You kind
• 11:31
  Speaker 1: of look through the universe is okay, what's cheap? You
• 11:34
  Speaker 1: got to think about it from a relative perspective. Now,
• 11:37
  Speaker 1: that's a group that actually looks good on an absolute
• 11:39
  Speaker 1: basis as well. A lot of people say that a
• 11:42
  Speaker 1: mid and small caps actually offer some protection from even
• 11:45
  Speaker 1: trade skirmishes just because they depend less on international types
• 11:50
  Speaker 1: of revenues. Is that one argument as well for you?
• 11:52
  Speaker 1: I don't use that particular argument, so I'll go too things.
• 11:55
  Speaker 1: One is that, well, the way we think about it
• 11:59
  Speaker 1: is more from a positioning standpoint. I like companies that
• 12:03
  Speaker 1: do have overseas exposure. However, I've not found a good
• 12:07
  Speaker 1: relationship between the dollar and small MidCap performance. I mean,
• 12:12
  Speaker 1: it's kind of an easy thing to kind of go to.
• 12:14
  Speaker 1: I think again, people sort of forget that a lot
• 12:17
  Speaker 1: of small cap companies and MidCap companies are suppliers to
• 12:20
  Speaker 1: the large cap companies, So the large cap companies have
• 12:23
  Speaker 1: problems there in the supply chain, there in the there
• 12:26
  Speaker 1: in the hair, you know, the cross hairs. The other
• 12:28
  Speaker 1: thing is a stronger dollar generally means that if the
• 12:32
  Speaker 1: dollar starts to appreciate for whatever reason, you end up
• 12:36
  Speaker 1: it's usually a risk off environment. Think about fifteen and sixteen,
• 12:40
  Speaker 1: the dollar appreciated and small really took it on the
• 12:42
  Speaker 1: chin in that period. So I think you kind of
• 12:45
  Speaker 1: think about it from more of a position standpoint, kind
• 12:48
  Speaker 1: of the positioning on on materials, a weaker dollar gives
• 12:51
  Speaker 1: you better you know, backdrop for materials. A weaker dollar
• 12:55
  Speaker 1: gives you potentially higher oil prices. That's kind of the
• 12:58
  Speaker 1: way I think about it, so real quick. What keeps
• 13:01
  Speaker 1: you up at night? What could undermine your thesis? You know,
• 13:03
  Speaker 1: first of all, I think, you know, any kind of
• 13:05
  Speaker 1: big pull back in the market small cap is just
• 13:07
  Speaker 1: not gonna hold up, right if it's a risk off environment.
• 13:10
  Speaker 1: When we get a VIX index of thirty nine, that
• 13:13
  Speaker 1: is definitely something that you know, makes me a little
• 13:16
  Speaker 1: bit worried. The other thing is that you know, we've
• 13:18
  Speaker 1: got this pro growth biased and growth is outperformed for
• 13:22
  Speaker 1: fourteen or fifteen months pretty consistently. Here, you do get
• 13:26
  Speaker 1: those moments where you get a big reversal where all
• 13:30
  Speaker 1: of a sudden you say, you know what, I don't
• 13:31
  Speaker 1: want to own the fang stocks or miracle grow is
• 13:34
  Speaker 1: something that our firm we talk about the miracle growth stocks.
• 13:37
  Speaker 1: But if you get a reversal just because they've worked
• 13:40
  Speaker 1: so well, and that kind of worries me because you
• 13:42
  Speaker 1: see that, and then it kind of builds on itself.
• 13:46
  Speaker 1: Thank you so much for being here. We'll have to
• 13:48
  Speaker 1: have you back on to reassess in a in a
• 13:51
  Speaker 1: little bit. Thank you again. Stephen Dissenttist, managing director and
• 13:55
  Speaker 1: small and mid cap analyst at Jeffreys in New York,
• 13:58
  Speaker 1: joining us here in our eleven three oh studios. What
• 14:15
  Speaker 1: does the US want out of talks with North Korea
• 14:19
  Speaker 1: leader Kim Jong un? And who is poised to potentially
• 14:23
  Speaker 1: lose the most? Here to talk about those issues, as
• 14:25
  Speaker 1: Errol Cohen, Senior Fellow at the Atlantic Council, also principle
• 14:29
  Speaker 1: with International Market Analysis Limited, based in Washington. D c Ariel,
• 14:34
  Speaker 1: thank you so much for being with us. I want
• 14:37
  Speaker 1: to just start with what is the latest that we know?
• 14:40
  Speaker 1: There were some reports about Kim Jong un wanting some
• 14:44
  Speaker 1: sort of peace treaty. What what he desperately needs is
• 14:49
  Speaker 1: a recognition of his regime. If you remember, during the
• 14:53
  Speaker 1: Cold War, the US recognized East Germany and West Germany.
• 14:57
  Speaker 1: We have an embassy in Soul, South Korea. We don't
• 15:00
  Speaker 1: have an embassy in pyong Young. We don't recognize this
• 15:03
  Speaker 1: murderous regime. And from our point of view, from the
• 15:07
  Speaker 1: American point of view, the most important thing, of course
• 15:10
  Speaker 1: is disarmament. But we made a mistake. The US made
• 15:13
  Speaker 1: a mistake. The Obama administration made a terrible mistake when
• 15:17
  Speaker 1: we did not demand and did not insist on dismantling
• 15:21
  Speaker 1: the Iranian nuclear program. They can reboot and start enrichment.
• 15:27
  Speaker 1: And we also did not insist on uh destroying and
• 15:31
  Speaker 1: dismantling the missile program. We should learn from our mistakes.
• 15:35
  Speaker 1: The Korean nuclear program should be dismantled, possibly with the
• 15:40
  Speaker 1: exception of civilian nuclear reactors that do not enriach, and
• 15:44
  Speaker 1: the missile arsenal should should be dismantled. Beyond that, if
• 15:48
  Speaker 1: the administration comes to the conclusion that we need to
• 15:51
  Speaker 1: recognize them and South Korea is cool with that, we
• 15:55
  Speaker 1: can do that. There are presidents, as I mentioned is
• 15:58
  Speaker 1: Germany is a president. Beyond that, I think they're reaching
• 16:03
  Speaker 1: out not because they're doing well. Um. The labor that
• 16:07
  Speaker 1: they were exporting, uh, slave labor essentially was kicked out
• 16:12
  Speaker 1: of Europe and kicked out of the Middle East, two
• 16:14
  Speaker 1: tens of thousands of people. Um. The fuel supply to
• 16:17
  Speaker 1: North Korea is being squelched, including by China. Uh so, yeah,
• 16:23
  Speaker 1: they're hurting. But in the past, they try to go
• 16:26
  Speaker 1: to negotiations to see what kind of concessions they're going
• 16:30
  Speaker 1: to get. And here here is a test of Mr Trump.
• 16:34
  Speaker 1: Is he Mr Deal? Is he um the author of
• 16:39
  Speaker 1: the art of the deal? And is he going to
• 16:41
  Speaker 1: apply this to Kim Chong? Arriol Cohen. Would it be
• 16:46
  Speaker 1: considered a positive development if the United States were to
• 16:50
  Speaker 1: in some way a seed to Kim Chong's desire to
• 16:57
  Speaker 1: be made to feel that he is not going to
• 17:01
  Speaker 1: be threatened by outside forces in terms of his control
• 17:04
  Speaker 1: of North Korea, and that we could live with a
• 17:07
  Speaker 1: nuclear armed North Korea. Would that be an objective that
• 17:10
  Speaker 1: would be regarded as positive. There's two elements to your question,
• 17:16
  Speaker 1: uh pim I would say, Yes, it's okay for him
• 17:22
  Speaker 1: not to feel threatened. No, it's not okay for him
• 17:25
  Speaker 1: to have nuclear weapons. Full dismantlement of rockets, of rocket
• 17:30
  Speaker 1: producing capacity, and of the uranium greade, the the high
• 17:37
  Speaker 1: grade uranium enrichment or plutonium enrichment. Anything shorter than that,
• 17:43
  Speaker 1: they can go back to threatening Arts and Japan and
• 17:47
  Speaker 1: South Korea with nukes, and that is not acceptable, uh Ariel.
• 17:52
  Speaker 1: We were speaking a lot last week about China's role
• 17:55
  Speaker 1: in potential negotiations between the US and North Korea. They
• 18:00
  Speaker 1: are hanging out in the background, and they really are
• 18:02
  Speaker 1: the only ones that could really enforce some kind of
• 18:06
  Speaker 1: permanent to Fagman. Without their involvement, this won't work. So
• 18:09
  Speaker 1: where are they on this and what would be or
• 18:13
  Speaker 1: could be their role in ongoing negotiations with the US
• 18:16
  Speaker 1: North Korea. Anybody who dealt with China, with a Chinese bureaucracy,
• 18:22
  Speaker 1: with Chinese government knows there are many many layers of
• 18:26
  Speaker 1: meaning UH that UM China communicates. So to us, they're saying, yes,
• 18:34
  Speaker 1: we do not want a war, we do not want
• 18:37
  Speaker 1: threats UM. But at the same time, UH, strategically and
• 18:42
  Speaker 1: geopolitical is they are using North Korea as a battering
• 18:46
  Speaker 1: ram against Japan, as a threat against the United States.
• 18:50
  Speaker 1: It's very convenient for Beijing to have a nasty Imagine
• 18:56
  Speaker 1: a pitbull on the leash. The question is do they
• 18:58
  Speaker 1: keep the pitball on the leash or not? And there
• 19:01
  Speaker 1: were many reports UH that UM chairman c president for life.
• 19:07
  Speaker 1: Now it looks like of China and the Young Kim
• 19:11
  Speaker 1: did not have a good relationship to what extent it's true.
• 19:15
  Speaker 1: I think this is many, many levels of security clearance
• 19:19
  Speaker 1: above my access or your access. But it looks like
• 19:23
  Speaker 1: China is not interested in distabilizing the Korean peninsula. It's
• 19:28
  Speaker 1: not interested in reunification of Korea, it's not interested in
• 19:32
  Speaker 1: the war, and they're just in the sort of balance
• 19:37
  Speaker 1: of what I just described lies the national interests of China. So, yes,
• 19:41
  Speaker 1: they're going to squil us North Korea. No, I don't
• 19:44
  Speaker 1: think they're going to support us in our demand of
• 19:48
  Speaker 1: full nuclear disarmament. Of any thoughts arel on the export
• 19:54
  Speaker 1: of nuclear technology from North Korea? Would that be considered
• 19:58
  Speaker 1: a positive development if that were to be curtailed. I'm
• 20:02
  Speaker 1: glad you asked that question. North Korea exported nuclear technology
• 20:06
  Speaker 1: to Iran. We know that, we're sure, and we know
• 20:10
  Speaker 1: that they're built in two thousand and five six and
• 20:13
  Speaker 1: nuclear reactor with the sole purpose of producing weapons great
• 20:18
  Speaker 1: plutonium UH in Syria. That reaction was destroyed UH in
• 20:23
  Speaker 1: Narrate by the Israeli Air Force. UH So they are
• 20:27
  Speaker 1: a proliferator, they are a poor country, and they have
• 20:30
  Speaker 1: nuclear technology other countries may want. So yes, absolutely, we
• 20:35
  Speaker 1: need to insist that UH exports of nuclear technology would
• 20:40
  Speaker 1: be a scenic one on an absolute condition for any
• 20:44
  Speaker 1: kind of a deal. By the way, I'm not sure
• 20:46
  Speaker 1: Trump is going to go to that meeting unless North
• 20:51
  Speaker 1: Koreans agree to the list of demands more or less
• 20:55
  Speaker 1: what I just described, nuclear disarmament, missile disarmament, uh an
• 21:00
  Speaker 1: embargo on exports of nuclear technology. And I want to
• 21:04
  Speaker 1: say one more thing, and I think it's very important
• 21:07
  Speaker 1: if this works. Number one, it would be a tremendous
• 21:11
  Speaker 1: uh foreign policy achievement for Trump if he manages to
• 21:15
  Speaker 1: dismantle the North Korean nuclear arsenal. But secondly, it would
• 21:19
  Speaker 1: be the model of what needs to happen Visavi Iran.
• 21:24
  Speaker 1: In other words, nobody says we should not have any
• 21:27
  Speaker 1: agreement with Iranians, but clearly the dismantlement of the potential
• 21:33
  Speaker 1: that threatens all of our allies in the region Saudi Arabia,
• 21:38
  Speaker 1: Gulf States, Israel and potentially Europe and in the far
• 21:42
  Speaker 1: future the United States. That has to happen visa vi
• 21:46
  Speaker 1: Iran and their nuclear enrichment capacity needs to be stopped.
• 21:51
  Speaker 1: And if we can do it with North Korea, we
• 21:53
  Speaker 1: can do it with the run. Thank you very much
• 21:55
  Speaker 1: for being with us. Ario Cohen is a senior fell
• 21:57
  Speaker 1: Off for the Atlantic Council, also a principle for international
• 22:01
  Speaker 1: market analysis, based in Washington, d C. Well, the New
• 22:19
  Speaker 1: York Antiquarian Book Fair has just concluded its four day
• 22:23
  Speaker 1: stint at the Armory, and here to tell us more
• 22:26
  Speaker 1: about the show and some of its rare offerings is
• 22:29
  Speaker 1: Jonathan Hill, the founder and owner of Jonathan A. Hill Bookseller. Jonathan,
• 22:34
  Speaker 1: thank you so much for coming in uh tell us
• 22:37
  Speaker 1: a little bit about this year's book fair and some
• 22:39
  Speaker 1: of the differences you noticed, not only just about the
• 22:42
  Speaker 1: books and the offerings, but the attendees. Well, this year
• 22:46
  Speaker 1: we hired a really good publicist at last, and we
• 22:50
  Speaker 1: had three times the normal attendance we ever had before um,
• 22:53
  Speaker 1: which was great. And what was particularly wonderful it was
• 22:56
  Speaker 1: filled with young people, young people with blue hair, piercings, tattoos.
• 23:02
  Speaker 1: So I would say that the printed book is alive.
• 23:05
  Speaker 1: And well, I'm just trying to reconcile the concept of
• 23:11
  Speaker 1: paying thousands of dollars, in some cases tens of thousands
• 23:14
  Speaker 1: of dollars for books at a time when most people
• 23:17
  Speaker 1: seem to say books are increasingly obsolete with the nook
• 23:20
  Speaker 1: or kindle. I disagree. First of all electronic books are
• 23:24
  Speaker 1: paying the neck to go through to get to the
• 23:26
  Speaker 1: index to find where you were book. The printed book
• 23:29
  Speaker 1: is so easy to to get around. Also, anyone as
• 23:35
  Speaker 1: a youth learning to read and their first book that
• 23:37
  Speaker 1: they fell in love with it took them to a
• 23:39
  Speaker 1: different world or taught them something essential, they will always
• 23:43
  Speaker 1: have a sentimental feeling about that book, that object, and
• 23:47
  Speaker 1: that continues as they grow up. Now it's not just
• 23:51
  Speaker 1: the sort of love of the specific book. When you
• 23:54
  Speaker 1: talk about the object, it can be its value because
• 23:57
  Speaker 1: it is rare, it is important, it has some his
• 24:00
  Speaker 1: storical uh context speak if you can. Let's use an
• 24:04
  Speaker 1: example of one book that I know that you have
• 24:06
  Speaker 1: on offer, and I got a chance to see it
• 24:08
  Speaker 1: and touch it and hold it in my hands yesterday.
• 24:11
  Speaker 1: And this is a book from I believe it was
• 24:13
  Speaker 1: fourteen fifty three. I know I was gonna get it
• 24:17
  Speaker 1: backwards fifteen forty three b before Gutenberg, that was the case.
• 24:21
  Speaker 1: And this has this is a book by Copernicus, and
• 24:25
  Speaker 1: uh it tested my my high school Latin because I
• 24:27
  Speaker 1: could actually read it. Tell us about this particular volume
• 24:30
  Speaker 1: and why it's relevant and what it exemplifies about rare books. Well,
• 24:35
  Speaker 1: the book printed in fifteen forty three and entitled Day
• 24:39
  Speaker 1: Revolution on a Bus is the first book which demonstrated
• 24:43
  Speaker 1: scientifically that the Earth is no longer the center of
• 24:47
  Speaker 1: the solar system, but that the Sun is. And this
• 24:51
  Speaker 1: upset the entire worldview which had existed for two thousand
• 24:54
  Speaker 1: years previously. It turned everything topsy turvy and got the
• 25:00
  Speaker 1: Catholic Church immediately upset and just changed everything. And there
• 25:05
  Speaker 1: was a scientific method demonstrating something fundamental for the first time. Jonathan,
• 25:10
  Speaker 1: there certainly is a sentimental and historical value with a
• 25:13
  Speaker 1: lot of these books. There's also, uh, an investment value.
• 25:17
  Speaker 1: And I'm wondering how much you've seen sort of the
• 25:20
  Speaker 1: investment aspect of the book business grow, especially as people
• 25:26
  Speaker 1: look for alternative assets. I mean, we're seeing auctions with uh,
• 25:29
  Speaker 1: you know, the Christie's of the World increased dramatically. I mean,
• 25:33
  Speaker 1: have you seen an in dramatic increase there? Yes, Um,
• 25:35
  Speaker 1: the first copy of Copernicus I sold was about thirty
• 25:38
  Speaker 1: years ago, and that was for a hundred and twenty
• 25:40
  Speaker 1: five thousand dollars. And this copy I'm offering now for
• 25:44
  Speaker 1: two million dollars. And yeah, and and this is one
• 25:48
  Speaker 1: of three hundred, one of about three hundred. Yes, it's
• 25:51
  Speaker 1: rare in the sense that not many of them are
• 25:53
  Speaker 1: not not in private collections, so that it's not like
• 25:55
  Speaker 1: you can just go and order up one of these. Correct,
• 25:59
  Speaker 1: it's the only copy on the market now, and then
• 26:02
  Speaker 1: there's a census of all the copies of Copernicus and
• 26:04
  Speaker 1: most of the Urne libraries. There are very very few
• 26:07
  Speaker 1: remaining in private hands, so you have to act if
• 26:10
  Speaker 1: you want to get one. And it's a fundamental book.
• 26:13
  Speaker 1: So how many what's the pool of investors like to
• 26:17
  Speaker 1: spend two million dollars on this book? Well, there are
• 26:20
  Speaker 1: number of private people, but another client who's seriously considering it.
• 26:26
  Speaker 1: It's a it's a library, an institution, right, absolutely, the
• 26:31
  Speaker 1: book it's something. Do you believe that the connection to
• 26:34
  Speaker 1: its ownership the fact that it can be traced all
• 26:37
  Speaker 1: the way back in simple forms, almost like a modern
• 26:41
  Speaker 1: day version of blockchain, that you know exactly who had it,
• 26:45
  Speaker 1: where they had it, and how it was sold on. Yes,
• 26:48
  Speaker 1: that's a very important thing. It's past history can be
• 26:52
  Speaker 1: traced from the sixteenth century shortly after it was printed,
• 26:57
  Speaker 1: up to today and we know exactly where it's been
• 27:01
  Speaker 1: and throughout in a series of owners. And that's a
• 27:04
  Speaker 1: very important thing. Is we call that provenance where it's
• 27:06
  Speaker 1: been and then you don't have to spend two million
• 27:09
  Speaker 1: to be a rare book collector. You can spend ten dollars.
• 27:11
  Speaker 1: There are a lot of fascinating collections that you can
• 27:14
  Speaker 1: spend five and ten dollars and you can have a
• 27:17
  Speaker 1: tremendous fun and education as well. You can learn as well.
• 27:21
  Speaker 1: Thank you so much for being with us. Jonathan Hill
• 27:24
  Speaker 1: is the founder and owner of Jonathan A. Hill Bookseller
• 27:27
  Speaker 1: and they did just complete their New York Antiquarian Book Fair,
• 27:32
  Speaker 1: uh at the Park Avenue Armory. Thank you so much
• 27:35
  Speaker 1: for being with us. And I will say, Pim, when
• 27:37
  Speaker 1: I think about children's books in particular, I think about
• 27:41
  Speaker 1: the physical copy, and you know, I think about my
• 27:44
  Speaker 1: children and the physical experience very much. Is uh. Well,
• 27:49
  Speaker 1: it's important, yeah, and it can also be quite remunerative
• 27:52
  Speaker 1: if you collect them carefully and collect what you love.
• 27:57
  Speaker 1: Thanks for listening to the Bloomberg P and L podcast.
• 28:00
  Speaker 1: You can subscribe and listen to interviews at Apple Podcasts, SoundCloud,
• 28:04
  Speaker 1: or whatever podcast platform you prefer. I'm Pim Fox I'm
• 28:07
  Speaker 1: on Twitter at pim Fox. I'm on Twitter at Lisa Abramo.
• 28:11
  Speaker 1: It's one before the podcast. You can always catch us
• 28:14
  Speaker 1: worldwide on Bluebirg Radio