tv Bloomberg Markets Americas Bloomberg May 3, 2017 12:00pm-1:01pm EDT
from bloomberg world headquarters in new york we are taking you from washington to san francisco this hour. u.s. stocks slipping from records high ahead of the fomc decision. apple shares weighing on the .ajor averages the u.s. dollar is gaining against most of its g10 peers. the white house is confident that they are only a few votes away from passing a health care care bill. president trump is expected to give a joint statement with palestinian authority mahmoud abbas. coming up on bloomberg television and radio, tom keene sits down for a conversation with ben bernanke. day,ay into this trading we have had a bankruptcy already
from puerto rico. lots going on. give us the lowdown. of it has to do with the earnings. that's where the focus of the market is. seeing more of the focus to apple and some of the big earnings we got out. being pulled was down by apple is paring some of those declines. of course the earnings aren't all negative. i wanted to point out the earnings winners. weight watchers is one of them. it's the oprah effect helping that company. it ended the first quarter with 3.6 million subscribers. it raised its forecast. the cybersecurity firm says it expects to be profitable by the first quarter of 2017.
solar reporting a surprise profit beating sales estimates by 29% on the back of a sale of one of its power plants. those shares are up by 15%. i want to turn to technology. apple today after its earnings is down about 1%. that's half of the decline we saw out of the gate this morning after iphone sales came in below estimates. alphabet hanging on to gains. in terms of other big tech companies that have been leading the market higher recently microsoft and amazon are both lower. the conventional wisdom has been that the market was relying too much on these companies for their gains. oliver renick out with a great story today dispelling that notion.
so.ses this chart to do we've got a look at how these companies have done this year versus the s&p 500 in white. we have facebook here as well. he says if you subtract the gains these companies have seen this year the s&p 500 would only be 1.5 percentage points lower than it is on the year currently. that's a smaller effect than we have seen for the past decade. these big tech companies do contribute significantly to the gains in the s&p 500 overall that that's not unusual for the best performers in a given year. we will continue to watch these companies and their affect on the market. you have to take it with a grain of salt as well. thank you for that. we are keeping our eye on capitol hill. white house officials say republicans are just two or
three votes away from being able to guarantee passage of a health care bill. president trump gets said to meet with palestinian authority president mahmoud abbas. the have already begun that meeting. let's head over to washington to hear from kevin cirilli. changed in just a couple votes away from passage of a new health care bill? >> four top republicans met with president trump led by mark upton. late last evening he introduced an amendment that would provide $8 billion worth of funds to folks centered around the issue of pre-existing conditions. this has gotten the backing of the house freedom caucus. representative upton saying there could be a vote as early
as tomorrow. this frankly we have heard time and time again. clearly this is a white house that wants to get a vote done before house members go into a recess on friday. vonnie: democrats having a press conference today as well. would it solve anything? could there be bipartisan agreement on this? could ask to the senate even? should any legislation that emerged out of the house extend to the senate it would radically change in some ways. in going to the process of reconciliation. the bottom line is that president himself has been working the phones on this contingent with reince priebus and mike pence. today i spoke with the founder of the freedom caucus representative jim jordan. he told me this is a bill they
could be able to get onboard with. paul ryan has been adamant he will not bring a vote to the floor unless he is assured they have the votes. is confidentse they will get them in the next day or two. vonnie: joint statement expected from president trump and mood of us -- mahmoud abbas. welcomed into the white house. includeshat they said that the meeting was a great honor. this is president trump thing that. they didn't talk about jerusalem. they didn't talk about health care. in fact mahmoud abbas didn't talk at all. it was just the president saying it was a great honor to have him at the white house and hopefully something terrific can come out of the meeting. what do you imagine that terrific could be? there were no questions
answered. there was no press conference. this is sending a signal that president trump has been adamant that he is a supporter and ally of israel. meeting that is important but also the lack of questions speaks volumes. fully sure ifen jared kushner or anybody else will be taking part in the working lunch is scheduled for later. we will check back with you in a little bit. thank you, kevin cirilli. most in fiveg the months after reporting a surprising fall in iphone sales. it wasn't a massive crash. they were down about 1.7%. they are down .8 percent now. if the company is to fend off competitors it will need to develop blockbuster new features. our next guest says the ecosystem bodes well for the future.
ubs i.t. hardware analyst joining us. very different approaches to this. one from gene munster this morning saying earnings were fine. apple services is doing well and we will see a great new cycle. said, that's not enough. it's not enough to have a new iteration of a product and is not enough for the services to ally.owing so anemic bewe think it's going to fairly successful. companies base is growing and the retention rates remain high. that will drive services revenue over time. buffett, youren have to recognize that apple is a major brand. people who have apple are likely to stick with it. we think at 15 times this year earning, 13 times next year it
is still a very good value. vonnie: it is of 25% year to date. what is left to price in? >> potentially some upside next year. we have moved to a bit of a two-year upgrade cycle. there is still some potential upside. it depends to a large degree on china. the increase in the stock price, the reason has been multiple expansion more than anything else. i think that's reflecting the franchise value of the company. earnings estimates haven't changed much. thise have more confidence is becoming an annuity revenue stream. some of that is confidence. some is hardware. talking at max 7%. what does that need to grow to
grapple -- for apple? >> it needs to grow to about 20% over time. the company says they expect to double it over the next four years. that's an 18% raise. there may be some acquisition required to achieve that. we think it's about a 60% gross margin. having said that we still think of the company as a hardware driven company. we need to see the next iphone and we need to see new products overtime. the watch is doing surprisingly well. you will see augmented reality products, possibly glasses. it's got to be more than services. it needs to be hardware as well. vonnie: the augmented reality portion of things is going to be exciting. right now the products anecdotally typically last a few years for a customer.
to expand that you either do it in the united states or you do it in someplace like china. is there any hope for apple to grow its hardware sales in china? >> i think there is. clearly the iphone eight needs to be successful. a lot of people bought a phone in fiscal 15 after china mobile made it available. good double-digit growth in china next year. it is still declining. that's the next question. steve. thank you, ubs i.t. hardware analyst. tom keene sits down for an interview with former fed chairman ben bernanke. it's a fortuitous day even we are also getting an fomc statement. we are awaiting a joint statement from president trump
historic visit to the white house. he just arrived a few moments ago. he didn't make any statement yet. somee bring you back to developments from earlier in the day. it looks like against all there may actually be a house vote on a new health care bill. >> i feel like it's the same thing every week with health care. right now the white house is saying once again they are just a few hertz chaya of passing health care legislation in the house. saying ago mark upton his amendment that would include an $8 billion fund for pre-existing conditions over , that money will be enough for him in order to get on board. now the with count is just a few votes shy. vonnie: we are going to go live to the white house and this joint press conference. thank you very much.
today i'm pleased to welcome president abbas to the white house for his first visit to washington in quite a while. it was onyears ago these grounds that president abbas stood with a courageous peacemaker. then israeli prime minister yet yitzakh rabin. abbas signed a declaration of principles which laid the foundation for peace between the israelis and palestinians. the president and mr. president, you signed your name to the first israeli-palestinian peace agreement. you remember that well. right? and i want to support you in being the palestinian leader who signs his name to the final and
most important peace agreement that brings safety, stability, prosperity to both peoples and to the region. i'm committed to working with israel and the palestinians to reach an agreement. any agreement cannot be imposed by the united states or any other nation. the palestinians and israelis must work together to reach an agreement that allows both peoples to live, worship and thrive and prosper incr peace. i will radiate, arbitrate anything they would like to do. i would love to be a mediator or an arbitrator or a facilitator. and we will get this done. this also means defeating isis and other terrorist groups. these groups are a threat to all people who cherish human life. i know president abbas has spoken out against isis and other terrorist groups. and we must continue to build
our partnership with the palestinian security forces to capture and defeat terrorism -- counter and if he carries a. and defeat terrorism. get along unbelievably well. i had meetings and at these meetings i was actually very impressed and somewhat surprised at how well they get along. they work together beautifully. there can be no lasting peace unless the palestinian leaders speak in a unified voice against incitement to violate and violence and hate. there is such hatred. but hopefully there won't be such hatred for very long. all children of god must be taught to value and respect human life and condemn all of
those who target the innocent. as part of our reference to move toward peace today we will also discuss my administration's effort to help unlock the potential of the palestinian through new economic opportunities. lastly i want to know the positive ongoing partnership between the united states and the palestinians on a range of issues. private sector development and job creation, regional security, counterterrorism and the rule of law. all of which are essential to moving forward toward peace. i welcome president abbas here today is a demonstration of that partnership, that very special partnership that we all need to make it all work. and i look forward to welcome him back as a great mark of towards and ultimately the signing of a document with
with israel and toward peace. we want to create peace between israel and the palestinians. we will get it done. we will be working so hard to get it done. it has been a long time and we will be working diligently. and i think there's a very very good chance and i think you feel the same way. mr. president thank you very much. >> mr. president, your excellency, i would like to thank you for this honorable invitation to come and meet with you and i look much forward to working with you in order to to bring aboutal
that is totally innocent of has nothing to do with our noble religion. if we create peace that is just and comprehensive that will also leave arab and islamic countries to have normal relations with stipulated innd the previous arab summit, the latest of which was the arab summit in jordan. mr. president, we believe that we are capable and able to bring about success to our efforts
that this is possible and able to be resolved. i am firmly believing that this is possibly, we are able to dissolve it. and i also believe we will be able to resolve the issue of the refugees and the issue of the prisoners according to the international law, international legitimacy and various relevant references and terms of reference in that regard. and based on what is stipulated in the previous treaties and agreements that no unilateral steps must be taken to get ahead of agreement and discussing those issues.
timeresident, it's about for israel to end its occupation of our people and of our land after 50 years. are the only remaining people in the world that still live under occupation. we are aspiring and want to achieve our freedom, our dignity and our right to self-determination and we also ant for israel to recognize palestinian state just as the palestinian people representatives -- recognize the state of israel.
mr. president, i affirm to you that we are raising our youth, and children, and grandchildren on a culture of peace and we are endeavoring to bring about security, freedom and peace for our children to live like the other children in the world along with the israeli children in peace, freedom and security. mr. president, i bring with me
today the message of suffering of my people as well as aspirations and hope of the palestinian people from the holy land. where the freedom of religion thrives and the jewish faith, the christian whereand the muslim faith they all coexist together to foster an environment of security, peace and stability for all.
mr. president, i believe that we are capable under your ,eadership and your stewardship your courageous stewardship and your wisdom, as well as your great negotiating ability, i believe with the grace of god and with all of your effort to believe that we can become -- we can be true partners to you to bring about a historic peace treaty under your stewardship to bring about peace. president, through you we have hope. >> thank you very much. so we are going to start a process. we have spoken to netanyahu. we have spoken to many of the great israeli leaders. we have spoken to many of your
great representatives. many of them are here today for lunch with us. we will start a process which hopefully will lead to peace. over the course of my lifetime i have always heard that perhaps the toughest yield to wake -- make is the deal let's see if we can prove them wrong, ok? ok. good. thank you very much, everybody. take it. an historic joint statement, gasol president donald trump give some remarks: by the palestinian authority president mahmoud abbas. a workingeading to lunch. the president saying at the end he was confident he would prove people wrong there couldn't be a piece achieved between the palestinian authority and israel. is with us, our chief washington correspondent. sort of very upbeat
statement from both leaders, particularly mahmoud abbas, until he got to the two state solution , which is the sticking point in a lot of cases. abbas sayingent they view this as a quote, unquote new under -- the opportunity to work with israel and the united states. noting that any type of peace agreement must include getting rid of terrorism. this is a white house that while at times has said comments to ruffle the feathers, so to speak, of israeli prime minister benjamin netanyahu, has for the most part been a strong supporter of israel and clearly no specifics in this joint statement, as well as no question south by -- quetsions -- questions asked by reporters. vonnie: this historic statement being made. kevin, thank you for that. again, mahmoud abbas says we are
able to bring about success and this is resolvable. we have another special interview for you. we are going to send you over to tom keene, who has the former chairman of the federal reserve on this fomc day. tom: thank you so much. we welcome bloomberg television bloomberg radio worldwide. ben bernanke need so introduction. i have one of our front-line academics. little did we know, a wonderful author. he's out now with a new edition beach reading, and it has a new afterward as well. ben, congratulations. i want to dive into it. longer, more thoughtful conversation about many of these
themes. let me begin with the emotion you captured at the beginning of the book. anybody in the racket of business journalism knows the name michelle smith. the gate.keeper of she guards the lock and key at the fed. if you don't get along with michelle smith, you don't talk to anyone. you open your book. about that moment where you really finally hit the wall in this crisis? mr. bernanke: michelle smith was also functioning as my chief of staff and general advisor. that was the day we decided to intervene with aig, and it was an enormously risky situation. i had been earlier that day to congress. i talked to a group of senators and representatives. they made it clear that we were on our own. of course, this was a couple days after lehman, and the financial system was in shock
essentially. it required a unanimous vote, to take the actions we did, which was to lend $85 billion to aig so it wouldn't collapse. i could have stopped it. we thought it was the right thing to do, and we went ahead and did it. it was one of the darkest moments. from there on, things began to look better. certainly there were dark moments at that time. fancy remember the bloomberg chart, watching bear stearns go down in flames. we all have our individual moments here. whendid you know -- not did you know it was all clear, but from those dark moments, where did you get the confidence that the theory and foundation you have learned at m.i.t. and on your teaching career at stanford, princeton, and the others, when did it click in that you may get this right? mr. bernanke: i think i understood the crisis. it was about subprime mortgages
and all these things, but it was basically a financial panic. in the sense that the short-term funding of the system through the repo markets, commercial paper markets was being withdrawn. everything was freezing up. i had seen the analogy to the earlier panics, and i think i understood in principle at that point how we were going to stabilize the situation, but the politics was difficult. even after lehman failed, it took quite a while to get congress to act. it took two tries before they would act. i think the passage of the tarp money toch provided recapitalize the banking system, and then there was a meeting in october of the g7 in washington, where we met with the finance ministers and central bank governors of the other major industrial powers, and there was a sense of that meeting that we
had to work together, hang together or hang separately at that point. i talked about it in my book. between that resolution in washington and then collectively among the g7 that we would do what it took to use mario draghi's famous phrase, i thought from there we would find our way out. but it was still very tricky. tom: a longer conversation with ben bernanke, we will touch on a number of the themes we've got going on right now. mediarse, we will avoid talk as we go to the fed meeting this afternoon. i'm not going to ask a ben bernanke about interest rates -- how many interest rates they will do this year at things like that. i want to speak about the structure of the fed, and this goes back to your speech 15 years ago with milton freeman, his 90th birthday. it's a great speech about something you are really good at, which is depression history. at the end of it, you talk about
then, which is exactly like now. this uncertainty of that leadership. benjamin strachan has the audacity to get sick and die, and you make clear they never recovered. do we face it now with this new administration -- talk about john taylor, talk about glenn hubbard, but they talk about other names as well the don't have your phd chops. do we have a risk of a leaderless fed with president trump? mr. bernanke: it's presumptuous to say. he could conceivably reappoint janet yellen, which from his be a verye would reasonable, sensible thing to do. she's highly competent, she's done a good job, she's got the confidence in the markets. i'm sures appointed, will work carefully with the rest of the fomc. there arereason why
so many people on the federal market committee making these decisions, including seven members of the board, and high-quality staff which provides a lot of guidance and help. i don't think we are quite in the 1928 situation by any means. i'm hopeful that they will appoint, if not janet yellen, they will appoint somebody strong and competent. tom: within that is a sharp debate in the business community. if you vet -- i will pick on gary cohn of the trump administration with great respect for mr. cohn's ability. do you need to have a phd in economics? paul volcker does not have a phd. he was very familiar with monetary policy and the fed, having been in the system for a number of years. i think is a range of skills you can have. you also have to be at least familiar with monetary policy, and how it works, and what the issues are.
there are important technical components to it. leadership is not constrained by a narrow set of skills. there's different types of backgrounds that can create a good, fair chair. it's important to know a lot about monetary policy in the financial system. tom: what do you envision that our vice chairman will do? this is a new position. fed not the romance of the that we cover bloomberg, business economics. what do you envision that job to be for that new kind of vice chairman? mr. bernanke: it's a very important job. as they say, personnel is policy. even if the regulatory structure is only moderately changed, not substantially changed the way it is implied and executed will matter a lot and practice. the people they talked about generally are people who are highly qualified, have had a lot
of background in financial regulation. it's important to get somebody who will take seriously what i think we kind of learned from the great crisis was that, it's not enough to be looking at individual banks, and the individual components of the system. somebody has to think hard about the stability of the system as a whole. that is something that was brought home to us when the system as a whole went into shock in 2008. person would have a very important role, coordinating with other regulators, the fdic and other agencies, trying to make sure not only are banks individually stable, but the system as a whole, is it resilient for the next shop that will come. tom: one more question and we will look back to things we have learned in other crises. within the depression, the great contraction, many have called it , there is this single idea that we had to keep the banks afloat. interesting is your speech, you don't go back to 1929.
you go back to challenges of 1928. do you worry that right now we have any of the precursors or ofups, not of the hysteria depression, but 1928 when everything was perfect? mr. bernanke: i wouldn't say i see strong parallels there. fed is much stronger. tom: and smarter. mr. bernanke: tomwe hope so. sometimes things go in cycles. our financial system is a lot stronger. one of the problems of the 30's was that the fed was a young institution, it was only created in 1914. objectives was to help maintain stability in the banking system. it did not succeed in doing that. in the united states, 8000 banks failed in the 1930's, which not only had term it is negative impacts on the money supply, but on credit. one of the lessons we took in the financial crisis of 2008 was
that the financial system is a critical input to the health of the economy as a whole. you can't let it collapsed because it will bring down the rest of the economy. i think that was something we learned with the benefit of hindsight, seeing what happened in the 1930's. us, if you are just joining a lengthy conversation with the former chairman of the federal reserve system, denver nike. -- ben bernanke. book he speaks interestingly, i would say sharply about the president and his administration. i want to get in -- i want to get to investment. --is y=c+1 now, everyone knows -- where is the investment? what mystery of the lack of investment now? mr. bernanke: it has been weaker
than we would like a comic capital investments in new factories, new buildings, and so on. it hasn't been catastrophically bad but it should be better, not only in terms of driving demand for output, but also in creating more capacity and increasing productivity and helping us grow more in the long run. larry summers talks about secular stagnation. i have some sympathy with that. there is some evidence that around the world, that there is a lot of savings, looking for good investments to make. but for a variety of reasons, slower growth, slower growing weak force, relatively productivity gains and advanced industrial economies, that the number of strong capital projects that pay a high return is limited, and with the amount of saving we see looking for returns, that's driving down yields, keeping interest rates globally. we have to look for new sources of growth, new industries, new technologies. these things are becoming, which
is why a don't by secular stagnation is a permanent situation, but right now and partially because of the after effects of the crisis itself, we just don't have the opportunities out there that we would like. tom: can there be a policy prescription to jumpstart investment that is modern and forward-looking, or do we risk having a nostalgic investment where we build as they did in japan years ago -- different elements. there is cost to capital and tax policy. technology. we need to continue to support technological advance and the adaptation of technologies into commercial purposes. skilled workers, to provide complements to those investments. and that you mention roads building straight and the united states i don't think we are quite in the state where we couldn't benefit from improved infrastructure.
tom: this is true. vonnie: -- mr. bernanke: you are talking about how long it took to get you from washington -- if you want people to spend less time in traffic jams and less time traveling from city to city, which is a detriment to productivity, infrastructure is one way to improve that dimension. as a number of different things that can help. but it's a slow process. you can't expect -- firms make capital investments over 5, 10, 20 year horizons. you can't expect everything to turn on the dime. i'm hopeful. chairman greenspan, not baffled, but almost bewildered by the productivity of another time and place. every chairman of the fed, all in -- all with courage to act, are dealt their productivity.
it's -- speaking with my colleague, michael mckee about this, it is at the top of mike mckee's lists. capital dynamics, labor dynamics, and with a great honor to robert solow, this odd thing up to the right side of the equation. what is wrong with america's productivity right now? mr. bernanke: some of it may be after effects of the financial crisis. the crisis led to fewer startups of big firms, let's venture capital, less r&d, less investment. all those things generate productivity over time. i think we are moving away from that now. it's almost a decade since the crisis. the other thing is the line pursued by bob gordon, you know his work on the rise and fall of american growth. aftergues that the period world war ii, the 1950's, 1960's was an unusual period. there was a lot of catch-up after world war ii, a lot of transformations happening in the american economy, which we have not seen that degree of change at this time. the slower productivity gains are reflecting the fact that technology comes in and flows. you mentioned greenspan's
technology boom in the 1990's straight that was a period when the new information technology revolution was really first having its big impact on productivity, from areas from office work to retail to engineering. that seems to have slowed in 2005. it appears at that time a lot of that first wave of i.t. productivity was absorbed. we may get another wave. at the moment we are in a flat spot. tom: within the flat spot a productivity, clearly with mr. , there is aso well primal scream to do something about it. how do you lift wages? with does wage growth -- the wonderful 20th century that you and i live, where does that prosperity come from? mr. bernanke: there's an interesting paradox, which is
that if you look at the economy as a whole, you talk about the unemployment rate and job creation and gdp growth and all those things, the recovery has been pretty good overall. unemployment is four point 5%, we created 16 million jobs. donald trump was elected president because there are a lot of people very dissatisfied. it's not the overall strength of the economy, which frankly, the united states is the envy of a lot of other countries in the world, but the fact that those gains are not being broadly shared, that upward mobility is not what it was 40 or 50 years ago in the united states. a big part of the overall growth picture is also trying to make sure everyone is contributing, everyone is sharing and prosperity. i think that is where we are falling down, where we have not help provide the opportunity that we need. 586, and it reads faster than that, it's not "war and peace. don't be afraid. i called on congress
to increase spending or cut taxes or at least to avoid new austerity. are we victims of our cultural almost our cultural religion, where we can't spend money when we need to? mr. bernanke: it's ironic because now we are talking about big tax cuts. released from the perspective of putting people back to work, -- at least from the perspective of putting people back to work, it would have meant more tax cuts. released from that perspective, with unemployment at 4.5%, the case today is a little weaker. there's always a case for improving the quality of the tax code, making it more efficient, fair, simple, and so on. in terms of adding demand to the economy, that would have been better if you years ago. tom: these tax cuts, tax cuts you can support, and particularly, are these tax cuts within the gilded age were all of those benefits go too narrowly to the affluent?
mr. bernanke: if i talk about the income tax proposal for personal income, i guess i have a couple concerns. it is more demand side, oriented than supply-side. it's going to generate more consumer spending. it's not obvious it will increase the potential of the economy very much. we couldive years ago, have used more demand-side stimulus. today is not as obvious that we need that. the other aspect of it is that as written down -- we don't know the details. it appears it would have created a much bigger deficit. i'm not opposed to increasing deficits in all circumstances by any means. if we're going to increase the deficit, why not think about improving efficiency of the corporate tax code or doing infrastructure that i think would have more direct effects on supply, potential output than the personal tax cut. tom: you didn't suffer the pain of working at bocbo, right? mr. bernanke: no, but i was in
the white house for a while and had my connections with omb. tom: do you have in your head a deficit to gdp percent where for ben bernanke it becomes problematic? right now we are at 3%, give or take a little. -- little 5%. does your caution kick in at 6%? mr. bernanke: the way i think about this, the cbo does the projections of the debt and deficit for 20, 30 years. i think about it that way. i aman always have -- supportive of the fiscal program in 2009, in the depths of the recession where because the recession was so bad, we needed fiscal stimulus, that a big deficit was inevitable at this point. i think about a longer-term perspective, so how much will changes in policy effect that longer-term trajectory. i think one of the key elements to that is really what will happen to health care, not that
i particularly want to get into the deep details of health care policy, but the federal government, which some people have described as being an insurance company with an army, it ensures people for health and retirement and runs the military, if the cost of health care in our aging society continue along the lines we have seen in the past few decades, that's going to be a huge fiscal burden 20 years on. tom: i'm going to take the bait on health care. gdp, it's ridiculous thatuch more we have spent any other prosperous nation in this world. would you suggest the affordable care act or trump care can lower that contribution to gdp of health care? mr. bernanke: there's been some success on that the last few years. record growth of health care costs has diminished a bit. the focus of both obamacare and
some of the proposals here, more about coverage, how many people are covered and at what cost, and the tough decisions about quality, what we are going to pay for, how much it is going to cost. that is there, but it hasn't gotten as much attention as the recovery. tom: we have too many things to talk about here today. a couple more minutes with ben bernanke here and then we will go back to some important things, including the idea of the fed balance sheet, which is front and center. talks about the complacency out there, the quiet out there with our reporting every day at bloomberg. are you worried that we are lulling ourselves into being not careful with our economics? is it just too quiet out there right now? mr. bernanke: markets are pretty quiet. i don't fully understand it. is ainly the world dangerous place in some dimensions, certainly there's no shortage of geopolitical
concerns, from north korea to the middle east. far -- we'reo seeing for example in europe, market so far have dismissed these things. tom: what do you make of that? there's just a quiet to what's going on. mr. bernanke: i don't have a great explanation for it. thatnk the good news is while a lot of the increase in market valuations in the last six months, or four months, came about because of reaction that there was going to be some kind has not movement, which materialized, it looks to be pushed further out in the future, not all of the market reaction is due to expectations about president trump's policies. some of it is due to the fact that there has been a better tone globally. you see better tone in europe, better tone in china, and that has made people a little more
comfortable. tom: you and i -- or member, you had a slide rule and you couldn't figure out how to use it. one day this magical thing showed up, a hewlett-packard calculator. remember, the first rich kid in your class to have one? the rich kids had them. it was like, one day i will have this too. that technological progress that is that really- what's going on right now, technological progress that the only advantage to a certain group of people versus a broader part of society? mr. bernanke: i don't know. everybody has a cell phone. so, some of these technological things are helping, advances are helping a lot of people. i think it is true that there is a bit of a paradox again, we talked about all these amazing advances in communications and artificial intelligence and so on. overall productivity isn't doing very much.
the truth is that outside some areas like communications, like that technological opportunities we see out there have not really completely diffused into our economy. that is the potential for the next couple of decades. tom: we will come back with ben bernanke in support of "the courage to act." it was hugely successful, now in paperwork -- paper back. -- paperback. about the balance sheet as well. coming up, my colleague david gura of bloomberg surveillance will speak with wilbur ross, secretary of commerce. from washington, stay with us on television, on radio. this is bloomberg. ♪
the former federal reserve chairman, ben bernanke. he's out with "the courage to act," hugely received in hardcover here. now in paperback with a new, biting afterward about the events of washington. that is on the edge of milton friedman. i remember milton friedman. are you enjoying grinding this out? mr. bernanke: [inaudible] tom: it's a public service. let's go to it right now. the going to ask you about fed balance sheet. you've written about this. i would suggest there is a fear in some camps bordering on hysteria, and you seem to face this debate about lowering the fed balance sheet to balloon up during the crisis. you seem calm about it. are you